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
October 31, 2000
Date of Report
(Date of Earliest Event Reported)
PACIFIC WEBWORKS, INC.
(Exact Name of Registrant as Specified in its Charter)
1760 Fremont Drive
Salt Lake City, Utah 84104
(Address of principal executive offices)
(801) 578-9020
Registrant's telephone number
NEVADA 000-26731 87-0627910
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
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In this report references to "Pacific WebWorks," "we," "us," and "our"
refer to Pacific WebWorks, Inc.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this report that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate," or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Pacific WebWork's control. These factors include but are not limited to
economic conditions generally and in the industries in which Pacific WebWorks
may participate; competition within Pacific WebWork's chosen industry,
including competition from much larger competitors; technological advances and
failure by Pacific WebWorks to successfully develop business relationships.
ITEM 2: ACQUISITION AND DISPOSITION OF ASSETS
On October 31, 2000, Pacific WebWorks signed an Agreement and Plan of
Reorganization to acquire all the outstanding and issued common stock of
Logio, Inc., a Nevada corporation. Pursuant to the agreement, Pacific
WebWorks's will issue 2,800,000 shares, par value $0.001, in exchange for
18,425,830 outstanding common shares of Logio. As a result of the exchange,
Logio will become the wholly owned subsidiary of Pacific WebWorks.
About Logio
Logio, Inc., formerly WordCruncher Internet Technologies, Inc., is a
development stage company historically engaged in the development and
marketing of a focused Internet directory and search engine which serves the
needs of the business professional. Logio launched its web site, logio.com,
on March 19, 2000. The web site was designed to provide a broad spectrum of
the information and services that are required by business people in their
daily work activities. In June 2000, Logio shifted its business model towards
the generation of revenues from set-up and maintenance fees from the sale of
its directory in private label form to certain Internet sites and corporate
intranets. Logio.com was taken down in early October pending the completion
of the Pacific WebWorks transaction. Logio is uncertain as to when it will
emerge from the development stage.
Summary of Agreement Terms
(1) Pacific WebWorks intends to acquire 100% of the 18,425,830 shares of
Logio common stock which are issued and outstanding as of October 31,
2000.
(2) Pacific WebWorks will exchange 2.8 million shares of its common stock
for approximately 18.4 million shares of Logio common stock, or an
exchange ratio of approximately 6.6 Logio shares for one Pacific
WebWorks shares.
(3) The acquisition is contingent upon stockholder approval by a majority
of Logio's stockholders and Logio expects to obtain stockholder
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approval at a special meeting of its stockholders to be held December
22, 2000.
(4) The acquisition is contingent upon registration of the 2.8 million
Pacific WebWorks shares. Pacific WebWorks expects to file a
registration statement on Form S-4 to register the shares to be
exchanged under the Securities Act of 1933. The SEC must review that
registration statement and declare it effective before the exchange
can occur.
(5) Pacific WebWorks plans to structure the acquisition as a tax-free,
stock-for-stock transaction which complies with the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
(6) Termination of the agreement may occur if either party fails to comply
in any material respect with the covenants and agreements outlined in
the agreement or if any representations or warranties in the
acquisition agreement are materially inaccurate. The parties may
terminate the agreement by mutual consent.
(7) Upon completion of the exchange Logio's stockholders will hold
approximately 15.8% of the 17,658,342 then issued and outstanding
shares of Pacific WebWorks.
Consideration for the Acquisition. The consideration exchanged in the
acquisition was negotiated at "arms length" and our management used criteria
from similar proposals, including the market value of Logio's common shares,
the relative value of the assets of Logio, Logio's present and past business
operations, the future potential of Logio, certain members of the management
of Logio and the potential benefit to the stockholders of Pacific WebWorks.
The source of the consideration we intend to use to acquire our interest in
Logio is 2.8 million authorized but unissued common shares of Pacific
WebWorks. The 6.6 to 1 exchange rate was based upon the considerations listed
above coupled with the trading history of both companies' shares on the OTC
Bulletin Board over the 30 days prior to the letter of intent. Our board of
directors determined that the consideration for the exchange was reasonable
based upon these factors.
Relationships Between Pacific WebWorks and Logio. In August 2000 our
management met with members of Logio to discuss sales and marketing ideas for
the Logio technology. As a result of this meeting our management realized
that Logio's technology would lend itself to the additional products we had
outlined in our business plan. Later that month our management returned to
Logio to evaluate its technology in more detail. During the next several
weeks the companies held meetings which culminated in the letter of intent in
September for the acquisition of Logio by Pacific WebWorks.
Except as described in this report, neither we, nor to the best of our
knowledge, any of our directors, executive officers or other affiliates had
any contract, arrangement, understanding or relationship with any other person
with respect to any Logio shares. Except as described in this report there,
have been no contacts, negotiations or transactions within the last two years
between us or any of our directors, executive officers or their affiliates, on
the one hand, and Logio or its affiliates, on the other hand, regarding the
merger, consolidation, acquisition of shares or election of directors.
