<PAGE>
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): January 7, 2000
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WEBB INTERACTIVE SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Colorado
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(State or other jurisdiction of incorporation)
0-28462 84-1293864
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(Commission File Number) (IRS Employer Identification No.)
1800 Glenarm Place, Suite 700, Denver, CO 80202
- ------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 296-9200
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N/A
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(Former name or former address, if changed since last report)
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
(1) Audited financial statements of Update Systems, Inc. from
February 24, 1999 to December 31, 1999 (1)
(b) Pro Forma Financial Information.
Pro forma combined financial information as of December 31, 1999
relative to the acquisition.*
Pro forma financial information as of September 30, 1999 relative to
the acquisition was filed on Form 8-K/A on March 22, 2000, Commission
File No. 0-28642.
(c) Exhibits:
10.1 Asset Purchase Agreement, including exhibits thereto, dated
December 27, 1999, between Webb Interactive Services, Inc.,
Update Systems, Inc. and Kevin Schaff. (2)
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* Filed herewith.
(1) Filed with our report on Form 8-K/A, filed March 22, 2000, Commission File
No. 0-28642.
(2) Filed with our original current report on Form 8-K, filed January 14, 2000,
Commission File No. 0-28462.
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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 hereunto duly authorized.
Dated: March 27, 2000 WEBB INTERACTIVE SERVICES, INC.
By /s/ Lindley S. Branson
--------------------------------------
Lindley S. Branson
Its: Vice-President/General Counsel
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UNAUDITED PRO FORMA FINANCIAL INFORMATION
Basis of Presentation 4
Unaudited Condensed Combined Pro Forma Statement of Operations for
the year ended December 31, 1999 5
Unaudited Condensed Combined Pro Forma Balance Sheet as of
December 31, 1999 6
Notes to Unaudited Condensed Pro Forma Financial Information 7
Basis of Presentation
The unaudited condensed combined pro forma financial data as of December
31, 1999 and for the year ended December 31, 1999 gives effect to the
acquisition by Webb Interactive Services, Inc. (the "Company" or "WEBB") of the
assets of Update Systems, Inc. ("Update") using the purchase method of
accounting. These statements are based on the historical financial statements of
WEBB and Update and assumptions set forth below and in the notes to the
unaudited condensed combined pro forma financial statements. The unaudited
condensed combined pro forma balance sheet data assumes that the Update
acquisition was consummated on December 31, 1999 and the unaudited condensed
combined pro forma statements of operations assumes the Update acquisition was
consummated on February 24, 1999, the date Update began operations. The Company
has not presented the condensed combined pro forma statements of operations for
the year ended December 31, 1998 as Update did not commence operations until
February 24, 1999.
For purposes of presenting the unaudited condensed combined pro forma
balance sheet data, the tangible assets and assumed liabilities of Update have
been adjusted to their estimated fair market value and the excess purchase price
has been preliminarily been allocated to developed technologies, goodwill and
other intangible assets, all of which are being amortized over a three year
period. The fair value of Update's assets and liabilities is based on
preliminary estimates and may change from those estimates due to changes in the
fair value of tangible assets and assumed liabilities based on management's
valuation of such assets and liabilities. The unaudited condensed combined pro
forma statements of operations data exclude any benefit that may result due to
synergies that may be derived and elimination of duplicative efforts resulting
for the acquisition of Update.
The pro forma adjustments included herein are based upon estimates,
currently available information and certain assumptions that management believes
appropriate and factually supportable. In management's opinion, the estimates
regarding allocation of the purchase price of the Update are not expected to
materially differ from the final adjustments. The unaudited condensed combined
pro forma financial data presented herein are not necessarily indicative of the
results that WEBB would have obtained had such events occurred at the beginning
of the year, as assumed, or of the future results of WEBB. The unaudited
condensed combined pro forma financial statements should be read in conjunction
with the other financial statements and notes thereto included elsewhere in this
Form 8-K/A, together with the audited financial statements and the notes thereto
included in the WEBB Form 10-KSB for the year ended December 31, 1999.
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WEBB INTERACTIVE SERVICES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Historical WEBB
------------------------------------- Pro Forma Pro Forma
WEBB UPDATE Adjustments Combined
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net revenues $ 1,944,283 $ 4,373 - $ 1,948,656
Cost of revenues 1,734,314 - - 1,734,314
----------------- ---------------- ---------------- ----------------
Gross margin 209,969 4,373 - 214,342
Operating expenses 12,710,280 1,211,957 - 13,922,237
Amortization of goodwill 2,523,351 - 2,835,151 (1) 5,358,502
----------------- ---------------- ---------------- ----------------
Loss from operations (15,023,662) (1,207,584) (2,835,151) (19,066,397)
Other income (expense), net (2,253,433) 7,887 - (2,245,546)
----------------- ---------------- ---------------- ----------------
Net loss from continuing operations (17,277,095) (1,199,697) (2,835,151) (21,311,943)
Expenses allocable to common stockholders (4,588,917) - - (4,588,917)
----------------- ---------------- ---------------- ----------------
Loss available to common stockholders $(21,866,012) $(1,199,697) $ (2,835,151) $(25,900,860)
================= ================ ================ ================
Loss from continuing operations per
common share, basic and diluted
(Note 4) $ (3.31) N/A N/A $ (3.76)
================= ================= ================= ================
Weighted average shares outstanding 6,610,836 N/A 278,411 (2) 6,889,247
================= ================= ================= ================
</TABLE>
The accompanying Notes to Unaudited Condensed Combined Pro Forma
Financial Statements are an integral part of these financial
statements.
