FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the months of October and November, 2002
Perle Systems Limited
(Registrant's name)
60 Renfrew Drive, Suite 100
Markham, Ontario, Canada
L3R OE1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F:
Form 20-F X Form 40-F __
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes ___ No X
Documents Included as Part of this Report
No. Document
1. Press release dated October 28, 2002 in connection with
financial results for the fiscal year ended May 31, 2002.
2. Press release dated October 31, 2002 in connection with
financial results for the first quarter of fiscal 2003.
3. Material change report filed with the Ontario Securities
Commission on November 8, 2002.
Document 1
PERLE
[GRAPHIC LOGO OMITTED]
Essential Network Connectivity
FOR IMMEDIATE RELEASE:
----------------------
PERLE SYSTEMS REPORTS FINANCIAL RESULTS FOR THE FISCAL YEAR ENDED 31 MAY 2002
Company Delivers Operating Profits
TORONTO, CANADA - October 28th, 2002 - Perle Systems Limited (OTCBB: PERL;
TSE: PL), a leading provider of networking products for Internet Protocol
("IP") and e-business access, today reported audited financial results for the
fiscal year ended May 31, 2002.
Financial Highlights
--------------------
On a US GAAP basis, the Company's revenue for the year ended May 31, 2002
totalled US$30.5 million. Cash earnings per share were US$0.08 for the year.
Net cash earnings or operating profits for the year were US$759,000 reflecting
the continuing improved productivity from the lower operating cost base of the
business.
The net loss for the year was US$(5.3) million and the basic loss per share
was US$(0.55) after the effect of the (non-cash) write down of US$2,945,000 of
goodwill and intangibles.
Revenue, cash earnings per share and net cash earnings or operating profits
for the year ended May 31, 2001 were US$36.8 million, US$0.12 and US$748,400,
respectively. The net loss and basic loss per share for the year ended May 31,
2001 was US$(2.5) million and US$(0.27), respectively.
Net cash earnings or operating profits and cash earnings per share exclude
acquisition-related amortization, capital asset depreciation and restructuring
costs.
President and Chief Executive Officer's Review:
-----------------------------------------------
Joe Perle, President and Chief Executive Officer, stated, "Our costs are in
line with revenues, and we delivered operating profits in this fiscal year.
Subsequent to the year-end we initiated a strategy to increase demand for our
products, by improving our channel program and expanding marketing activities
as they relate to our VAR's. We also continued our sales push into the strong
Chinese economy."
"During the fiscal year we focused R&D activities on our high growth product
lines. This resulted in releasing the P-series midsize router product line,
and in several high-value product feature releases such as SSH security on the
Perle CS9000 console server family."
"Looking at the progress of these sales growth initiatives in the current
year, I am confident in the opportunities for sales growth, despite the
current market environment. I am therefore hopeful of increasing profitability
from our new product releases, as well as Perle's increasing base of
successful VAR channel partners."
Chief Financial Officer's statement:
------------------------------------
"During the year we continued with our disciplined monitoring of operating
costs and maintained the Company's expenditure levels in line with the current
sales levels, allowing us to deliver operating profits," stated Derrick
Barnett, Perle's Vice President, Finance and Chief Financial Officer. "We
generated additional internal working capital by further decreasing inventory
and accounts receivables. We took appropriate write downs in our goodwill and
intangible assets, which in large part contributed to our net loss for the
year."
"Notwithstanding this return to operating profitability, the Company has
experienced a substantial downturn in sales and operating earnings over the
last three years, and had both working capital and shareholder's equity
deficiencies for the year ended May 31, 2002. Should the slowdown in the
technology sector continue, it may not be possible for the Company to meet its
loan covenants and continue to operate as a going concern. Under these
circumstances, the Company may seek to obtain waivers of its loan covenants
and to secure additional financing. However there can be no assurance that the
Company's lender will agree to any such waivers or that additional financing
will be forthcoming."
"Subsequent to the year end, on October 28, 2002, the Company entered into a
letter of commitment and terms of agreement with its banker to revise its
credit agreement, the terms of which will include a reduction of interest
payments and deferral and extension of principal payments. As a result
additional working capital will be introduced to the business and will
significantly reduce concerns about the Company's ability to continue as a
going concern."
