SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 3)
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
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(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
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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.
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 29, 2000 By: /s/ TAREK KIRSCHEN
-----------------------------
Tarek Kirschen, President
<PAGE>
PRO FORMA FINANCIAL INFORMATION
MERCHANTONLINE.COM, INC. AND INNOVONICS, INC.
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 $24,998,491, 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 ($22,441,220),
the fair value of stock options and warrants issued to employees and
non-employees ($2,004,137) and the assumption of $543,134 of net liabilities.
MOL also recognized $251,791 in compensation expense related to options and
warrants issued to non-employees. The purchase price has been allocated to
"purchase price to be allocated"($24,988,491).
Effective April 19, 2000, MerchantOnline.com, Inc. (MOL), consummated an
agreement and plan of reorganization (the "Agreement") with Web Financial
Services Corporation (the Company), a development stage enterprise, and WFS
Acquisition Corp., a wholly- owned subsidiary of MerchantOnline.com, Inc. In
connection with the Agreement, WFS Acquisition Corporation merged with and into
Web Financial Services Corporation in a reverse triangular merger (the
"Merger"), with the Company the surviving corporation. Pursuant to the Merger,
MOL issued 2,500,000 shares of common stock in exchange for all of the
outstanding stock of the Company. Additionally, MOL agreed to issue additional
shares to the Company if on the first anniversary date of the transaction, the
fair value of the outstanding shares, as determined by the trading price of the
stock for a specific period of time, does not equal or exceed $10 per share.
Effective January 7, 2000, MerchantOnline.com, Inc. consummated an agreement and
plan of merger (the "Merger") with Approve.net, Inc. In connection with the
Merger, MerchantOnline.com, Inc. issued 2,000,000 shares of common stock for all
of the outstanding shares of Approve.net, Inc. The value of the
MerchantOnline.com, Inc. common shares was determined to be $3.33 per share on
the Merger date by an independent appraiser.
The Mergers were 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.
These amounts are currently being amortized over three to five-year periods.
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, Innovonics, Inc. for the year ended January 31,
2000, Web Financial Services Corp. for the year ended December 31, 1999 and
Approve.net, Inc. for the year ended December 31, 1999, and assumes the
transactions 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. and Innovonics, Inc.
for the six-month periods ended April 30, 2000, Web Financial Services
Corporation for the five-month period ended March 31, 2000 and Approve.net, Inc.
for the two-month period ended December 31, 1999 and assumes the transactions
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 two months of fiscal year
2000 (November 1, 1999 to December 31, 1999) of Web Financial Services
Corporation and Approve.net, Inc. were 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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<PAGE>
<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
-------------- -------------- ----------- ------------
<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 -- 27,640 27,640
------------ ---------- ------------
Total current assets 2,374,270 59,480 2,433,750
Property and equipment, net 1,153,956 8,619 1,162,575
Deferred advertising 250,000 -- 250,000
Other assets 29,077 -- 29,077
Purchase price to be
allocated 30,974,036 -- 24,988,491(A) 55,962,527
------------ ---------- ------------- ------------
Total assets $ 34,781,339 $ 68,099 $ 24,988,491 $ 59,837,929
============ ========== ============= ============
Liabilities and equity
Accounts payable $ 869,543 $ 32,743 $ 902,286
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 (61,525)(A) 88,761
Accrued compensation -- 429,383 429,383
Revolving credit arrangements -- 69,792 69,792
------------ ---------- ------------- ------------
Total current liabilities 1,479,650 672,758 (61,525) 2,090,883
Note payable to shareholder 270,000 -- 270,000
Other liabilities -- 50,000 (50,000)(A) --
Equity:
Common stock 51,537 -- 8,976 (A) 60,513
Additional-paid-in capital 39,767,251 2,446,572 24,436,381 (A)
(2,446,572)(A) 64,203,632
Subscriptions receivable (25,000) -- -- (25,000)
Accumulated deficit (6,762,099) (3,101,231) 3,101,231 (A) (6,762,099)
------------ ---------- ------------- -----------
Total liabilities and equity $ 34,781,339 $ 68,099 $ 24,988,491 $59,837,929
