<PAGE>
================================================================================
United States
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 (Date of earliest event reported): March 22, 2000
SciQuest.com, Inc.
(Exact name of Registrant as specified in charter)
Delaware 0-27803 56-2127592
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
5151 McCrimmon Parkway, Suite 208, Morrisville, NC 27560
(Address of principal executive offices) (zip code)
(919) 659-2100
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name or former address, if changed since last report)
================================================================================
Page 1 of ___
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On March 22, 2000, SciQuest.com, Inc., a Delaware corporation ("SciQuest"),
completed the acquisition of EMAX Solution Partners, Inc., a Delaware
corporation ("EMAX"), through the merger (the "Merger") of SciQuest Acquisition,
Inc., a Delaware corporation and subsidiary of SciQuest ("Acquisition") with and
into EMAX, pursuant to the terms of an Agreement and Plan of Merger and
Reorganization, dated March 13, 2000, by and among SciQuest, Acquisition and
EMAX, as amended by Amendment No. 1 to Agreement and Plan of Merger and
Reorganization, dated March 22, 2000, by and among SciQuest, Acquisition and
EMAX (the "Merger Agreement"). EMAX survived the Merger as a wholly owned
subsidiary of SciQuest.
In the Merger, (i) each outstanding share of EMAX common stock was
converted into the right to receive .487061 (the "Conversion Ratio") of a share
of SciQuest common stock, $.001 par value per share ("SciQuest Common Stock"),
(ii) each outstanding share of EMAX Series A Convertible Preferred Stock was
converted into the right to receive .487061 of a share of SciQuest Common Stock
divided by 10, (iii) each outstanding share of EMAX Series B Convertible
Preferred Stock was converted into the right to receive .487061 of a share of
SciQuest Common Stock divided by 10, (iv) each outstanding share of EMAX Series
D Convertible Preferred Stock was converted into the right to receive .487061 of
a share of SciQuest Common Stock divided by 8.55 and (v) each outstanding share
of EMAX Series E Convertible Preferred Stock was converted into the right to
receive the sum of (A) .487061 and (B) the quotient of (I) $7,000,000 divided by
$74.75625, divided by (II) the aggregate number of shares of Series E Preferred
Stock outstanding immediately prior to the Merger. Outstanding EMAX warrants are
being exchanged for SciQuest warrants in accordance with the Conversion Ratio.
Pursuant to the Merger, SciQuest is required to issue 1,999,833 shares of
SciQuest Common Stock, which includes 415,692 shares subject to outstanding
options and warrants.
All outstanding options to purchase shares of EMAX Capital Stock under the
EMAX Solution Partners, Inc. 1993 Stock Plan (the "EMAX Stock Plan")
(collectively, the "EMAX Stock Options"), whether or not exercisable, were
assumed by SciQuest; provided, however, that each holder of EMAX Stock Options
had the right to elect prior to the Merger to either (A) retain the EMAX Stock
Options held by such person (which EMAX Stock Options vested at the effective
time of the Merger (the "Effective Time") in accordance with the terms of the
EMAX Stock Plan) or (B) retain the portion of the EMAX Stock Options held by
such person that was vested immediately prior to the Effective Time and amend
the portion of the EMAX Stock Options held by such person that was unvested
immediately prior to the Effective Time (the "Amended Options") to provide that
such Amended Options will vest as set forth in the Merger Agreement and receive
in consideration of the amendment options to acquire such number of shares of
SciQuest Common Stock (the "Additional Options") equal to .487061 multiplied by
50% of the number of shares subject to all outstanding EMAX Stock Options
(without regard to vesting) held by such person immediately prior to the
Effective Time.
The total consideration in the Merger was determined through arms' length
negotiations between representatives of SciQuest and EMAX. Neither SciQuest nor
any of its affiliates had, nor to the knowledge of SciQuest, did any director or
officer or any associate of any such director or officer of SciQuest have, any
material relationship with EMAX prior to the Merger.
The Merger was accounted for under the purchase method of accounting. A
complete description of the transaction is contained in the Merger Agreement
filed as Exhibits 2.1 and 2.2 to this report. SciQuest announced the signing of
the Merger Agreement on March 14, 2000. A copy of the press release is filed as
Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) The following financial statements of EMAX, together with the
independent auditors' reports thereon, are filed as Exhibit 7.1:
(i) consolidated balance sheets as of December 31, 1998 and 1999;
<PAGE>
(ii) consolidated statements of operations for the years ended
December 31, 1998 and 1999;
(iii) consolidated statements of stockholders' deficit for the years
ended December 31, 1998 and 1999;
(iv) consolidated statements of cash flows for the years ended
December 31, 1998 and 1999; and
(v) notes to consolidated financial statements.
(b) Pro Forma Financial Information
The required pro forma financial information relating to the business
acquired is filed as Exhibit 7.2.
(c) Exhibits:
2.1 Agreement and Plan of Merger, dated as of March 13, 2000 by and among
SciQuest.com, Inc., SciQuest Acquisition, Inc., and EMAX Solution
Partners, Inc. (incorporated by reference to SciQuest's Registration
Statement on Form S-1 (Registration No. 333-32582)).
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of March 22,
2000, by and among SciQuest.com, Inc., Sciquest Acquisition, Inc., and
EMAX Solution Partners, Inc.
7.1 Consolidated Financial Statements of EMAX Solution Partners, Inc.
7.2 Unaudited Pro Forma Combined Condensed Financial Statements of EMAX
Solution Partners, Inc.
99.1 Text of Press Release of Sciquest.com, Inc., dated March 14,2000.
<PAGE>
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.
SCIQUEST INTERNATIONAL CORPORATION
By: /s/ James J. Scheuer
------------------------------------------
James J. Scheuer
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
Date: April 6, 2000
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of
March 22, 2000, by and among SciQuest.com, Inc., Sciquest
Acquisition, Inc., and EMAX Solution Partners, Inc.
7.1 Consolidated Financial Statements of EMAX Solution Partners,
Inc.
7.2 Unaudited Pro Forma Combined Condensed Financial Statements of
EMAX Solution Partners, Inc.
99.1 Text of Press Release of SciQuest.com, Inc., dated March 14,
2000.