Assets Involved. At September30, 2000, Logio had $1,755,093 in total assets.
The majority of their assets, 84.4%, are fixed assets, which have a net book
value of $1,480,493. Their fixed assets consist
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mostly of computer equipment, which was acquired to run Logio's Internet
application. The computers are mostly Sun Mircrosystems servers and
workstations. Along with the Sun equipment, Logio has load balancing and
firewall equipment, which improve upon and protect the accessibility to their
application. Cash is the next most significant assets at $171,226 or 9.8% of
total assets. The balance of Logio's assets are primarily prepaid assets
mostly for service contracts on their computer equipment, and are being
amortized over their contract period.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements.
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements of Logio
which are required by this Item 7(a). Such financial statements shall be
filed by amendment to this Form 8-K before January 12, 2001.
(b) Pro Forma Financial Information.
The pro forma consolidated financial statements of Pacific WebWorks for
the period ended September 30, 2000 and the year ended December 31, 1999 are
attached. The pro forma consolidated statements of operation assumes that the
entities were together as of January 1, 1999. The pro forma consolidated
balance sheet assumes elimination of intercompany payables and receivables,
the issuance of 2,800,000 shares of common stock and the amortization of good
will.
(c) Exhibits.
Exhibit No. Exhibit
---------- -------
2.1 Agreement and Plan of Reorganization between Pacific
WebWorks and Logio, dated October 31, 2000.
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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.
Pacific WebWorks, Inc.
/s/ Christian Larsen 11/10/00
By: _____________________________________________ Date:_______________
Christian Larsen, President
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PROFORMA - CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Pacific
Logio, Inc Webworks, Inc. Before Adjustments
September 30, September 30, Adjustments -------------------------- Proforma
2000 2000 NewCo DR CR NewCo
------------- ------------- ------------- ------------ ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 171,226 $ 72,044 $ 243,270 $ 243,270
Short term investments - - - -
Accounts receivable 28,815 232,483 261,298 261,298
Employee receivables - 3,924 3,924 3,924
Note receivable - - - -
Prepaid assets 68,748 362,350 431,098 431,098
------------- ------------- ------------- ------------ ------------- -------------
Total current assets 268,789 670,801 939,590 939,590
------------- ------------- ------------- ------------ ------------- -------------
PROPERTY & EQUIPMENT, net 1,480,493 443,826 1,924,319 1,924,319
OTHER ASSETS 5,811 4,631,723 4,637,534 1,999,442 299,916 6,337,060
------------- ------------- ------------- ------------ ------------- -------------
$ 1,755,093 $ 5,746,350 $ 7,501,443 $ 9,200,969
============= ============= ============= ============ ============= ============
CURRENT LIABILITIES
Current portion of long-term
capital lease obligations $ 312,880 $ - $ 312,880 312,880
Accounts payable 99,866 473,599 573,465 573,465
Accrued expenses 57,091 271,485 328,576 328,576
Deferred Revenues - 2,967,088 2,967,088 2,967,088
Notes Payable-Related Parties - 216,580 216,580 216,580
Notes Payable - Vendors 96,116 - 96,116 96,116
------------- ------------- ------------- ------------ ------------- ------------
Total current liabilities 565,953 3,928,752 4,494,705 4,494,705
CAPITAL LEASE OBLIGATIONS,
less current maturities 38,582 - 38,582 38,582
STOCKHOLDERS' EQUITY
(Notes 3, 5 and 6)
Preferred stock - - - -
Common stock 17,271 14,858 32,129 17,271 (2,800) 17,658
Additional paid-in capital 18,371,258 9,763,603 28,134,860 18,371,258 (3,147,200) 12,910,803
Accumulated deficit (17,237,971) (7,960,863) (25,198,834) 299,916 (17,237,971) (8,260,779)
------------- ------------- ------------- ------------ ------------- ------------
Total stockholders' equity 1,150,558 1,817,598 2,968,156 4,667,682
------------- ------------- ------------- ------------ ------------- ------------
$ 1,755,092 $ 5,746,350 $ 7,501,442 $ 9,200,969
============= ============= ============= ============ ============= ============
</TABLE>
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<TABLE>
<CAPTION>
PROFORMA - CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Pacific
Logio, Inc. Webworks, Inc.