"In addition, Perle agreed to issue to its banker warrants to acquire
2,400,000 of its common shares in addition to repricing 500,000 warrants
previously issued to the bank. Perle is entitled to purchase up to 1,400,000
of these new warrants to acquire common shares of the Company at a nominal
amount on a pro rata basis on early repayment of a portion of its credit
facility at any time prior to May 31, 2006. Perle currently has approximately
9,600,000 common shares issued and outstanding."
"Because of our improved operating efficiencies together with the new credit
agreement, I remain confident regarding Perle's long-term growth and
profitability strategy. "
Company Profile
Perle Systems is a leading developer, manufacturer and vendor of award-winning
networking products. These products are used to connect remote users reliably
and securely to central servers for a wide variety of e-business and general
business applications. Perle specializes in Internet Protocol (IP)
connectivity applications, with an increasing focus on mid-size IP routing
solutions. Product lines include routers, remote access servers,
serial/console servers, emulation adapters, multi-port serial cards,
multi-modem cards, print servers and network controllers. Perle distinguishes
itself by its ownership of extensive networking technology, depth of
experience in major network connectivity environments and long-term channel
relationships in major world markets. Perle Systems has offices and
representative offices in 12 countries in North America, The United Kingdom,
Europe and Asia and sells its products through distribution channels
worldwide. Its stock is traded on the OTCBB (symbol PERL) and the Toronto
Stock Exchange (symbol PL). For more information about Perle and its products,
access the Company's Web site at http://www.perle.com.
Forward-looking statements in this release, including statements relating to
the Company's future growth prospects, future profits, anticipated revenue and
earnings results, revenue and earnings guidance for fiscal 2003, and the
success of the Company's growth and restructuring initiatives are made
pursuant to the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, risks relating to the company's ability to maintain compliance
with the covenants contained in its credit agreement, to meet its sales
forecasts while maintaining control over its costs, to continue to operate as
a going concern, the Company's ability to manage growth, the implementation of
the Company's restructuring plan, the impact of FASB 141 and FASB 142 on the
Company's results of operations and financial condition, continued acceptance
of the Company's products, increased levels of competition for the Company,
new products and technological changes, the Company's dependence upon third
party suppliers, intellectual property rights and other risks detailed from
time to time in the Company's periodic reports filed with the United States
Securities and Exchange Commission and Canadian securities regulators.
- Financial statements to follow -
PERLE SYSTEMS LIMITED
CONSOLIDATED BALANCE SHEETS
(US dollars)
(See Note 2 - going concern)
-------------------------------------------------------------------------------------------------------------------
As at May 31 2002 2001
-------------------------------------------------------------------------------------------------------------------
ASSETS (Note 11)
Current:
Cash and cash equivalents $ 470,064 $ 962,046
Accounts receivable (Note 5) 5,716,445 8,522,086
Inventories (Note 6) 3,646,673 5,072,979
Prepaid expenses 284,654 449,794
Income taxes receivable 227,728 339,438
-------------------------------------------------------------------------------------------------------------------
Total current assets 10,345,564 15,346,343
-------------------------------------------------------------------------------------------------------------------
Capital assets, net (Note 7) 832,247 993,943
Other assets (Note 8) 496,604 506,899
Technology, net (Note 9) 1,542,946 2,361,279
Brand names, net (Note 9) 1,737,573 2,175,159
Sales channel, customer list and distribution rights, net (Note 9) 1,886,840 2,587,363
Goodwill (Note 9 and 17) 7,320,079 9,872,244
-------------------------------------------------------------------------------------------------------------------
Total assets $ 24,161,853 $ 33,843,230
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current:
-------------------------------------------------------------------------------------------------------------------
Bank indebtedness (Note 11) $ 8,683,648 $ 8,690,662
Accounts payable and accrued liabilities (Note 10) 6,334,023 8,060,759
Income taxes payable 109,280 185,268
Deferred revenue 1,225,808 1,507,957
Current portion of long-term loan (Note 11) 736,500 1,237,303
Current portion of notes payable (Note 12) 463,341 295,206
Current portion of obligation under capital lease (Note 13) 52,923 44,054
-------------------------------------------------------------------------------------------------------------------
