8-K 1 anovo-8k.txt CURRENT REPORT 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 DATE OF REPORT (Date of earliest event reported): May 29, 2002. 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.) 196 QUIGLEY BLVD., NEW CASTLE, DELAWARE 19720 (Address of Principal Executive Offices) (Zip Code) ITEM 5. OTHER ITEMS. On May 29, 2002 the Company obtained a one year credit facility from Silicon Valley Bank. Amounts borrowed under the new facility bear interest at an annual rate equal to prime plus 2% and are secured by substantially all of the assets of the Company. Drawings under the new facility are available up to the lesser of $3 million or 80% of the Company's eligible receivables, as defined. Borrowings under the facility are guaranteed by A Novo SA and A Novo Americas LLC, the Company's indirect and direct parents. In connection with the new credit facility, A Novo Americas converted the $5.20 million balance of its bridge loan to the Company into 3,714,058 shares of the Company's common stock, increasing its ownership to approximately 76.8% of the total outstanding common stock. The Company immediately drew and applied approximately $1.5 million under the new facility to pay off its prior credit facility with Bank of America, which had been in default. The Company expects to use the new credit facility for general corporate purposes, including working capital. SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: June 5, 2002 A NOVO BROADBAND, INC. By: /s/ Steve Easterday ---------------------------------------- Steve Easterday Vice President and Principal Financial Officer

December 31, June 30, ASSETS 2000 2001 ------ ------------ ------------ CURRENT ASSETS: Cash $ 1,350 $ 1,350 Accounts receivable, net of allowance for doubtful accounts of $384,767 and $98,271 1,418,651 1,688,515 Unbilled accounts receivable 1,985 288,803 Inventory, net 317,557 520,411 Other current assets 71,839 71,839 ------------ ------------ Total current 1,811,382 2,570,918 PROPERTY AND EQUIPMENT, net 643,914 826,850 GOODWILL, net 385,700 336,980 OTHER ASSETS 62,321 62,321 ------------ ------------ Total assets $ 2,903,317 $ 3,797,069 ============ ============ LIABILITIES AND PARENT'S EQUITY ------------------------------- CURRENT LIABILITIES: Accounts payable $ 244,344 $ 355,646 Accrued expenses 374,476 438,391 ------------ ------------ Total current liabilities 618,820 794,037 OTHER NONCURRENT LIABILITIES 6,734 -- PARENT'S EQUITY 2,277,763 3,003,032 ------------ ------------ Total liabilities and parent's equity $ 2,903,317 $ 3,797,069 ============ ============

Predecessor Successor ----------------- ----------------- Period From Period From January 1, 1999 December 14, 1999 Six Months Through Through Year Ended Ended December 13, December 31, December 31, June 30, 1999 1999 2000 2001 ----------------- ---------------- --------------- ------------- REVENUES $ 9,012,584 $ 475,094 $ 7,155,597 $ 4,406,501 COST OF REVENUE 5,889,037 284,115 4,119,618 2,574,053 ------------ ------------ ------------ ------------ GROSS MARGIN 3,123,547 190,979 3,035,979 1,832,448 ------------ ------------ ------------ ------------ OPERATING EXPENSES: Selling, general and administrative 2,301,770 164,143 3,376,560 1,669,836 Depreciation and amortization 278,421 7,046 193,592 143,112 ------------ ------------ ------------ ------------ Total operating expenses 2,580,191 171,189 3,570,152 1,812,948 ------------ ------------ ------------ ------------ OPERATING INCOME (LOSS) 543,356 19,790 (534,173) 19,500 OTHER INCOME (EXPENSE) -- (28) (2,301) 2,077 ------------ ------------ ------------ ------------ NET INCOME (LOSS) BEFORE INCOME TAXES 543,356 19,762 (536,474) 21,577 INCOME TAXES 217,342 7,905 -- 8,631 ------------ ------------ ------------ ------------ NET INCOME (LOSS) 326,014 11,857 (536,474) 12,946 PURCHASE OF REPAIR DIVISION -- 3,322,076 -- -- ADVANCES FROM PARENT, net 423,731 262,878 (782,574) 712,323 PARENT'S EQUITY, beginning of period 2,261,613 -- 3,596,811 2,277,763 ------------ ------------ ------------ ------------ PARENT'S EQUITY, end of period $ 3,011,358 $ 3,596,811 $ 2,277,763 $ 3,003,032 ============ ============ ============ ============

Predecessor Successor --------------- ---------------- Period From Period From January 1, 1999 December 14, 1999 Six Months Through Through Year Ended Ended December 13, December 31, December 31, June 30, 1999 1999 2000 2001 ------------ ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 326,014 $ 11,857 $ (536,474) $ 12,946 Reconciliation of net income (loss) to net cash (used in) provided by operating activities- Depreciation and amortization 278,421 7,046 193,592 143,112 Provisions for bad debts 42,367 2,312 43,929 17,712 Changes in operating assets and liabilities- Accounts receivable (1,048,831) (457,183) 1,200,353 (574,394) Inventory 179,437 9,511 340,495 (202,854) Prepaid expenses and other assets (11,019) -- (80,637) -- Accounts payable and accrued expenses (77,102) 163,579 85,301 175,217 Other noncurrent liabilities -- -- (26,933) (6,734) ------------ ------------ ------------ ------------ Net cash (used in) provided by operating activities (310,713) (262,878) 1,219,626 (434,995) ------------ ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of predecessor -- (3,322,076) -- -- Purchase of property and equipment (112,518) -- (437,052) (277,328) ------------ ------------ ------------ ------------ Net cash used in investing activities (112,518) (3,322,076) (437,052) (277,328) ------------ ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Advances from parent, net -- 262,878 (782,574) 712,323 Parent's equity in Division -- 3,322,076 -- -- Advances from predecessor's parent 423,731 -- -- -- ------------ ------------ ------------ ------------ Net cash provided by (used in) financing activities 423,731 3,584,954 (782,574) 712,323 ------------ ------------ ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 500 -- -- -- CASH AND CASH EQUIVALENTS, at beginning of period 850 1,350 1,350 1,350 ------------ ------------ ------------ ------------ CASH AND CASH EQUIVALENTS, at end of period $ 1,350 $ 1,350 $ 1,350 $ 1,350 ============ ============ ============ ============

Estimated December 31, June 30, Lives 2000 2001 ---------- ------------- --------- Furniture and Fixtures 5-7 years $ 50,785 $ 56,145 Transportation Equipment 5 years 6,953 6,953 Machinery and Equipment 3-5 years 444,923 674,964 Software and Computer Equipment 3 years 51,617 82,376 Telecommunication and Headend Equipment 5 years 143,713 144,271 Leasehold Improvements 5 years 45,061 55,671 -------- ---------- Property and equipment, at cost 743,052 1,020,380 Accumulated depreciation (99,138) (193,530) -------- ---------- Property and equipment, net $643,914 $ 826,850 ======== ========== Depreciation expense was as follows: January 1, 1999 through December 13, 1999 $178,182 December 14, 1999 through December 31, 1999 2,986 January 1, 2000 through December 31, 2000 96,152 January 1, 2001 through June 30, 2001 94,392

December 31, June 30, 2000 2001 ------------- --------- Accrued wages $154,525 $210,709 Accrued vacation 92,907 116,894 Accrued other 127,044 110,788 -------- -------- $374,476 $438,391 ======== ========

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