UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): June 30, 2005
HALIFAX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 1-08964 54-0829246
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
5250 Cherokee Avenue, Alexandria, Virginia 22312
(Address of principal executive offices/Zip Code)
Registrant's telephone number, including area code: (703) 658-2400
Former name, former address, and former fiscal year, if changed since
last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to
satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act(17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Forward Looking Statements
Certain statements in this Currant Report on Form 8-K/A constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. While forward-looking
statements sometimes are presented with numerical specificity, they are
based on various assumptions made by management regarding future events
over which we have little or no control. Forward-looking statements may
be identified by words including "anticipate," "believe," "estimate,"
"expect" and similar expressions. We caution readers that forward-
looking statements, including without limitation, those relating to
future business prospects, revenues, working capital, liquidity, and
income, are subject to certain risks and uncertainties that would cause
actual results to differ materially from those indicated in the forward-
looking statements. Factors that could cause actual results to differ
from forward-looking statements include the concentration of our
revenues, risks involved in contracting with our customers, including
difficulties to accurately estimate costs when bidding on a contract and
the occurrence of start-up costs prior to receiving revenues and contract
with fixed price provisions, government contracting risks, potential
conflicts of interest, difficulties we may have in attracting and
retaining management, professional and administrative staff, fluctuation
in quarterly results, risks related to acquisitions and acquisition
strategy, continued favorable banking relationships, the availability of
capital to finance operations and ability to make payments on outstanding
indebtedness, weakened economic conditions, acts of terrorism, risks
related to competition and our ability to continue to perform efficiently
on contracts, and other risks and factors identified from time to time in
the reports we file with the Securities and Exchange Commission ("SEC"),
including our Annual Report on Form 10-K. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those
anticipated, estimated or projected.
Forward-looking statements are intended to apply only at the time
they are made. Moreover, whether or not stated in connection with a
forward-looking statement, the Company undertakes no obligation to
correct or update a forward-looking statement should we later become
aware that it is not likely to be achieved. If the Company were to
update or correct a forward-looking statement, you should not conclude
that the Company will make additional updates or correction thereafter.
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As reported in the Current Report on Form 8-K filed on July 1, 2005,
on June 30, 2005, we simultaneously entered into and closed on an asset
purchase agreement with INDUS Corporation pursuant to which we sold
substantially all of the assets and certain liabilities of our secure
network services business. The purchase price was approximately $12.5
million, subject to adjustments described in the asset purchase agreement
based on the net assets of the business on the date of closing. The
asset purchase agreement provides that $3.0 million of the purchase price
will be held in escrow. Of this amount, $625,000 will be held as
security for the payment of our indemnification obligations pursuant to
the asset purchase agreement, if any, and will be released to us eighteen
(18) months following the date of the asset purchase agreement unless a
certain key government contract, referred to as the Key Contract, is not
assigned (referred to as a novation) as of such time. A portion of the
escrow amount equal to $2,000,000 (which includes the portion referenced
above for indemnification obligations), plus any interest or other income
earned thereon, will also serve as security for a payment obligation we
have to INDUS Corporation if the novation of the Key Contract from us to
INDUS Corporation is not approved by such government customer and
received within two years from the date of the asset purchase agreement.
If such novation of the Key Contract is not received by the second
anniversary of the date of the asset purchase agreement or if such
novation is affirmatively rejected prior to such time under circumstances
not giving rise to the rescission right referenced below, we will be
obligated to pay to INDUS Corporation an amount equal $2,000,000 with the
entire amount then held in escrow being released to INDUS Corporation as
full or partial payment of such obligation, as the case may be. We will
be obligated to pay directly to INDUS Corporation the amount, if any, by
which the balance of escrow funds at the time of disbursement is less
than $2,000,000. Finally, a portion of the escrow amount equal to
$1,000,000 serves as security for a payment obligation we have to INDUS
Corporation in connection with a failure to obtain certain consents
related to the transaction. In addition, INDUS Corporation has certain
rescission rights. First, if the government customer to the Key Contract
rejects the novation of such Key Contract on or before the six month
anniversary of the date of the asset purchase agreement and the
government customer takes action to preclude us from providing INDUS
Corporation with the economic benefit of such Key Contract (whether by
subcontract or otherwise), INDUS Corporation may rescind the entire sale
transaction in lieu of being paid the $2,000,000 amount referenced above.