Total current liabilities 17,605,523 20,021,209
-------------------------------------------------------------------------------------------------------------------
Long-term loan (Note 11) 7,389,523 8,030,342
Notes payable (Note 12) - 452,714
Obligation under capital lease (Note 13) 26,910 75,112
Accrued facilities cost (Note 15) 90,768 455,976
Deferred tax liabilities (Note 16) 1,300,121 1,735,094
-------------------------------------------------------------------------------------------------------------------
Total liabilities 26,412,845 30,770,447
-------------------------------------------------------------------------------------------------------------------
Commitment and contingencies (Notes 2, 18 and 20)
Shareholders' Equity (Deficiency):
Share capital (Note 14) - Authorized: Unlimited Common Shares,
issued and outstanding: 9,592,293 (2001 - 9,592,293) 33,770,304 33,770,304
Other comprehensive loss (1,880,443) (1,838,849)
Deficit (34,140,853) (28,858,672)
-------------------------------------------------------------------------------------------------------------------
Total Shareholders' equity (deficiency) (2,250,992) 3,072,783
-------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity (deficiency) $ 24,161,853 $ 33,843,230
===================================================================================================================
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars)
-----------------------------------------------------------------------------------------------------------------------------
For the years ended May 31 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------------------
Sales $ 30,455,314 $ 36,791,778 $ 46,979,723
-----------------------------------------------------------------------------------------------------------------------------
Expenses:
Cost of sales 13,769,576 14,666,419 18,555,981
Selling, general and administration 11,530,707 15,735,867 26,565,742
Research and development expenditures (net of ITCs) 3,069,008 3,280,818 6,344,780
Amortization of intangible assets 2,264,612 3,214,323 2,714,757
Write-down of intangible assets (Note 9(a)) 270,000 -- --
Depreciation of capital assets 256,563 363,725 784,713
Interest expense 1,754,300 2,197,434 1,172,249
Restructuring and other (Note 15) 575,000 -- 11,851,866
-----------------------------------------------------------------------------------------------------------------------------
Total expenses 33,489,766 39,458,586 67,990,088
-----------------------------------------------------------------------------------------------------------------------------
Loss before income taxes and cumulative effect of change
in accounting principles (3,034,452) (2,666,808) (21,010,365)
Income tax expense (recovery) (Note 16) (427,271) (369,924) 840,359
-----------------------------------------------------------------------------------------------------------------------------
Net loss for the year before cumulative effect of change
in accounting principles (2,607,181) (2,296,884) (21,850,724)
Cumulative effect of change in accounting principles,
net of nil tax (Note 17) - goodwill (2,675,000) -- --
- revenue recognition -- (169,054) --
-----------------------------------------------------------------------------------------------------------------------------
Net loss for the year $ (5,282,181) $ (2,465,938) $(21,850,724)
=============================================================================================================================
Loss per Common Share - basic and diluted before cumulative effect
of change in accounting principles $ (0.27) $ (0.25) $ (2.68)
Cumulative effect of change in accounting principles (Note 17) (0.28) (0.02) --
-----------------------------------------------------------------------------------------------------------------------------
Loss per Common Share - basic and diluted $ (0.55) $ (0.27) $ (2.68)
=============================================================================================================================
Weighted average number of shares outstanding 9,592,293 9,249,364 8,156,158
=============================================================================================================================
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
(US dollars)
Total
Common Shares Warrants Other Shareholders'
------------------------------------------------------ Comprehensive Deficit Equity
Number $ Number $ Loss $ $ (Deficiency)$
------------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 1999 7,731,476 21,858,995 381,530 - (1,382,944) (4,542,010) 15,934,041
Exercise of stock options 246,048 494,320 494,320
Issuance of Common Shares,
acquisitions 306,313 2,915,354 2,915,354
Issuance of Common Shares,
purchase of technology 163,840 405,203 405,203
Issuance of warrants,
private placement,
net of issuance costs 670,000 7,205,017 7,205,017
Conversion of warrants to
Common Shares 670,000 7,205,017 (670,000) (7,205,017) -
