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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: April 25, 2000
(Date of earliest event reported)
drkoop.com, Inc.
(exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware Commission File: 95-4697615
(State or other jurisdiction 000-26275 (I.R.S. Employer Identification No.)
of incorporation or organization)
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7000 North Mopac
Austin, Texas 78731
(Address of Principal executive offices, including zip code)
(512) 583-5667
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On April 25, 2000, our company, drkoop.com, Inc., a Delaware corporation
(the "Company"), released two press releases, each of which is attached to this
Report as Exhibits 5.1 and 5.2, respectively, and which are incorporated herein
by this reference. The incorporated press releases shall not be deemed to
include any material in any of the hyperlinks to Internet sites included
therein.
Portal Renegotiations. The consideration for the renegotiation of the
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portal agreements referred to in the press releases consisted of, in the
aggregate, (a) 3,500,000 shares of Company common stock; (b) cash payments to be
made over the next six months, including accrued costs of service; and (c)
warrants to acquire 820,000 shares of common stock at an exercise price of $1.25
per share (subject to anti-dilution adjustment for specified future financings).
In addition, the 775,000 warrants presently held by one of the portal partners
became presently exercisable. The cash payments to be made are included in the
accounts payable disclosed in the press release attached as Exhibit 5.1.
After giving effect to these transactions, the Company has outstanding as
of the date of this Report: (i) approximately 34,683,000 shares of common stock,
(ii) warrants to purchase approximately 1,628,000 shares of common stock at
exercise prices of $1.25 to $8.60; and (iii) stock options to acquire
approximately 11,584,000 shares of common stock, of which approximately
5,622,000 are vested with exercise prices varying from $0.01 to $13.88.
This Report includes forward-looking statements that are based on current
expectations and involve risks and uncertainties. drkoop.com cannot guarantee
that actual future events will not vary materially from those described in this
Report. Specifically, the sources and uses of cash resources, the nature and
deployment of new products and services and the continued operations of the
business are uncertain and cannot be assured. In addition, our traffic growth
is subject to our ability to continue to attract and retain our audience of
users by providing healthcare content, tools and other features which meet the
changing demands of those users. For a further discussion of the business risks
faced by drkoop.com, please see the section captioned ``Risk Factors'' in our
Form 10-K for the year ended December 31, 1999 filed with the Securities and
Exchange Commission. drkoop.com undertakes no obligation to update any of the
forward-looking statements in this Report. In particular, no duty to update is
undertaken with respect to projections of cash sources and uses.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits
5.1 Press Release dated April 25, 2000 regarding corporate developments.
5.2 Press Release dated April 25, 2000 regarding Go.com.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized,
drkoop.com, Inc.
Date: April 26, 2000 By /S/ Susan M. Georgen-Saad
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Name: Susan M. Georgen-Saad
Title: Chief Financial Officer
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EXHIBIT INDEX
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Sequentially
Exhibit Numbered
No. Description Page
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5.1 Press Release dated April 25,
2000 regarding corporate
developments
5.2 Press Release dated April 25,
2000 regarding Go.com
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EXHIBIT 5.1
DRKOOP.COM COMMENTS ON FIRST QUARTER RESULTS
Company restructures commerce agreement - reduces future cash outlay
Company explores strategic alternatives
AUSTIN, TX - April 25, 2000 - drkoop.com, Inc. (Nasdaq: KOOP) today commented on
financial results for the first quarter ended March 31, 2000 and announced it
has retained a financial advisor to assist it in exploring strategic
alternatives available to the Company. In addition, the Company announced the
successful restructuring of its agreement with its commerce partner, America
Online, Inc. (AOL), so as to convert future cash payments into increased equity
ownership.
drkoop.com said that preliminary financial data indicates that revenue for the
first quarter ending March 31, 2000 is anticipated to be in the range of $4.5
million to $4.7 million, which was below internal expectations. The Company
attributed the anticipated shortfall to lower than expected direct-to-consumer
(DTC) advertising revenue. Accordingly, net loss per share is also expected to
be wider than anticipated and in the range of $0.80-$0.82. Increased overall
expenditures, due to an accelerated business plan, contributed to the quarter's
wider than expected loss. The Company expects to release final financial
results in the second week in May.
