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UNITED STATES
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 earliest event reported): April 3, 2006
ELECTRIC CITY CORP.
(Exact name of registrant as specified in its charter)
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DELAWARE
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001-16265
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36-4197337 |
(State or other jurisdiction of
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(Commission File #)
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(IRS Employer Identification No.) |
incorporation or organization |
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1280 Landmeier Road, Elk Grove Village, Illinois 60007-2410
(Address of principal executive offices)
(847) 437-1666
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 1.01 Entry into Material Definitive Agreement
Item 2.01 Completion of Acquisition of Disposition of Assets
On April 3, 2006, Electric City Corp. (Electric City or the Company) completed a Stock Purchase
Agreement with Eugene Borucki and Denis Enberg (the Purchasers) in which it agreed to sell
effective as of March 31, 2006, all of the outstanding common stock of Great Lakes Controlled
Energy Corporation (Great Lakes) to the Purchasers for 212,904 shares of Electric City common
stock (the Transaction). Closing also occurred on April 3, 2006 effective as of midnight on
March 31, 2006. The Agreement also provides that in the event that Great Lakes Adjusted Net Book
Value (defined below), is less than $20,000, then Electric City will make a cash payment to the
Purchasers in the amount equal to the difference between the Adjusted Net Book Value and $20,000,
and in the event that Great Lakes Adjusted Net Book Value exceeds $20,000, then the Purchasers
will make a cash payment to Electric City in the amount equal to the amount by which the Adjusted
Net Book Value exceeds $20,000. Adjusted Net Book Value is defined as net assets (excluding
goodwill) less net liabilities (excluding inter-company debt), as such items are shown on the final
closing date balance sheet, which will be prepared and agreed upon within approximately 60 days.
In connection with the transaction, Messrs. Borucki and Enberg both signed Non-competition,
Non-disclosure and Non-solicitation agreements in which they agreed not to compete with Electric
Citys ballasted lighting power reduction business, not to disclose confidential information
regarding Electric City and not to solicit Electric Citys employees to work for Great Lakes.
Mr. Borucki was the President of Great Lakes, Mr. Enberg was Electric Citys Executive Vice
President of Engineering and both were the former owners of Great Lakes prior to its acquisition by
Electric City in June 2001.
The 212,904 shares of Electric City common stock have been retired and become authorized but
un-issued shares. For accounting purposes, the Company has valued these shares at $0.91 each,
which is the average closing market price of the common stock for the five days prior to entering
into the letter of intent to sell Great Lakes. The Company believes that any gain or loss that it
may incur as a result of the Transaction will be insignificant.
The description of the Stock Purchase Agreement and the transactions contemplated thereby is not
intended to be complete and is qualified in its entirety by the complete text of the Stock Purchase
Agreement and the Non-Competition, Non-Disclosure and Non-Solicitation Agreements which are
attached to this report as exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein
by reference.
Item 9.01 Financial Statements and Exhibits
(a) Not Applicable
(b) Pro forma financial information
The following unaudited pro forma consolidated financial statements reflect the sale of all of
the capital stock of Great Lakes Controlled Energy Corporation (Great Lakes), giving effect to
the pro forma adjustments described in the accompanying notes. The unaudited pro forma
consolidated financial statements have been prepared from, and should be read in conjunction with,
the historical consolidated financial statements and notes thereto of Electric City Corp., which
are included in Electric Citys Annual Report on Form 10-K for the year ended December 31, 2005.
The unaudited pro forma information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that would have occurred had
the sale been consummated at the dates indicated, nor is it necessarily indicative of the future
operating results or financial position of Electric City.
The unaudited pro forma consolidated statements of operations give effect to the Transaction
as if it had occurred at the beginning of the period presented. The unaudited pro forma
consolidated balance sheet gives effect to the Transaction as if it occurred on December 31, 2005.
ELECTRIC CITY CORP.
Unaudited Pro Forma Consolidated Balance Sheet
As of December 31, 2005
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Pro-forma |
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Historical |
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Adjustment(1) |
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Pro-forma |
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Assets |
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Current Assets |
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Cash and cash equivalents |
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$ |
4,229,150 |
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$ |
(25,697 |
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$ |
4,203,453 |
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Accounts receivable, net |
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1,747,019 |
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(406,991 |
)(2) |
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1,340,028 |
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Inventories |
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1,457,789 |
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(10,000 |
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1,447,789 |
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Advances to suppliers |
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324,677 |
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324,677 |
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Costs and estimated earnings in
excess of billings on
uncompleted contracts |
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28,462 |
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28,462 |
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Prepaid expenses and other |
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207,480 |
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(9,590 |
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197,890 |
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Total Current Assets |
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7,994,577 |
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(452,278 |
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7,542,299 |
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Net Property and Equipment |
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2,514,196 |
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(16,028 |
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2,498,168 |
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Deferred Financing Costs, net of
amortization |
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299,964 |
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299,964 |
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Intangibles, net of amortization |
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1,960,835 |
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1,960,835 |
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Cost in Excess of Assets Acquired |
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4,329,402 |
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(173,743 |
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4,155,659 |
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$ |
17,098,974 |
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$ |
(642,049 |
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$ |
16,456,925 |
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ELECTRIC CITY CORP.