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WEBB INTERACTIVE SERVICES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHHETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Historical WEBB
------------------------------------- Pro Forma Pro Forma
WEBB UPDATE Adjustments Combined
----------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 4,164,371 $ 83,565 $ (83,565) (3) $ 4,099,371
(65,000) (4)
Current assets 950,894 600 (600) (3) 950,894
----------------- ---------------- ---------------- ----------------
Total current assets 5,115,265 84,165 (149,165) 5,050,265
Property and equipment, net 2,352,489 45,932 - 2,398,421
Intangible assets, net 12,503,047 - 10,014,485 (5) 22,517,532
Deferred financing costs 2,649,517 - - 2,649,517
Other assets 4,216 - - 4,216
----------------- ---------------- ---------------- ----------------
Total assets $ 22,624,534 $ 130,097 $ 9,865,320 $ 32,619,951
================= ================ ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 2,363,213 $ 134,604 $ (134,604) (3) $ 2,363,213
Capital leases payable 115,493 - - 115,493
10% convertible note payable 4,052,290 - 4,052,290
Stockholders equity
10% preferred stock 1,020,295 - 1,020,295
Common stock 49,513,769 850 8,630,741 (5) 58,144,510
(850) (5)
Additional paid-in capital - 1,194,340 (1,194,340) (5) -
Warrants and options 8,612,322 - 1,364,676 (5) 9,976,998
Deferred compensation (412,707) - - (412,707)
Accumulated deficit (42,640,141) (1,199,697) 1,199,697 (5) (42,640,141)
----------------- ---------------- ----------------- ----------------
Total stockholders' equity 16,093,538 (4,507) 9,999,924 29,088,955
----------------- ---------------- ----------------- ----------------
Total liabilities and stockholders' equity $ 22,624,534 $ 130,097 $9,865,320 $ 32,619,951
================= ================ ================= ================
</TABLE>
The accompanying Notes to Unaudited Condensed Combined Pro Forma
Financial Statements are an integral part of these financial
statements.
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NOTES TO UNAUDITED CONDENSED PRO FORMA FINANCIAL INFORMATION
NOTE 1 - BACKGROUND
On January 7, 2000, the Company completed an acquisition of Update by
exchanging 278,411 of the Company's common stock valued at $8,630,741 for the
assets of Update and options to purchase 49,704 shares of common stock valued at
$1,364,676. The acquisition of the assets was recorded using the purchase method
of accounting whereby the consideration paid of $10,060,417 was allocated based
on the relative fair values of the assets and liabilities acquired with the
excess consideration over the fair market value of tangible assets of
$10,014,485 recorded as intangible assets.
Total consideration for the merger is as follows:
Value of common stock issued $ 8,630,741 (a)
Value of warrants and options issued 1,364,676 (b)
Acquisition expenses 65,000
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Total purchase price $10,060,417
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The purchase price was allocated to the assets acquired based on their fair
market values as follows:
Property and equipment, net $ 45,932
Developed technologies, goodwill and other intangibles 10,014,485
-----------
Total assets acquired $10,060,417
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(a) 278,411 shares issued multiplied by $31.00, the average closing price of
the Webb stock the two days prior to and the two days subsequent to the
closing of the Update transaction (January 7, 2000).
(b) 49,704 warrants and options issued valued using the Black-Scholes option
pricing model using the following assumptions:
Exercise prices $4.33
Fair market value of common stock on
measurement date $29.50
Option lives 5 years
Volatility rate 104%
Risk free rate of return 5.0%
Dividend rate 0%
The following table indicates the preliminary allocation of excess purchase
price and expected amortization periods:
Intangible Asset Assigned Value Amortization Period
- --------------------------------------------------------------------------------
Developed technologies $ 4,500,000 3 Years
Goodwill 5,514,485 3 Years
-----------
Total intangible assets and
goodwill $10,014,485
===========
NOTE 2 - HISTORICAL
The condensed pro forma combined statements of operations include the
historical results of WEBB for the year ended December 31, 1999 and of Update
for the period from inception (February 24, 1999) through December 31, 1999.
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The Company has not presented the condensed pro forma combined statements
of operations for the year ended December 31, 1998 as Update did not commence
operations until February 24, 1999.
NOTE 3 - PRO FORMA ADJUSTMENTS
The condensed pro forma combined statements of operations have been
adjusted to reflect the following pro forma adjustments:
1. Reflects the amortization of intangible assets and goodwill over a
three-year period assuming the transaction occurred February 24, 1999,
the date Update began operations.
2. Reflects the issuance of 278,411 shares of Webb common stock issued in
accordance with the Asset Purchase Agreement.
3. Reflects certain assets and liabilities not acquired in the
acquisition in accordance with the Asset Purchase agreement.
4. Reflects the estimated acquisition costs consisting principally of
transaction fees for attorneys and accountants.
5. Reflects the issuance of 278,411 shares of the Company's common stock
to the stockholders of Update; the value of the replacement options
issued to Update employees; and the recording of the excess purchase
over the tangible assets and liabilities recorded as developed
technologies, goodwill and other intangibles which are being amortized
over three years.
NOTE 4 - LOSS FROM CONTINUING OPERATIONS PER COMMON SHARE
The combined Company has presented its loss from continuing operations per
common share for the year ended December 31, 1999 pursuant to Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings per Share." Basic loss
per common share was computed by dividing loss from continuing operations
available to common shareholders by the weighted average number of shares of
common stock outstanding during the year ended December 31, 1999. The loss from
continuing operations available to common shareholders is equal to the loss from
continuing operations less the accretion of Preferred Stock to redemption value
and Preferred Stock dividends of $4,588,917 for the year ended December 31,
1999. Diluted loss per common share has not been presented, since the impact on
loss per share using the treasury stock method is anti-dilutive due to the
combined Company's losses.
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