<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Amendment No. 1
to
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): June 21, 2000
______________________
DIGITAL INSIGHT CORPORATION
(Exact name of Registrant as specified in its charter)
Commission File Number: 0-27459
Delaware 77-0493142
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26025 Mureau Road, Calabasas, California 91302
(Address of principal executive offices, including zip code)
(818) 871-0000
(Registrant's telephone number, including area code)
___________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 21, 2000, Digital Insight completed its acquisition of all of the
outstanding shares of 1View Network Corporation, a company based in San
Francisco that provides electronic information aggregation and electronic bill
presentment and payment solutions for the financial services market. In the
acquisition Digital Insight paid $5 million in cash and issued 1.1 million in
shares -- in the form of 807,425 shares of Digital Insight's common stock and
292,559 shares underlying options to purchase Digital Insight's common stock --
in exchange for all of the outstanding shares and options of 1View Network. If
1View Network does not meet certain performance objectives by September 30,
2000, the former majority shareholder of 1View Network has agreed to return to
Digital Insight $3 million in cash and 178,112 shares of Digital Insight's
common stock.
The acquisition was consummated by means of a reverse-triangular merger.
Calabasas Acquisition Corp., a wholly-owned subsidiary of Digital Insight,
merged with and into 1View Network, with 1View Network as the surviving
corporation in the merger. Each outstanding share of common stock of Calabasas
Acquisition Corp. was converted into one share of common stock of 1View Network.
1View Network, the surviving corporation, thus became a wholly-owned subsidiary
of Digital Insight.
The Purchase price was determined through arms-length negotiations between
Digital Insight and 1View Network, taking into account the value of companies
comparable to 1View Network. Both Digital Insight and 1View Network engaged
financial advisors to assist them in determining a fair and reasonable price for
the acquisition.
The funds used by Digital Insight to pay the cash portion of the purchase
price came from Digital Insight's working capital. The assets acquired by
Digital Insight include a lease of office space in San Francisco, California.
Digital Insight intends to continue occupying this office space.
The acquisition is to be accounted for using the purchase method of
accounting.
The Agreement and Plan of Merger, listed as Exhibit 2.1 to this Current
Report on Form 8-K, is incorporated herein by reference to Digital Insight's
Current Report on Form 8-K filed with the SEC on April 14, 2000. The foregoing
description of the Agreement and Plan of Merger is qualified in its entirety by
reference to the Agreement.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
The financial statements of 1View are included with this Current Report on
Form 8-K as pages F-1 through F-12.
(b) Pro Forma Financial Information.
Pro forma financial information for the transaction described in this
Current Report on Form 8-K is included with this Current Report on Form 8-K as
pages F-13 through F-18.
<PAGE>
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of April 8, 2000, by and among
Digital Insight Corporation, Calabasas Acquisition Corp. and 1View
Network Corporation (incorporated herein by reference to the
Registrant's Current Report on Form 8-K filed with the SEC on April
14, 2000).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 to this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: August 11, 2000 DIGITAL INSIGHT CORPORATION
By: /s/ Kevin McDonnell
----------------------------------
Kevin McDonnell
Senior Vice President, Finance &
Administration, Chief Financial
Officer and Secretary
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Director of
1View Network Corporation (A Development Stage Enterprise)
In our opinion, the accompanying balance sheet of 1View Network Corporation
(A Development Stage Enterprise) (the "Company") as of December 31, 1999, and
the related statements of operations, stockholders' deficit and cash flows for
the period from commencement of operations (May 21, 1999) through December 31,
1999 present fairly, in all material respects, the financial position of the
Company as of December 31, 1999, and the results of its operations and its cash
flows for the period from commencement of operations (May 21, 1999) through
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Woodland Hills, California
June 23, 2000
F-1
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
BALANCE SHEETS
<TABLE>
<CAPTION>
December March 31,
31, 1999 2000
----------- -----------
(Unaudited)
ASSETS
------
<S> <C> <C>
Current assets:
Cash................................................ $ 455,377 $ 96,442
Accounts receivable................................. 451,050 140,100
Other current assets................................ 1,637 1,637
----------- ----------
Total current assets.............................. 908,064 238,179
Furniture and equipment, net.......................... 211,124 336,678
Other assets.......................................... 118,500 118,500
----------- ----------
$ 1,237,688 $ 693,357
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
Accounts payable.................................... $ 248,299 $ 279,827
Accrued liabilities................................. 123,160 376,110
Accrued compensation and related expenses........... 120,116 125,859
Loan payable--stockholder........................... 60,374 80,651
Deferred revenue.................................... 384,000 50,000
----------- ----------
Total current liabilities......................... 935,949 912,447
----------- ----------
Convertible notes..................................... 1,013,250 1,271,213
Commitments and contingencies (Note 9)................
