SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): SEPTEMBER 4, 2001.
COMMISSION FILE NUMBER 0-23111
A NOVO BROADBAND, INC.
(Name of Small Business Issuer in Its Charter)
DELAWARE 31-1239657
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3011 GREENE STREET, HOLLYWOOD, FLORIDA 33020
(Address of Principal Executive Offices) (Zip Code)
ITEM 2. ACQUISITION OF ASSETS
On September 4, 2001, A Novo Broadband, Inc. ("A Novo") consummated its
acquisition of substantially all of the assets of the equipment repair business
of Broadband Services, Inc. ("BSI") and ICS Sub, Inc. ("ICS"), BSI's
wholly-owned subsidiary. The acquisition was consummated pursuant to that
certain Asset Purchase Agreement dated as of August 13, 2001 between A Novo, BSI
and ICS. The purchase price was approximately $8 million, subject to
post-closing adjustments, and the assumption of certain related liabilities of
BSI and/or ICS. A Novo used existing cash reserves and a bridge loan from an
affiliate to finance the transaction.
BSI and ICS are providers of products and services to the broadband and
communications industry and prior to this reported transaction were engaged in,
among other businesses, the business of servicing and repairing customer premise
equipment and related equipment for broadband network operators and equipment
manufacturers, including line gear and power supplies.
A Novo intends to integrate the acquired assets and business into its
existing operations.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of business acquired.
Incorporated by reference to the registrant's Form 8-K filed on
September 17, 2001.
(b) Pro forma financial information.
See Appendix B. attached hereto.
(c) Exhibits.
Exhibit 2.1. Asset Purchase Agreement dated as of August 13, 2001 between A Novo
Broadband, Inc., ICS Sub, Inc. and Broadband Services, Inc
incorporated by reference to the registrant's Form 8-K filed on
September 17, 2001.
Exhibit 23.1 Consent of the Accountants
Exhibit 99.1 Press Release issued September 4, 2001 incorporated by reference to
the registrant's Form 8-K filed on September 17, 2001.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the issuer has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Dated: November 6, 2001
A NOVO BROADBAND, INC.
By: /s/ Louis Brunel
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Louis Brunel, Chief Executive Officer and President
EXHIBIT INDEX
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Exhibit No. Description
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2.1 Asset Purchase Agreement dated as of August 13, 2001 between A
Novo Broadband, Inc., ICS Sub, Inc. and Broadband Services,
Inc. incorporated by reference to the registrant's Form 8-K
filed on September 17, 2001.
23.1 Consent of the Accountants
99.1 Press Release issued September 4, 2001 incorporated by
reference to the registrant's Form 8-K filed on September 17,
2001.
APPENDIX B
A NOVO BROADBAND, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONTENTS
Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 2001 (Unaudited)................................................... B-2
Pro Forma Condensed Consolidated Statement of Income for the
year ended September 30, 2000 (Unaudited)................................... B-3
Pro Forma Condensed Consolidated Statement of Income for the
nine months ended June 30, 2001 (Unaudited)................................. B-4
Notes to Pro Forma Condensed Consolidated Financial Information
(Unaudited)................................................................. B-5
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION (UNAUDITED)
On September 4, 2001, A Novo Broadband, Inc, ("A Novo") acquired
substantially all of the assets of the equipment repair business of Broadband
Services Inc. (such business "BSI"). The purchase price of the assets was
$8,641,726, of which $8,077,022 was paid in cash, and $564,704 was assumed
liabilities. The acquisition will be accounted for using the purchase method,
and accordingly, goodwill of approximately $5,073,990 will be recorded as part
of the transaction in A Novo's September 30, 2001, financial statements.
The unaudited pro forma condensed consolidated balance sheets of A Novo
and BSI as of June 30, 2001, reflect adjustments as if the acquisition had
occurred on that date. The unaudited pro forma condensed consolidated statement
of income for the year ended September 30, 2000, and for the nine months ended
June 30, 2001, reflect adjustments as if the acquisition had occurred on
October 1, 1999, and October 1, 2000, respectively.
The unaudited pro forma condensed consolidated balance sheet and
statement of income should be read in conjunction with the separate historical
audited financial statements of A Novo and BSI and the related notes appearing
elsewhere in this report. The pro forma financial information is not necessarily
indicative of the results that would have been reported had such events actually
occurred on the dates specified, nor is it necessarily indicative of the future
results of the combined company.
B-1
A NOVO BROADBAND, INC. AND
REPAIR BUSINESS OF BROADBAND SERVICES, INC.
PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED)
JUNE 30, 2001
ASSETS
A NOVO PRO FORMA PRO FORMA
BROADBAND BSI ADJUSTMENTS COMBINED
------------ ----------- ------------ ------------
CURRENT ASSETS
Cash and cash equivalents ................................ $ 3,892,098 $ 1,350 (a) $ (3,077,022) $ 816,426
Accounts receivable, net ................................. 2,092,492 1,977,318 -- 4,069,810
Inventories .............................................. 1,839,838 520,411 -- 2,360,249
Note receivable, related party ........................... 200,000 -- -- 200,000
Prepaid and other assets ................................. 194,591 71,839 -- 266,430
Deferred income taxes .................................... 47,000 -- -- 47,000
------------ ----------- ------------ ------------
Total current assets ................................... 8,266,019 2,570,918 (3,077,022) 7,759,915
------------ ----------- ------------ ------------
PROPERTY AND EQUIPMENT, at cost ............................. 1,976,627 826,850 -- 2,803,477
------------ ----------- ------------ ------------
OTHER ASSETS
Goodwill ................................................. 3,023,951 336,980 (a) 5,073,990 8,434,921
Deferred income taxes .................................... 800,731 -- -- 800,731
Other assets ............................................. 323,612 62,321 -- 385,933
------------ ----------- ------------ ------------
Total other assets ..................................... 4,148,294 399,301 5,073,990 9,621,585
------------ ----------- ------------ ------------
TOTAL ASSETS ................................................ $ 14,390,940 $ 3,797,069 $ 1,996,968 $ 20,184,977
============ =========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term obligations ................. $ 190,008 $ -- $ -- $ 190,008
Accounts payable ......................................... 1,578,682 355,646 -- 1,934,328
Accrued expenses ......................................... 235,274 438,391 -- 673,665
------------ ----------- ------------ ------------
Total current liabilities .............................. 2,003,964 794,037 -- 2,798,001
------------ ----------- ------------ ------------
LONG TERM LIABILITIES ....................................... 104,167 -- (a) 5,000,000 5,104,167
------------ ----------- ------------ ------------
TOTAL LIABILITIES ........................................... 2,108,131 794,037 5,000,000 7,902,168
------------ ----------- ------------ ------------
STOCKHOLDERS' EQUITY
Parent's equity .......................................... 3,003,032 (a) (3,003,032) --
Common stock, $0.001 par value ........................... 4,869 -- -- 4,869
Additional paid-in-capital ............................... 13,706,709 -- -- 13,706,709
Retained (deficit) earnings .............................. (1,428,769) -- -- (1,428,769)
------------ ----------- ------------ ------------
Total stockholders' equity ............................. 12,282,809 3,003,032 (3,003,032) 12,282,809
------------ ----------- ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................. $ 14,390,940 $ 3,797,069 $ 1,996,968 $ 20,184,977
============ =========== ============ ============
See accompanying notes to the unaudited pro forma
consolidated financial information.
B-2
A NOVO BROADBAND, INC. AND
REPAIR BUSINESS OF BROADBAND SERVICES, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Year Ended September 30, 2000
A NOVO PRO FORMA PRO FORMA
BROADBAND BSI ADJUSTMENTS COMBINED
------------ ----------- ----------- ------------
Revenues .............................................. $ 10,865,748 $ 7,155,597 $ -- $ 18,021,345
Cost of sales ......................................... 6,952,832 4,119,618 (d) (312,200) 10,760,250
------------ ----------- --------- ------------
Gross profit ....................................... 3,912,916 3,035,979 312,200 7,261,095
(a) (440,496)
Selling, general and administrative expenses .......... 3,482,951 3,570,152 (d) (132,577) 6,480,030
------------ ----------- --------- ------------
Income (loss) from operations ...................... 429,965 (534,173) 885,273 781,065
Interest income ...................................... -- -- -- --
Acquisition bonus .................................... 400,000 -- -- 400,000
Interest expense ..................................... 84,644 2,301 (c) 400,000 486,945
------------ ----------- --------- ------------
Income (loss) before income taxes ..................... (54,679) (536,474) 485,273 (105,880)
Provision for (benefit from) income taxes ............ 206,072 -- (e) (17,408) 188,664
------------ ----------- --------- ------------
Income (loss) from continuing operations .............. $ (260,751) $ (536,474) $ 502,681 $ (294,544)
============ =========== ========= ============
Basic Earnings Per Share
Loss from continuing operations ................... $ (0.12) $ (0.14)
============ ============
Weighted average shares outstanding ............... 2,177,324 2,177,324
============ ============
See accompanying notes to unaudited pro forma
consolidated financial information.
