================================================================================
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
November 12, 1999
Date of Report (Date of earliest event reported)
NUMEREX CORP.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-22920 11-2948749
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
1600 Parkwood Circle
Suite 200
Atlanta, Georgia 30339
(770) 693-5950
(Address of principal executive offices, including zip code,
and telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
================================================================================
Item 2. Acquisition or Disposition of Assets
On November 12, 1999, Numerex Corp. (the "Corporation") sold the stock of its
wholly owned subsidiary, Bronzebase Limited, to British Telecommunications plc
("BT"). Bronzebase Limited is an English limited liability company which owns
all of the stock of Versus Technology Limited. The consideration for the sale
was 12,500,000 pounds (approximately U.S. $20,000,000), payable in cash at
closing. However, 750,000 pounds has been retained and placed in escrow pending
a post-closing net asset statement. The terms of the transaction were negotiated
between the Corporation and BT at arm's length. Numerex and BT also entered into
separate agreements which, among other things, allow Numerex to retain licensing
rights to market, sell and develop derived channel technology in certain
territories, principally the Americas.
This summary of the sale of Bronzebase Limited is qualified in its entirety by
reference to the terms of the Agreement Relating to the Sale and Purchase of the
Whole of the Issued Share Capital of Bronzebase Limited, which is filed as an
exhibit to, and incorporated by reference into this Form 8-K.
Item 5. Other Events.
Effective as of November 1, 1999, the Corporation and BellSouth Wireless, Inc.
("BellSouth") completed the previously reported restructuring of certain aspects
of their Cellemetry joint venture operating agreement. Cellemetry is 60% owned
by the Corporation and 40% owned by BellSouth.
Under the terms of the restructuring, the original operating agreement for
Cellemetry LLC, a Delaware limited liability company, has been modified and the
original Cellemetry business plan has been modified, revised and extended
through November 1, 2004. Greater flexibility has been created for third party
investment capital and performance tests and related rights have been reset to
November 2, 2002 in accordance with a modified business plan. The Corporation
has conveyed 100% of the capital stock of its formerly wholly owned subsidiary,
Uplink Security, Inc., a Georgia corporation, to Cellemetry. The Corporation has
also agreed to provide up to $5.5 million in debt financing to Cellemetry. In
addition, the Corporation issued preferred stock to BellSouth that is redeemable
or convertible to approximately 6% of the Corporation's common stock, and that
includes certain registration rights for the common stock upon such conversion.
This summary of the restructured operating agreement is qualified in its
entirety by reference to the terms of the Series A Preferred Stock Purchase
Agreement, First Amendment to the Operating Agreement, and Terms of Convertible
Preferred Stock, Series A, each of which is filed as an exhibit to, and
incorporated by reference into this Form 8-K.
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) AT JULY
31, 1999
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
FOR THE NINE MONTH PERIOD ENDED JULY 31, 1999
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (Unaudited)
FOR THE YEAR ENDED OCTOBER 31, 1998
3
NUMEREX CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
JULY 31, 1999
(IN THOUSANDS U.S. DOLLARS)
Pro Forma Pro Forma
NMRX Adjustments Consolidated
---- ----------- ------------
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 4,566 18,005 (i,ii) 22,571
Accounts Receivable, net 9,775 (4,066)(i) 5,709
Inventory 5,695 (1,966)(i) 3,729
Prepaid Taxes 323 0 323
Prepaid Expenses 329 (13)(i) 316
------- ------- -------
20,688 11,960 32,648
PROPERTY AND EQUIPMENT, NET 3,566 (740)(i) 2,826
GOODWILL, NET 8,277 (403)(i) 7,874
INTANGIBLE ASSETS, NET 11,860 (1,177)(i) 10,683
OTHER ASSETS 383 0 383
------- ------- -------
TOTAL ASSETS 44,774 9,640 54,414
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short Term Debt 0 0 0
Accounts Payable 3,632 (689)(i) 2,943
Income Taxes 1,679 753 (i,ii) 2,432
Other Current Liabilities 2,593 (646)(i) 1,947
Obligations under capital leases, current position 30 0 30
------- ------- -------
TOTAL CURRENT LIABILITIES 7,934 (582) 7,352
------- ------- -------
LONG TERM LIABILITIES
Obligations under capital leases 99 0 99
------- ------- -------
MINORITY INTEREST 7,652 0 7,652
------- ------- -------
SHAREHOLDERS' EQUITY
Common Stock 29,870 0 29,870
Additional paid-in capital 370 0 370
Treasury Stock (5,222) 0 (5,222)
Cumulative Translation Adjustment (150) (29)(i) (179)
Retained Earnings 4,221 10,251 (i,ii) 14,472
------- ------- -------
29,090 10,222 39,312
------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 44,774 9,640 54,414
======= ======= =======
(i) Record the sale of Bronzebase Limited.