Stockholders' deficit:
Common stock, $0.001 par value; 5,000,000 shares
authorized; 3,051,333 and 3,124,041 shares issued
and outstanding at December 31, 1999 and March 31,
2000 (unaudited), respectively..................... 3,051 3,124
Additional paid-in capital.......................... 5,358,093 5,905,470
Deferred stock compensation......................... (5,060,183) (5,224,836)
Deficit accumulated during the development stage.... (1,012,472) (2,174,061)
----------- ----------
Total stockholders' deficit....................... (711,511) (1,490,303)
----------- ----------
Total liabilities and stockholders' deficit....... $ 1,237,688 $ 693,357
=========== ==========
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For The For The
Period From Period From
May 21, 1999 May 21, 1999
(Inception) Three Months (Inception)
Through Ended Through
December March 31, March 31,
31, 1999 2000 2000
----------- ------------ ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue.................................. $ 975,850 $ 621,200 $ 1,597,050
Cost of sales............................ 577,024 332,631 909,655
----------- ----------- -----------
Gross profit......................... 398,826 288,569 687,395
----------- ----------- -----------
Operating expenses:
Development expenses................... 216,006 299,402 515,408
General and administrative expenses.... 898,446 762,118 1,660,564
Stock-based compensation............... 292,828 375,526 668,354
----------- ----------- -----------
Total operating expenses............. 1,407,280 1,437,046 2,844,326
----------- ----------- -----------
Loss from operations................. (1,008,454) (1,148,477) (2,156,931)
Interest expense, net.................... (4,018) (13,112) (17,130)
----------- ----------- -----------
Net loss............................. $(1,012,472) $(1,161,589) $(2,174,061)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional Deferred During The Total
---------------- Paid In Stock Development Stockholders'
Shares Amount Capital Compensation Stage Deficit
--------- ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at May 21, 1999 (inception)................ -- $ -- $ -- $ -- $ -- $ --
Issuance of common stock........................... 3,051,333 3,051 5,082 -- -- 8,133
Deferred stock compensation........................ -- -- 5,353,011 (5,353,011) -- --
Amortization of deferred stock compensation........ -- -- -- 292,828 -- 292,828
Net loss........................................... -- -- -- -- (1,012,472) (1,012,472)
--------- ------ ---------- ----------- ----------- -----------
Balance at December 31, 1999....................... 3,051,333 3,051 5,358,093 (5,060,183) (1,012,472) (711,511)
Issuance of common stock (unaudited)............... 72,708 73 7,198 -- -- 7,271
Deferred stock compensation (unaudited)............ -- -- 540,179 (540,179) -- --
Amortization of deferred stock compensation
(unaudited)...................................... -- -- -- 375,526 -- 375,526
Net loss (unaudited)............................... -- -- -- (1,161,589) (1,161,589)
--------- ------ ---------- ----------- ----------- -----------
Balance at March 31, 2000 (unaudited).............. 3,124,041 $3,124 $5,905,470 $(5,224,836) $(2,174,061) $(1,490,303)
========= ====== ========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For The
For The Period From
Period From May
May 21, 1999 For The 21, 1999
(Inception) Three Months (Inception)
Through Ended Through
December 31, March 31, March 31,
1999 2000 2000
------------ ------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss............................... $(1,012,472) $(1,161,589) $(2,174,061)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation.......................... 15,251 24,080 39,331
Stock-based compensation.............. 292,828 375,526 668,354
Changes in assets and liabilities:
Accounts receivable.................. (451,050) 310,950 (140,100)
Other current assets................. (1,637) -- (1,637)
Other assets......................... (118,500) -- (118,500)
Accounts payable and accrued
liabilities......................... 371,459 284,478 655,937
Accrued interest on bridge loan and
loan payable stockholder............ 9,286 13,617 22,903
Accrued compensation and related
expense............................. 120,116 5,743 125,859
Deferred revenue..................... 384,000 (334,000) 50,000
----------- ----------- -----------
Net cash used in operating activities... (390,719) (481,195) (871,914)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of furniture and equipment.... (226,375) (149,635) (376,010)
----------- ----------- -----------
Net cash used in investing activities... (226,375) (149,635) (376,010)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from loan payable to
stockholder........................... 59,338 19,624 78,962
Proceeds from issuance of common
stock................................. 8,133 7,271 15,404
Proceeds from Bridge Note borrowings... 1,005,000 245,000 1,250,000
----------- ----------- -----------
Net cash provided by financing
activities......................... 1,072,471 271,895 1,344,366
----------- ----------- -----------
Net increase (decrease) in cash......... 455,377 (358,935) 96,442
Cash, beginning of period............... -- 455,377 --
----------- ----------- -----------
Cash, end of period..................... $ 455,377 $ 96,442 $ 96,442
=========== =========== ===========
Supplemental disclosures of cash flow
information
Interest received...................... $ 5,377 $ 505 $ 5,882
=========== =========== ===========
Income taxes paid...................... $ -- $ -- $ --
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
1. THE COMPANY
1View Network Corporation (the "Company") was incorporated in the State of
Delaware on May 21, 1999 as 1Vue Network, Inc. and changed its name in
September 1999. The Company is engaged in developing Internet banking
solutions to banks, consisting of consulting and programming. This includes
home banking for individual customers and business banking for commercial
customers of banks. In 1999 the Company had one main customer together with
whom the Internet banking solutions were developed in a partnership-type of
relationship. Substantially all of the Company's revenues are derived from
these services on a per-hour basis. In addition the Company develops its own
software product.