B-3
A NOVO BROADBAND, INC. AND
REPAIR BUSINESS OF BROADBAND SERVICES, INC.
PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Nine Months Ended June 30, 2001
A NOVO PRO FORMA PRO FORMA
BROADBAND BSI ADJUSTMENTS COMBINED
------------ ---------- ----------- ------------
Revenues ............................................... $ 11,729,890 $4,406,504 $ -- $ 16,136,391
Cost of sales .......................................... 8,259,031 2,574,053 (d) (488,895) 10,344,189
------------ ---------- ----------- ------------
Gross profit ........................................ 3,470,859 1,832,448 488,895 5,792,202
(a) (220,248)
Selling, general and administrative expenses ........... 4,792,929 1,812,948 (d) (590,683) 5,794,946
------------ ---------- ----------- ------------
Income (loss) from operations ....................... (1,322,070) 19,500 1,299,826 (2,744)
Interest Income ....................................... 273,591 2,077 (b) (90,000) 185,668
Interest expense ...................................... 24,814 -- (c) 300,000 324,814
------------ ---------- ----------- ------------
Income (loss) before income taxes ...................... (1,073,293) 21,577 909,826 (141,890)
Total benefit (provision) for income taxes ............. (364,529) 8,631(e) 316,677 (39,221)
------------ ---------- ----------- ------------
Income (loss) from continuing operations ............... $ (708,764) $ 12,946 593,149 $ (102,669)
============ ========== =========== ============
Basic Earnings Per Share
Income (loss) from continuing operations ........... $ (0.15) $ (0.02)
============ ============
Weighted average shares outstanding ................ 4,849,923 4,849,923
============ ============
See accompanying notes to the unaudited pro forma
consolidated financial information.
B-4
A NOVO BROADBAND, INC. AND
THE REPAIR DIVISION OF BROADBAND SERVICES, INC.
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
Note 1 - Significant Accounting Policies and Basis of Presentation
The accompanying historical financial statements of A Novo Broadband, Inc. ("A
Novo"), and the equipment repair business of Broadband Services, Inc. (such
business, "BSI") have been derived from financial statements prepared in
accordance with generally accepted accounting principles. A Novo's historical
financial statements as of and for the year ended September 30, 2000, used in
the pro forma financial statements are derived from A Novo's audited financial
statements for the fiscal year then ended. The BSI historical financial
statements as of and for the twelve months ended September 30, used in the pro
forma financial statements are based on the audited financial statements of BSI
at December 31, 2000.
A Novo's historical financial statements as of and for the nine months ended
June 30, 2001, used in the pro forma financial statements are derived from A
Novo's unaudited financial statements for the nine months ended June 30, 2001.
The BSI historical financial statements as of June 30, 2001 are based on the
audited financial statements of BSI at June 30, 2001. A Novo's interim financial
statements are prepared on the basis of generally accepted accounting principles
and include all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation of such financial information.
The pro forma adjustments are based on A Novo's allocation of the purchase price
of BSI to the net assets acquired as if the transaction occurred on June 30,
2001.
Note 2 - Pro Forma Condensed Consolidated Balance Sheet Adjustment
This column reflects the following adjustments:
(a) To record the consideration paid and the net assets acquired at their
fair market value. The consideration paid by A Novo to acquire BSI was
$8,641,726, of which $8,077,022 was paid in cash, and $564,704 was
assumed liabilities. Of this consideration, the following allocation
was made based on the net assets of BSI as of June 30, 2000:
Net assets $ 3,003,032
Goodwill 5,073,990
------------
$ 8,077,022
===========
To record the $5 million bridge loan, bearing an interest rate of 8%,
provided by A Novo's affiliate, A Novo S.A., to fund the acquisition.
B-5
Note 3 - Pro Forma Consolidated Statement of Income Adjustments
This column reflects the following adjustments:
(a) To record the elimination of corporate overhead charges assessed by
Broadband Services, Inc. These services will be provided by A Novo.
(b) To eliminate interest income previously realized from the investment
of $3 million in excess cash, which has been used to fund the
acquisition.
(c) To record interest expense for the bridge loan.
(d) To eliminate costs which were duplicated by the two organizations.
Costs included herein relate to facility rent and overhead costs, and
to eliminate costs of personnel that were eliminated due to
consolidation of the two organizations.
(e) To record the income tax effect of the pro forma adjustments.
B-6