Nine Months Nine Months
Ended Ended Before Adjustments
September 30, September 30, Adjustments -------------------------- Proforma
2000 2000 NewCo DR CR NewCo
------------- ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Advertising $ 2,180 $ - 2,180 $ 2,180
Product - 3,273,508 3,273,508 3,273,508
------------- ------------- ------------- ------------ ------------- -------------
2,180 3,273,508 3,275,688 3,275,688
Cost of sales 440,907 212,597 653,504 653,504
------------- ------------- ------------- ------------ ------------- -------------
Gross profit (loss) (438,727) 3,060,911 2,622,184 2,622,184
------------- ------------- ------------- ------------ ------------- -------------
Research and development 1,672,316 645,372 2,317,688 2,317,688
Selling expenses 658,034 4,503,581 5,161,615 5,161,615
General and administrative 976,183 2,255,464 3,231,647 3,231,647
Depreciation and amortization 606,141 730,052 1,336,193 299,916 1,636,109
Compensation expense for
stock options 631,242 - 631,242 631,242
------------- ------------- ------------- ------------ ------------- -------------
Total operating expenses 4,543,916 8,134,469 12,678,385 299,916 12,978,301
------------- ------------- ------------- ------------ ------------- -------------
Loss from operations (4,982,643) (5,073,558) (10,056,201) (299,916) (10,356,117)
Other income (expense)
Interest income 55,002 - 55,002 55,002
Financing charges (133,703) - (133,703) (133,703)
Loss on disposal of equipment (2,215) - (2,215) (2,215)
Interest expense (96,422) (100,553) (196,975) (196,975)
------------- ------------- ------------- ------------ ------------- -------------
(177,338) (100,553) (277,891) (277,891)
------------- ------------- ------------- ------------ ------------- -------------
Net loss before
extraordinary item (5,159,981) (5,174,111) (10,334,092) (299,916) (10,634,008)
Extraordinary gain 204,238 - 204,238 204,238
------------- ------------- ------------- ------------ ------------- -------------
NET LOSS (4,955,743) (5,174,111) (10,129,854) (299,916) (10,429,770)
Deduction for dividends
and accretion (64,360) - (64,360) (64,360)
------------- ------------- ------------- ------------ ------------- -------------
Net loss attributable to
common stockholders $ (5,020,103) $ (5,174,111) $(10,194,214) $ (299,916) $ - $(10,494,130)
============= ============= ============= ============ ============= =============
Net loss per common share -
basic and diluted
Before extraordinary item
and deduction for dividends
and accretion (0.38) (0.41)
Extraordinary gain 0.020 -
Deduction for dividends
and accretion (0.01) -
------------- ------------- -------------
$ (0.37) $ (0.41) $ (0.69)
============= ============= =============
Weighted-average number of
shares outstanding - basic
and diluted 13,509,126 12,504,532 15,304,532
============= ============= =============
</TABLE>
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<TABLE>
<CAPTION>
PROFORMA - CONSOLIDATED STATEMENTS OF OPERATIONS
Pacific
Logio, Inc. Webworks, Inc.
Year Year
Ended Ended Before Adjustments
December 31, December 31, Adjustments -------------------------- Proforma
1999 1999 NewCo DR CR NewCo
------------- ------------- ------------- ------------ ------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Advertising $ - $ - $ -
Product 23,355 305,628 328,983 328,983
------------- ------------- ------------- ------------ ------------- -------------
23,355 305,628 328,983 328,983
Cost of sales 15,071 42,874 57,945 57,945
------------- ------------- ------------- ------------ ------------- -------------
Gross profit (loss) 8,284 262,754 271,038 271,038
------------- ------------- ------------- ------------ ------------- -------------
Research and development 1,198,546 320,479 1,519,025 1,519,025
Selling expenses 953,708 406,917 1,360,625 1,360,625
General and administrative 1,340,486 773,283 2,113,769 2,113,769
Depreciation and amortization 179,169 44,029 223,198 399,888 623,086
Compensation expense for stock
options and warrants 1,452,610 1,242,584 2,695,194 2,695,194
------------- ------------- ------------- ------------ ------------- -------------
Total operating expenses 5,124,519 2,787,292 7,911,811 399,888 8,311,699
------------- ------------- ------------- ------------ ------------- -------------
Loss from operations (5,116,235) (2,524,538) (7,640,773) (399,888) (8,040,661)
Other income (expense)
Interest income 196,310 1,246 197,556 197,556
Loss on Investment (25,000) (25,000) (25,000)
Interest expense (9,955) (19,243) (29,198) (29,198)
------------- ------------- ------------- ------------ ------------- -------------
186,355 (42,997) 143,358 143,358
------------- ------------- ------------- ------------ ------------- -------------
NET LOSS (4,929,880) (2,567,535) (7,497,415) (399,888) (7,897,303)
Deduction for dividends and
accretion (6,469,861) - (6,469,861) (6,469,861)
------------- ------------- ------------- ------------ ------------- -------------
Net loss attributable to
common stockholders (11,399,741) (2,567,535) (13,967,276) (399,888) (14,367,164)
============= ============= ============= ============ ============= =============
Net loss per common share -
basic and diluted (Note 4) $ (0.96) $ (0.27) $ (1.16)
============= ============= =============
Weighted-average number of
shares outstanding - basic
and diluted 11,879,919 9,632,500 12,432,500
============= ============= =============
</TABLE>
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