(ii) Record the estimated income tax liability on the gain on the sale.
The accompanying notes are an integral part
of these pro forma financial statements.
4
NUMEREX CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE NINE MONTH PERIOD ENDED JULY 31, 1999
(IN THOUSANDS U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
Pro Forma Pro Forma
NMRX Adjustments Consolidated
---- ----------- ------------
Net Sales 22,941 (9,905)(i) 13,036
Cost of sales 9,542 (3,213)(i) 6,329
Selling, general, administrative and other expenses 16,582 (1,790)(i) 14,792
------- ------- -------
OPERATING INCOME (LOSS) (3,183) (4,902) (8,085)
Interest and other income (net) 227 392 (i,ii) 619
Equity in net loss of affiliate 0 0 0
Minority interest 1,967 0 1,967
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES (989) (4,510) (5,499)
Provision for income taxes 1,418 (1,418)(i) 0
------- ------- -------
NEW INCOME (LOSS) (2,407) (3,092) (5,499)
======= ======= =======
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment (321) 321 (i) 0
------- ------- -------
Comprehensive Income (loss) (2,728) (2,771) (5,499)
======= ======= =======
BASIC AND DILUTED EARNINGS (LOSS)
PER (0.23) (0.53)
======= =======
NUMBER OF SHARES USED IN PER SHARE
CALCULATION
BASIC 10,343 10,343
======= =======
DILUTED 10,414 10,414
======= =======
(i) Record the sale of Bronzebase Limited.
(ii) Record the estimated interest income on cash at an approximate 5.0% rate.
The accompanying notes are an integral part
of these pro forma financial statements.
5
NUMEREX CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
FOR THE YEAR ENDED OCTOBER 31, 1998
(IN THOUSANDS U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
Pro Forma Pro Forma
NMRX Adjustments Consolidated
---- ----------- ------------
Net sales 25,129 (11,381)(i) 13,748
Cost of sales 12,234 (5,154)(i) 7,080
Inventory write-downs 2,192 (200)(i) 1,992
Selling, general, administrative and other expenses` 20,378 (2,931)(i) 17,447
Special charges 1,591 (466)(i) 1,125
------- ------- -------
OPERATING INCOME (LOSS) (11,266) (2,630) (13,896)
Interest and other income (net) 1,070 168 (i,ii) 1,238
Equity in net loss of affiliate 420 0 420
Minority interest 733 0 733
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES (9,833) (2,462) (12,345)
Provision for income taxes 1,274 (1,274)(i) 0
------- ------- -------
NET INCOME (LOSS (11,157) (1,188) (12,345)
======= ======= =======
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment (594) 440 (154)
------- ------- -------
Comprehensive income (loss) (11,751) (748) (12,499)
======= ======= =======
BASIC AND DILUTED EARNINGS (LOSS) PER
SHARE (1.03) (1.16)
======= =======
NUMBER OF SHARES USED IN PER SHARE
CALCULATION
BASIC 10,818 10,818
======= =======
DILUTED 10,818 10,818
======= =======
(i) Record the sale of Bronzebase Limited.
(ii) Record the estimated interest income on cash at an approximate 5.0% rate.
The accompanying notes are an integral part
of these pro forma financial statements.
NOTES
The pro forma condensed consolidated balance sheet as at July 31, 1999 and the
pro forma condensed consolidated statements of income for the nine month period
then ended and the year ended October 31, 1998 give effect to the sale of
Bronzebase Limited. The adjustments related to the pro forma condensed
consolidated balance sheet assume the transaction was consummated at July 31,
1999, while the adjustments to the pro forma condensed
6
consolidated income statements assume the transaction was consummated at the
beginning of the period presented. The sale occurred on November 12, 1999.
The pro forma information is based on the historical financial statements of
Numerex Corp. ("NMRX"). The pro forma adjustments required are to eliminate
Bronzebase Limited and to reflect the associated interest income.
These pro forma statements are not necessarily indicative of the results that
actually would have occurred if the sale had been in effect as of and for the
periods presented or what may be achieved in the future.
(c) Exhibits.
The exhibits listed in the Exhibit Index are filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Numerex Corp. has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NUMEREX CORP.
By: /s/ Peter J. Quinn
-------------------------------
Vice President Finance
Date: November 24, 1999
7
EXHIBIT INDEX
2.1 Agreement Relating to the Sale and Purchase of the Whole of the Issued
Share Capital of Bronzebase Limited
99.1 Preferred Stock Purchase Agreement between Numerex Corp. and BellSouth
Wireless, Inc. effective as of November 1, 1999
99.2 First Amendment to the Operating Agreement of Cellemetry LLC effective
as of November 1, 1999
99.3 Terms of Convertible Preferred Stock
8