"We are clearly disappointed in the overall performance of the DTC component of
our advertising program for the quarter," said Donald Hackett, president and CEO
of drkoop.com. "As we communicated last quarter, we have taken steps to bring
our DTC ad sales and serving program back in-house. These actions enable us to
regain control over integrated packaging, inventory usage and cost per 1,000
(CPM) impression rates, and to remove the significant lag that has existed in
the reporting systems of external providers. While these steps did not produce
significant results as quickly as anticipated,
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we have established a dedicated pharmaceutical ad sales team led by an
experienced pharmaceutical sales executive, and we signed our first deal with a
Top 5 pharmaceutical company for a mega-brand product with a value approaching
seven figures on an annualized basis."
"On the expense side, our first quarter expenses were higher than forecasted, as
we made a strategic decision to ramp-up activities, such as bringing our ad
serving and sales back in-house and investing in systems infrastructure,"
continued Hackett. "We have now completed much of this groundwork and have
reduced on-going expenditures on these initiatives. In addition, we have
reduced expenses related to contractors, marketing expenditures, and
professional fees. As a result, we have substantially reduced our quarterly cash
burn net of revenues and portal costs going forward by more than 57% to an
estimated $6 million compared to approximately $14 million in the first
quarter."
As of March 31, 2000 drkoop.com had approximately $24 million in cash on hand
before giving effect to outstanding trade payables and accrued liabilities
payable of approximately $16 million and approximately $3 million in trade
receivables. Based on these estimates, the Company believes it has in excess of
four months of cash remaining.
drkoop.com is actively pursuing other sources of new cash financing.
Additionally, the investment-banking firm of Bear, Stearns & Co., Inc. has been
retained to explore strategic alternatives available to the Company.
Separately, the Company has successfully restructured its content and commerce
agreement with AOL. Under the restructuring, AOL has agreed to convert its
previous agreement, including all future cash commitments as well as warrants,
into drkoop.com common stock, giving AOL ownership of 10% of drkoop.com based on
current shares outstanding. The term of the agreement and drkoop.com's level of
promotion across the AOL properties has been modified to reflect the scale of
the agreement going forward.
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"We are happy to continue our relationship with AOL," said Hackett. "The
tremendous exposure we received through this agreement was critical in
positioning our brand during our launch, helping us grow our traffic during the
last year. The importance of restructuring contracts with ISP and portal
partners cannot be overstated, and we are pleased to reassure our shareholders
with this key first step in addressing the cash issue. We intend to reevaluate
all other portal agreements while continuing to broaden both the reach and
quality of our Network traffic and registered users going forward."
NOTE: A conference call discussing the above announcement will be held today,
Tuesday, April 25, 2000 at 5:15 p.m. EST. To listen, please visit
www.streetevents.com/ or the Investor Relations section of the drkoop.com site.
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From the drkoop.com home page, click on About Us, then click on Investor
Relations or www.corporate-ir.net/ireye/ir_site.zhtml?ticker=koop&script-2100.
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Participants should visit the site approximately 5 minutes prior to the call.
drkoop.com expects to announce final first quarter 2000 results the second week
in May.
About drkoop.com, Inc.
drkoop.com is a leading global healthcare Network providing measurable value to
individuals worldwide. Its mission is to empower consumers with the information
and resources they need to become active participants in the management of their
own health. The drkoop.com Network is built from relationships with other Web
sites, healthcare portals and traditional media outlets, and integrates dynamic,
medically reviewed content, interactive communities and consumer-focused tools
into a complete source of trusted healthcare information. Its strategic alliance
with Shared Medical Systems (SMS) makes drkoop.com a leader in promoting secure
online interaction between patients, their physicians and local healthcare
organizations. With more than one million registered users worldwide, drkoop.com
has strategic relationships with 21 online organizations, including those of
America Online and Disney's GO Network. The company's content is also featured
on the Web sites of more than 330 healthcare facilities and more than 20
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leading television stations nationwide.
