8-K 1 iwsale.txt 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: September 9, 2004 (Date of Earliest Event Reported) J NET ENTERPRISES, INC. (Exact Name of Registrant as Specified in its Charter) 1-9728 ---------- (Commission File Number) Nevada 88-0169922 ---------- ---------- (State of Incorporation) (I.R.S. Employer Identification Number) 4020 Lake Creek Drive, #100 Wilson, Wyoming 83014 ------------------------------ (Address, including zip code, of Principal Executive Offices) (307) 739-8603 ------------------- (Registrant's Telephone Number, Including Area Code) N/A _____________________________________________________________ (Former name or former address, if changed since last report) Section 2 - Financial Information Item 2.01 Completion of Acquisition or Disposition of Assets On September 9, 2004, IW Holdings, Inc. ("IWH"), a wholly owned subsidiary of J Net Enterprises, Inc. ("J Net" or the "Company") completed the sale of its assets to a newly formed Delaware limited liability company named InterWorld Holdings, LLC ("Holdings"). Holdings was formed on August 25, 2004 by Robert Weis, the former Vice-President of IWH. Other than the membership interest described below, neither IWH nor J Net have any affiliation with Holdings. J Net has offered to provide certain administrative and back-office services to Holdings through the end of calendar 2004 for fees which represent fair market value for such services. Holdings is under no obligation to use J Net for such services. Consideration received by IWH for the sale was $1 million, represented by the assumption of $466 thousand of IWH liabilities by Holdings and a $534 thousand promissory note (the "Note"). In addition, IWH received a 19.9% membership interest in Holdings. The Note has a five year term with annual interest of 6.5%. The Note is secured by the assets, contracts and intellectual property that were transferred to Holdings at closing of the transaction. Section 9 - Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits (A) Financial Statements of Business Acquired Not applicable. (B) Unaudited Pro Forma Financial Information. The following unaudited pro forma condensed consolidated balance sheet of J Net at March 31, 2004, reflects the financial position of the Company after giving effect to the sale of assets described in Item 2.01 and assumes that the sale took place on March 31, 2004. The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended June 30, 2003 and the nine months ended March 31, 2004 assume the sale of IWH assets occurred on July 1, 2002. The unaudited pro forma financial information has been prepared by the Company based on assumptions which the Company has deemed to be proper. The pro forma statements are provided for informational purposes only and should not be interpreted to be indicative of the Company's consolidated results of operations had the sale of assets described in Item 2.01 occurred on the assumed date nor should they be used to project results for any future dates or periods. J Net Enterprises, Inc. Pro Forma Condensed Consolidated Balance Sheet As of March 31, 2004 (dollars in thousands) (Unaudited) Pro Forma Adjustments _____________ ASSETS Historical IWH (a) Other Pro Forma ______ __________ _______ _____ _________ Current assets: Cash and cash equivalents $ 4,271 $ (25) $ - $ 4,246 Short term investments 12,923 - - 12,923 Accounts receivable, net 177 (177) - - Prepaid expenses 66 (61) - 5 _______ _____ ____ _______ Total current assets 17,437 (263) - 17,174 _______ _____ ____ _______ Notes receivable - - 534 (b) 534 Investments in technology- related businesses 2,000 - - 2,000 Property and equipment, net of accumulated depreciation 64 (2) - 62 Other non-current assets 689 (30) - 659 _______ _____ ____ _______ Total assets $20,190 $(295) $534 $20,429 ======= ===== ==== ======= LIABILITIES AND STOCKHOLDERS EQUITY ___________________________________ Current liabilities: Accounts payable and other current liabilities $ 3,197 $(175) $ 80 (b) $ 3,102 Deferred revenue and customer deposits 848 (590) - 258 _______ _____ ____ _______ Total current liabilities 4,045 (765) 80 3,360 _______ _____ ____ _______ Deferred income taxes 6,910 - - 6,910 Deferred rent 177 - - 177 Other non-current liabilities 212 - - 212 _______ _____ ____ _______ Total liabilities 7,299 - - 7,299 _______ _____ ____ _______ Total stockholders' equity 8,846 470 454 9,770 _______ _____ ____ _______ Total liabilities and stockholders' equity $20,190 $(295) $534 $20,429 ======= ===== ==== ======= (a) To eliminate the assets and liabilities of IWH included in the balance sheet as of March 31, 2004. (b) To reflect receipt of the Note issued to IWH at closing and record liabilities assumed by the Company, including transaction costs. J Net Enterprises, Inc. Pro Forma Condensed Consolidated Statements of Operations Fiscal Year Ended June 30, 2003 (dollars in thousands) (Unaudited) Pro Forma Adjustments ________________ Historical IWH (a) Other Pro Forma __________ _______ _____ _________ Revenues, net Product licenses $ 21 $ (21) $ - $ - Maintenance 2,090 (2,090) - - Services 514 (514) - - _______ _______ ___ _______ Total revenues, net 2,625 (2,625) - - _______ _______ ___ _______ Cost of revenues: Product licenses - - - - Maintenance 108 (108) - - Services 501 (501) - - _______ _______ ___ _______ Total cost of revenues 609 (609) - - _______ _______ ___ _______ Gross profit 2,016 (2,016) - - Operating expenses: Research and development 1,605 (1,605) - - General and administrative 4,843 (1,011) 3,832 Impairment of assets and other costs 1,229 - - 1,229 _______ _______ ___ _______ Total operating expenses 7,677 (2,616) - 5,061 _______ _______ ___ _______ Operating loss (5,661) 600 - (5,061) Other income (expense): Interest and other income 1,521 (3) 35 (b) 1,553 Gain from repurchase of convertible notes 553 - - 553 _______ _______ ___ _______ Total other income (expense) 2,074 (3) 35 2,106 _______ _______ ___ _______ Income (loss) before income tax (3,587) 597 35 (2,955) Income tax expense 241 - - 241 _______ _______ ___ _______ Net income (loss) $(3,828) $ 597 $35 $(3,196) ======= ======= === ======= Basic and diluted loss per share $ (.45) $ .07 $ - $ (.37) ======= ======= === ======= (a) To eliminate the operations of IWH included in the statement of operations for the twelve months ended June 30, 2003. (b) To record interest earned on the Note for 12 months at 6.5%. J Net Enterprises, Inc. Pro Forma Condensed Consolidated Statements of Operations Nine Months ended March 31, 2004 (dollars in thousands) (Unaudited) Pro Forma Adjustments ________________ Historical IWH (a) Other Pro Forma __________ _______ _____ _________ Revenues, net Product licenses $ 28 $ (28) $ - $ - Maintenance 1,253 (1,253) - - Services 551 (551) - - _______ _______ ___ _______ Total revenues, net 1,832 (1,832) - - _______ _______ ___ _______ Cost of revenues: Product licenses - - - - Maintenance 133 (133) - - Services 391 (391) - - _______ _______ ___ _______ Total cost of revenues 524 (524) - - _______ _______ ___ _______ Gross profit 1,308 (1,308) - - Operating expenses: Research and development 495 (495) - - General and administrative 2,457 (740) 1,717 _______ _______ ___ _______ Total operating expenses 2,952 (1,235) - 1,717 _______ _______ ___ _______ Operating loss (1,644) (73) - (1,717) Other income (expense): Interest and other income 1,052 (9) 26 (b) 1,069 Interest expense - - - - _______ _______ ___ _______ Total other income (expense) 1,052 (9) 26 1,069 _______ _______ ___ _______ Income (loss) before income tax (592) (82) 26 (648) Income tax expense - - - - _______ _______ ___ _______ Net income (loss) $ (592) $ (82) $26 $ (648) ======= ======= === ======= Basic and diluted loss per share $ (.07) $ (.01) $ - $ (.08) ======= ======= === ======= (a) To eliminate the operations of IWH included in the statement of operations for the nine months ended March 31, 2004. (b) To record interest earned on the Note for 9 months at 6.5% (C) EXHIBITS 10.1 Asset Purchase Agreement 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. J NET ENTERPRISES, INC. By: /s/ Mark E. Wilson ____________________ Name: Mark E. Wilson Title: Chief Financial Officer Dated: September 14, 2004 EXHIBIT INDEX Exhibit No. Description ___________ ___________ 10.1 Asset Purchase Agreement