Expiry of warrants
during the year (192,942) -
Currency translation
for the year (315,451) (315,451)
Net loss for the year (21,850,724) (21,850,724)
------------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 2000 9,117,677 32,878,889 188,588 - (1,698,395) (26,392,734) 4,787,760
Exercise of stock options 11,028 27,258 27,258
Issuance of Common Shares,
purchase of technology 125,000 312,458 312,458
Issuance of Common Shares,
private placement,
net of issuance costs 300,000 176,945 176,945
Issuance of warrants,
bank financing 700,000 242,609 242,609
Issuance of warrants,
private placement, net
of issuance costs 121,990 27,657 27,657
Exercise of warrants for
Common Shares
during the year 38,588 104,488 (38,588) 104,488
Expiry of warrants
during the year (200,000) -
Currency translation
for the year (140,454) (140,454)
Net loss for the year (2,465,938) (2,465,938)
------------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 2001 9,592,293 33,500,038 771,990 270,266 (1,838,849) (28,858,672) 3,072,783
Expiration of warrants
for Common Shares
during the year (46,990)
Currency translation
for the year (41,594) (41,594)
Net loss for the year (5,282,181) (5,282,181)
------------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 2002 9,592,293 $33,500,038 725,000 $270,266 $(1,880,443 $(34,140,853) $(2,250,992)
====================================================================================================================================
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US dollars)
-----------------------------------------------------------------------------------------------------------------------------
For the years ended May 31 2002 2001 2000
-----------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in):
Operating activities
Net loss for the year $(5,282,181) $(2,465,938) $(21,850,724)
Add (deduct) items not affecting cash:
Investment tax credits recoverable -- -- (134,273)
Write-down of investment tax credits -- -- 5,683,954
Write-down of goodwill and intangible assets 2,945,000 -- 3,113,937
Amortization of intangible assets 2,264,612 3,214,323 2,714,757
Depreciation of capital assets 256,563 363,725 784,713
Amortization of deferred financing cost 60,294 -- --
Deferred income taxes (444,126) (458,810) 706,954
---------------------------------------------------------------------------------------------------------------------------
(199,838) 653,300 (8,980,682)
Net change in non-cash working
capital balances related to operations 2,122,337 (1,670,796) 5,044,801
---------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) operating activities 1,922,499 (1,017,496) (3,935,881)
---------------------------------------------------------------------------------------------------------------------------
Investing activities
Decrease in loans to shareholders, officers and directors 33,050 31,345 153,153
Additions to capital assets (69,753) (242,322) (279,704)
Acquisitions (net of cash acquired) -- -- (8,973,961)
Purchase of technology and other intangible assets (637,724) (54,221) (247,042)
---------------------------------------------------------------------------------------------------------------------------
Cash used in investing activities (674,427) (265,198) (9,347,554)
---------------------------------------------------------------------------------------------------------------------------
Financing activities
Increase (decrease) in bank indebtedness (102,649) 445,358 3,684,249
Issuance of Common Shares, net -- 336,348 7,699,337
Deferred financing cost (80,418) (64,187) --
Repayment of notes payable (296,441) (302,259) (278,145)
Repayment of obligation under capital lease (39,495) (27,910) --
Increase in long-term loan -- 1,505,528 4,638,163
Repayment of long-term loan (1,199,079) (1,175,150) (1,900,014)
---------------------------------------------------------------------------------------------------------------------------
Cash provided by (used in) financing activities $(1,718,082) 717,728 13,843,590
---------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents (21,972) (27,840) (176,442)
---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents
during the year (491,982) (592,806) 383,713
Cash and cash equivalents, beginning of the year 962,046 1,554,852 1,171,139
---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of the year $ 470,064 $ 962,046 $ 1,554,852
===========================================================================================================================
Components of net change in non-cash working
capital balances related to operations:
Accounts receivable $ 2,809,605 $ 2,492,615 $ 3,889,990
Inventories 1,452,997 2,742,674 (2,206,539)
Prepaid expenses 240,680 439,847 (177,455)
Income taxes 38,439 (202,881) 682,072
Accounts payable and accrued liabilities (2,125,062) (6,626,805) 2,633,806
Deferred revenue (294,322) (516,246) 222,927
---------------------------------------------------------------------------------------------------------------------------
