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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 15, 1997
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Date of Report (Date of earliest event reported)
NHANCEMENT TECHNOLOGIES INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21999 84-1360852
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(State or Other Jurisdiction (S.E.C. File Number) (IRS Employer Identification
of Incorporation) No.)
39420 Liberty Street
Suite 250
Fremont, CA 94538
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(Address of principal executive offices, including zip code)
(510) 744-3333
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(Registrant's telephone number, including area code)
Not applicable
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(Former name or former address, if changed since last report)
This Amendment No. 1 to the Registrant's Current Report on Form 8-K dated
December 15, 1997 (the "Report"), relates to the Registrant's completion of the
acquisition (the "Acquisition") of one hundred percent (100%) of all the issued
and fully paid up shares of Advantis Network & System Sdn Bhd., a corporation
organized and existing under the laws of Malaysia ("Advantis"). The Report,
which was first filed with the Commission on December 30, 1997, has been amended
and restated in its entirely. As a result of the Acquisition, Advantis became a
wholly owned subsidiary of the Registrant on December 15, 1997, the effective
date of the Acquisition.
Total Number of Pages: 29
Exhibit Index on Sequentially Numbered Page: 4
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) Pursuant to an Agreement for the Sale of Shares in Advantis Network
& System Sdn. Bhd. ("Advantis") between NHancement Technologies Inc., a Delaware
corporation ("NHancement"), and the six individuals ("Advantis Shareholders")
who owned one hundred percent (100%) of all of the issued and fully paid up
shares of Advantis, dated as of June 20, 1997 (the "Original Agreement"), as
amended by two Supplemental Agreements, each dated as of November 26, 1997
(individually "Supplement No. 1" and "Supplement No. 2" and collectively with
the Original Agreement referred to as the "Agreement"), NHancement purchased one
hundred percent (100%) of the shares of Advantis (the "Acquisition").
Consummation of the Acquisition, pursuant to the Agreement, occurred on December
15, 1997, the date the last Advantis Shareholder signed Supplement No. 2. As a
result of the Acquisition, Advantis has become a wholly owned subsidiary of
NHancement. Advantis is a telecommunications systems integrator formed to
address the growing telecommunications infrastructure needs of Malaysia.
The initial consideration payable to the Advantis Shareholders in
connection with the Acquisition is 300,000 shares of common stock of NHancement
("NHancement Shares"), to be paid to each Advantis Shareholder pro rata
proportional to his Advantis share ownership. The Advantis Shareholders also
have the opportunity to receive up to a maximum of 230,000 additional NHancement
Shares as contingent purchase consideration ("contingent Purchase
Consideration") as a consequence of the Acquisition if Advantis exceeds certain
minimum profit levels for its next two fiscal years ending March 31, 1998 and
1999. All NHancement Shares to be distributed to the Advantis Shareholders
pursuant to the Agreement will be issued by NHancement in reliance upon Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"), and will be
subject to the restrictions on transferability as imposed by the 1933 Act. In
addition, the first 300,000 NHancement Shares are subject to a lock-up provision
prohibiting transfer of fifty percent (50%) of the shares for one year following
the effective date, and prohibiting transfer of the remaining fifty percent
(50%) until February 4, 1999.
The consideration payable to the Advantis Shareholders was based upon
the value of NHancement's common stock on December 15, 1997, the effective date,
as determined by reference to the closing price quoted on the Nasdaq SmallCap
Market. At the effective date, 300,000 NHancement Shares were valued at
approximately US$660,000. (For accounting purposes, these shares have been
discounted by twenty percent (20%) to reflect the lock-up provisions restricting
transfer of the shares as described above.)
During the due diligence period provided for in the Original Agreement,
NHancement uncovered an account receivable in the amount of Ringgit Malaysia
640,174 (approximately US$183,000 at the exchange rate in effect as of December
30, 1997, the date of filing of the initial report on Form 8-K regarding the
Advantis acquisition), the collectability of which NHancement determined was in
doubt. Pursuant to Supplement No. 2, Advantis Shareholders have guaranteed the
collectability of this receivable. The Advantis Shareholders may utilize their
NHancement Share holdings in satisfaction of their guarantee obligations. A
total of 91,454 shares of the initial 300,000 NHancement Shares issued are being
held in escrow for this purpose.
