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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): March 23, 1999
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GOODNOISE CORPORATION
(Exact name of registrant as specified in its charter)
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FLORIDA 0-24671 65-0207877
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification Number)
organization)
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1991 BROADWAY, SUITE 200, REDWOOD CITY, 94063
CALIFORNIA
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (650) 556-9733
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719 COLORADO AVE., PALO ALTO, CALIFORNIA, 94303
(Former name or former address, if changed since last report)
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Item 5. Other Events.
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
March 23, 1999, related to the private placement of approximately 118,000 shares
of Series B Convertible Preferred Stock (the "Series B Shares") for aggregate
net proceeds of approximately $31.6 million.
Item 7. Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
See exhibit 99.3 for the Unaudited Pro Forma Combined Condensed Financial
Information.
(c) Exhibits.
Exhibit No. Description
----------- -----------
3.1* Restated Articles of Incorporation (Incorporated by reference
to the Registrant's Current Report on Form 8-K filed on April
6, 1999.
10.1* Investor Rights Agreement dated March 23, 1999 (Incorporated
by reference to the Registrant's Current Report on Form 8-K
filed on April 6, 1999.)
99.1* Unaudited Pro Forma Combined Condensed Financial Information
reflecting the acquisition by the Registrant of Creative
Fulfillment, Inc. (Incorporated by reference to the
Registrant's Current Report on Form 8-K/A filed in April 13,
1999.)
99.2* Audited Financial Statements of Creative Fulfillment, Inc.
(d.b.a. "Emusic") for the fiscal years ended October 31, 1997
and 1998, and unaudited Financial Statements for the three
months ended January 31, 1998 and 1999. (Incorporated by
reference to the Registrant's Current Report on Form 8-K/A
filed in April 13, 1999.)
99.3 Unaudited Pro Forma Combined Condensed Financial Information
reflecting the acquisition by the Registrant of Creative
Fulfillment, Inc. and reflecting the private placement of
Series B Convertible Preferred Stock.
_______________
* -Incorporated by reference as indicated.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
GOODNOISE CORPORATION
Date: April 19, 1999 By: /s/ Joseph Howell
--------------------------------
Joseph Howell, Chief Financial
Officer
2
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Exhibit 99.3
Unaudited Pro Forma Condensed Combining Balance Sheet Data
The following unaudited Pro Forma Combined Condensed Financial Information
assumes a business combination between GoodNoise Corporation ("GoodNoise" or the
"Company") and Creative Fulfillment, Inc. (d.b.a. "Emusic") which was accounted
for as a purchase acquisition (the "Merger"), and the private placement of
approximately 118,000 shares of Series B Redeemable Convertible Preferred Stock
(the "Series B Shares") for aggregate net proceeds of approximately $31.6
million. The Pro Forma Combined Condensed Balance Sheet is based on the
historical financial statements and the notes thereto of GoodNoise included in
the Quarterly Report on Form 10-QSB for the quarter ended December 31, 1998, and
the historical financial statements and the notes thereto of Emusic included in
the Current Report on Form 8-K/A filed on April 13, 1999.
The Pro Forma Combined Condensed Balance Sheet combines GoodNoise's
December 31, 1998 balance sheet with EMusic's balance sheet dated January 31,
1999, giving effect to the Merger and the private placement as if they had
occurred on December 31, 1998.
The Pro Forma Combined Condensed Statement of Operations combines
GoodNoise's historical condensed statement of operations for the six months
ended December 31, 1998 with the Emusic condensed statement of operations for
the six months ended January 31, 1999, giving effect to the private placement as
if it had occurred at the start of the period ended on December 31, 1998.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the financial position that would have occurred
if the Merger and private placement had been consummated as of the period
presented, nor is it necessarily indicative of future operating results or
financial position. The unaudited Pro Forma Combined Condensed Financial
Information does not incorporate any benefits from cost savings or synergy of
operations of the combined company.
GoodNoise incurred direct transaction costs of approximately $150,000
associated with the Merger which will be included in the purchase price
allocated to acquired net assets. There can be no assurance that GoodNoise will
not incur additional charges in subsequent quarters to reflect costs associated
with the Merger or that management will be successful in its efforts to
integrate the operations of the two companies.
This Pro Forma Combined Condensed Financial Information should be read in
conjunction with the historical financial statements and the related notes
thereto of GoodNoise included in the Form 10-SB/A and Form 10-QSB filed with the
Securities and Exchange Commission, and the financial statements and the notes
thereto of Emusic included in the Current Report on Form 8-K/A filed on April
13, 1999.
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<TABLE>
<CAPTION>
UNAUDITED PROFORMA CONDENSED COMBINING BALANCE SHEET DATA
GoodNoise Emusic Pro Forma
----------------- ----------------- ------------------------------------------
December 31, January 31,
1998 1999 Adjustments Combined
--------------------------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash............................ $ 348,101 $ 13,852 $ (312,500) (A) $ 31,626,531
31,577, 078 (E)
Accounts receivable............. 4,000 3,062 --- 7,062
Prepaid expenses and other 153,067 --- (89,820) (A) 63,247
assets.........................----------------- ----------------- ------------------- -----------------
Total current assets.......... 505,168 16,914 31,174,758 31,696,840
----------------- ----------------- ------------------- -----------------
Property and equipment, net...... 101,407 6,774 --- 108,181
Intangible assets................ --- --- 6,006,590 (A) 6,006,590
Other assets..................... 16,520 --- --- 16,520
----------------- ----------------- ------------------- -----------------
Total assets.................. $ 623,095 $ 23,688 $ 37,181,348 $ 37,828,131
================= ================= =================== =================
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
Current Liabilities:
Notes payable................... $ 410,348 $ 12,500 $ (12,500) (B) $ 410,348
Accounts payable................ 143,792 10,229 72,680 (A) 226,701
Accrued payroll and related 19,221 --- --- 19,221
benefits.......................