As of December 31, 1999, the Company is a development stage enterprise as
defined by Financial Accounting Standards Board Statement No. 7. Since
inception, the Company has devoted substantial attention toward the
development of its product. The Company's business is extremely competitive
and characterized by rapid technological change, new product development, and
a competitive business environment for the attraction and retention of
knowledge workers. The Company is an early stage enterprise and is subject to
all the risks associated with development stage companies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Accounting Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and notes payable are carried at cost,
which approximates their fair value because of the short-term maturity of
these instruments and the relatively stable interest rate environment. The
amounts shown for loan payable--stockholder and convertible notes also
approximate fair value because current interest rates offered to the Company
for loans of similar maturities are substantially the same.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The Company maintains
cash deposits at banks that are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of December 31, 1999, uninsured balances held
at these financial institutions totaled $355,000. The Company has not
experienced any losses in such accounts and believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Accounts Receivable
Accounts receivable consist primarily of short-term amounts due from one
customer. The Company does not provide for an allowance as the customer is a
reputable bank.
F-6
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
Property and Equipment
Furniture and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the related assets
as follows:
<TABLE>
<S> <C>
Furniture and equipment......................................... 3 to 5 years
Computer software and hardware.................................. 3 years
</TABLE>
Other Assets
Other assets consist primarily of deposits on leased facility which expires
in January 2005.
Revenue Recognition
1View's historical revenues to date have been from one development contract,
which provides for the Company to bill on a time and materials basis. The
Company recognizes revenue on this contract as services are performed on a per
hour basis plus out-of-pocket expenses. Amounts invoiced in advance of
services are recorded as deferred revenue and will be recognized at the time
services are performed.
Research and Product Development
Research and product development costs incurred to research and develop the
Company's products are expensed as incurred.
Advertising
To date, the Company has not incurred any significant advertising costs.
Income Taxes
The Company utilizes Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The provision for income taxes represents the tax
payable for the period and the change during the period in deferred tax assets
and liabilities.
Risk Concentrations
Substantially all of the Company's revenues are generated from the sale of
one product to one customer. The loss of, or an economic event related to this
product, most likely would have a substantial impact on the Company's
revenues. As of December 31, 1999, accounts receivable from one significant
customer accounted for 100% of the Company's total accounts receivable.
F-7
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
Comprehensive Income
Comprehensive income generally represents all changes in stockholders' equity
(deficit) during the period except those resulting from investments by, or
distributions to, stockholders. For the period from commencement of operations
(May 21, 1999) through December 31, 1999, there were no such changes in
stockholders' equity other than net loss amounts.
Accounting for Start-up costs
The Company accounts for start-up costs in accordance with AICPA Statement of
Position ("SOP") No. 98-5, "Reporting on the Costs of Start-Up Activities".
Under SOP No. 98-5 all start-up costs related to new operations must be expensed
as incurred.
Accounting For Stock-Based Compensation
The Company accounts for stock-based employee compensation arrangements in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and complies with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation expense is recognized over the
vesting period based on the difference, if any, on the date of grant between the
deemed fair value for accounting purposes of the Company's stock and the
exercise price on the date of grant. The Company accounts for equity awards
issued to non-employees in accordance with the provisions SFAS No. 123 and
Emerging Issues Task Force ("EITF") 96-18.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended by
SFAS 137, "Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133" is effective for
financial statements with fiscal years beginning after June 15, 2000. SFAS No.
133 establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The Company does not expect adoption of SFAS No. 133 to have
a material effect, if any, on its financial position or results of operations.
3. FURNITURE AND EQUIPMENT
Furniture and equipment consisted of the following:
<TABLE>
<S> <C>
Furniture and equipment............................................ $203,891
Computer hardware and software..................................... 22,484
--------
226,375
Less accumulated depreciation...................................... 15,251
--------
Total............................................................ $211,124
========
</TABLE>
Depreciation expense was $15,251 for the period from May 21, 1999 (inception)
to December 31, 1999.