<PAGE>
EXHIBIT 2.2
AMENDMENT NO.1 TO
AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
THIS AMENDMENT NO.1 TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(this "Amendment") is made and entered into as of March 22, 2000, by and among
SCIQUEST.COM, INC., a Delaware corporation ("SciQuest"), SCIQUEST ACQUISITION,
INC., a Delaware corporation and wholly-owned subsidiary of SciQuest ("Merger
Sub"), and EMAX SOLUTION PARTNERS, INC., a Delaware corporation ("Company").
WITNESSETH:
WHEREAS, SciQuest, Merger Sub and the Company are parties to that certain
Agreement and Plan of Merger and Reorganization, dated as of March 13, 2000 (the
"Original Agreement");
WHEREAS, capitalized terms used herein, unless otherwise defined herein
shall have the meanings ascribed to them in the Original Agreement; and
WHEREAS, SciQuest, Merger Sub and the Company desire to amend the Original
Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein, the
parties hereto agree as follows:
1. Section 1.4 of the Original Agreement is hereby amended to read in its
entirety as follows:
1.4 Certificate of Incorporation and Bylaws of Surviving Corporation.
(a) The Certificate of Incorporation of the Company in effect at
the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation from and after the Effective Time until thereafter
amended as provided by law and such Certificate of Incorporation and bylaws
of the Surviving Corporation; provided, however, that such Certificate of
Incorporation shall be amended and restated in its entirety to read as set
forth on Exhibit A hereto.
---------
(b) The bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by such bylaws, the Certificate of
Incorporation and applicable law.
2. As amended by this Amendment, the Original Agreement shall continue in
full force and effect in accordance with its terms.
<PAGE>
4. This Amendment shall be governed by, and construed and enforced in
accordance with, the terms of the Original Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
SCIQUEST.COM, INC. SCIQUEST ACQUISITION, INC.
By: /s/ James J. Scheuer BY: /s/ James J. Scheuer
------------------------------ ---------------------------
James J. Scheuer James J. Scheuer
Vice President Vice President
EMAX SOLUTION PARTNERS, INC.
By: /s/ John N. Connor
------------------------------
John N. Connor
President and Chief Executive Officer
-2-
<PAGE>
EXHIBIT A
---------
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EMAX SOLUTION PARTNERS, INC.
I.
The name of the corporation is EMAX Solution Partners, Inc.
II.
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
III.
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under General Corporation Law of Delaware.
IV.
The total number of shares of stock which the corporation shall have
authority to issue is One Hundred (100) shares of common stock at $0.001 par
value per share.
V.
The board of directors is authorized to make, alter or repeal the bylaws of
the corporation. Election of directors need not be by written ballot.
VI.
A director of the Corporation shall not be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent that such exemption from liability or limitation thereof is
not permitted under the General Corporation Law of the State of Delaware as
currently in effect or as the same may hereafter be amended. If the General
Corporation Law of the State of Delaware is amended after the date hereof to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
<PAGE>
No amendment, modification or repeal of this Article VII shall adversely affect
any right or protection of a director that exists at the time of such
amendment, modification or repeal.
VII.
The Corporation is to have perpetual existence.
-2-
<PAGE>
EXHIBIT 7.1
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
EMAX Solution Partners, Inc.:
We have audited the accompanying consolidated balance sheets of EMAX
Solution Partners, Inc. and subsidiaries as of December 31, 1998 and 1999, and
the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of EMAX
Solution Partners, Inc. and subsidiaries as of December 31, 1998 and 1999, and
the results of their operations and their cash flows for the years then ended,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 6, 2000, except for note 11, which is as of March 13, 2000
1
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1999
<TABLE>
<CAPTION>
Assets
1998 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 10,725 $ 2,066,284
Accounts receivable................................ 586,771 1,644,126
Unbilled revenue................................... 30,305 122,966
Prepaid expenses and other current assets.......... 31,006 120,508
----------- -----------
Total current assets............................. 658,807 3,953,884
----------- -----------
Property and equipment:
Furniture and office equipment..................... 177,908 514,876
Computer hardware.................................. 647,834 678,524
Purchased software................................. 158,361 276,198
Leasehold improvements............................. 50,620 65,188
----------- -----------
1,034,723 1,534,786
Less: accumulated depreciation and amortization.... (616,602) (837,534)
----------- -----------
Net property and equipment....................... 418,121 697,252
----------- -----------
Other assets......................................... 46,576 115,958
----------- -----------
Total assets......................................... $ 1,123,504 $ 4,767,094
=========== ===========
<CAPTION>
Liabilities and Stockholders' Equity (Deficit)
<S> <C> <C>
Current liabilities:
Accounts payable................................... $ 3,681 $ 6,923
Accrued expenses................................... 414,553 810,738
Note payable, line of credit (note 2).............. 385,000 --
Current installments of obligations under capital
leases (note 8)................................... 110,943 176,625
Deferred maintenance revenue....................... 249,376 447,169
Billings in excess of recognized revenue........... 1,720,580 1,121,911
----------- -----------
Total current liabilities........................ 2,884,133 2,563,366
----------- -----------
Deferred stock issuance (note 5)..................... 1,000,000 1,000,000
----------- -----------
Obligations under capital leases, excluding current
installments (note 8)............................... 197,818 283,057
----------- -----------
Commitments (note 8)
Stockholders' equity (deficit):
Preferred stock, $.01 par value; authorized
20,000,000 shares; issued and outstanding
14,983,249 and 16,079,931 shares in 1998 and 1999,
respectively (note 7)............................. 149,832 160,799
Common stock, $.01 par value; authorized 2,500,000
shares in 1998 and 4,500,000 shares in 1999;
issued and outstanding 186,850 and 230,850 shares
in 1998 and 1999, respectively.................... 1,869 2,308
Additional paid-in capital......................... 3,920,021 10,240,358
Accumulated deficit................................ (7,008,206) (9,458,433)
Accumulated other comprehensive loss............... -- (2,398)
Less:
Officer stock loans............................... (16,667) (16,667)
Treasury stock, at cost: 52,961 common shares and
100,000 Series A convertible preferred shares.... (5,296) (5,296)
----------- -----------
Total stockholders' equity (deficit)............. (2,958,447) 920,671
----------- -----------
