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): SEPTEMBER 30, 1997
SMARTSERV ONLINE, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-28008 13-3750708
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
One Station Place, Stamford, Connecticut 06902
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 353-5950
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS.
On September 30, 1997, SmartServ Online, Inc., a Delaware corporation
(the "COMPANY"), consummated the sale of $4,000,000 of Prepaid Common Stock
Purchase Warrants of the Company ("WARRANTS") in a private placement (the
"PRIVATE PLACEMENT") exempted from the registration requirements of the
Securities Act of 1933, as amended, pursuant to Regulation D promulgated
thereunder.
The Warrants will be exercisable for shares of the Company's common
stock, par value $0.01 per share (the "COMMON STOCK"). Warrants may be exercised
at any time after the earlier of the date on which a registration statement has
been declared effective by the Securities and Exchange Commission (the "SEC") or
90 days after their date of issuance. One-third of the Common Stock issued upon
exercise of the Warrants will be locked up for 60, 90 and 120 days,
respectively, following the effectiveness of the registration statement. The
initial exercise price of the Warrants will be 70% of the average closing bid
price of the Common Stock as reported on the Nasdaq Small Cap Market for the
five trading days ending on the day prior to the date of exercise. The exercise
price percentage shall be reduced by an additional 1% on the 60th day following
the date of original issue of the Warrants and by an additional 1% for each 60
day period thereafter that the Warrants remain unexercised. In no event will the
exercise price exceed $1.40. The Warrants expire three years from their date of
issuance.
The Company has agreed to file a registration statement covering the
shares of Common Stock issuable upon exercise of the Warrants within 20 days
from the date hereof and to effect appropriate qualifications in the states in
which the Common Stock may be issued in order to comply with applicable laws in
connection with the exercise of such Warrants. In the event that a registration
statement has not become effective within 90 days after the final closing date
of the Offering, the Company will pay each holder of Warrants an amount in cash
equal to 1% of the aggregate subscription price therefor for the first month
thereafter and 2% of such price for each subsequent month thereafter. The
Company will also pay such penalties to each investor based on the number of
unexercised Warrants held by such investor in the event that the Company fails
to maintain the effectiveness of the registration statement with the SEC at any
time while the Warrants remain exercisable.
Concurrently with the consummation of the above transaction, the
Company issued warrants to purchase 600,000 shares of Common Stock to The Zanett
Securities Corporation ("ZANETT") in connection with the Private Placement. In
addition, pursuant to a Consulting Agreement entered into by the Company and
Bruno Guazzoni, the Company issued to Mr. Guazzoni warrants to purchase
3,555,555 shares of Common Stock. Mr. Guazzoni may be deemed to be an affiliate
of Zanett Lombardier, Ltd., an investor in the Private Placement. The warrants
issued to Zanett and Mr. Guazzoni are exercisable at $1.125 per share for five
years.
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<PAGE>
The Company also entered into an agreement with Zanett Capital, Inc.
("ZCI") which provides that at the request of ZCI the Company will appoint such
number of designees of ZCI to its Board of Directors that the designees of ZCI
will constitute a majority of the members of the Board of Directors of the
Company. This agreement will expire in five years.
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro forma balance sheet at August 31, 1997.
PROFORMA BALANCE SHEET
AUGUST 31, 1997
SMARTSERV ONLINE, INC.
PROFORMA BALANCE SHEET
AUGUST 31, 1997
<TABLE>
<CAPTION>
Unaudited Proforma
Balance Balance
Sheet Proforma Adjustments Sheet
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<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents 18,185 (1),(4) 100,000 520,000
(3) 3,163,941 2,762,126
Accounts receivable 159,188 159,188
Prepaid expenses and miscellaneous receivables 78,353 78,353
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Total current assets 255,726 2,999,667
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Property and equipment, net of accumulated
depreciation of $212, 522 727,710 727,710
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Other assets
Deferred Charges 21,000 21,000
Security deposit 81,218 81,218
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102,218 102,218
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Total Assets 1,085,654 3,829,595
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Loan payable 661,111 (3),(1) 772,222 111,111 0
Accounts payable and accrued expenses 1,388,068 (5) 25,000 1,413,068
Payroll taxes payable 24,384 24,384
Salaries payable 40,333 40,333
Accrued interest payable 46,722 (3),(2) 63,837 27,507 10,392
Current portion of capital lease 99,075 99,075
Deferred revenues 23,618 23,618
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Total current liabilities 2,283,311 1,610,870
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Long term portion of capital lease 147,136 147,136
STOCKHOLDERS' EQUITY
Common stock - $.01 par value 36,950 36,950
Authorized - 15,000,000 shares
Issued and outstanding - 3,695,000 shares
Additional paid-in capital 9,001,642 (4),(3) 520,000 4,000,000
(5) 60,000 12,421,642
Accumulated deficit (10,383,385) (1),(5) 11,111 35,000
(2) 27,507 (10,387,003)
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Total stockholders' equity (1,344,793) 2,071,589
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Total Liabilities and Stockholders' Equity 1,085,654 4,718,618 4,718,618 3,829,595
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</TABLE>
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<PAGE>
SMARTSERV ONLINE, INC.
PROFORMA BALANCE SHEET
AUGUST 31, 1997
(1)
Cash 100,000
Accumulated Deficit 11,111
Loan Payable - Zanett 111,111
(Record Zanett's September Advance pursuant
to the Second Amendment to the May 1997
Line of Credit Agreement)
(2)
Accumulated Deficit 27,507
Accrued Interest Payable 27,507
(Record Interest on Zanett Loan Obligation for
the Month of September 1997)
(3)
Cash 3,163,941
Loan Payable 772,222
Interest Payable 63,837
Additional Paid-in Capital 4,000,000
(Record cash received at Closing and
satisfaction of Zanett's loan obligation)
(4)
Additional Paid-in Capital 520,000
Cash 520,000
(Record 10% placement agent fee and 3%
unaccountable expense allowance in connection
with the $4 million private placement)
(5)
Additional Paid-in Capital 60,000
Accrued Expenses 25,000
Accumulated Deficit 35,000
(Reclassify legal fees previously charged to
operations and accrue estimated placement agent
legal fees and printing costs) ----------- -----------
4,718,618 4,718,618
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<PAGE>
(c) Exhibits:
Exhibit Number Description
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*4.1 Form of Prepaid Common Stock Purchase Warrant.
*4.2 Form of Registration Rights Agreement.
*4.3 Warrant issued to The Zanett Securities Corporation.
*4.4 Warrant issued to Bruno Guazzoni
*4.5 Consulting Agreement with Bruno Guazzoni
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* To be filed by amendment
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<PAGE>
SIGNATURES
Pursuant to the requirement 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.
Dated: September 30, 1997 SMARTSERV ONLINE, INC.
By: /s/ Sebastian E. Cassetta
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Name: Sebastian E. Cassetta
Title: Chairman of the Board,
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