F-8
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
4. RELATED-PARTY TRANSACTIONS
As of December 31, 1999, the Company had a loan payable outstanding to one of
its stockholders/officers, of which the balance including accrued interest was
$60,374. The loan was unsecured, with interest accruing at a rate of 6% per
annum, and was payable on demand.
5. CONVERTIBLE NOTES
During the period from May 21, 1999 (inception) through December 31, 1999 and
the three months ended March 31, 2000, the Company issued several series of
convertible notes for proceeds of $1,005,000 and $245,000 (unaudited),
respectively, bearing interest at a rate of 5%. The convertible notes contained
conversion features, which allowed for the conversion of the notes and accrued
interest into equity of the Company if certain future events occurred including
the Company raising financing in the amount of more than $3,000,000. In that
case the conversion rate would be dependent on the price per equity securities
sold in this financing. If the Company does not close such a financing round
before the due date of each note, the note plus accrued interest becomes payable
at due date. The notes issued had a term of two years.
Attached to the Convertible Notes issued were warrants, which, only upon
conversion of the notes, give the investors the right to purchase the same type
of equity security at the same price per share as the originally issued
(convertible) securities. No separate value was placed on the warrants as their
vesting and exercizability was contingent on the future events.
See Note 10 for further details.
6. INCOME TAXES
As a result of the Company's net operating losses, no provision for income
taxes has been recognized.
The Company has a net deferred tax asset of approximately $285,000 at
December 31, 1999. The deferred tax asset is primarily comprised of net
operating loss carryforwards. Due to uncertainty surrounding the realization of
the benefits in the future tax returns, the Company has placed a full valuation
allowance against its deferred tax asset at December 31, 1999.
As of December 31, 1999, the Company had net operating loss carryforwards for
federal and state purposes of approximately $720,000. Federal and state net
operating loss carryforwards begin to expire in the years 2019 and 2004,
respectively.
7. CAPITALIZATION
The Company is authorized to issue 5,000,000 shares of common stock. The
holders of common stock are afforded equal voting rights on matters to be voted
on by the stockholders of the Company. Common stockholders are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors. The Company has not declared or paid any dividends during its
operating history.
F-9
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
The Company is required to reserve and keep available out of its authorized
but unissued shares of common stock such number of shares sufficient to allow
the exercise of shares granted and available for grant under the Company's
stock option plan. The amount of such shares of common stock reserved for
these purposes is as follows:
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
------------ -----------
(Unaudited)
<S> <C> <C>
Outstanding stock options........................... 1,312,000 1,294,292
Additional shares available for grant under
the Company's stock option plan.................... 488,000 433,000
--------- ---------
1,800,000 1,727,292
========= =========
</TABLE>
8. STOCK OPTIONS
In June 1999, the Company adopted the 1999 Stock Plan (the "Plan") which
provides for the grant of nonstatutory stock options to the Company's employees,
consultants and directors and the grant of incentive stock options to employees
of the Company. The Company's Board of Directors administers the Plan, selects
the individuals to whom options will be granted, determines the number of
options to be granted and sets the term and exercise price of each option.
An aggregate of 1,800,000 shares of common stock have been reserved for
issuance under the Plan of which 488,000 shares were available for future grant
at December 31, 1999 and 1,312,000 options were outstanding at December 31,
1999.
A summary of the status of the Company's stock options and related changes is
presented below:
<TABLE>
<CAPTION>
Weighted-
Average
Exercise
Shares Price
--------- ---------
<S> <C> <C>
Outstanding at May 21, 1999 (Inception)................. -- --
Granted............................................... 1,312,000 $0.10
Exercised............................................. -- --
Canceled.............................................. -- --
--------- -----
Outstanding at December 31, 1999........................ 1,312,000 $0.10
Granted (unaudited)................................... 55,000 $0.10
Exercised (unaudited)................................. (72,708) $0.10
Canceled (unaudited).................................. -- --
--------- -----
Outstanding at March 31, 2000 (Unaudited)............... 1,294,292 $0.10
========= =====
</TABLE>
In connection with the option grants made during the period ended December
31, 1999 and the three month period ended March 31, 2000, the Company recorded
approximately $5.4 million and $0.5 million (unaudited), respectively, of
deferred stock compensation charges which are being amortized in accordance with
the vesting period of the options (4 years) on a straight-line basis.