$ 2,122,337 $(1,670,796) $ 5,044,801
===========================================================================================================================
Supplemental cash flow information:
Interest paid $ 1,766,791 $ 1,951,851 $ 1,265,095
Income taxes paid $ 100,089 $ 372,000 $ 377,888
===========================================================================================================================
Non-cash investing and financing activities:
Shares issued upon acquisition -- $ 312,458 $ 4,252,360
Vendor take back debt -- -- $ 442,441
Capital assets purchased by capital lease -- $ 147,467 --
===========================================================================================================================
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(US dollars)
2002 2001 2000
--------------------------------------------------------------------------------------------------------------------------------
Net loss for the year $(5,282,181) $(2,465,938) $(21,850,724)
Cumulative translation account (41,594) (140,454) (315,451)
--------------------------------------------------------------------------------------------------------------------------------
Comprehensive loss for the year $(5,323,775) $(2,606,392) $(22,166,175)
================================================================================================================================
###
Contacts: Derrick Barnett
Vice President, Finance & CFO
Perle Systems Limited
Phone: 905-946-5034
Fax: 905-944-2116
Email: dbarnett@perle.com
Document 2
PERLE
[GRAPHIC LOGO OMITTED]
Essential Network Connectivity
FOR IMMEDIATE RELEASE:
----------------------
PERLE SYSTEMS REPORTS FIRST QUARTER FISCAL 2003 FINANCIAL RESULTS
Company Organizes for Sales Growth
TORONTO, CANADA - October 31, 2002 - Perle Systems Limited (OTCBB: PERL; TSE:
PL), a leading provider of networking products for Internet Protocol ("IP") and
e-business access, today reported unaudited financial results for the first
quarter fiscal 2003 ended August 31, 2002.
Financial Highlights
--------------------
Based on US GAAP, the Company's revenue for the first quarter of fiscal 2003
totaled US$5.3 million, compared to revenue of US$7.7 million for the first
quarter of fiscal 2002.
This reduction in sales was due to poor economic conditions in our largest
European markets, including the United Kingdom, France and Germany, combined
with the traditional European summer slowdown. In North America, we reorganized
our entire distribution channel to lay the groundwork for sales growth in the
coming quarters. This reorganization had the result of inhibiting sales during
the quarter. Sales in the Asia-Pacific region, especially China, were
maintained. In addition to these factors, we experienced some production
backlogs, which prevented meeting all of the demand during the quarter. We
anticipate clearing this backlog during the second quarter.
Disciplined cost controls and stable gross margins offset the lower sales
revenue to some extent and the cash loss or net operating loss for the quarter
was approximately US$478,000 compared to a net operating loss of approximately
US$172,000 in the same period last year. Cash loss per share was US$0.05 for the
quarter compared to a cash loss per share of US$0.02 in the same period last
year.
Net cash loss or net operating loss and cash loss per share figures exclude
acquisition-related amortization, depreciation of capital assets and intangibles
and one time costs. There were no one-time costs in the first quarter of this
year or last year.
Chief Executive Officer's comments:
"Our goal in fiscal 2003 is to continue to deliver operating profitability and
sales growth. "
"During the first quarter we continued with research and development programs to
concentrate on our higher growth product lines with the intention of bringing
leading technology at value prices to the market", stated Joe Perle, President
and Chief Executive Officer.
"Our marketing campaigns have taken a more aggressive approach and we have
restructured our distribution channel, in particular in North America, to better
service our VAR's and in so doing, to help drive demand for our products. We are
already seeing some of the benefits in the second quarter and I remain confident
of the long term outlook for Perle."
Chief Financial Officer's comments:
"Having restored the Company to operating profitability in fiscal 2002, we are
taking steps to further strengthen the Company in fiscal 2003. We continue to
focus on the fundamentals of building sales, improving margins and operating
efficiencies while containing costs," stated Derrick Barnett, Vice President,
Finance and Chief Financial Officer. "We are particularly encouraged by the
terms of the new credit agreement with our bankers, which we recently announced
and believe that this will provide Perle with the working capital needed to
continue on its path to attain full profitability and further growth."