Total liabilities and stockholders' equity (deficit). $ 1,123,504 $ 4,767,094
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
December 31,
------------------------
1998 1999
----------- -----------
<S> <C> <C>
Revenue:
License fees....................................... $ 790,958 $ 1,284,987
Services........................................... 3,317,756 5,006,259
Software maintenance............................... 298,291 448,653
Hardware sales..................................... 166,808 253,565
----------- -----------
Total revenues.................................... 4,573,813 6,993,464
----------- -----------
Expenses:
Direct operating costs and expenses................ 3,237,657 5,243,969
Selling, general and administrative................ 3,228,116 4,411,863
----------- -----------
Total expenses.................................... 6,465,773 9,655,832
----------- -----------
Net operating loss................................ (1,891,960) (2,662,368)
----------- -----------
Other income (expense):
Interest income.................................... 10,751 27,515
Interest expense................................... (44,161) (65,374)
Gain on sale of EHS division (note 10)............. -- 250,000
----------- -----------
Total other income (expense)...................... (33,410) 212,141
----------- -----------
Net loss............................................. $(1,925,370) $(2,450,227)
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 1998 and 1999
<TABLE>
<CAPTION>
Preferred Stock
Common ----------------------------------------------------------------------------------
Stock Series A Series B Series C Series D Series E
-------------- ----------------- -------------- ------------- ----------------- -----------------
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
------- ------ --------- ------- ------- ------ ------ ------ --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1997............ 183,663 $1,837 9,150,000 $91,500 833,249 $8,332 -- $-- 5,000,000 $50,000 -- $ --
Exercise of
options......... 3,187 32 -- -- -- -- -- -- -- -- -- --
Net loss........ -- -- -- -- -- -- -- -- -- -- -- --
------- ------ --------- ------- ------- ------ --- --- --------- ------- --------- -------
Balance at
December 31,
1998............ 186,850 1,869 9,150,000 91,500 833,249 8,332 -- -- 5,000,000 50,000 -- --
Issuance of
common stock ... 41,000 410 -- -- -- -- -- -- -- -- -- --
Exercise of
options......... 3,000 29 -- -- -- -- -- -- -- -- -- --
Cash paid for
fractional
shares.......... -- -- -- -- -- -- -- -- -- -- -- --
Issuance of
preferred
stock........... -- -- -- -- -- -- -- -- -- -- 1,096,682 10,967
Net loss........ -- -- -- -- -- -- -- -- -- -- -- --
Foreign currency
translation
adjustment...... -- -- -- -- -- -- -- -- -- -- -- --
Comprehensive
loss............ -- -- -- -- -- -- -- -- -- -- -- --
------- ------ --------- ------- ------- ------ --- --- --------- ------- --------- -------
Balance at
December 31,
1999............ 230,850 $2,308 9,150,000 $91,500 833,249 $8,332 -- $-- 5,000,000 $50,000 1,096,682 $10,967
======= ====== ========= ======= ======= ====== === === ========= ======= ========= =======
<CAPTION>
Accumulated
Additional Treasury Stock other Total
Paid-In Officers --------------- Accumulated comprehensive stockholders'
Capital loans Shares Amount deficit loss deficit
------------ --------- ------ -------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1997............ $ 3,914,896 $(16,667) 52,961 $(5,296) $(5,082,836) $ -- $(1,038,234)
Exercise of
options......... 5,125 -- -- -- -- -- 5,157
Net loss........ -- -- -- -- (1,925,370) -- (1,925,370)
------------ --------- ------ -------- ------------ ------------- -------------
Balance at
December 31,
1998............ 3,920,021 (16,667) 52,961 (5,296) (7,008,206) -- (2,958,447)
Issuance of
common stock ... 40,590 -- -- -- -- -- 41,000
Exercise of
options......... 6,871 -- -- -- -- -- 6,900
Cash paid for
fractional
shares.......... (9) -- -- -- -- -- (9)
Issuance of
preferred
stock........... 6,272,885 -- -- -- -- -- 6,283,852
Net loss........ -- -- -- -- (2,450,227) -- (2,450,227)
Foreign currency
translation
adjustment...... -- -- -- -- -- (2,398) (2,398)
-------------
Comprehensive
loss............ -- -- -- -- -- -- (2,452,625)
------------ --------- ------ -------- ------------ ------------- -------------
Balance at
December 31,
1999............ $10,240,358 $(16,667) 52,961 $(5,296) $(9,458,433) $(2,398) $ 920,671
============ ========= ====== ======== ============ ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
December 31,
------------------------
1998 1999
----------- -----------
<S> <C> <C>
Cash flows used in operating activities:
Net loss............................................ $(1,925,370) $(2,450,227)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization...................... 190,072 220,933
Gain on sale of EHS division....................... -- (250,000)
Changes in other assets and current liabilities:
Accounts receivable............................... (365,454) (1,057,355)
Unbilled revenue.................................. 263,103 (92,661)
Prepaid expenses and other current assets......... 20,851 (70,971)
Other assets...................................... (32,099) (12,914)
Accounts payable.................................. (48,589) 3,242
Accrued expenses.................................. 157,494 396,185
Deferred maintenance revenue...................... 62,399 197,793
Billings in excess of recognized revenue.......... 1,166,468 (598,669)
----------- -----------
Net cash used in operating activities............ (511,125) (3,714,644)
----------- -----------
Cash flows used in investing activities:
Proceeds from sale of EHS division.................. -- 175,000
Purchases of property and equipment................. (37,442) (215,260)
----------- -----------
Net cash used in investing activities............ (37,442) (40,260)
----------- -----------
Cash flows provided by financing activities:
Payments on notes payable........................... -- (385,000)
Proceeds from notes payable......................... 385,000 --
Payment for fractional shares--reverse split........ -- (9)
Principal payments under capital lease obligations.. (87,149) (133,883)
Foreign currency translation........................ -- (2,398)
Proceeds from issuance of preferred stock and common
stock............................................... 5,157 6,331,753
----------- -----------
Net cash provided by financing activities........ 303,008 5,810,463
----------- -----------
Net increase (decrease) in cash and cash
equivalents..................................... (245,559) 2,055,559
Cash and cash equivalents at beginning of year....... 256,284 10,725
----------- -----------
Cash and cash equivalents at end of year............. $ 10,725 $ 2,066,284
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.............. $ 36,394 $ 53,268
=========== ===========
Noncash investing and financing activities:
Equipment acquired under capital lease obligations. $ 258,938 $ 284,803
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1999
1. Summary of Significant Accounting Policies
a. Description of Business
EMAX Solution Partners, Inc. (the Company) is an information technology
solution development company that specializes in integrating chemical
information systems to improve productivity and compliance for major
corporations.