F-10
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
Additional information with respect to stock options outstanding at December
31, 1999 and March 31, 2000 (unaudited) is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- ---------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Number Contractual Exercise Number Exercise
Period ended Prices Outstanding Life Price Outstanding Price
------------ ------ ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1999....... $0.10 1,312,000 9.78 $0.10 -- --
March 31, 2000
(unaudited)............ $0.10 1,294,000 9.75 $0.10 -- --
</TABLE>
The Company determined the compensation expense of options granted using the
methodology prescribed in SFAS No. 123 and determined the results to be
immaterial. The fair value of these awards was estimated at the date of grant
using a minimum value option pricing model with the following assumptions: risk-
free interest rate of 5.5%; no dividend yield; no volatility factor; a
forfeiture rate of 5%; and an expected average life of 4 years. The effects of
applying SFAS No. 123 are not indicative of future amounts and additional awards
in future years are anticipated.
9. COMMITMENTS AND CONTINGENCIES
Operating Leases
Rent expense was $10,500 for the period from May 21, 1999 to December 31,
1999. During the period May 1999 to October 1999, the Company was operated in
the President's apartment, whereby he charged the Company $1,100 per month for
rent. The remainder is attributed to rent paid to a third party for subleased
rent expenses.
In January 2000, the Company entered into a five year operating lease for
its office facilities commencing on January 24, 2000 and expiring on January 31,
2005. Monthly rent under this agreement will total approximately $19,750 for the
first year, and $21,330 for the second to fifth years.
Consulting Agreements
In October, 1999, the Company entered into an agreement with a software
consultant, which provides for the consultant to make staff resources available
to 1View at a rate of $1,000 per person per day plus expenses. Under the terms
of the contract the cost of these resources will initially be invested by the
consultant and 1View will not have to pay back the investment until license fees
are received, if any, on the software developed using the consultant's
resources. This compensation will be paid by way of a 10% royalty on the future
license fees up to the aggregate amount of the investment.
Although no license income has been recognized yet, the Company fully
accrues the estimated cost of consulting services received to date.
10. SUBSEQUENT EVENTS (UNAUDITED)
On April 8, 2000 the Company entered into a purchase agreement with Digital
Insight Corporation ("Digital Insight"), which provided for the purchase of
all the Company's outstanding common stock and stock options,
F-11
<PAGE>
1VIEW NETWORK CORPORATION
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the Period from May 21, 1999 (Inception) to December 31, 1999
and The Three Months Ended March 31, 2000 (Unaudited)
to be paid partly in shares of Digital Insight and partly in cash. In
connection with the sale, on March 23, 2000, the Company offered to amend each
individual Convertible Note holder's subscription agreement such that the
Convertible Notes outstanding at March 31, 2000 would be converted into a
total of 445,600 common shares immediately prior to the consummation of the
sale, at conversion rates ranging from approximately $2 to $6 per share
(dependent on the commencement date of the note) at a weighted average price
per common share of $3.03. All Convertible Note holders accepted their offers
within the next two weeks. Since the value per common share of the Company on
a fully diluted basis, based on the acquisition price offered by Digital
Insight, can be calculated at $10.54, the Convertible Note holders will
receive an amount in excess of their conversion price of approximately
$3.4 million, which will be recorded as part of the purchase price upon
consummation of the acquisition.
F-12
<PAGE>
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
On July 31, 2000, Digital Insight completed its acquisition of all of the
outstanding shares of AnyTime Access, Inc., a company based in Sacramento,
California that provides solutions that allow credit unions, banks and other
financial institutions to outsource certain customer communication and other
administrative functions associated with consumer loan originations. In the
acquisition, Digital Insight issued 2,121,862 shares of its common stock -- in
the form of 2,001,186 shares of Digital Insight's common stock, 68,347 shares
underlying options to purchase Digital Insight's common stock and 52,329 shares
underlying warrants to purchase Digital Insight's common stock -- in exchange
for all of the outstanding shares, options and warrants of AnyTime Access. Upon
closing of the acquisition, Digital Insight also issued to certain employees of
AnyTime Access options to purchase an aggregate of 15,072 shares of Digital
Insight's common stock at an exercise price of $0.19 per share. The acquisition
is to be accounted for using the purchase method of accounting. The purchase
price will be allocated to the estimated fair value of assets acquired and
liabilities assumed. The estimated fair value of the assets acquired and
liabilities assumed approximate the historical cost basis, and the preliminary
purchase price allocation indicates goodwill and identifiable intangible assets
of approximately $108.0 million, which Digital Insight estimates will be
amortized over an aggregate life of five years. In addition, deferred
compensation in the amount of $2.2 million will be recorded for the unvested
stock options to be assumed in connection with the acquisition and will be
amortized over the estimated service period of the employees.