Company Profile
Perle Systems is a leading developer, manufacturer and vendor of award-winning
networking products. These products are used to connect remote users reliably
and securely to central servers for a wide variety of e-business and general
business applications. Perle specializes in Internet Protocol (IP) connectivity
applications, with an increasing focus on mid-size IP routing solutions. Product
lines include routers, remote access servers, serial/console servers, emulation
adapters, multi-port serial cards, multi-modem cards, print servers and network
controllers. Perle distinguishes itself by its ownership of extensive networking
technology, depth of experience in major network connectivity environments and
long-term channel relationships in major world markets. Perle Systems has
offices and representative offices in 12 countries in North America, The United
Kingdom, Europe and Asia and sells its products through distribution channels
worldwide. Its stock is traded on the OTCBB (symbol PERL) and the Toronto Stock
Exchange (symbol PL). For more information about Perle and its products, access
the Company's Web site at http://www.perle.com.
Forward-looking statements in this release, including statements relating to the
Company's future growth prospects, future profits, anticipated revenue and
earnings results, revenue and earnings guidance for fiscal 2003,production
backlogs and the success of the Company's growth and restructuring initiatives
are made pursuant to the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, risks relating to the company's ability to maintain compliance with
the covenants contained in its credit agreement, to meet its sales forecasts
while maintaining control over its costs, to continue to operate as a going
concern, the Company's ability to manage growth, the implementation of the
Company's restructuring plan, the impact of FASB 141 and FASB 142 on the
Company's results of operations and financial condition, continued acceptance of
the Company's products, increased levels of competition for the Company, new
products and technological changes, the Company's dependence upon third party
suppliers, intellectual property rights and other risks detailed from time to
time in the Company's periodic reports filed with the United States Securities
and Exchange Commission and Canadian securities regulators.
- Financial statements to follow -
PERLE SYSTEMS LIMITED
CONSOLIDATED BALANCE SHEETS
(US dollars)
------------------------------------------------------------------------------------------------------------
As at August 31, 2002 May 31, 2002
------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited) (audited)
Current:
Cash and cash equivalents $389,670 $470,064
Accounts receivable 4,138,174 5,716,445
Inventories 3,553,593 3,646,673
Prepaid expenses 186,782 284,654
Income taxes receivable 241,723 227,728
------------------------------------------------------------------------------------------------------------
Total current assets 8,509,942 10,345,564
------------------------------------------------------------------------------------------------------------
Capital assets, net 780,236 832,247
Other assets 463,138 496,604
Technology, net 1,359,565 1,542,946
Brand names, net 1,588,266 1,737,573
Sales channel, customer list and distribution rights, net 1,705,223 1,886,840
Goodwill 7,177,405 7,320,079
------------------------------------------------------------------------------------------------------------
Total assets $21,583,775 $24,161,853
============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current:
------------------------------------------------------------------------------------------------------------
Bank indebtedness $8,669,381 $8,683,648
Accounts payable and accrued liabilities 5,436,527 6,334,023
Income taxes payable 111,522 109,280
Deferred revenue 1,306,694 1,225,808
Current portion of long-term loan 288,665 736,500
Current portion of notes payable 335,802 463,341
Current portion of obligation under capital lease 54,011 52,923
------------------------------------------------------------------------------------------------------------
Total current liabilities 16,202,602 17,605,523
------------------------------------------------------------------------------------------------------------
Long-term loan 7,240,683 7,389,523
Notes payable - -
Obligation under capital lease 15,584 26,910
Accrued facilities cost 89,034 90,768
Deferred tax liabilities 1,162,317 1,300,121
------------------------------------------------------------------------------------------------------------
Total liabilities 24,710,220 26,412,845
------------------------------------------------------------------------------------------------------------
Commitment and contingencies
Shareholders' Equity (Deficiency):
Share capital - Authorized: Unlimited Common Shares,
issued and outstanding: 9,592,293 (2002 - 9,592,293) 33,770,304 33,770,304
Cumulative translation account (1,825,726) (1,880,443)
Deficit (35,071,023) (34,140,853)
------------------------------------------------------------------------------------------------------------
Total Shareholders' equity (deficiency) (3,126,445) (2,250,992)