Unaudited Pro Forma Consolidated Balance Sheet
As of December 31, 2005
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Pro-Forma |
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Historical |
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Adjustment (1) |
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Pro-Forma |
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Liabilities and Stockholders Equity |
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Current Liabilities |
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Line of credit |
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$ |
2,000,000 |
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$ |
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$ |
2,000,000 |
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Notes payable |
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150,000 |
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150,000 |
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Current maturities of
long-term debt |
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651,313 |
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(2,160) |
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649,153 |
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Accounts payable |
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913,369 |
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(73,825) |
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839,544 |
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Accrued expenses |
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1,228,765 |
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(81,167) |
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1,147,598 |
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Deferred revenue |
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984,728 |
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(241,154) |
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743,574 |
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Customer deposits |
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1,419,919 |
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(50,000) |
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1,369,919 |
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Total Current Liabilities |
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7,348,094 |
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(448,306) |
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6,899,788 |
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Deferred Revenue |
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1,044,524 |
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1,044,524 |
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Long-Term Debt, less current
maturities |
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4,328,719 |
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4,328,719 |
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Total Liabilities |
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12,721,337 |
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(448,306 |
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12,273,031 |
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Stockholders Equity |
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Preferred stock: |
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Series E |
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2,363 |
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2,363 |
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Common stock |
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5,081 |
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(21) |
(3) |
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5,060 |
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Additional paid-in capital |
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64,768,814 |
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64,768,814 |
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Accumulated deficit |
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(60,398,621 |
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(193,722 |
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(60,592,343 |
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Total Stockholders Equity |
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4,377,637 |
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(193,743 |
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4,183,894 |
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$ |
17,098,974 |
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$ |
(642,049 |
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$ |
16,456,925 |
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ELECTRIC CITY CORP.
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2005
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Pro-Forma |
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Historical |
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Adjustment(4) |
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Pro-Forma |
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Revenue |
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$ |
4,854,772 |
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$ |
(1,161,356 |
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$ |
3,693,416 |
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Expenses |
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Cost of sales |
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4,489,227 |
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(797,387 |
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3,691,840 |
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Selling, general and
administrative |
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6,450,836 |
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(372,738 |
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6,078,098 |
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Impairment Loss |
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242,830 |
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(242,830 |
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11,182,893 |
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(1,412,955 |
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9,769,938 |
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Operating loss |
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(6,328,121 |
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251,599 |
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(6,076,522 |
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Other Income (Expense) |
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Interest income |
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58,737 |
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58,737 |
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Interest expense |
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(603,354 |
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364 |
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(602,990 |
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Total other income (expense) |
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(544,617 |
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364 |
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(544,253 |
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Net Loss |
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(6,872,738 |
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251,963 |
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(6,620,775 |
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Preferred Stock Dividends |
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(1,851,345 |
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(1,851,345 |
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Net Loss Available to
Common Shareholders |
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$ |
(8,724,083 |
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$ |
251,963 |
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$ |
(8,472,120 |
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Basic and Diluted Loss Per
Common Share |
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$ |
(0.18 |
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$ |
0.00 |
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$ |
(0.18 |
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Weighted Average Common
Shares Outstanding |
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47,859,964 |
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(212,904) |
(3) |
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47,647,060 |
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ELECTRIC CITY CORP.
Notes to the Unaudited Pro Forma Financial Statements
1. |
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Eliminates certain assets and liabilities sold or transferred as part of the
Transaction as if the Transaction had occurred on the balance sheet date. |
2. |
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The Adjusted Net Book Value adjustment to the purchase price based on the December 31,
2005 balance sheet would result in an amount due to Electric City of $32,464. This amount
has been included in the pro-forma accounts receivable. |
3. |
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Represents shares of Electric City common stock received from the Purchasers of Great
Lakes as consideration for the sale and subsequently retired. |
4. |
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Eliminates the results of operation of Great Lakes for the period as if the Transaction
had been completed at the beginning of the period presented. |
(c) Not Applicable
(d) Exhibits
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10.1 |
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Stock Purchase Agreement dated as of April 3, 2006 |
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10.2 |
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Non-Competition, Non-Disclosure And Non-Solicitation Agreement Dated
as of March 31, 2006 between Electric City Corp. and Eugene Borucki |
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10.3 |
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Non-Competition, Non-Disclosure And Non-Solicitation Agreement Dated
as of March 31, 2006 between Electric City Corp. and Denis Enberg |
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ELECTRIC CITY CORP.:
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Dated: April 7, 2006 |
By: |
/s/ Jeffrey Mistarz
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Jeffrey Mistarz |
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Chief Financial Officer & Treasurer |
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