On June 21, 2000, Digital Insight completed its acquisition of the
outstanding shares of 1View Network Corporation ("1View"), a company based in
San Francisco, California that provides electronic information aggregation
solutions for the financial services market. The purchase price was comprised of
$5 million in cash and 1.1 million shares of common stock and shares underlying
options to purchase common stock in exchange for all the outstanding shares and
options of 1View. Digital Insight's common stock to effect the acquisition was
valued at approximately $46.2 million. The acquisition is to be accounted for
using the purchase method of accounting. The purchase price will be allocated to
the estimated fair value of assets acquired and liabilities assumed. The
estimated fair value of the assets acquired and liabilities assumed approximated
the historical cost basis, and the preliminary purchase price allocation
indicates goodwill of approximately $36.9 million which will be amortized on a
straight-line basis over an estimated life of three years. In addition, deferred
compensation will be recorded in the amount of $6.6 million for the unvested
stock options to be issued in connection with the acquisition and will be
amortized over the estimated service period of the employees. If 1View does not
meet certain performance objectives by September 2000, the former majority
stockholder of 1View has agreed to return to Digital Insight $3.0 million in
cash and 178,112 shares of Digital Insight's common stock valued at $7.5 million
which are being held in escrow pending the resolution of the contingency.
Accordingly, this portion of the purchase price will be accounted for as
contingent purchase consideration upon resolution of the future performance
requirements.
The following unaudited pro forma condensed consolidated balance sheet
assumes that the acquisitions of AnyTime Access and 1View were consummated as
of March 31, 2000 and present a preliminary allocation of the purchase prices
over historical net book values and are for illustrative purposes only. Actual
fair values will be based on financial information as of the acquisition
dates. The following unaudited pro forma consolidated statements of operations
for the year ended December 31, 1999 and the three months ended March 31, 2000
give effect to the acquisitions as if they had occurred on January 1, 1999 and
2000, respectively.
The unaudited pro forma condensed consolidated financial information is not
necessarily indicative of the results that would have occurred if the
acquisitions had occurred as of the beginning of the periods presented and
should not be construed as being representative of future operating results or
financial position.
F-13
<PAGE>
DIGITAL INSIGHT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Digital 1View AnyTime
Insight Network Access, Pro Forma Pro Forma
Corporation Corporation Inc. Adjustments Consolidated
----------- ----------- -------- ----------- ------------
ASSETS
------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash, cash equivalents and short-term
investments................................. $ 57,467 $ 96 $ 3,500 $ (5,000)(1) $ 56,063
Accounts receivable, net..................... 8,975 140 1,487 10,602
Accumulated implementation costs............. 33 -- -- 33
Other current assets......................... 2,312 2 802 3,000 (1) 6,116
-------- ------- -------- -------- --------
Total current assets....................... 68,787 238 5,789 (2,000) 72,814
Property and equipment, net.................... 15,400 337 3,195 18,932
Goodwill and intangible assets................. -- -- -- 144,937 (2) 144,937
Other assets................................... 521 118 166 805
-------- ------- -------- -------- --------
$ 84,708 $ 693 $ 9,150 $142,937 $237,488
======== ======= ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Accounts payable............................. $ 4,021 $ 280 $ 526 $ -- $ 4,827
Accrued compensation and related benefits..... 2,128 126 474 2,728
Current portion of capital lease obligation
and long-term debt.......................... 355 -- 1,002 1,357
Convertible notes and loan payable........... -- 1,352 -- (1,352)(3) --
Customer deposits and deferred revenue....... 7,316 50 -- 7,366
Other accruals............................... 3,739 376 669 6,559 (4) 11,343
-------- ------- -------- -------- --------
Total current liabilities.................. 17,559 2,184 2,671 5,207 27,621
Long term portion of capital lease
obligation and long-term debt............... 998 -- 41 1,039
Stockholders' equity (deficit):
Preferred stock.............................. -- -- 33,540 (33,540)(5) --
Common stock and additional paid-in
capital..................................... 116,831 5,908 4,302 (10,210)(5) 268,249
142,677 (6)
8,741 (7)
Notes receivable from stockholders........... (219) -- (152) 152 (5) (219)
Deferred stock-based compensation............ (2,950) (5,225) (992) 6,217 (5) (11,691)
(8,741)(7)
Accumulated deficit.......................... (47,511) (2,174) (30,260) 32,434 (5) (47,511)
-------- ------- -------- -------- --------
Total stockholders' equity (deficit)....... 66,151 (1,491) 6,438 137,730 208,828
-------- ------- -------- -------- --------
$ 84,708 $ 693 $ 9,150 $142,937 $237,488
======== ======= ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-14
<PAGE>
DIGITAL INSIGHT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For The Three Months Ended March 31, 2000
(in thousands, except per share data)
<TABLE>
<CAPTION>
Digital Insight 1View Network AnyTime Access, Pro Forma Pro Forma
Corporation Corporation Inc. Adjustments Consolidated
--------------- ------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Implementation fees............................. $ 3,078 $ -- $ -- $ -- $ 3,078
Service fees.................................... 7,341 -- -- 7,341