------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity (deficiency) $21,583,775 $24,161,853
============================================================================================================
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars)
-------------------------------------------------------------------------------------------------------------
For the three month period ended August 31, 2002 August 31, 2001
-------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
Sales $5,308,630 $7,665,991
-------------------------------------------------------------------------------------------------------------
Expenses:
Cost of sales 2,251,761 3,209,953
Selling, general and administration 2,364,664 3,501,335
Research and development expenditures (net of ITCs) 846,481 684,164
Amortization of intangible assets 408,207 657,499
Depreciation of capital assets 43,585 73,217
Interest expense 436,470 556,353
-------------------------------------------------------------------------------------------------------------
Total expenses 6,351,168 8,682,521
-------------------------------------------------------------------------------------------------------------
Loss before income taxes (1,042,538) (1,016,530)
Income tax expense (recovery) (112,368) (113,734)
-------------------------------------------------------------------------------------------------------------
Net loss for the year $(930,170) $(902,796)
=============================================================================================================
Loss per Common Share - basic and diluted $(0.10) $(0.10)
=============================================================================================================
Weighted average number of shares outstanding 9,592,293 9,592,293
===============================================================================================----==========
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)
(US dollars)
-------------------------------------------------------------------------------------------------------------
For the three month period ended August 2002 2001
-------------------------------------------------------------------------------------------------------------
Common Share Capital: (Unaudited) (Unaudited)
-------------------------------------------------------------------------------------------------------------
Shares
Opening balance 9,592,293 9,592,293
-------------------------------------------------------------------------------------------------------------
Closing balance 9,592,293 9,292,293
=============================================================================================================
Amount
Opening balance $33,770,304 $33,770,304
-------------------------------------------------------------------------------------------------------------
Closing balance $33,770,304 $33,770,304
-------------------------------------------------------------------------------------------------------------
Other comprehensive income:
Opening balance $(1,880,443) $(1,838,849)
Net change for the period 54,717 8,647
------------------------------------------------------------------------------------------------------------
Closing balance $(1,825,726) $(1,830,202)
------------------------------------------------------------------------------------------------------------
Deficit:
Opening balance $(34,140,853) $(28,858,672)
Net loss for the period (930,170) (902,796)
-----------------------------------------------------------------------------------------------------------
Closing balance (35,071,023) (29,761,468)
------------------------------------------------------------------------------------------------------------
Total shareholders' equity (deficiency) $(3,126,445) $2,178,634
============================================================================================================
PERLE SYSTEMS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US dollars)
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For the three months ended August 2002 2001
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Cash provided by (used in):
Operating activities
Net loss for the year $(930,170) $(902,796)
Add (deduct) items not affecting cash:
Amortization of intangible assets 408,207 657,499
Depreciation of capital assets 43,585 73,217
Amortization of deferred financing cost 23,622 -
Deferred income taxes (112,368) (113,734)
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(567,124) (285,814)
Net change in non-cash working
capital balances related to operations 908,802 1,257,743
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Cash provided by (used in) operating activities 341,678 971,929
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Investing activities
Additions to capital assets (8,331) (55,259)
Purchase of technology and other intangible assets - (318,857)
---------------------------------------------------------------------------------------------------------
Cash used in investing activities (8,331) (374,116)
---------------------------------------------------------------------------------------------------------
Financing activities