The amount of consideration paid in connection with the purchase was
determined in arms-length negotiations between officers of NHancement and the
selling Advantis Shareholders.
In connection with the Acquisition, three of the Advantis Shareholders
who are directors or managers of Advantis reaffirmed their employment agreements
and agreed to continue to be employed by Advantis for not less than two (2)
years after the close of the transaction. Each of these individuals has also
agreed that if he resigns voluntarily or is terminated for cause after the close
of the Acquisition, and before the distribution (if any) of the 230,000
additional NHancement Shares, he will forfeit his right to receive his pro rata
portion of any such undistributed shares. These three Advantis Shareholders are
eligible to receive approximately thirty-three percent (33%) of the Contingent
Purchase Consideration.
(b) Not applicable.
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ITEM 5. OTHER EVENTS
Effective as of November 12, 1997, BioFactors, Inc., a Delaware
corporation and a wholly owned subsidiary of NHancement ("BioFactors"), was
merged with and into Voice Plus, Inc., a California corporation, and a wholly
owned subsidiary of NHancement ("Voice Plus"), in a statutory merger intended to
qualify, for federal income tax purposes, as a reorganization under Section 368
of the Internal Revenue Code of 1986, as amended. Voice Plus is the surviving
corporation in the merger transaction with BioFactors. As of the effective date
of the merger, the operations of the combined entity are being conducted under
the name of "Voice Plus," which is headquartered in Fremont, California. Voice
Plus remains a wholly-owned subsidiary of Nhancement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
See Exhibit 99.01 attached hereto for Advantis'
financial statements.
(b) PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
See Exhibit 99.02 attached hereto
(c) Exhibits
Exhibit
Number Description
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2.01 Agreement for the Sale of Shares in Advantis Network &
System Sdn. Bhd. Dated June 20, 1997, as amended by the
Supplemental Amendment to the Agreement dated November 26,
1997, and the Second Supplemental Amendment to the
Agreement dated November 26, 1997, is incorporated by
reference to Exhibit 2.01 included in Registrant's filing
on Form 8-K filed with the Securities and Exchange
Commission on December 30, 1997
4.01 Form of Lock-up Agreement
99.01 Advantis Network & System Sdn. Bhd. Audited Financial
Statements for the Years Ended March 31, 1996 and 1997
(with unaudited information as of September 30, 1997 and
for the six months ended September 30, 1996 and 1997)
99.02 Pro Forma Combined Condensed Financial Statements
(unaudited) of Advantis Network & System Sdn. Bhd. and
NHancement Technologies Inc. as of September 30, 1997, for
the nine months ended September 30, 1997 and for the year
ended December 31, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NHancement Technologies Inc.
Date: February 10, 1998 By: /s/ Douglas S. Zorn
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Douglas S. Zorn, Executive
Vice President, and Chief Financial
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INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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2.01 Agreement for the Sale of Shares in Advantis Network & System Sdn. Bhd. Dated
June 20, 1997, as amended by the Supplemental Amendment to the Agreement dated
November 26, 1997, and the Second Supplemental Amendment to the Agreement dated ---
November 26, 1997, is incorporated by reference to Exhibit 2.01 included in
Registrant's filing on Form 8-K filed with the Securities and Exchange Commission
on December 30, 1997
4.01 Form of Lock-up Agreement 5
99.01 Advantis Network & System Sdn. Bhd. Audited Financial Statements for the Years
Ended March 31, 1996 and 1997 (with unaudited information as of September 30, 6 - 22
1997 and for the six months ended September 30, 1996 and 1997)
99.02 Pro Forma Combined Condensed Financial Statements (unaudited) of Advantis
Network & System Sdn. Bhd. and NHancement Technologies Inc. as of September 30, 23 - 29
1997, for the nine months ended September 30, 1997 and for the year ended
December 31, 1996.
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