b. Principles of Consolidation
The consolidated financial statements include the accounts of EMAX Solution
Partners, Inc. and its wholly owned subsidiaries, EMAX Delaware, Inc. and EMAX
Solution Partners (UK) Ltd. Appropriate eliminations have been made of all
intercompany transactions and account balances.
c. Cash Equivalents
Cash equivalents at December 31, 1998 and 1999, consist of money market
investment accounts and certificates of deposit. For purposes of the statements
of cash flows, the Company considers all money market accounts and certificates
of deposit to be cash equivalents.
d. Property and Equipment
Property and equipment are stated at cost. Depreciation on property and
equipment is provided on the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are amortized on the straight-line
method over the shorter of the lease term or estimated useful life of the
asset. Useful lives for other property and equipment range from three to five
years.
e. Revenue Recognition
Revenues from software related services are recognized using one of two
methods and depend on the contract terms. Revenues from fixed fee contracts are
recognized on the percentage-of-completion method based on costs incurred to
total costs. The cumulative impact of revisions in total cost estimates during
the progress of work is reflected in the year in which these changes become
known. Revenues from time and material contracts are recognized concurrently
with the effort and material costs incurred by the Company, at billable rates
specified in the terms of the contract.
Software license fee revenue is recognized on the percentage-of-completion
method when there are significant Company obligations beyond delivery of the
related software. When significant Company obligations beyond delivery are
nonexistent and collection is probable, then license fee revenue is recognized
upon delivery of the software. Hardware sales revenue is recognized upon
delivery of the hardware unless the Company has obligations beyond delivery.
Losses expected to be incurred on contracts in process, after consideration
of estimated minimum recoveries from claims and change orders, are charged to
income as soon as such losses are known.
The Company sells maintenance contracts to provide updates and standard
enhancements to its software products. Maintenance fee revenue is recognized
ratably over the life of the arrangements, generally one year.
The Company adopted the provisions of Statement of Position (SOP) 97-2
issued by the American Institute of Certified Public Accountants for all
computer software-related transactions. SOP 97-2 does not affect transactions
entered into prior to adoption, as retroactive application to prior years is
prohibited.
6
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
SOP 97-2 generally requires revenue earned on software arrangements involving
multiple elements to be allocated to each element based on relative fair values
of the elements and on evidence that is specific to the vendor. If a vendor
does not have evidence of the fair value of each element in a multiple element
arrangement, then all revenue is deferred until such evidence exists or until
all elements are delivered.
f. Use of Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles requires the use of management's
estimates. Such estimates include percentage of completion and total costs to
complete certain fixed price contracts. Actual results could differ from those
estimates.
g. Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109 and utilizes the asset-and-
liability method of accounting for income taxes. Under this method, deferred
income taxes are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
h. Stock Options
The Company has elected to continue to apply Accounting Principles Board
Opinion (APB) No. 25 for stock options and stock-based awards to employees and
has disclosed a pro forma net loss as if the fair value method had been applied
(note 6).
i. Long-Lived Assets
In accordance with SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," the Company
periodically evaluates the carrying value of long-lived assets when events and
circumstances warrant such review. The carrying value of a long-lived asset is
considered impaired when the anticipated undiscounted cash flow from such asset
is separately identifiable and is less than the carrying value. In that event,
a loss is recognized based on the amount by which the carrying value exceeds
the fair market value of the long-lived asset. The Company has identified no
such impairment losses.
j. Reverse Stock Split
During 1999, the Company's Board of Directors approved a 10-for-1 reverse
stock split of the Company's common stock and the reduction in authorized
shares outstanding to 3,000,000. The effects of the reverse stock split have
been reflected in the 1998 and 1999 financial statements. Also, in August 1999,
the authorized shares of common stock were increased to 4,500,000.
2. Liquidity
The Company relies on both cash on hand and a $400,000 line of credit at
December 31, 1999. This line of credit is secured by the Company's accounts
receivable, and the amount available is determined based on the level of
accounts receivable. The balance outstanding at December 31, 1998 and 1999, was
$385,000 and $0, respectively. Interest is charged based upon the prime rate
plus 2%.
On August 17, 1999, the Company issued 1,096,682 shares of Series E
Convertible Preferred Stock for an aggregate price of $7,000,000, resulting in
net proceeds of $6,283,852. The Series E Convertible Preferred Stock contains
terms and rights described in note 7.
7
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
The Company has been dependent on financing and financial support from the
issuance of equity interests to its shareholders since inception. The Company
anticipates its monthly operating cash flows to become positive during year
2000 and that its future cash flow needs will be met substantially through cash
remaining from the proceeds of the preferred stock issuance, operating cash
flow, and borrowings on the line of credit. If cash flows are less than
expected, management of the Company believes that other measures to reduce
costs or to raise additional equity financing could be taken to assure the
Company remains liquid.
3. 401(k) Profit Sharing Plan and Trust
The Company has a 401(k) Profit Sharing Plan and Trust (the Plan) that
qualifies for treatment under Section 401(k) of the Internal Revenue Code. All
eligible employees may participate by electing to contribute up to 15% of gross
pay to the Plan. The Company at its discretion makes a matching contribution to
the Plan. For the years ended December 31, 1998 and 1999, the Company has
matched 15% of employee contributions up to 6% of each employee's salary. The
Company's total matching contribution was $19,062 and $28,686 for 1998 and
1999, respectively.
4. Income Taxes
Due to the net losses incurred in 1998 and 1999, no current income tax
expense or benefit has been recorded. The December 31, 1998 and 1999 income tax
expense (benefit) differed from the amounts computed by applying the federal
statutory rate of 34% to pre-tax loss as a result of the following:
<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Computed expected tax expense (benefit)..................... (654,626) (833,077)
State taxes, net of federal benefit......................... (76,169) (220,275)
Tax effect of permanent differences......................... 88,173 88,400
Other, net.................................................. 52,566 1,472
-------- --------
(590,056) (963,481)
Change in valuation allowance............................... 590,056 963,481
-------- --------
-- --
======== ========
</TABLE>
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31, 1998 and 1999 are detailed
below:
<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Accruals and other reserves............................. 234,626 278,616
Net operating losses (federal and state)................ 1,970,319 2,889,810
Valuation allowance..................................... (2,204,945) (3,168,426)
---------- ----------
Net deferred tax asset.................................. -- --
========== ==========
</TABLE>
The Company believes it is more likely than not that such benefits will not
be realized through future taxable income; therefore, the net deferred tax
asset as of December 31, 1998 and 1999, is fully reserved.