Transaction fees and other...................... -- 621 3,013 3,634
-------- ------- ------- -------- --------
Total revenues.................................. 10,419 621 3,013 -- 14,053
-------- ------- ------- -------- --------
Cost of revenues:
Implementation.................................. 2,380 -- -- 2,380
Service......................................... 3,709 -- -- 3,709
Transaction fees and other...................... -- 333 2,052 2,385
-------- ------- ------- -------- --------
Total cost of
revenues....................................... 6,089 333 2,052 -- 8,474
-------- ------- ------- -------- --------
Gross profit...................................... 4,330 288 961 -- 5,579
-------- ------- ------- -------- --------
Operating expenses:
Sales, general and administrative............... 9,016 762 1,447 11,225
Research and development........................ 3,718 299 917 4,934
Amortization of stock-based compensation........ 329 376 57 1,914 (8) 2,676
Amortization of goodwill and intangibles........ -- -- -- 8,477 (9) 8,477
Merger related expenses......................... 12,658 -- -- 12,658
-------- ------- ------- -------- --------
Total operating expense......................... 25,721 1,437 2,421 10,391 39,970
-------- ------- ------- -------- --------
Loss from operations.............................. (21,391) (1,149) (1,460) (10,391) (34,391)
Interest and other income, net.................... 995 (13) 19 -- 1,001
-------- ------- ------- -------- --------
Net loss ......................................... $(20,396) $(1,162) $(1,441) $(10,391) $(33,390)
======== ======= ======= ======== ========
Basic and diluted net loss per share.............. $ (0.89)
========
Shares used in computing basic and diluted net
loss per share................................... 22,803
========
Pro forma basic and diluted net loss per
share............................................ $ (1.31)(10)
========
Shares used in computing pro forma basic and
diluted net loss per share....................... 25,420 (10)
========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-15
<PAGE>
DIGITAL INSIGHT CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended December 31, 1999
(in thousands, except per share data)
<TABLE>
<CAPTION>
Digital Insight 1View Network AnyTime Access, Pro Forma Pro Forma
Corporation Corporation Inc. Adjustments Consolidated
--------------- ------------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Implementation fees........................ $ 9,351 $ -- $ -- $ -- $ 9,351
Service fees............................... 16,894 -- -- 16,894
Transaction fees and other................. -- 976 10,384 11,360
-------- ------- ------- -------- --------
Total revenues............................... 26,245 976 10,384 -- 37,605
-------- ------- ------- -------- --------
Cost of revenues:
Implementation............................. 5,548 -- -- 5,548
Service.................................... 10,056 -- -- 10,056
Transaction fees and other................. -- 577 7,978 8,555
-------- ------- ------- -------- --------
Total cost of revenues....................... 15,604 577 7,978 -- 24,159
-------- ------- ------- -------- --------
Gross profit................................. 10,641 399 2,406 -- 13,446
-------- ------- ------- -------- --------
Operating expenses:
Sales, general and
administrative............................ 21,211 898 7,187 29,296
Research and development................... 7,668 216 4,641 12,525
Amortization of stock-based
compensation.............................. 1,221 293 34 7,655 (8) 9,203
Amortization of goodwill and
intangibles............................... -- -- -- 33,908 (9) 33,908
-------- ------- ------- -------- --------
Total operating expense...................... 30,100 1,407 11,862 41,563 84,932
-------- ------- ------- -------- --------
Loss from operations......................... (19,459) (1,008) (9,456) (41,563) (71,486)
Interest and other income, net............... 1,441 (4) (144) -- 1,293
-------- ------- ------- -------- --------
Net loss .................................... (18,018) (1,012) (9,600) (41,563) (70,193)
Accretion on redeemable convertible
preferred stock............................ (136) -- -- -- (136)
-------- ------- ------- -------- --------
Net loss attributable to common
stockholders............................... $(18,154) $(1,012) $(9,600) $(41,563) $(70,329)
======== ======= ======= ======== ========
Basic and diluted net loss per share......... $ (1.26)
========
Shares used in computing basic and
diluted net loss per share................. 14,389
========
Pro forma basic and diluted net loss
per common share........................... $ (1.00) $ (3.38)(10)
======== ========
Shares used in computing pro forma
basic and diluted net loss per
share...................................... 18,216 20,833 (10)
======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
F-16
<PAGE>
DIGITAL INSIGHT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
(Dollars in thousands)
The pro forma adjustments give effect to the acquisitions of 1View and
AnyTime Access as if the transactions were consummated on March 31, 2000. The
estimated fair value per share of the Digital Insight stock assumed to be issued
to effect the acquisitions was approximately $42 per share and $53 per share for
1View and AnyTime Access, respectively. The fair values were based on the
average trading price for the public announcement dates and the four days prior
to and after those dates. The pro forma balance sheet adjustments are as
follows:
(1) To reflect the $5,000 cash consideration paid for 1View. $3,000 of the cash
consideration was deposited in escrow and is contingent upon certain
performance goals that must be achieved by September 2000 and will be
accounted for as contingent consideration upon resolution of the performance
goals.