Second, if we are unable to provide INDUS Corporation with evidence of
the government's approval of the assignment to INDUS Corporation to a
material contract (other than the Key Contract) on or before a date
roughly six months from the date of closing, INDUS Corporation may
rescind the transaction. The asset purchase agreement contains
representations, warranties, covenants and related indemnification
provisions, in each case that are customary in connection with a
transaction of this type; however, certain of the representations and
warranties require updating to a date which is the earlier of the
contract novation or thirty months from the closing. In addition,
survival periods applicable to such updated warranties may be extended
together with related indemnification periods.
The description of the sale described in this report does not
purport to be complete and is qualified in its entirety by reference to
the asset purchase agreement, which will be filed as an exhibit to our
annual report on Form 10-K for the year ended March 31, 2005. The asset
purchase agreement will be included to provide investors and security
holders with information regarding its terms. It is not intended as an
exhibit to the Form 10-K to provide any other factual information about
our company. The asset purchase agreement contains representations and
warranties the parties thereto made to and solely for the benefit of each
other. The assertions embodied in those representations and warranties
are qualified by information in confidential disclosure schedules that
the parties have exchanged in connection with signing the asset purchase
agreement. Accordingly, investors and security holders should not rely on
the representations and warranties as characterizations of the actual
state of facts, since they were only made as of the date of the asset
purchase agreement and are modified in important part by the underlying
disclosure schedules. Moreover, information concerning the subject matter
of the representations and warranties may change after the date of the
asset purchase agreement, which subsequent information may or may not be
fully reflected in our public disclosures.
The secure network services business comprised approximately $13.5
million, or 22%, and $9.5 million, or 19%, of our revenues for the fiscal
years ended 2005 and 2004 and represented 7% of our assets at March 31,
2005.
Additionally, we expect that we will use approximately $9.0 million
of the proceeds from the sale of the secure network services business to
repay indebtedness and accrued interest and the remainder of the proceeds
will be used for working capital purposes.
In connection with the asset purchase agreement, we also transferred
to INDUS Corporation all of our right, title and interest in and to our
Federal Supply Service Information Technology (Schedule 70) Contract (the
"Contract") with the federal government and a Blanket Purchase Agreement
("BPA") that we entered into with one federal agency pursuant to the
Contract. Since we have a need to utilize the Contract and BPA in
connection with businesses that we have retained, we entered into a
transition services agreement with INDUS Corporation with respect to the
Contract and BPA in order to continue performing existing, and to receive
new, task/delivery orders from federal government agencies awarded under
the Contract and BPA until such time as we are awarded a new Federal
Supply Service Information Technology Contract.
This Amendment to the Current Report on Form 8-K filed July 1, 2005
is being filed to include the pro-forma financial information required by
Item 9.01.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
As reported in the Current Report on Form 8-K filed on July 1, 2005,
Halifax completed the sale of assets described above on June 30, 2005.
The information contained in Item 1.01 above is hereby incorporated by
reference into this Item 2.01.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
None.
(b) Pro-forma Financial Information
The following pro forma financial information is filed as
exhibit 99.2 to this Form 8-K/A and is hereby incorporated by
reference.
(i) Unaudited Pro-forma Condensed Consolidated Statements of
Operations of operations for the nine months December 31, 2004
giving effect to the sale of the secure network services
business as if it occurred on April 1, 2004 and the year ended
March 31, 2004, giving effect to the sale of the secure
network services business as if it occurred on April 1, 2003;
and
(ii) Pro-forma Condensed Consolidated Balance Sheets at December
31, 2004, giving effect to the sale of the secure network
services business as if it occurred on April 1, 2004.
(c) Exhibits
The following exhibit is filed herewith:
The following exhibit is filed herewith
Exhibit
Number Description
99.1 Press Release dated July 1, 2005.*
99.2 Pro Forma Financial Information.
*Previously Filed
SIGNATURE
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.
HALIFAX CORPORATION
Date: July 7, 2005 By: /s/Joseph Sciacca
Joseph Sciacca
Vice President, Finance & CFO