As of December 31, 1999, the Company has approximately $12,100,000 of net
operating loss carryforwards for federal and state tax purposes that are
available to offset future federal taxable income, if any, through 2019.
The Company's net operating losses may be subject to the provisions of
Internal Revenue Code Section 382, as established by the Tax Reform Act of
1986, related to changes in stock ownership. Presently, no
8
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
determination has been made to evaluate what effect the application of these
regulations may have on the utilization of the net operating losses. Should
these regulations apply, the amount of the net operating losses that can be
utilized to offset taxable income in future periods may be subject to an annual
limitation and it is possible that some portion of the net operating losses may
never be utilized.
5. Software Arrangements
On December 20, 1994, the Company entered into an agreement to transfer all
of its right, title and interest in and to its OPTIMA software (formerly called
"ChemTrol") to Polar Investment Partners (Polar) for total consideration of
$4,500,000, comprised of $1,000,000 payable in quarterly installments and a
$3,500,000 promissory note (the Note). The first cash payment of $250,000 was
made upon closing, and the Note bears interest at 7%. In 1995, the Company
received from Polar the remaining quarterly installments, which totaled
$750,000. Principal and accrued interest on the Note are due December 2004.
Contemporaneously, the parties also entered into a Joint Enterprise Agreement
(the Agreement) whereby Polar granted the Company the sole and exclusive right
to distribute and sell copies of the software, in exchange for a percentage of
the revenues generated. Under certain circumstances, the Company may reacquire
the software. This agreement will remain in effect until such time as the
Company does so. Such reacquisition is triggered by the occurrence, on or after
January 1, 1997, of any one of several events, the occurrence of which requires
Polar to convey all rights it has to the software to the Company in exchange
for a number of shares of common stock to be determined in accordance with the
Agreement. The Agreement also defines the terms of payment by Polar on the
Note, which is based upon Polar's percentage of revenues earned under the
Agreement.
As the arrangements with Polar give the Company rights to exclusively sell
and distribute the software and provide under certain circumstances for the
reacquisition of the software as described above, the Company retains an
ongoing economic interest in the software. Therefore, the OPTIMA software sale
has been reflected in the financial statements as a financing arrangement and
the Note has not been established as a receivable on the Company's balance
sheet.
6. Stock Options
The Company has a qualified employee incentive stock option plan allowing
for the issuance of options for 5,000,000 shares of common stock. The options
generally expire in eight years and are exercisable in annual installments of
25%, starting one year from the date of grant.
A summary of stock option activity follows (all amounts reflect the 10 for 1
reverse stock split):
<TABLE>
<CAPTION>
1998 1999
----------------- -----------------
Weighted Weighted
Number average Number average
of exercise of exercise
options price options price
------- -------- ------- --------
<S> <C> <C> <C> <C>
Balance as of beginning of year............. 311,326 $4.00 365,351 $2.20
Options granted............................ 94,951 3.30 339,869 4.10
Options expired............................ (37,738) 2.70 (55,163) 2.90
Options exercised.......................... (3,188) 1.60 (3,000) 2.20
------- ----- ------- -----
Balance as of end of year................... 365,351 $2.20 647,057 $3.30
======= ===== ======= =====
</TABLE>
9
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
At December 31, 1999, 185,626 options with a weighted-average exercise price
of $1.50 were fully vested and exercisable.
The following summarizes information about the Company's stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
-------------------------- --------------------------
Weighted Weighted
average average
Number remaining Number remaining
outstanding at contractual outstanding at contractual
December 31, life December 31, life
Range of exercise prices 1999 (years) 1999 (years)
- ------------------------ -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
$.1 - .5................. 103,488 3.3 98,951 3.3
$1.50.................... 34,125 5.1 17,063 5.1
$3.00 - 4.79............. 509,444 7.0 69,612 6.1
------- -------
Totals................... 647,057 185,626
======= =======
</TABLE>
Had compensation cost been recognized pursuant to SFAS No. 123, the
Company's loss would have been increased to the pro forma amount indicated
below:
<TABLE>
<CAPTION>
1999
----------
<S> <C>
Net loss, as reported............................................. $2,450,227
Pro Forma net loss................................................ $2,632,352
</TABLE>
The per-share weighted-average fair value of stock options issued by the
Company during 1999 was $1.25 on the date of grant.
The following range of assumptions was used by the Company to determine the
fair value of stock options granted using a minimum value option-price model:
<TABLE>
<CAPTION>
<S> <C>
Dividend yield....................................................... 0%
Average expected option life......................................... 6 years
Risk-free interest rate.............................................. 5.60%
</TABLE>
The full impact of calculating compensation cost for stock options under
SFAS No. 123 is not reflected in the pro forma loss amounts presented above
because compensation cost is reflected over an option's vesting period and
compensation cost for options granted prior to January 1, 1996, is not
considered. Compensation costs of $613,860 will be recognized in the pro forma
net loss in future years.
7. Convertible and Redeemable Preferred Stock
The Company is authorized to issue up to 20,000,000 shares of preferred
stock, including shares which can be designated by the Board of Directors as
$.01 Convertible Preferred Stock--Series A, B, C, D and E or Redeemable
preferred stock--Series F and 2,773,304 shares of undesignated preferred stock.
As of December 31, 1999, the Board of Directors issued 9,150,000, 833,249, 0,
5,000,000, and 1,096,682 shares of Series A, B, C, D, and E Convertible
Preferred Stock, respectively. All convertible shares are voting and with
respect to Series A, B, C and D, convertible at the option of the holder at any
time into the Company's common stock at a conversion rate of one share of
common stock per ten shares of preferred stock. Series E
10
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
preferred stock is convertible into a conversion unit that includes one share
of common stock and one share of Series F preferred stock per share of Series E
preferred stock converted. Series E preferred stock is automatically converted
to conversion units upon an initial public offering or sale transaction. Series
F redeemable preferred stock is redeemable upon an initial public offering with
gross cash proceeds of at least $30,000,000 or upon a sale of the company for
$7,000,000 plus all accrued but unpaid dividends. The conversion rates are
subject to adjustment based on the occurrence of certain events.
