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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 8, 1999
E-SYNC NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-2401 06-0625999
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
35 Nutmeg Drive, Trumbull, CT 06611
(Address of principal executive offices)
(203) 601-3000
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On November 8, 1999, E-Sync Networks, Inc. (the "Company") acquired
100% of the outstanding stock of Braincraft Learning Technologies, Inc.
("Braincraft") in exchange for $250,000 of cash and 671,676 shares of
the Company's common stock (the "Acquisition"). The Acquisition was
effected through the merger (the "Merger") of BLT Acquisition Corp., a
wholly owned subsidiary of the Company ("BLT"), with and into
Braincraft, pursuant to an Agreement and Plan of Merger, dated as of
September 27, 1999, by and among the Company, BLT, Braincraft, Dan
Stechow and Kevin Marth, the stockholders of Braincraft (the
"Stockholders"), as amended (the "Agreement"). Braincraft was the
surviving entity in the Merger (the "Surviving Corporation") and became
a wholly owned subsidiary of the Company thereby. The Merger was
effective upon the filing of a Certificate of Merger with the Secretary
of State of the State of New York on November 16, 1999 (the "Effective
Time").
Pursuant to the Agreement, each outstanding share of Braincraft common
stock, par value $0.01 per share (the "Braincraft Common Stock"), has
been converted into the right to receive cash equal to $0.25 per share
("Cash Consideration") and 0.671676 shares of the Company's common
stock, par value $0.01 per share (the "Company Common Stock"), per
share ("Share Consideration"). The aggregate consideration paid for the
Braincraft Common Stock pursuant to the Agreement was $250,000 of
cash and 671,676 shares of the Company Common Stock. As of the
Effective Time, the shares of Braincraft Common Stock that were owned
by Braincraft as treasury stock or by any direct or indirect subsidiary
of Braincraft were canceled and retired. No payment was, or will be,
made with respect to such shares of Braincraft Common Stock.
Each holder of options to purchase shares of Braincraft Common Stock
that were issued by Braincraft and were outstanding at the Effective
Time whether vested or unvested (the "Braincraft Options"), have been
converted into options to purchase the number of shares of the Company
Common Stock equal to 0.671676 multiplied by the number of shares of
Braincraft Common Stock issuable upon exercise of such Braincraft
Options immediately prior to the Effective Time, such number to be
rounded down to the nearest whole share of the Company Common Stock.
The exercise price per share of each converted Braincraft Option is
equal to the exercise price of such Braincraft Option at the Effective
Time divided by 0.671676, such price to be rounded up to the nearest
whole cent. A total of 194,750 Braincraft Options were converted into
options to purchase a maximum of 130,809 shares of the Company Common
Stock at an exercise price of either $2.98 or $5.02 per share depending
on the exercise price of the original underlying Braincraft Option.
The Agreement provides for the Stockholders to receive additional
shares of the Company Common Stock as follows. If, at the close of
business on the first business day following the sixtieth day from
the Effective Time (the"Contingent Payment Time"), the Surviving
Corporation has exceeded $230,000 in Cash Receipts (as defined below),
but has not exceeded $280,000
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in Cash Receipts, then the Company shall deliver to the Stockholders
(in proportion to the Share Consideration received by each Stockholder
at the Effective Time) 5,040 shares of the Company Common Stock. If, at
the Contingent Payment Time, the Surviving Corporation has exceeded
$280,000 in Cash Receipts, then the Company shall deliver to the
Stockholders (in proportion to the Share Consideration received by each
Stockholder at the Effective Time) 10,080 shares of the Company Common
Stock. "Cash Receipts" shall mean the sum of (x) the aggregate cash
receipts from sales of products and services received by the Surviving
Corporation from the Effective Time through the Contingent Payment
Time, and (y) to the extent cash receipts therefrom are not included in
clause (x), the amount that would have been billed to an unaffiliated
third party for any services provided by the Surviving Corporation to
the Parent from the Effective Time through the Contingent Payment Time.
