SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 15, 2000
MERCHANTONLINE.COM, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-22607 84-1233073
--------------- ---------------- -------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
902 CLINT MOORE ROAD, SUITE 114
BOCA RATON, FLORIDA 33487
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 864-6000
1600 SOUTH DIXIE HIGHWAY
BOCA RATON, FLORIDA 33432
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(Former name or former address, if changed since last report.)
MerchantOnline.com, Inc., a Florida corporation, is filing this Amendment to its
Form 8-K/A dated July 31, 2000 in order to replace Item 7. (b) Pro Forma
Financial Information filed as an exhibit to such Form 8-K.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
The pro forma financial statements for the year ended October 31, 1999
and the six months ended April 30, 2000 are attached.
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.
MERCHANTONLINE.COM, INC.
Date: August 03, 2000 By: /s/ TAREK KIRSCHEN
-----------------------------
Tarek Kirschen, President
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MERCHANTONLINE.COM, INC. AND INNOVONICS, INC.
PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
INTRODUCTION TO PRO FORMA CONDENSED FINANCIAL
STATEMENTS
(UNAUDITED)
Effective May 15, 2000, MerchantOnline.com, Inc. (MOL), consummated an agreement
and plan of reorganization (the "Agreement") with Innovonics, Inc. (the
Company), and Innovonics Acquisition Corp., a wholly-owned subsidiary of
MerchantOnline.com, Inc. In connection with the Agreement, Innovonics
Acquisition Corporation merged with and into Innovonics, Inc. in a reverse
triangular merger (the "Merger"), with Innovonics, Inc. the surviving
corporation. Pursuant to the Merger, MerchantOnline.com, Inc. issued 8,976,488
shares of common stock for 90.1 percent of the outstanding shares and issued
stock options and warrants to purchase 1,023,512 shares of common stock in
exchange for all of the outstanding stock options and warrants of Innovonics,
Inc. Additionally, MOL agreed to issue additional shares to the Company if on
the first anniversary date of the transaction, the fair value of the shares
issued in the Merger, as determined by the trading price of the stock for a
specific period of time, is less than $25,000,000.
MOL has determined the purchase price to be $25,604,029, which consists of the
fair value of the issued common stock, as determined by an independent
appraiser, adjusted by the guarantee of the future stock price ($24,382,606),
the fair value of the issued stock options and warrants ($617,394), and the
assumption of $604,029 of liabilities. The purchase price has been allocated to
cash, inventory and fixed assets ($55,624) and "purchase price to be allocated"
($25,548,405).
The Merger was accounted for using the purchase method of accounting. The pro
forma balance sheet and the pro forma adjustments described in the notes to pro
forma financial statements reflect the purchase price as "purchase price to be
allocated". The Company is currently in the process of evaluating the fair
values of assets acquired, including identifiable intangible assets, if any.
This amount is currently being amortized over a five-year period.
The accompanying unaudited pro forma balance sheet as of April 30, 2000,
presents the financial position of MerchantOnline.com, Inc. and Innovonics, Inc.
at April 30, 2000, assuming the Merger had been consummated on that date. The
unaudited pro forma condensed statement of operations for the year ended October
31, 1999, combines the statements of operations of MerchantOnline.com, Inc. for
the year ended October 31, 1999 and of Innovonics, Inc. for the year ended
January 31, 2000, and assumes the transaction occurred on November 1, 1998. The
unaudited pro forma condensed statement of operations for the six-month period
ended April 30, 2000 combines the statements of operations of
MerchantOnline.com, Inc. for the six-month period ended April 30, 2000 and of
Innovonics, Inc. for the six-month period ended April 30, 2000 and assumes the
transaction occurred on November 1, 1999. The fourth quarter of fiscal year 2000
(November 30, 1999 to January 31, 2000) for Innovonics, Inc. was included in
both the annual and the six-month period presentations.
The unaudited pro forma financial information does not purport to be indicative
of the results which would have actually have been obtained had such
transactions been completed as of the assumed dates and for the periods
presented or which may be obtained in the future.
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<TABLE>
<CAPTION>
MERCHANTONLINE.COM, INC. AND INNOVONICS, INC.
PRO FORMA BALANCE SHEET
APRIL 30, 2000
(UNAUDITED)
Merchant
Online.com, Inc. Innovonics, Inc.
Period ended Period ended Pro Forma
April 30, 2000 April 30, 2000 Adjustments Combined
(A)
------------ ---------- ------------- ------------
<S> <C> <C> <C> <C>
Assets
Cash $ 1,146,603 $ 31,840 $ 1,178,443
Prepaid services 672,525 -- 672,525
Prepaid advertising 464,166 -- 464,166
Deferred advertising 50,834 -- 50,834
Accounts receivable 23,894 -- 23,894
Accounts receivable from
related party 7,525 -- 7,525
Due from shareholder 8,723 -- 8,723
Inventory -- 19,175 19,175
------------ ---------- ------------
Total current assets 2,374,270 51,015 2,425,285
Property and equipment, net 1,153,956 4,609 1,158,565
Deferred advertising 250,000 -- 250,000
Other assets 29,077 -- 29,077
Purchase price to be
allocated 30,974,036 -- 25,548,405(B) 56,522,441
------------ ---------- ------------- ------------
Total assets $ 34,781,339 $ 55,624 $ 25,548,405 $ 60,385,368
============ ========== ============= ============
Liabilities and equity
Accounts payable $ 869,543 $ 32,484 $ 902,027
Accrued expenses and other 353,011 -- 353,011
Notes payable 25,000 -- 25,000
Other liabilities 215,600 -- 215,600
Notes payable to shareholder -- 7,050 7,050
Deferred revenue 16,496 133,790 (68,470)(B) 81,816
Accrued compensation -- 429,383 429,383
Revolving credit arrangements -- 69,792 69,792
------------ ---------- ------------- ------------
Total current liabilities 1,479,650 672,499 (68,470) 2,083,679
Note payable to shareholder 270,000 -- 270,000
Other liabilities -- 50,000 (50,000)(B) --
Equity:
Common stock 51,537 -- 8,976 (B) 60,513
Additional-paid-in capital 39,767,251 2,446,572 24,991,024 (B)
(2,446,572)(B) 64,758,275
Subscriptions receivable (25,000) -- -- (25,000)
Accumulated deficit (6,762,099) (3,113,447) 3,113,447 (B) (6,762,099)
------------ ---------- ------------- -----------
Total liabilities and equity $ 34,781,339 $ 55,624 $ 25,548,405 $60,385,368
============ ========== ============= ===========
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
(UNAUDITED)
Merchant
Online.com, Inc. Innovonics, Inc.