Participating dividends on Series A, B, C and D are payable upon the
approval of the Board of Directors, and holders of preferred stock must be paid
such dividends before dividends can be paid on common stock. The Series A, B, C
and D preferred stockholders are entitled to the amount of dividends per share
as would be declared payable on the largest number of whole and fractional
shares of common stock into which each share of convertible preferred stock
could be converted as of the record date.
Series E preferred stock accrues cumulative dividends commencing July 1,
2001 at an annual rate of 8%. Series F redeemable preferred accrues cumulative
dividends at 8% from the date of issue.
In the event of liquidation, the holders of each share of preferred stock
shall be entitled to be paid first out of the assets available for
distribution, an amount equal to $.20 per share for Series A and B, $.40 per
share for Series D, $6.38 per share for Series E and F, plus total dividends in
arrears on each share. The remaining assets shall be distributed among the
holders of common and preferred stock in proportion to the shares of common
stock held and the shares of common stock that the preferred stockholders have
the right to acquire upon conversion of such shares of preferred stock held by
them.
All convertible preferred shares are subject to certain anti-dilution
provisions.
8. Leases
The Company is obligated under several noncancelable operating leases and
capital leases that expire over the next five years. During 1999, the Company
entered into capital lease arrangements for computer hardware totaling
$284,803. Rent expense for the years ended December 31, 1998 and 1999, was
$262,613 and $374,700, respectively. Future minimum lease payments under
noncancelable operating leases and the capital lease (with initial or remaining
lease terms in excess of one year) as of December 31, 1999, are:
<TABLE>
<CAPTION>
Capital Operating
Year ending December 31, leases leases
- ------------------------ --------- ----------
<S> <C> <C>
2000..................................................... $ 255,735 $ 381,969
2001..................................................... 108,327 396,099
2002..................................................... 119,433 397,543
2003..................................................... 37,535 209,646
2004..................................................... 21,686 20,116
Thereafter............................................... -- --
--------- ----------
Total minimum lease payments........................... 542,716 $1,405,373
==========
Less: amount representing interest....................... (83,034)
---------
Present value of net minimum capital lease payments.... 459,682
Less: current installments of obligations under capital
leases.................................................. (176,625)
---------
Obligations under capital leases, excluding current
installments............................................ $ 283,057
=========
</TABLE>
11
<PAGE>
EMAX Solution Partners, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
December 31, 1998 and 1999
9. Business and Credit Concentrations
The Company sells its services directly to or as a subcontractor to
chemical, pharmaceutical and other manufacturing companies located primarily in
the Eastern region of the United States. During 1998 and 1999, four customers
accounted for 63% and 81%, respectively, of total revenues. At December 31,
1998 and 1999, two customers accounted for 64% and 67% of the accounts and
unbilled receivable balances, respectively.
10. Sale of SAP EHS Business
In July 1998, the Company entered into an agreement to sell its SAP EHS
environmental software business unit in exchange for cash and warrants for
equity in the newly formed company. The SAP EHS business provided consulting
services to customers who used the Company's SAP R/3 EHS software. The Company
sold the rights, title and interests to the contracts related to the SAP EHS
business and any related permits and customer certifications.
Proceeds from the sale were contingent upon the formation and success of the
new entity which would continue the SAP EHS business. The new entity was
formed, however, the business did not materialize to the extent anticipated.
Although EMAX had the rights to exercise warrants and was entitled to $310,000
in 1998, the gain on the sale was not recorded due to the uncertainty of
collection of the amounts due under the agreement and the dependency of the
consideration on the future results of the business sold by EMAX. EMAX
management decided to recognize a gain on the sale only to the extent cash
consideration was collected or probable of collection. $250,000 has been
collected and recognized as a gain.
11. Subsequent Event
On March 13, 2000 the Company entered into an Agreement and Plan of Merger
and Reorganization with SciQuest.com, Inc. and its subsidiary SciQuest
Acquisition, Inc. whereby all shares of capital stock of the Company, including
common and preferred stock, would be converted to shares of SciQuest.com, Inc.
Additionally, all Company options would become exercisable for SciQuest.com,
Inc. common stock.
12
<PAGE>
EXHIBIT 7.2
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The unaudited pro forma combined balance sheet and statement of operations
data as of and for the year ended December 31, 1999 combines the historical
balance sheets and statement of operations of SciQuest.com and EMAX Solution
Partners, Inc. as if the acquisition of EMAX had been completed on December 31,
1999 and January 1, 1999, respectively. We issued 1,999,833 shares of common
stock in the acquisition, which will be accounted for using the purchase method
of accounting. The unaudited pro forma balance sheet and statement of
operations and the accompanying notes should be read in conjunction with the
historical financial statements (including the related notes) of SciQuest.com
and EMAX appearing elsewhere in this prospectus, and Management's Discussion
and Analysis of Financial Condition and Results of Operations.
The pro forma adjustments reflecting the consummation of the acquisition are
based on the purchase method of accounting, available financial information and
certain estimates and assumptions set forth in the notes to the unaudited pro
forma balance sheet and statement of operations data. The unaudited pro forma
balance sheet and statement of operations data reflects our management's best
estimates; however, the actual financial position and results of operations may
differ significantly from the pro forma amounts reflected herein due to various
factors, including, without limitation, access to additional information and
changes in value. The pro forma adjustments do not reflect any operating
efficiencies or cost savings that may be achievable with respect to the
combined businesses of SciQuest.com and EMAX. The pro forma net loss per common
share reflects the conversion of our preferred stock into common stock, which
occurred upon the closing of our initial public offering on November 19, 1999,
as if such conversion occurred on January 1, 1999, or the date of issuance of
the preferred stock, if later, and the acquisition of EMAX.
The unaudited pro forma statement of operations data for the year ended
December 31, 1999 do not purport to represent what the actual results of the
combined businesses would have been if the acquisition of EMAX had occurred on
January 1, 1999, nor does this information purport to project our results for
any future period.