----------------- ------------------- ----------------- -----------------
Total current liabilities..... 573,361 22,729 60,180 656,270
----------------- ------------------- ----------------- -----------------
Redeemable Convertible Preferred
Stock -- Series A................. 182,307 --- (182,307) (E) ---
Redeemable Convertible Preferred
Stock -- Series B................. --- --- 31,759,385 (E) 31,759,385
----------------- ------------------- ----------------- -----------------
Total Redeemable Preferred Stock 182,307 --- 31,577,078 31,759,385
----------------- ------------------- ----------------- -----------------
Stockholders' Equity (Deficit):
Common Stock.................... 150,253 186,133 (186,133) (C) 156,555
6,302 (A)
Additional paid-in capital.... 3,047,563 --- 5,551,247 (A) 40,175,888
31,577,078 (E)
Notes receivable from (6,000) --- --- (6,000)
employees....................
Deficit accumulated during
the development stage........ (3,324,389) (185,174) 185,174 (C) (34,913,967)
(50,000) (B)
37,500 (B)
(31,577,078) (E)
Total stockholders' equity ----------------- ----------------- ------------------- -----------------
(deficit).................... (132,573) 959 5,544,090 5,412,476
----------------- ----------------- ------------------- -----------------
Total liabilities,
redeemable convertible
preferred stock and
stockholders' equity $ 623,095 $ 23,688 $ 37,181,348 $ 37,828,131
(deficit)..................================= ================= =================== =================
See accompanying notes.
</TABLE>
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<TABLE>
<CAPTION>
UNAUDITED PROFORMA CONDENSED COMBINING INCOME STATEMENT DATA
GoodNoise Emusic Pro Forma
------------------- ------------------- ----------------------------------------------
Six Months Six Months
Ended Ended
December 31, January 31,
1998 1999 Adjustments Combined
------------------------------------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C>
Revenues............................. $ 20,465 $102,688 $ (50,000) (B) $ 73,153
Cost of revenues..................... 4,716 31,570 --- 36,286
------------------- ------------------- ------------------- --------------------
Gross profit....................... 15,749 71,118 (50,000) 36,867
------------------- ------------------- ------------------- --------------------
Operating expenses:
Product development................. 1,591,961 57,490 (37,500) (B) 1,611,951
Sales, general and administrative... 401,928 13,038 1,001,098 (D) 1,416,064
------------------- ------------------- -------------------- --------------------
Total operating expenses........... 1,993,889 70,528 963,598 3,028,015
------------------- ------------------- ------------------- --------------------
Income (loss) from operations........ (1,978,140) 590 (1,013,598) (2,991,148)
Interest and other expense, net...... 2,902 106 --- 3,008
------------------- ------------------- ------------------- --------------------
Net income (loss).................... $(1,975,238) $ 696 $ (1,013,598) $ (2,988,140)
=================== ===================
Accretion of Series A and Series B
Preferred to redemption value....... (169,047) (31,870,192) (E) (32,039,239)
-------------------- --------------------
Net loss applicable to common
stockholders........................ $(2,144,285) $(35,027,379)
==================== ====================
Net loss per share, basic and diluted $(0.15) $(2.31)
=================== ====================
Weighted average common shares
outstanding, basic and diluted...... 14,504,346 630,179 (A) 15,134,525
=================== =================== ====================
See accompanying notes.
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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINING FINANCIAL DATA
1. The preliminary allocation of the purchase price among the identifiable
tangible and intangible assets was based on a preliminary assessment of the
fair market value of those assets. Such preliminary purchase price
allocation is subject to adjustment based upon the GoodNoise's further
analysis, which adjustment could be material in amount. The amounts
preliminarily identified as intangible assets arising from the transaction
are expected to be amortized over an estimated useful life of three years.
2. The following pro forma adjustments are reflected in the unaudited pro forma
condensed combining financial information and are required to allocate the
preliminary purchase price and acquisition costs to the net assets acquired
from Emusic based on their fair value, and to record the issuance of Series
B redeemable convertible preferred stock:
(A) Reflects the allocation of the purchase price of approximately $6.0
million, which consisted of cash payments of $312,500, issuance of
630,179 shares of Common Stock and direct acquisition related expenses
of approximately $150,000.
(B) Reflects the elimination of inter-company transactions including
development consulting revenue paid by GoodNoise to Emusic and a short-
term loan of $12,500 made by GoodNoise to Emusic in January 1999.
(C) Reflects the elimination of Emusic's equity accounts.
(D) Reflects the amortization of intangible assets associated with the
purchase of Emusic as if the acquisition was completed as of the
beginning of the period presented. Amortization is over the estimated
useful lives of the assets acquired of three years.
(E) Reflects the issuance of approximately 118,000 shares of Series B
Convertible Preferred Stock (the Series B Shares") for aggregate net
proceeds of approximately $31.6 million, including:
. valuation of the in-the-money conversion feature of the Series B
Shares of approximately $31.6 million and resulting accretion of
the Series B redeemable convertible preferred stock balance to
redemption value of approximately $34.8 million.
. conversion of the outstanding shares of Series A redeemable
convertible preferred stock into Series B redeemable convertible
preferred stock.
. undewriting discounts, commissions and estimated offering expenses
of approximtely $2.7 million payable by Goodnoise Corporation.
