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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NUMBER 1
FILED OCTOBER 25, 2000
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 10, 2000
eUNIVERSE, INC.
(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C> <C>
NEVADA 0-26355 06-1556248
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
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6300 WILSHIRE BOULEVARD, SUITE 1700, LOS ANGELES, CALIFORNIA 90048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (323) 658-9089
101 NORTH PLAINS INDUSTRIAL ROAD, WALLINGFORD, CONNECTICUT 06492
(Former name or former address, if changed since last report.)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
As of October 10, 2000, CD Universe, Inc., a wholly-owned subsidiary of
eUniverse, Inc. ("CD Universe"), sold all of its assets to CLBL, Inc., a
Connecticut corporation ("CLBL"), for $1,000,000 in the form of a promissory
note, and assumption of certain liabilities related to the business. The
promissory note is payable in installments, without interest, and has a final
maturity date of September 30, 2001. The purchase price was determined through
arms length negotiations between the parties.
Additionally, CLBL has agreed to purchase $500,000 worth of advertising
on the eUniverse Network from eUniverse.
CLBL is a corporation formed by a former eUniverse director, Charles C.
Beilman, to acquire the assets of CD Universe. To secure payments under the
promissory note, Mr. Beilman has placed 825,000 of his shares of eUniverse
common stock into escrow.
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CLBL will assume the lease on the Wallingford, Connecticut facility,
which was maintained by eUniverse to conduct the operations of CD Universe.
Twenty employees of CD Universe will join CLBL. CLBL will continue to operate
through the cduniverse.com web site to sell music CDs, and VHS and DVD movies.
Mr. Beilman's employment with eUniverse ended on July 31, 2000.
Additionally, he resigned his position as a director of eUniverse on September
29, 2000 and was not a director of eUniverse at the time that the Boards of
Directors of eUniverse and CD Universe approved the transaction.
Last year, on April 14, 1999, eUniverse acquired from Charles Beilman,
then the sole shareholder of CD Universe, one hundred percent of the capital
stock of CD Universe for a total consideration of $1,915,000 in cash plus
2,425,000 shares of eUniverse common stock with a fair market value of
$7,275,000. In connection with this transaction, Charles Beilman became an
executive officer and a director of eUniverse.
In connection with the transaction between CD Universe and CLBL, the
Stock Option Agreement between Mr. Beilman and eUniverse dated as of January 26,
2000, as amended, was further amended. In addition to extending the Stock Option
Agreement until March 1, 2001, the amendment provides that eUniverse shall use
its reasonable best efforts, subject to applicable securities laws and
regulations, to assist Mr. Beilman to sell his shares of eUniverse common stock
(the "Shares"). All proceeds received by Mr. Beilman from any sale of the Shares
shall be distributed, as received, as follows: forty percent (40%) of the
proceeds shall be distributed to Mr. Beilman; and sixty percent (60%) of the
proceeds shall be distributed to eUniverse, provided that the proceeds
distributed to eUniverse shall go to offset the $500,000 advertising package
purchased by CLBL from eUniverse and that certain promissory note in the
principal amount of $1 million made by CLBL and secured by a pledge of the
Shares by Mr. Beilman in favor of CD Universe. Proceeds from the sale of Shares
received by eUniverse are to be ratably applied to each of the above
obligations. After the obligations are paid in full, any other proceeds received
from the sale of any Shares shall be distributed to Mr. Beilman. In the event
that the obligations are not fully paid by September 30, 2001, Beilman shall
transfer to eUniverse the number of Shares equal in value to the outstanding
obligations (assuming a purchase price of $1.85 per share) and eUniverse's
rights to receive proceeds from the sale of Shares under the Stock Option
Agreement shall automatically terminate upon receipt of such payment by Mr.
Beilman.
The sale of CD Universe's assets to CLBL represents a major step by
eUniverse to move from selling retail items over the Internet and to work
towards making the eUniverse network of web sites the number one entertainment
destination network on the Internet.
2
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information.
The pro forma income statement for the three-month period ended June 30, 2000
reflects the historical consolidated income statement of the registrant. Pro
forma adjustments have been made to give effect to the disposition of the assets
of the CD Universe business as if it had occurred as of the beginning of the
fiscal year presented (April 1, 2000) and carried forward through the interim
period presented. The pro forma balance sheet for June 30, 2000 reflects the
historical consolidated balance sheet of eUniverse, Inc. Pro forma adjustments
have been made to give effect to the disposition of the assets of the CD
Universe business as if it had occurred as of that date. The adjustments reflect
the disposal of the associated goodwill and intangibles of that business and the
related charge to retained earnings.