(2) To reflect goodwill and intangible assets created as a result of the
acquisitions as follows:
<TABLE>
<CAPTION>
AnyTime
1View Access Total
------- -------- --------
<S> <C> <C> <C>
Estimated fair value of the assumed issuance
of 629,313 (excluding 178,112 contingent
shares in escrow) and 1,987,557 shares of the
Company's common stock for the acquisitions
of 1View and AnyTime Access, respectively.... $ 26,452 $105,341 $131,793
Estimated fair value of 136,183 and 97,837
shares underlying vested stock options (net
of estimated proceeds on exercise) assumed
upon the acquisitions of 1View convertible
notes and AnyTime Access, respectively....... 5,720 5,164 10,884
Additional cash consideration excluding cash
in escrow ................................... 2,000 -- 2,000
Direct transaction costs ..................... 2,600 3,959 6,559
Conversion of 1View convertible notes and
shareholder loan............................. (1,352) -- (1,352)
Net assets acquired........................... 1,491 (6,438) (4,947)
------- -------- --------
Estimated goodwill and intangibles created.... $36,911 $108,026 $144,937
======= ======== ========
</TABLE>
(3) To reflect conversion of 1View convertible notes and loan from shareholder
upon consummation of the acquisition of 1View.
(4) To reflect the accrual of the estimated direct acquisition costs of $2,600
and $3,959 related to the acquisitions of 1View and AnyTime Access,
respectively.
(5) To eliminate the historical stockholders equity of 1View and AnyTime Access.
(6) To reflect the increase in additional paid-in capital for the step-up in
basis and deferred stock-based compensation related to the acquisitions as
follows:
<TABLE>
<CAPTION>
AnyTime
1View Access Total
------- -------- -------
<S> <C> <C> <C>
Estimated fair value of the assumed issuance of
shares underlying the Company's common stock and
vested stock options for the 1View and AnyTime
Access acquisitions ............................. $32,172 $110,505 $142,677
Estimated fair value of 156,376 and 41,365 shares
underlying vested stock options (net of estimated
proceeds on exercise) assumed upon acquisitions
of 1View and AnyTime Access, respectively,
recorded as deferred stock-based compensation.... 6,568 2,173 8,741
------- -------- --------
$38,740 $112,678 $151,418
======= ======== ========
</TABLE>
(7) To reflect deferred stock-based compensation for the assumed issuance of
shares underlying unvested stock options for 1View and AnyTime Access.
F-17
<PAGE>
DIGITAL INSIGHT CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION--(Continued)
(Dollars in thousands)
The pro forma statement of operations adjustments to give effect to the
acquisitions of AnyTime Access and 1View as if the acquisitions occurred on
January 1, 1999 and 2000, respectively, are as follows:
(8) To reflect the amortization of stock-based compensation created as result of
the acquisitions as follows:
<TABLE>
<CAPTION>
Amortization
For The Three
Annual Months Ended
Amortization March 31, 2000
------------ --------------
<S> <C> <C>
1View........................................... $6,568 $1,642
AnyTime Access.................................. 1,087 272
------ ------
$7,655 $1,914
====== ======
</TABLE>
(9) To reflect the amortization of goodwill and intangible assets created as a
result of the acquisitions as follows:
<TABLE>
<CAPTION>
Estimated
Amortization
Goodwill and Estimated Estimated For The Three
Intangible Aggregate Annual Months Ended
Assets Life Amortization March 31, 2000
------------ --------- ------------ --------------
<S> <C> <C> <C> <C>
1View.................... $ 36,911 3 years $12,303 $3,076
AnyTime Access........... 108,026 5 years 21,605 5,401
-------- ------- ------
$144,937 $33,908 $8,477
======== ======= ======
</TABLE>
(10) To reflect the pro forma basic and diluted net loss per common share
assuming the issuance of 629,313 (excluding 178,112 contingent shares in
escrow) and 1,987,557 shares of common stock to effect the acquisitions of
1View and AnyTime Access, respectively. Vested and unvested stock options
were excluded from the computation as they have an antidilutive effect.
F-18