Pursuant to the Merger Agreement, the Company appointed the
Stockholders to serve on the Board of Directors of the Surviving
Corporation and the Surviving Corporation has entered into employment
agreements with each Stockholder.
Braincraft is a leading provider of web-based corporate communication
and training tools to major enterprise clients. The addition of
Braincraft enables the Company to leverage Braincraft's expertise in
the development of innovative communications solutions across internal
and external settings.
The Company financed the acquisition of Braincraft primarily through
the issuance of the Company Common Stock. The $250,000 Cash
Consideration came from the Company's internal funds.
The Agreement is attached as Exhibit 2.1 hereto, and such Agreement is
incorporated by reference herein. Amendment No. 1 to the Agreement,
dated as of November 8, 1999, is attached as Exhibit 2.2 hereto, and
such Amendment is incorporated by reference herein. The descriptions of
the Agreement, the Amendment and the transactions contemplated
thereunder contained herein are qualified in their entirety by
reference to the Agreement and the Amendment.
Attached as Exhibit 99.1 hereto is the Company's press release
announcing the consummation of the transactions contemplated by the
Agreement.
(b) Certain of the assets of Braincraft constitute equipment and other
physical property. Such assets were used by Braincraft in the operation
of its business. The Surviving Corporation intends to continue
substantially the same use for such acquired assets.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
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It is currently impracticable for the Company to file with this Form
8-K the historical financial information of Braincraft required to be
filed pursuant to Item 7(a) of Form 8-K. Such financial information
will be filed by amendment not later than 60 days after the date on
which this Form 8-K must be filed.
(b) Pro Forma Financial Information
It is currently impracticable for the Company to file with this Form
8-K the pro forma financial information required to be filed pursuant
to Item 7(b) of Form 8-K. Such pro forma financial information will be
filed by amendment not later than 60 days after the date on which this
Form 8-K must be filed.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of September 27, 1999,
by and among E-Sync Networks, Inc., Braincraft Learning
Technologies, Inc., BLT Acquisition Corp., Dan Stechow and
Kevin Marth.
2.2 Amendment No. 1 to the Agreement and Plan of Merger, dated as
of November 8, 1999, by and among E-Sync Networks, Inc.,
Braincraft Learning Technologies, Inc., BLT Acquisition Corp.,
Dan Stechow and Kevin Marth.
99.1 Press Release.
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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.
E-SYNC NETWORKS, INC.
Date: November 23, 1999 By: /s/ Frank J. Connolly, Jr.
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Name: Frank J. Connolly, Jr.
Title: Chief Financial Officer
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Index to Exhibits
2.1 Agreement and Plan of Merger, dated as of September 27, 1999,
by and among E-Sync Networks, Inc., Braincraft Learning
Technologies, Inc., BLT Acquisition Corp., Dan Stechow and
Kevin Marth.*
2.2 Amendment No. 1 to the Agreement and Plan of Merger, dated as
of November 8, 1999, by and among E-Sync Networks, Inc.,
Braincraft Learning Technologies, Inc., BLT Acquisition Corp.,
Dan Stechow and Kevin Marth.
99.1 Press Release.
* The following exhibits and schedules to the Agreement and Plan of
Merger were not filed herewith pursuant to Item 601 of Regulation S-B:
Form of Certificate of Merger
Form of Promissory Note
Form of Stechow Employment Agreement
Form of Marth Employment Agreement
Form of Escrow Agreement
Form of Stockholders' Agreement
Form of Company Counsel Opinion
Form of Company Compliance Certificate
Form of Payroll Tax Certificate
Form of Settlement Certificate
Form of Parent and Purchaser Counsel Opinion
Form of Registration Rights Agreement
Form of Parent Compliance Certificate
Form of Incentive Stock Option Agreement
Form of Non-Qualified Stock Option Agreement
The Registrant will furnish copies of such exhibits and schedules to the
Commission upon request.
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