The pro forma income statement for the twelve-month period ended March 31, 2000
reflects the historical income statement for eUniverse, Inc. for the year ended
March 31, 2000. Pro forma adjustments have been made to give effect to the above
transaction as if it had occurred at the beginning of the twelve-month period
presented.
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EUNIVERSE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000
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<CAPTION>
Consolidated Pro forma Pro Forma
Income Statement adjustment Income Statement
for the to reflect for the
Three Months Ended disposition of Three Months Ended
June 30,2000 CD Universe June 30,2000
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Products............................................. $ 3,030,553 $ 3,030,553 $ -
Services............................................. 2,803,993 33,157 2,770,836
----------- ----------- -----------
TOTAL REVENUE 5,834,546 3,063,710 2,770,836
COST OF GOODS SOLD
Products............................................. 3,018,690 3,018,690 -
Services............................................. 573,482 - 573,482
----------- ----------- -----------
TOTAL COST OF GOODS SOLD 3,592,172 3,018,690 573,482
GROSS PROFIT
Products............................................. 11,863 11,863 -
Services............................................. 2,230,511 33,157 2,197,354
----------- ----------- -----------
TOTAL GROSS PROFIT 2,242,374 45,020 2,197,354
OPERATING EXPENSES:
Marketing and sales.................................. 2,855,471 1,152,390 1,703,081
Product development.................................. 1,166,374 509,774 656,600
General and administrative........................... 1,118,341 181,635 936,706
Amortization of goodwill
and other intangibles............................... 889,839 303,632 586,207
Stock-based compensation............................. (187,189) - (187,189)
----------- ----------- -----------
TOTAL OPERATING EXPENSES................................. 5,842,836 2,147,431 3,695,405
----------- ----------- -----------
OPERATING LOSS (3,600,462) (2,102,411) (1,498,051)
NONOPERATING INCOME (EXPENSE)
Interest and dividend income......................... 5,303 - 5,303
Interest expense..................................... (14,427) - (14,427)
----------- ----------- -----------
LOSS BEFORE INCOME TAXES (3,609,586) (2,102,411) (1,507,175)
INCOME TAXES ............................................ - - -
----------- ----------- -----------
NET LOSS $(3,609,586) $(1,242,606) $(1,242,606)
=========== =========== ===========
Basic loss per common share.............................. $ (0.20) $ - $ (0.07)
=========== =========== ===========
Basic weighted average common
shares outstanding...................................... 17,744,336 - 17,744,336
=========== =========== ===========
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EUNIVERSE, INC.
PRO FORMA BALANCE SHEET
JUNE 30, 2000
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<CAPTION>
Pro forma
adjustment
to reflect
Consolidated disposition of Pro Forma
Balance Sheet CD Universe Balance Sheet
--------------- -------------- ---------------
ASSETS
CURRENT ASSETS
<S> <C> <C> <C>
Cash and cash equivalents ........................................... $ 28,751 $ 28,751
Accounts receivable ................................................. 1,590,911 1,590,911
Inventory ........................................................... 333,192 (333,192) --
Notes receivable .................................................... -- 1,000,000 1,000,000
Due from employees .................................................. 153,200 153,200
Prepaid expenses and other current assets ........................... 2,594,166 2,594,166
------------ ------------ ------------
Total Current Assets .......... 4,700,220 666,808 5,367,028
FURNITURE AND EQUIPMENT, less accumulated depreciation ................... 1,259,991 (462,112) 797,879
GOODWILL, less accumulated amortization .................................. 28,941,486 (8,314,382) 20,627,104
OTHER INTANGIBLES, less accumulated amortization ......................... 921,961 (241,179) 680,782
Other Assets ............................................................. 486,175 (1,820) 484,355
------------ ------------ ------------
TOTAL ASSETS .............. $ 36,309,833 $ (8,352,685) $ 27,957,148
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable .................................................... $ .2,665,733 2,665,733
Accrued liabilities ................................................. 2,299,202 2,299,202
Accrued advertising ................................................. 2,157,595 2,157,595