This document contains forward-looking statements relating to, among other
things, expense levels, revenue trends, advertising sales trends, growth plans,
future results of operations and general business conditions relating to
drkoop.com. These forward-looking statements are based on our current
expectations and are subject to material risks and uncertainties. Actual results
could differ materially from these forward-looking statements depending on
changes in external competitive market factors, the effectiveness of our
marketing and promotion strategies or our ability to execute our business
strategy. These matters and other business risks to which drkoop.com is
subject are discussed in our periodic reports and registration statements filed
from time to time with the Securities and Exchange Commission. In particular,
investors are urged to review carefully the information under the caption "Risk
Factors" in the Form 10-K for the year ended December 31, 1999 and the other
information contained in that report. The Form 10-K may be obtained by
accessing the database maintained by the Securities and Exchange Commission at
www.sec.gov or by contacting drkoop.com as noted above.
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EXHIBIT 5.2
DRKOOP.COM ANNOUNCES RESTRUCTURING OF GO PORTAL AGREEMENT
AUSTIN, Texas -- April 25, 2000 -- drkoop.com, Inc. (Nasdaq: KOOP) today
announced the restructuring of its agreement with GO.com (NYSE: GO). Under the
restructuring, GO.com will receive an undisclosed amount of cash and additional
warrants to purchase shares of drkoop.com common stock, subject to adjustment.
This substantially reduces the cash obligations outlined by the previous
agreement between drkoop.com and GO.com. GO.com continues to hold warrants to
purchase 775,000 shares of drkoop.com common stock that were issued in 1999.
"The announcements made today are the first steps in reassuring our
shareholders that we are addressing our cash issue," said Donald Hackett,
president and CEO of drkoop.com. "We are continuing to execute our business
model and are actively pursuing other sources of new cash financing."
The company also stated that it has retained the investment banking firm of
Bear, Stearns and Co. to explore strategic options for the company.
About drkoop.com, Inc.
drkoop.com is a leading global healthcare Network providing measurable value
to individuals worldwide. Its mission is to empower consumers with the
information and resources they need to become active participants in the
management of their own health. The drkoop.com Network is built from
relationships with other Web sites, healthcare
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portals and traditional media outlets, and integrates dynamic, medically
reviewed content, interactive communities and consumer-focused tools into a
complete source of trusted healthcare information. Its strategic alliance with
Shared Medical Systems (SMS) makes drkoop.com a leader in promoting secure
online interaction between patients, their physicians and local healthcare
organizations. With more than one million registered users worldwide, drkoop.com
has strategic relationships with 21 online organizations, including those of
America Online and Disney's GO Network. The company's content is also featured
on the Web sites of more than 330 healthcare facilities and more than 20 leading
television stations nationwide.
This document contains forward-looking statements relating to, among other
things, expense levels, revenue trends, advertising sales trends, growth plans,
future results of operations and general business conditions relating to
drkoop.com. These forward-looking statements are based on our current
expectations and are subject to material risks and uncertainties. Actual results
could differ materially from these forward-looking statements depending on
changes in external competitive market factors, the effectiveness of our
marketing and promotion strategies or our ability to execute our business
strategy. These matters and other business risks to which drkoop.com is subject
are discussed in our periodic reports and registration statements filed from
time to time with the Securities and Exchange Commission. In particular,
investors are urged to review carefully the information under the caption "Risk
Factors" in the Form 10-K for the year ended December 31, 1999 and the other
information contained in that report. The Form 10-K may be obtained by
accessing the database maintained by the Securities and Exchange Commission at
www.sec.gov or by contacting drkoop.com as noted above.
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