SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 30, 2001
--------------------
(Date of Report)
SOFTECH, INC.
--------------------
(Exact name of registrant as specified in its charter)
Massachusetts 0-10665 04-2453033
- ------------- ------- ----------
(State or other jurisdic- (Commission (IRS Employer
tion of Incorporation or file number) Identification Number)
organization)
4695 44th Street SE, Suite B-130, Grand Rapids, MI 49512
-------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(616) 957-2330
--------------
(Registrants telephone number, including area code)
Item 5. Other events.
On March 30, 2001, SofTech, Inc. issued a press release announcing a
delay in the sale of its CAM Business Unit, a loss for the third quarter of
fiscal year 2001 and possible Nasdaq delisting actions. SofTech, Inc. hereby
incorporates by reference herein the information set forth in its Press Releases
dated March 30, 2001, a copy of which is annexed hereto as Exhibits 99.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
Exhibit
Number Description
- - --- -----------
99.1 Press Release dated March 30, 2001
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.
SofTech, Inc.
Date: April 6, 2001 By: /s/ Joseph P. Mullaney
-----------------------------
Joseph P. Mullaney
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
EXHIBIT INDEX
-------------
Exhibit Number Document
- -------------- --------
99.1 Press release dated March 30, 2001
- --------------------------------------------------------------------------------
March 30, 2001
PRESS RELEASE
SOFTECH ANNOUNCES A DELAY IN SELLING ITS CAM BUSINESS UNIT, LOSS FOR Q3 2001
AND POSSIBLE NASDAQ DELISTING ACTION;
PLANS FOR REVERSE SPLIT PUT ON HOLD
GRAND RAPIDS, Mich.--(BUSINESS WIRE) -- March 30, 2001--SofTech, Inc.
(Nasdaq:SOFTC - news) announced today that the agreement to sell its Computer
Aided Manufacturing (CAM) business to an undisclosed third party was terminated
due to the inability of the third party to get the financing required to close
on the business during the period of exclusivity. The Letter of Intent (LOI) was
described in the Companys Form 10-Q filing on January 16, 2001.
SofTechs decision to sell this operating unit has not changed, however, it is
expected that the process to complete the sale will take several months. Since
announcing the signing of the LOI we have been contacted by numerous parties
that expressed an interest in getting additional information about the business.
The LOI prevented us from seeking alternative buyers, however, now that the
period of exclusivity has ended we will look at alternatives to maximize
shareholder value.
The Company also announced that based on preliminary results for its third
quarter ended February 28, 2001, revenue was between $2.5 and $2.8 million and
the loss for the quarter was between $1.5 and $2.0 million. This revenue was
well below the levels expected.
"Our inability to complete the sale of the CAM business before the end of the
third quarter together with the expected loss will result in an additional
NASDAQ SmallCap listing deficiency when the Form 10-Q is filed on or about
April 16, 2001" said Joe Mullaney, Vice President and CFO. "We expect to report
tangible net assets of less than the $2.0 million required to maintain our
listing on this market".
The Board of Directors had authorized a reverse split as a means of correcting
for the existing listing deficiency of the bid price of less than $1.00. This
plan was detailed in a press release on March 6, 2001. A preliminary proxy has
been filed with the Securities and Exchange Commission by the Company. Given the
expectation that the Company will fail to meet the minimum tangible net asset
requirement when its third quarter results are filed, the plans for a reverse
split have been put on hold while a determination is made as to whether the
Nasdaq will provide the Company with additional time to comply with the other
requirements.
The Company has requested that the Nasdaq provide an additional 120 days of
contingent listing on the Nasdaq Smallcap market in order to allow for the sale
of the AMT Division to
be completed which the Company believes will correct for its listing
deficiencies. However, in the event whereby this request is denied, the Company
expects that its shares will be listed on the Over the Counter market.
Our Plan Going Forward
- ----------------------
Although we do not expect to complete the sale of our CAM business for several
months we have begun the difficult process of restructuring the business
anticipating the completion of this sale. It is obvious that our decentralized,
multi-office approach has failed to consistently produce the license revenue
required to generate positive cash flow every quarter. Over the next quarter we
expect to reduce our operating expenses by focusing our operations around one
central location in Massachusetts. We are actively pursuing subtenants for our
facilities in Indianapolis, Indiana and Grand Rapids, Michigan and staff
reductions in those offices have been internally announced. Our goal is to
reduce our quarterly fixed cash expenses to approximately $2.0 million after the
sale of the CAM business. This level of expenditure will allow us to continue to
aggressively develop our DesignGateway technology, enhance our Cadra technology
for our loyal users and market our MICRO CADAM migration strategy throughout the
North American, European and Japanese marketplaces. We believe this cash
expenditure goal can be achieved for Q1 of fiscal 2002 which begins on June 1,
2001.
At that level of cash expenditures, we believe the core CAD business can be cash
flow positive on a consistent basis. Achieving consistent positive cash flow
will allow us to continue to pursue the DesignGateway and MICRO CADAM
opportunities while we wait for the target customers to make their buying
decisions. The current cloudy economic environment has certainly slowed capital
spending in general and we believe this has negatively impacted our ability to
attract potential customers. The reorganization will allow us to wait out this
recession-like atmosphere while generating positive cash flow.
This plan has the overwhelming support of our lender and largest shareholder,
Greenleaf Capital. Greenleaf has been a strong believer in our solutions and is
fully behind our plan.
Business Outlook
- ----------------
Once completed, we believe the sale of our CAM business will provide the
necessary liquidity to allow us to pursue the DesignGateway and MICRO CADAM
opportunities while continuing to provide our Cadra users with valued
enhancements. While we are very disappointed with our inability to maintain the
Nasdaq listing requirements during these tumultuous times for the financial
markets thereby jeopardizing our near 20 year listing on this Exchange, moving
to the Over the Counter Market is not expected to have any impact whatsoever on
our operations. We have the capital available to realize our opportunities.
Our level of debt, our inconsistent profitability, the capital spending
slowdown, the general malaise in the CAD software market and our split focus on
CAD and CAM require the actions enumerated above. The circumstances demand that
we focus our resources on our greatest opportunities totally dedicated to the
CAD market.
At our earliest opportunity we will seek to get back on the NASDAQ market after
we have met the listing standards. However, all of our energies must now be
directed at successfully implementing our business plan.
The foregoing statements that are not historical fact are forward-looking
statements and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements are
subject to a wide range of
risks and uncertainties. Further information regarding factors that could affect
SofTech's results are included in SofTech's Form 10-K for the 2000 fiscal year,
which was filed with the Securities and Exchange Commission in September 2000
and in its quarterly filings on Form 10-Q for fiscal 2001.
About SofTech
SofTech was formed in 1969 and its stock has been publicly listed since 1981.
SofTech provides world-class productivity solutions to solve real-world problems
for the design through manufacturing marketplace. SofTech operates offices
throughout North America and Europe and has distribution in Asia. The SofTech
software family includes Cadra(TM), DesignGateway(TM), Prospector(TM),
ToolDesigner(TM), ExpertCAD(TM), and ExpertCAM(TM).
Cadra and all SofTech product names are registered trademarks of SofTech, Inc.
Names of products from other vendors mentioned in this document may be
trademarks or registered trademarks of their respective owners.
Contact:
SofTech, Inc.
Joseph P. Mullaney, 781/890-8373
http://www.softech.com
----------------------