Notes payable ....................................................... 1,250,000 1,250,000
Short-term portion of lease obligations ............................. 6,758 6,758
------------ ------------ ------------
Total Current Liabilities ........ 8,379,288 8,379,288
------------ ------------ ------------
LONG-TERM LIABILITIES
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock ..................................................... 178,252 178,252
Common stock ........................................................ 17,793 17,793
Additional paid-in capital .......................................... 42,411,732 42,411,732
Retained deficit .................................................... (14,677,232) (8,352,685) (23,029,917)
------------ ------------ ------------
Total Shareholders' Equity ....... 27,930,545 (8,352,685) 19,577,860
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 36,309,833 $ (8,352,685) $ 27,957,148
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EUNIVERSE, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 2000
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<CAPTION>
Consolidated Pro forma Pro Forma
Income Statement adjustment Income Statement
for the to reflect for the
Year Ended disposition of Year Ended
March 31, 2000 CD Universe March 31, 2000
---------------- --------------- -----------------
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REVENUE:
Products .......................... $ 8,864,461 $ 8,864,461 $ --
Services .......................... 2,069,737 227,296 1,842,441
------------ ------------ ------------
TOTAL REVENUE ......................... 10,934,198 9,091,757 1,842,441
COST OF GOODS SOLD
Products .......................... 8,153,179 8,153,179 --
Services .......................... 139,954 -- 139,954
------------ ------------ ------------
TOTAL COST OF GOODS SOLD .............. 8,293,133 8,153,179 139,954
GROSS PROFIT
Products .......................... 711,282 711,282 --
Services .......................... 1,929,783 227,296 1,702,487
------------ ------------ ------------
TOTAL GROSS PROFIT .................... 2,641,065 938,578 1,702,487
OPERATING EXPENSES:
Marketing and sales ............... 3,942,416 2,500,846 1,441,570
Product development ............... 2,222,176 1,082,341 1,139,835
General and administrative ........ 4,589,737 844,443 3,745,294
Amortization of goodwill
and other intangibles ............ 2,440,080 1,025,944 1,414,136
Stock-based compensation .......... 580,930 -- 580,930
------------ ------------ ------------
TOTAL OPERATING EXPENSES .............. 13,775,339 5,453,574 8,321,765
------------ ------------ ------------
OPERATING LOSS .................... (11,134,274) (4,514,996) (6,619,278)
NONOPERATING INCOME (EXPENSE)
Interest income ................... 62,518 671 61,847
Interest expense .................. -- -- --
Loss allocated to minority interest 4,110 -- 4,110
------------ ------------ ------------
LOSS BEFORE INCOME TAXES .......... (11,067,646) (4,514,325) (6,553,321)
INCOME TAXES .......................... -- -- --
============ ============ ============
NET LOSS .......................... $(11,067,646) $ (4,514,325) $ (6,553,321)
Basic and diluted loss per common share $ (0.70) $ -- $ (0.42)
============ ============ ============
Basic weighted average common
shares outstanding ................... 17,744,336 -- 15,765,108
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Notes to pro forma financial statements
Balance Sheet, June 30, 2000
1) To record disposal of the assets of the CD Universe business for a sale
price of $1,000,000. The sale price has been allocated as follows:
Inventory, $333,192; Fixed Assets, $462,112; Other assets, $1,820;
Intangibles, $241,179, Goodwill, $8,831,382 and Retained earnings,
$(8,352,685).
Income Statement, Three-months ended June 30, 2000 and Twelve-months ended
March 31, 2000.
2) To reflect disposal of the e-commerce business of eUniverse.
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(c) Exhibits.
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Exhibit
Number Exhibit Title/Description
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10.39.05 Fifth Amendment to Stock Option Agreement by and between
eUniverse, Inc. and Charles Beilman, dated as of October
10, 2000.*
10.47 Asset Purchase Agreement by and between CD Universe, Inc. and
CLBL, Inc., dated as of October 3, 2000.*
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* Previously filed with eUniverse's Form 8-K filed on October 24, 2000.
SIGNATURE
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 thereunto duly authorized.
Date: October 25, 2000 eUniverse, Inc.
(Registrant)
By: /s/ William R. Wagner
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William R. Wagner
Chief Financial Officer