Increase (decrease) in bank indebtedness 164,171 44,122
Deferred financing cost - (65,287)
Repayment of notes payable (107,013) (21,037)
Repayment of obligation under capital lease (8,597) (1,556)
Increase in long-term loan - -
Repayment of long-term (447,835) (220,779)
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Cash provided by (used in) financing activities (399,274) (264,537)
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Effect of exchange rate changes on cash and cash equivalents (14,467) (3,924)
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Net increase (decrease) in cash and cash equivalents
during the year (80,394) 329,352
Cash and cash equivalents, beginning of the year 470,064 962,046
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Cash and cash equivalents, end of the year $389,670 $1,291,398
=========================================================================================================
Components of net change in non-cash working
capital balances related to operations:
Accounts receivable $1,482,258 $1,280,619
Inventories 16,108 292,618
Prepaid expenses 93,072 (14,721)
Income taxes (13,846) 20,039
Accounts payable and accrued liabilities (772,516) (252,435)
Deferred revenue 103,726 (68,377)
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$908,802 $1,257,743
=========================================================================================================
Supplemental cash flow information:
Interest paid $436,750 $274,713
Income taxes paid $41,224 $46,080
=========================================================================================================
Non-cash investing and financing activities:
Vendor take back debt - $261,148
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###
Contacts: Derrick Barnett
Vice President, Finance & CFO
Perle Systems Limited
Phone: 905-946-5034
Fax: 905-944-2116
Email: dbarnett@perle.com
Document 3
Form 27
SECURITIES ACT (Ontario)
MATERIAL CHANGE REPORT UNDER SECTION 75(2) OF THE ACT
ITEM 1 ---- Reporting Issuer:
Perle Systems Limited (the "Company" or "Perle")
60 Renfrew Drive, Suite 100
Markham, Ontario, L3R 0E1
ITEM 2---- Date of Material Change:
October 28, 2002
ITEM 3 ---- Press Release:
A press release in respect of the material change was
disseminated on October 28, 2002 through Canada NewsWire.
ITEM 4 ---- Summary of Material Change:
On October 28, 2002, the Company entered into a letter of
commitment and terms of agreement with its banker to revise
its credit agreement, the terms of which will include a
reduction of interest payments, deferral and extension of
principal payments, and the issuance of warrants to acquire
common shares of the Company.
ITEM 5 ---- Full Description of Material Change:
On October 28, 2002, the Company has entered into a letter of
commitment and terms of agreement with its banker, setting out
the revised terms and conditions of its credit agreement. The
major terms of this agreement are as follows:
o reduction of interest rates on the Company's
operating line of credit and term loan borrowings to
Canadian prime rate;
o conversion of US$4.22 million (Cdn$6.45 million) of
its operating line of credit into a long-term loan;
o deferral of principal payments on the long-term loan
from November 2002 through May 2003;
o extension of the repayment terms of the long-term
loan to fiscal 2004, 2005 and 2006, on a flexible
repayment schedule, based on a percentage between
33.3% and 50% of the Company's EBITDA (minus interest
expenses), subject to certain minimum payments; and
o repayment of the Company's operating line of credit
and long-term debt by May 31, 2006.
In addition, subject to regulatory approval, the Company
agreed to issue to its banker new warrants to purchase up to
2,398,073 common shares. These warrants will expire in five
years and are exercisable at $0.43 (Cdn.) per share. The
Company is entitled to repurchase, at any time prior to May
31, 2006, up to 1,400,000 of these warrants at a nominal
amount and on a pro rata basis on early repayment in amounts
not less than Cdn$1,000,000 of the portion of the operating
line of credit converted to long-term debt, subject to
regulatory approval. The Company also agreed to reprice
outstanding warrants held by its banker. These warrants are
exercisable for up to 500,000 common shares of the Company and
are now exercisable at $0.43 (Cdn.) per share.
ITEM 6---- Reliance on Section 75(3) of the Act:
The report is not being filed on a confidential basis.
ITEM 7 ---- Omitted Information:
No information has been omitted.
ITEM 8 ---- Senior Officers:
Derrick Barnett, Vice President, Finance and Chief Financial
Officer
ITEM 9 ---- Statement of Senior Officer:
The foregoing accurately discloses the material change
referred to herein.
DATED at Toronto, in the Province of Ontario, this 7th day of
November, 2002.
"Derrick Barnett"
---------------------------
DERRICK BARNETT
Vice President Finance and
Chief Financial Officer
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, thereunto duly authorized.
Date: November 11, 2002
PERLE SYSTEMS LIMITED
By: /s/ Joseph E. Perle
-----------------------------
Joseph E. Perle
President and Chief Executive
Officer