============ ========== ============= ===========
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
(UNAUDITED)
Web
Merchant Approve.net, Financial Services Innovonics, Pro Forma
Online.com, Inc. Inc. (E) Corp. (F) Inc. (G) Adjustments Combined
--------------- ------------ ----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues, net $ 204,106 $ 79,173 $ -- $ 222,285 $ -- $ 505,564
Costs of revenues 111,064 32,973 -- 86,441 -- 230,478
Sales and marketing 1,296,774 14,259 -- 3,299 -- 1,314,332
General and administrative 721,023 49,872 459,196 305,053 403,633(C) 1,938,777
Depreciation and amortization 30,649 18,857 14,738 9,721 15,755,441(B) 15,829,406
Other expenses - settlement 455,000 -- -- -- -- 455,000
------------ ------------ ------------ ------------ ------------ ------------
Total costs and expenses 2,614,510 115,961 473,934 404,514 16,159,074 19,767,993
------------ ------------ ------------ ------------ ------------ ------------
Operating loss (2,410,404) (36,788) (473,934) (182,229) (16,159,074) (19,262,429)
Interest expense (29,924) -- (17,642) (34,300) (81,866)
------------ ------------ ------------ ------------ ------------ ------------
Net loss $ (2,440,328) $ (36,788) $ (491,576) $ (216,529) $(16,159,074) $(19,344,295)
============ ============ ============ ============ ============ ============
Net loss per share - Basic and Diluted ($0.37)
Weighted average shares outstanding 51,986,494(D)
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 2000
(UNAUDITED)
Web
Merchant Approve.net, Financial Services Innovonics, Pro Forma
Online.com, Inc. Inc. (E) Corp. (F) Inc. (G) Adjustments Combined
--------------- ------------ ----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues, net $ 97,770 $ 23,434 $ -- $ 91,867 $ -- $ 213,071
Costs of revenues 36,699 11,915 -- 25,097 73,711
General and administrative 2,616,636 22,478 213,261 250,318 124,808(C) 3,227,501
Depreciation and amortization 1,533,725 3,143 8,403 13,163 6,427,440(B) 7,985,874
------------ ------------ ------------ ------------ ------------ ------------
Total costs and expenses 4,187,060 37,536 221,664 288,578 6,552,248 11,287,086
------------ ------------ ------------ ------------ ------------ ------------
Operating loss (4,089,290) (14,102) (221,664) (196,711) (6,552,248) (11,074,015)
Interest expense (7,149) -- (12,938) (8,316) -- (28,403)
------------ ------------ ------------ ------------ ------------ ------------
Net loss $ (4,096,439) $ (14,102) $ (234,602) $ (205,027) $ (6,552,248) (11,102,418)
============ ============ ============ ============ ============ ============
Net loss per share - Basic and Diluted ($0.19)
Weighted average shares outstanding 59,773,429(D)
</TABLE>
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<PAGE>
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
BALANCE SHEET ADJUSTMENTS
(A) 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 ($22,441,220),
the fair value of stock options and warrants issued to employees and
non-employees ($2,004,137) and the assumption of $543,134 of net liabilities.
MOL also recognized $251,791 in compensation expense related to options and
warrants issued to non-employees. The purchase price has been allocated to
"purchase price to be allocated"($24,988,491).
INCOME STATEMENT ADJUSTMENTS
(B) Reflects the amortization of the "purchase price to be allocated" over a
three-year amortization period for both Approve.net, Inc. and Web Financial
Services Corp. and a five-year amortization period for Innovonics, Inc. 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.
(C) Reflects increase of compensation expense for key employees of Innovonics,
Inc., Web Financial Services Corp. and Approve.net based on new employment
agreements entered into in connection with the Merger, as well as the
recognition of a portion of the deferred compensation expense related to the
unvested employee and non-employee stock options exchanged in connection with
the Innovonics Merger.
(D) Reflects the weighted average number of shares outstanding for the period,
after giving effect to the three Mergers, calculated as the historical weighted
average common shares for MerchantOnline.com, Inc.
(E) Represents Approve.net, Inc.'s results of operations for the twelve-month
period ended December 31, 1999 in the twelve-month presentation and the
two-month period ended December 31, 1999 in the six-month presentation.
(F) Represents Web Financial Services Corp.'s results of operations for the
twelve-month period ended December 31, 1999 in the twelve-month presentation and
the five-month period ended March 31, 2000 in the six-month presentation.
(G) Represents Innovonics, Inc.'s results of operations for the twelve-month
period ended January 31, 2000 in the twelve-month presentation.
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