1
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA
<TABLE>
<CAPTION>
Year Ended December 31, 1999
-------------------------------------------------------------
(in 000's)
Pro Forma Pro Forma
SciQuest.com EMAX Combined Adjustment Combined
(audited) (audited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Product and advertising
revenue................ $ 3,882 $ -- $ 3,882 $ -- $ 3,882
Software license,
consulting and
maintenance revenue.... -- 6,994 6,994 -- 6,994
---------- ------- -------- -------- --------
Total revenues......... 3,882 6,994 10,876 -- 10,876
Cost of product and
advertising revenues... 3,427 -- 3,427 -- 3,427
---------- ------- -------- -------- --------
Gross profit........... 455 6,994 7,449 -- 7,449
---------- ------- -------- -------- --------
Operating expenses:
Development............ 9,008 -- 9,008 5,482 (b) 14,490
Sales and marketing.... 10,206 -- 10,206 1,827 (b) 12,033
General and
administrative........ 7,076 -- 7,076 2,347 (b) 9,423
Operating costs and
expenses.............. -- 5,244 5,244 (5,244)(b) --
Selling, general and
administrative........ -- 4,412 4,412 (4,412)(b) --
Stock based non-cash
employee compensation. 323 -- 323 -- 323
Stock based non-cash
customer acquisition
costs................. 9,108 -- 9,108 -- 9,108
Amortization of
goodwill ............. -- -- -- 40,139 (a) 40,139
---------- ------- -------- -------- --------
Total operating
expenses.............. 35,721 9,656 45,377 40,139 85,516
---------- ------- -------- -------- --------
Operating loss.......... (35,266) (2,662) (37,928) (40,139) (78,067)
Other income (expense),
net.................... 1,869 212 2,081 -- 2,081
---------- ------- -------- -------- --------
Loss before income
taxes.................. (33,397) (2,450) (35,847) (40,139) (75,986)
Income tax benefit...... 219 -- 219 -- 219
---------- ------- -------- -------- --------
Net loss................ $ (33,178) $(2,450) $(35,628) $(40,139) $(75,767)
========== ======= ======== ======== ========
Pro forma net loss per
common share--basic and
diluted................ $ (2.09) $ (4.25)
Pro forma weighted
average common shares
outstanding............ 15,846 17,846
</TABLE>
- ----------------
(a) Reflects the amortization of the goodwill and intangible assets recorded
in the acquisition of EMAX using a three year life assuming that the
acquisition occurred on January 1, 1999.
(b) Reflects the reclassification of the operating expenses of EMAX to conform
to our method of presentation.
2
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1999
-------------------------------------------------------------
(in 000's)
Pro Forma Pro Forma
SciQuest.com EMAX Combined Adjustment Combined
(audited) (audited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash
equivalents........... $ 98,127 $ 2,066 $ 100,193 $ -- $ 100,193
Short-term investments. 24,285 -- 24,285 -- 24,285
Accounts receivable.... 1,772 1,767 3,539 -- 3,539
Prepaid expenses and
other assets.......... 1,625 121 1,746 -- 1,746
--------- ------- --------- -------- ---------
Total current assets... 125,809 3,954 129,763 -- 129,763
--------- ------- --------- -------- ---------
Long-term investments... 23,592 -- 23,592 -- 23,592
Property and equipment,
net.................... 2,869 697 3,566 -- 3,566
Capitalized development
costs, net............. 1,392 -- 1,392 -- 1,392
Goodwill and other
intangibles............ -- -- -- 120,417 (b) 120,417
Other assets............ 3,239 116 3,355 -- 3,355
--------- ------- --------- -------- ---------
Total assets........... $ 156,901 $ 4,767 $ 161,668 $120,417 $ 282,085
========= ======= ========= ======== =========
Liabilities and
Stockholders' Equity
(Deficit)
Current Liabilities:
Accounts payable....... $ 4,251 $ 7 $ 4,258 $ -- $ 4,258
Accrued liabilities.... 1,111 811 1,922 -- 1,922
Deferred revenue....... -- 1,569 1,569 -- 1,569
Current maturities of
capital lease
obligations........... 463 176 639 -- 639
Current maturities of
notes payable......... -- -- -- -- --
--------- ------- --------- -------- ---------
Total current
liabilities........... 5,825 2,563 8,388 -- 8,388
--------- ------- --------- -------- ---------
Deferred stock issuance. -- 1,000 1,000 (1,000)(c) --
Deferred income taxes... 66 -- 66 -- 66
Capital lease
obligations, less
current maturities..... 1,191 283 1,474 -- 1,474
Stockholders' equity
(deficit): --
Preferred stock........ -- 161 161 (161)(c) --
Common stock........... 26 2 28 2 (b) 28
(2)(c)
Additional paid-in
capital............... 591,842 10,240 602,082 122,338 (b) 714,180
(10,240)(c)
Treasury stock......... -- (5) (5) 5 (c) --
Notes receivable from
officers.............. -- (17) (17) 17 (c) --
Deferred compensation.. (12,276) -- (12,276) -- (12,276)
Deferred customer
acquisition costs..... (391,139) -- (391,139) -- (391,139)
Accumulated other
comprehensive loss.... -- (2) (2) -- (2)
Accumulated deficit.... (38,634) (9,458) (48,092) 9,458 (c) (38,634)
--------- ------- --------- -------- ---------
Total stockholders'
equity................ 149,819 921 150,740 121,417 272,157
--------- ------- --------- -------- ---------
Total liabilities and
stockholders' deficit. $ 156,901 $ 4,767 $ 161,668 $120,417 $ 282,085
========= ======= ========= ======== =========
</TABLE>
- ----------------
(b) Reflects the value of the 1,999,833 shares of our common stock issued to
acquire EMAX, based on the average closing price of our common stock of
$61.175 for the two day period immediately preceding and following the
date of the announcement of the acquisition, March 14, 2000. This purchase
price allocation is based on our best estimates, however, we intend to
have an independent valuation performed to determine the actual allocation
of the purchase price of EMAX. This allocation may result in a portion of
the purchase price being expensed as acquired in-process research and
development expense.
(c) Reflects the elimination of the stockholders' equity balances of EMAX as
this acquisition will be accounted for using the purchase method of
accounting and the repurchase of the intellectual property rights to the
OPTIMA technology by EMAX in accordance with the terms of the agreement
with Polar Investment Partners.