Period ended Period ended Pro Forma
October 31, 1999 January 31, 2000 Adjustments Combined
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues, net $ 204,106 $ 222,285 $ -- $ 426,391
Costs of revenues 111,064 86,441 -- 197,505
Sales and marketing 1,296,774 3,299 -- 1,300,073
General and administrative 721,023 305,053 55,000(D) 1,081,076
Depreciation and amortization 30,649 9,721 5,109,681(C) 5,150,051
Other expenses - settlement 455,000 -- 455,000
----------- ----------- ----------- -----------
Total costs and expenses 2,614,510 404,514 5,164,681 8,183,705
----------- ----------- ----------- -----------
Operating loss (2,410,404) (182,229) (5,164,681) (7,757,314)
Interest expense (29,924) (34,300) (64,224)
----------- ----------- ----------- -----------
Net loss $(2,440,328) $ (216,529) $(5,164,681) $(7,821,538)
=========== =========== =========== ===========
Net loss per share - Basic and Diluted ($0.17)
Weighted average shares outstanding 46,446,498(E)
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 2000
(UNAUDITED)
Merchant
Online.com, Inc. Innovonics, Inc.
Six month Six month
period ended period ended Pro Forma
April 30, 2000 April 30, 2000 Adjustments Combined
(A)
-------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues, net $ 97,770 $ 91,867 $ -- $ 189,637
Costs of revenues 36,699 25,097 61,796
General and administrative 2,616,636 250,318 27,500(D) 2,894,454
Depreciation and amortization 1,533,725 13,163 2,554,841(C) 4,101,729
----------- ---------- ----------- -----------
Total costs and expenses 4,187,060 288,578 2,582,341 7,057,979
----------- ---------- ----------- -----------
Operating loss (4,089,290) (196,711) (2,582,341) (6,868,342)
Interest expense (7,149) (8,316) (15,465)
----------- ---------- ----------- -----------
Net loss $(4,096,439) $ (205,027) $(2,582,341) $(6,883,807)
=========== ========== =========== ===========
Net loss per share - Basic and Diluted ($0.12)
Weighted average shares outstanding 56,827,685(E)
</TABLE>
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NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(A) The historical MerchantOnline.com, Inc. balance sheet and statement of
operations at April 30, 2000 and for the three-month period then ended, reflect
a revision to the purchase price and related amortization pertaining to
MerchantOnline.com's April 19, 2000 acquisition of Web Financial Services
Corporation, as previously reflected on form 8-K/A dated July 31, 2000. The
purchase price has been increased from $8,086,154 to $25,882,053, and the
related amortization expense for the three month period ended April 30, 2000 has
increased from $224,615 to $717,474, to reflect a revision to the Company's
estimate of its obligation to issue additional shares if the fair value of its
price per share, as determined by the trading price for a specific period of
time, does not equal $10 per share. An amended Form 10-QSB for the quarter ended
April 30, 2000 has been filed to reflect such revision.
BALANCE SHEET ADJUSTMENTS
(B) Reflects the accounting for the purchase of Innovonics, Inc., which consists
of the fair value of the issued common stock, as determined by an independent
appraiser, adjusted by the guarantee of the future stock price ($24,382,606),
the fair value of the issued stock options and warrants ($617,394), and the
assumption of $604,029 of liabilities. The purchase price has been allocated to
cash, inventory and fixed assets ($55,624) and "purchase price to be allocated"
($25,548,405). See (F) below.
INCOME STATEMENT ADJUSTMENTS
(C) Reflects the amortization of the "purchase price to be allocated" over a
five-year amortization period. Actual amortization for future periods will be
dependent upon the final allocation of the purchase price, when completed, to
identifiable intangible assets and goodwill, if any, and the evaluation of
appropriate useful lives for such assets. The Company is currently in the
process of evaluating such allocations and useful lives. See (F) below.
(D) Reflects increase of compensation expense for key employees of Innovonics,
Inc. based on new employment agreements entered into in connection with the
Merger.
(E) Reflects the weighted average number of shares outstanding for the period,
after giving effect to the Merger, calculated as the historical weighted average
common shares for MerchantOnline.com, Inc.
(F) Amounts described in (B) and (c) above, have been revised from the Form
8-K/A dated July 31, 2000, to reflect a revision to the Company's estimate of
its obligation to issue additional shares if the fair value of its price per
share, as determined by the trading price for a specific period of time, does
not equal or exceed $2.50 per share. Accordingly, the purchase price has been
increased from $20,158,544 to $25,604,029, and the related monthly amortization
expense has increased from $335,976 to $425,807.
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