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UNITED STATES
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
June 30, 2001
(Date of Earliest Event Reported)
ORION TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
1133 21st Street, N.W.
8th Floor
Washington, D.C. 20036
(Address of principal executive offices (zip code))
(202) 822-0114
(Registrant's telephone number, including area code)
Nevada 000-29673 88-0369588
(State of incorporation) (Commission File Number) (IRS Employer Identification No.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Date and Manner of Acquisition
On June 30, 2001 (the "Closing Date"), Orion Technologies, Inc. ("Orion") and
its wholly-owned subsidiary, Globalinx, Inc. ("Globalinx") entered into an Asset
Purchase Agreement (the "Purchase Agreement") with Erbia, Inc., its wholly-owned
subsidiary, Erbia Network, Inc. ("Erbia"), and FGC, INC., collectively referred
to as the "Sellers."
Assets Purchased and Liabilities Assumed
Pursuant to the Purchase Agreement, Orion purchased certain tangible and
intangible assets from the Sellers, and assumed certain liabilities. The
tangible assets purchased consisted primarily of the Sellers' subscriber, trade
and other accounts receivable which have been outstanding for thirty days or
less as of the Closing Date owed to the Sellers as payment for services rendered
by the Sellers prior to the Closing Date, which totaled approximately $360,000
at the Closing Date. Orion also assumed certain liabilities of the Sellers,
which consisted primarily of a $500,000 liability due Qwest Communications, Inc.
("Qwest") and assumed certain lease and other contract obligations of the
Sellers that Orion feels will be necessary to continue the business of the
Sellers.
Nature and Amount of Consideration
The purchase price payable to the Sellers by Orion for the purchased assets
consisted of 300,000 shares (the "Initial Shares") of Orion common stock, par
value $0.01 per share ("Common Stock"). A total of 175,000 of the Initial Shares
will be held in reserve by Orion on behalf of the Sellers and transferred, at
the request of the Sellers, to the certain creditors of the Sellers for the
settlement of certain liabilities not assumed by Orion.
The Purchase Agreement contains a share adjustment provision which provides that
if the value of the Initial Shares, based on the average closing price of a
share of the Common Stock of Orion for the last ten trading days immediately
preceding the six-month anniversary of the Closing Date, is less than $1,000,000
(the "Six Month Stock Value"), Orion will deliver to the Sellers that number of
additional shares of Common Stock of Orion equal to (i) $1,000,000 minus the Six
Month Stock Value, (ii) multiplied by fifty percent, (iii) divided by the
average closing price of a share of Common Stock of Orion for the ten trading
days immediately preceding the six-month anniversary of the Closing Date (the
"Additional Six Month Shares").
If Orion is required to deliver the Additional Six Month Shares and if the value
of the Initial Shares and the Additional Six Month Shares, based on the average
closing price of a share of Common Stock of Orion for the ten trading days
immediately preceding the one-year anniversary of the Closing Date, is less than
$1,000,000 (the "One Year Stock Value"), then Orion will deliver to the Sellers
that number of shares of Common Stock of Orion equal to (i) $1,000,000 minus the
One Year Stock Value, (ii) divided by the average closing price of a share of
Common Stock of Orion for the ten trading days immediately preceding the one
year anniversary of the Closing Date (the "Additional One Year Shares" and,
collectively with the Initial Shares and the Additional Six Month Shares, the
"Shares").
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In addition to the foregoing consideration, beginning on October 15, 2001 and on
the fifteenth day of each month thereafter through and including September 15,
2001, Orion will pay a commission override (the "Override") to the Sellers equal
to three percent of the billed monthly revenue for the prior month attributable
to the Sellers' customer base, excluding certain accounts.
In addition, a certain Promissory Note dated April 19, 2001 by Erbia to Orion in
the sum of $250,000 was replaced in its entirety with a new Promissory Note
dated June 20, 2001.
As further consideration, Orion assumed certain liabilities of the Sellers. In
connection with the assumption of these liabilities, Orion delivered to Qwest a
promissory note in the principal amount of $500,000 and 400,000 shares (the
"Initial Qwest Shares") of the Common Stock of Orion. The agreement between
Orion and Qwest includes a share adjustment provision which provides that if the
value of the Initial Qwest Shares, based on the average closing price of a share
of the Common Stock of Orion for the ten trading days immediately preceding the
three-month anniversary of the Closing Date, is less than $400,000 (the "Three
Month Stock Value"), Orion will deliver to Qwest that number of additional
shares of Common Stock of Orion equal to (i) $400,000 minus the Three Month
Stock Value, (ii) multiplied by fifty percent, (iii) divided by the average
closing price of a share of Common Stock of Orion for the ten trading days
immediately preceding the three-month anniversary of the Closing Date (the
"Additional Three Month Qwest Shares").