3
<PAGE>
EXHIBIT 99.1
SciQuest.com Acquires EMAX Solution Partners, Inc.
(BW)(NC-SCIQUEST.COM)(SQST) SciQuest.com Acquires EMAX Solution Partners, Inc.
Business Editors/High Tech Writers
NOTE TO MEDIA: Photo available on BW PhotoWire/AP PhotoExpress,
NewsCom, PressLink and on Business Wire's Web site
at www.businesswire.com
RESEARCH TRIANGLE PARK, N.C. and NEWTOWN SQUARE, Pa. --(BUSINESS WIRE)--March
14, 2000--
Creates the first electronic "Source-to-Discovery" supply
chain solution for life sciences
SciQuest.com (NASDAQ:SQST), a leading business-to-business e-marketplace for
----
products used by pharmaceutical, chemical, biotechnology, industrial and
educational organizations, today announced that it has signed a definitive
agreement to acquire EMAX Solution Partners, Inc.
The agreement unites SciQuest.com with a leading supplier of e-Research
capabilities and online solutions for the life sciences. EMAX's e-Research
technology, used by more than 10,000 research scientists around the world,
manages the sourcing, requisition, receipt, internal inventory management and
tracking, and disposal of chemical reagents and proprietary compounds that are
used, created or screened in life science research operations.
The acquisition of EMAX is expected to give researchers that utilize the
SciQuest marketplace the ability to both purchase and continually manage
critical research material assets from a single desktop interface. The
consolidation of these functions on the desktop is designed to enable
researchers to speed new compound discovery, reduce administrative and inventory
management overhead, boost productivity, assure worker health and safety
compliance and streamline substance logistics management throughout research
operations.
Under the terms of the agreement, SciQuest.com common stock with an aggregate
value of approximately $150 million will be exchanged for all outstanding shares
and options of EMAX. The acquisition has been approved by the boards of
directors of both companies and is subject to various closing conditions. After
closing, EMAX Solution Partners, Inc. will be known as EMAX Solutions, a
SciQuest.com company. EMAX Solutions will remain headquartered in Newtown
Square, Pennsylvania.
"As a SciQuest.com company, we expect EMAX Solutions to advance our core mission
of streamlining product purchase and management in the $36 billion laboratory
products marketplace," said Scott Andrews, CEO, SciQuest.com. "Our buyer
communities worldwide will have the opportunity to improve research productivity
while driving down supply chain costs, and our laboratory product suppliers can
become incorporated more strategically into the everyday work processes of
research organizations that use EMAX technology."
"Both buyers and suppliers of laboratory products and chemical reagents will now
have the option of unified product supply chain access and management," said Jeb
Connor, CEO, EMAX. "Discovery research operations will gain a platform that
unites their B2B e-commerce and supply-chain processes for reagents and lab
supplies with their mission critical gene-to-lead substance creation, screening
and logistics process - resulting in faster discovery of new chemical entities,
cost containment, and researcher productivity." About SciQuest.com
SciQuest.com is a leading business-to-business e-marketplace for scientific
products used by pharmaceutical, chemical, biotechnology, industrial and
educational organizations worldwide. By leveraging its extensive laboratory
products and supply chain management expertise with its exclusive supplier
relationships and robust portfolio of e-procurement solutions, SciQuest.com
reduces customers'
1 of 2
<PAGE>
procurement costs and increases researchers' productivity. Additionally,
SciQuest.com provides suppliers a cost-effective sales and marketing channel.
The company's e-marketplace is distributor-neutral and can be customized and
seamlessly integrated with its customers' enterprise systems. SciQuest.com is
headquartered in Research Triangle Park, NC, with offices in Mountain View, CA,
and Plainview, NY. For more information about SciQuest.com, please visit
http://www.sciquest.com or call 919-659-2100. About EMAX Solution Partners
Based near Philadelphia, EMAX Solution Partners, Inc. is the pioneer of
e-Research asset management and planning solutions, a domain expert in drug
discovery work processes and technologies, and the leading innovator of software
and Internet supply chain solutions for life science research organizations.
EMAX's e-Research software platform unites scientists, research managers and
suppliers into a collaborative e-service network enabling on-demand, research
enterprise-wide management of the substances and reagents that enable high
throughput drug discovery. By eliminating the traditionally time-consuming
search for research materials, EMAX enables scientists to focus on lead
discovery and decreases the cost per lead by enabling capacity and throughput
optimization throughout the discovery operation. Additional information about
EMAX can be found at http//www.emax.com.
EMAX is a registered trademark of EMAX Solution Partners, Inc. SciQuest and
SciQuest.com are trademarks of SciQuest.com, Inc. All other trademarks are the
property of their respective holders.
Statements in this press release that are not historical facts are
forward-looking statements that involve risks and uncertainties. For such
statements, the Company claims the protection of the safe harbor for
forward-looking statements under the Private Securities Litigation Reform Act of
1995. The potential risks and uncertainties associated with these
forward-looking statements could cause actual results to differ materially from
those presented herein, and the reported results should not be considered as an
indication of future performance. Factors that could cause actual results to
differ from those contained in the forward-looking statements include, among
others, the Company's ability to successfully market the SciQuest.com brand,
increase transaction volume, attract and retain a broad range of purchasers and
suppliers, to effectively add additional products to its e-commerce database and
to otherwise operate efficiently and cost effectively. These and other risk
factors are discussed in the Company's Registration Statement on Form S-1, filed
with the Securities and Exchange Commission on November 19, 1999.
Note: A Photo is available at URL:
http//businesswire.com/cgi-bin/photo.cgi?pw.031400/bwl
CONTACT: RLM
Anita Bose, 212/484-7699
[email protected]
or
Cunningham Communication, Inc. for SciQuest.com
Media: Patrick Ward, 617/494-8202
[email protected]
or
EMAX Solutions Partners, Inc.
Jim Fields, 610/325-3700
[email protected]
Copyright 2000, Business Wire. All of the releases provided by Business Wire
are protected by copyright and other applicable laws, treaties and conventions.
Information contained in the release is furnished by Business Wire's members,
who are solely responsible for their content, accuracy and originality. All
reproduction, other than for an individual user's reference, is prohibited
without prior written permission.
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