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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): December 22, 1999
Interface Systems, Inc.
(Exact name of registrant as specified in its charter)
Michigan 0-10902 38-1857379
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5855 Interface Drive, Ann Arbor, Michigan 48103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (734) 769-5900
Not Applicable
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 22, 1999, Interface Systems, Inc., a Michigan corporation
(the "Company"), completed its sale of all of the assets of I.G.K. Industries,
Inc. ("IGK"), a Michigan corporation and a wholly-owned subsidiary of the
Company, to The Lance Field Company ("Lance Field"). In connection with the
transaction, the Company transferred all of the assets of IGK used in the
manufacture and sale of custom printed circuit boards to Lance Field. Also in
connection with the transaction, the Company transferred the real property owned
by it and located at 7232 Jackson Road, Ann Arbor, Michigan, to L&D Capital
Holdings, L.L.C., a Michigan limited liability company and an affiliate of Lance
Field ("L&D"). Lance Field also agreed to assume all current liabilities of IGK.
Pursuant to the Asset Purchase Agreement, dated December 22, 1999, by
and between IGK and Lance Field, the aggregate purchase price for the
transaction was one million four hundred and fifty thousand dollars
($1,450,000), of which one million one hundred thousand dollars ($1,100,000) was
paid to IGK on December 22, 1999. The balance of the purchase price is to be
paid by Lance Field and L&D in accordance with the terms of a promissory note
providing for the payment of three hundred fifty thousand dollars ($350,000)
from Lance Field and L&D to the Company.
Prior to the transaction, there were no material relationships between
Lance Field and the Company or any of its affiliates, any director or officer of
the Company or any associate of such director or officer.
The Company issued a press release announcing the sale of substantially
all of the assets of IGK. The press release is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
Pro Forma Data (Unaudited)
The following unaudited pro forma consolidated condensed balance sheet as of
September 30, 1999, and unaudited pro forma consolidated condensed statement of
operations for the year then ended, give pro forma effect to the disposition of
IGK as if it had occurred as of October 1, 1998. The unaudited pro forma
consolidated condensed balance sheet and statement of operations do not purport
to be indicative of the financial position or the results of operations of the
Company had the transaction actually been completed as of October 1, 1998, or
which may be obtained in the future.
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Pro Forma Consolidated Condensed Balance Sheet
As of September 30, 1999
(in thousands, except per share data)
Historical Historical
Interface IGK Pro Forma Pro Forma
Systems, Inc. Industries, Inc. Adjustments Historical
------------- ---------------- ----------- ----------
Current Assets:
Cash and cash equivalents $ 1,575 $ - $ 1,100 $ 2,675
Accounts receivable, net 3,690 359 106 (1) 3,437
Inventories 916 466 - 450
Prepaid expenses and other 310 12 - 298
-------- ------ -------- --------
Total current assets 6,491 837 1,206 6,860
-------- ------ -------- --------
Property and equipment, net 3,188 509 (224)(2) 2,455
Goodwill, net 789 - - 789
Note receivable - - 270 270
Other assets 55 - - 55
-------- ------ -------- --------
$ 10,523 $1,346 $ 1,252 $ 10,429
======== ====== ======== ========
Current Liabilities:
Accounts payable $ 912 $ 92 $ - $ 820
Accrued expenses 1,190 65 - 1,125
Deferred revenue 431 - - 431
-------- ------ -------- --------
Total current liabilities 2,533 157 - 2,376
-------- ------ -------- --------
Long-term debt 71 - - 71
Stockholders' Equity:
Common stock 11,324 450 450 11,324
Accumulated deficit (3,352) 739 802 (3,289)
Accumulated other comprehensive
loss (53) - - (53)
-------- ------ -------- --------
Total stockholders' equity 7,919 1,189 1,252 7,982
-------- ------ -------- --------
$ 10,523 $1,346 $ 1,252 $ 10,429
======== ====== ======== ========
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Pro Forma Consolidated Condensed Statement of Operations
For the Year Ended September 30, 1999
(in thousands, except per share data)
Historical Historical
Interface IGK Pro Forma Pro Forma
Systems, Inc. Industries, Inc. Adjustments Historical
------------- ---------------- ----------- ----------
Net revenues $ 20,169 $ 2,717 $ - $ 17,452
Cost of revenues 7,899 2,400 - 5,499
-------- ------- --- --------
Gross profit 12,270 317 - 11,953
Product development 3,854 - - 3,854
Selling, general & administrative 8,683 419 - 8,264
-------- ------- --- --------
Loss from operations (267) (102) - (165)
Other income 43 - 26(1) 69
-------- ------- --- --------
Loss before taxes (224) (102) 26 (96)
Income tax provision (credit) 41 (4) - 45
-------- ------- --- --------
Loss from continuing operations $ (265) $ (98) $26 $ (141)
======== ======= === ========
Basic loss per share $ (0.06) $ (0.03)
======== ========
Weighted average shares outstanding 4,481 4,481
======== ========
The above pro forma consolidated condensed financial statements include the
following pro forma adjustments:
(1) Recognition of twelves months of interest income on the note receivable from
the sale.
(2) Removal of the building owned by the Company that was sold in the
transaction.
(c) EXHIBITS
Exhibit No. Exhibit
- ----------- -------
2.1 Asset Purchase Agreement, dated December 22, 1999,
by and between I.G.K. Industries, Inc. and The
Lance Field Company
99.1 Press Release, dated December 22, 1999
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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.
January 4, 2000 INTERFACE SYSTEMS, INC.
/s/ Robert A. Nero
-----------------------------------------
By: Robert A. Nero
President
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Exhibit Index
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Exhibit No. Description
- ----------- -----------
2.1 Asset Purchase Agreement, dated December 22, 1999,
by and between I.G.K. Industries, Inc. and The
Lance Field Company
99.1 Press Release, dated December 22, 1999