If Orion is required to deliver the Additional Three Month Qwest Shares and if
the value of the Initial Qwest Shares and the Additional Three Month Qwest
Shares, based on the average closing price of a share of Common Stock of Orion
for the ten trading days immediately preceding the six-month anniversary of the
Closing Date, is less than $400,000 (the "Qwest Six Month Stock Value"), then
Orion will deliver to Qwest that number of shares of Common Stock of Orion equal
to (i) $400,000 minus the Qwest Six Month Stock Value, (ii) divided by the
average closing price of a share of Common Stock of Orion for the ten trading
days immediately preceding the six month anniversary of the Closing Date.
In exchange, Qwest delivered a release of all claims against Sellers and
permitted Orion to transfer its customers under Orion's Globalinx Reseller
Agreement to Sellers' account with Qwest.
Orion also delivered 100,000 shares of Common Stock of Orion to Arne Dunhem
("Dunhem") as consideration for Dunhem continuing to be a guarantor for certain
contracts and an additional 100,000 shares of Common Stock of Orion for
consulting support provided by Dunhem. If Orion does not take the necessary
actions to eliminate the need for Dunhem's personal guarantee on or before the
six-month anniversary of the Closing Date on certain leases and other contracts
that Orion assumed as part of the Purchase Agreement, then Orion will deliver to
Dunhem an additional 50,000 shares of Common Stock of Orion.
As part of the Purchase Agreement, Orion agreed to hire certain employees of the
Sellers and to enter into a consulting agreement with Dunhem.
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For each of the first three months after the Closing Date, the Sellers shall
from collection of accounts receivables being thirty one days or older that were
not purchased by Orion and are being retained by the Sellers (the "Retained
Accounts Receivable") pay to Orion the lesser of the following amounts: (i)
$75,143 in the first month, $36,336 in the second month and $7,832 in the third
month, or (ii) the amount of entire Retained Accounts Receivable collected by
Seller during such month.
Nature of Determining Consideration
The consideration was determined by arms-length negotiations between Orion,
Globalinx and the Sellers, and was presented to and approved by the directors of
each corporation and the shareholders of Orion and the Sellers.
Orion intends to integrate the business of the Sellers with Globalinx and to use
the combined assets of these entities to continue and expand the business
operations of Erbia, an integrated communications provider company that offers
business organizations of all sizes and consumers with long distance (domestic
and international), calling card, and 800 services and that currently provides
long distance telecommunications services to over 17,000 customers throughout
the United States. Erbia's customer base consists of small office/home office,
small to medium enterprises, and high-value residential users. Erbia is
headquartered in the McLean, Virginia and operates a call center in Ft.
Lauderdale, Florida. Globalinx plans to relocate its corporate office to Erbia's
McLean, Virginia facility.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND
EXHIBITS
(a) Financial Statements of Business Acquired.
It is impracticable to provide the financial statements required relative
to the acquired business described in Item 2 at the time this Current
Report on Form 8-K is filed. Orion will file the required financial
statements as soon as practicable, but in no event later than September
15, 2001.
(b) Pro Forma Financial Information.
It is impracticable to provide the pro forma financial information
required relative to the acquired business described in Item 2 at the
time this Current Report on Form 8-K is filed. Orion will file the
required pro forma financial information as soon as practicable, but in
no event later than September 15, 2001.
(c) Exhibits.
2 Asset Purchase Agreement (The disclosure schedules and attachments
listed in the table of contents to the Agreement and Plan of
Merger have been omitted in accordance with Item 601(b)(2) of
Regulation S-B. A copy of such exhibits and schedules will be
furnished supplementally to the Securities and Exchange Commission
upon request.)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 8-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
ORION TECHNOLOGIES, INC.,
A Nevada Corporation
Date July 24, 2001 By : /s/ A. Frans Heideman
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A. Frans Heideman,
President and Chief Executive Officer
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