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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 15, 1999
Netzee, Inc.
(Exact name of registrant as specified in its charter)
Georgia 0-27925 58-2488883
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
6190 Powers Ferry Road, Suite 400, Atlanta, Georgia 30339
(Address of principal executive offices)
(770) 850-4000
(Registrant's telephone number including area code)
2410 Paces Ferry Road, 150 Paces Summit, Atlanta, Georgia 30339
(Former name, former address and former fiscal year,
if changed since last report)
Item 2. Acquisition or Disposition of Assets.
Pursuant to the terms of the Asset Purchase Agreement dated December 15, 1999 by
and among Netzee, Inc. ("Netzee"), Netcal, Inc., a wholly-owned subsidiary of
Netzee ("Netcal"), DPSC Software, Inc., a California corporation ("DPSC"), and
certain shareholders of DPSC, effective as of December 15, 1999, Netcal acquired
certain operating assets and assumed certain operating liabilities of DPSC for a
total purchase price (the "Purchase Price") of approximately $33,547,000,
including $18,500,000 in cash, 500,000 shares of Netzee Series A 8% Convertible
Preferred Stock having a value as of December 15, 1999 of approximately
$6,500,000, 525,000 shares of Netzee common stock having a value as of December
15, 1999 of approximately $7,547,000 and the payment of other acquisition costs
of approximately $1,000,000. Netzee paid the cash portion of the purchase price
using proceeds from the initial public offering of its common stock. A portion
of the shares of common stock and preferred stock issued in this transaction was
placed in escrow for indemnification and other purposes. The amount of the
consideration was determined based upon arm's length negotiations.
DPSC is located in Calabasas Hills, California and was engaged principally in
the business of developing, marketing and distributing software and providing
related products and services to financial institutions, including marketing and
distributing Internet banking software and other products of third parties.
Netzee intends to continue to use the acquired assets to engage in these
activities.
Bruce R. Gall, the founder and former Chief Executive Officer of DPSC, has
become an Executive Vice President of Netzee, Inc.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
It is impractical to provide the required financial statements for
DPSC at the date of the filing of this Form 8-K. The required
financial statements will be provided by amendment as soon as
practicable, but no later than sixty days after the date on which
this initial report on Form 8-K must be filed.
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(b) Pro Forma Financial Information.
It is impractical to provide the required pro forma financial
information at the date of the filing of this Form 8-K. The required
pro forma financial information will be provided by amendment as
soon as practicable, but no later than sixty days after the date on
which this initial report on Form 8-K must be filed.
(c) Exhibits.
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Item No. Exhibit List
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2.1* Asset Purchase Agreement dated December 15, 1999 by and among
Netzee, Netcal and DPSC.**
4.1* Form of Netzee, Inc. Series A 8% Convertible Preferred Stock
certificate.
4.2* Registration Rights Agreement, dated December 15, 1999, by
and between Netzee, Inc. and each of the former shareholders
of DPSC Software, Inc.
99.1 Press Release dated December 15, 1999.
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*Incorporated by reference from Netzee's Form 10-Q for the quarter ended
September 30, 1999, as filed with the Securities and Exchange Commission on
December 22, 1999.
**Pursuant to Item 601(b)(2) of Regulation S-K, Netzee agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
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 thereunto duly authorized.
NETZEE, INC.
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Date: December 30, 1999 /s/ Richard S. Eiswirth
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Executive Vice President, Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer and
Duly Authorized Officer)
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EXHIBIT LIST
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Exhibit No. Description
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2.1* Asset Purchase Agreement dated December 15, 1999 by and among
Netzee, Netcal and DPSC.**
4.1* Form of Netzee, Inc. Series A 8% Convertible Preferred Stock
certificate.
4.2* Registration Rights Agreement, dated December 15, 1999, by
and between Netzee, Inc. and each of the former shareholders
of DPSC Software, Inc.
99.1 Press Release dated December 15, 1999.
</TABLE>
*Incorporated by reference from Netzee's Form 10-Q for the quarter ended
September 30, 1999, as filed with the Securities and Exchange Commission on
December 22, 1999.
**Pursuant to Item 601(b)(2) of Regulation S-K, Netzee agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
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EXHIBIT 99.1
[NETZEE LOGO]
FOR IMMEDIATE RELEASE
Contact: Richard S. Eiswirth
Chief Financial Officer
770-805-2151
NETZEE, INC. ACQUIRES DPSC SOFTWARE, INC.
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EXPANDS PRODUCT LINE; INCREASES CUSTOMER PENETRATION
IN THE COMMUNITY BANKING MARKET;
ACQUIRES SOFTWARE PRODUCT LINE AND CUSTOMER SERVICE ORGANIZATION
ATLANTA (December 15, 1999) -- Netzee, Inc. (Nasdaq/NM:NETZ), a leading provider
of integrated Internet banking products, services and e-commerce solutions,
today announced the acquisition of DPSC Software, Inc. (DPSC), a provider of
specialized software for community banks and savings and loans, in exchange for
approximately $18.5 million cash, 500,000 shares of 8% cumulative preferred
stock of Netzee and 525,000 shares of common stock of Netzee. A portion of the
stock will be held back in escrow by Netzee. This acquisition significantly
enhances Netzee's product offerings and reach in the community banking arena.
Robertson Stephens advised Netzee in this transaction.
DPSC provides approximately 7,000 financial institutions with mission
critical software designed to meet the special needs of the community banking
industry. Management believes the acquisition of DPSC will provide both Netzee's
and DPSC's customers with an enhanced group of products and services, all backed
by a customer service organization committed to building strong relationships
with its community financial institution customers. The combined companies'
offerings will assist community financial institutions as they strive to level
the competitive playing field between themselves and large financial
institutions. By using Netzee's offerings, community financial institutions may
generate new fee income, strengthen relationships with current customers and
attract new ones.
Bruce R. Gall founded DPSC in 1982 as a microcomputer-based software
provider specializing in meeting the needs of the community banking industry.
The company provides nine software products including: CALLREPORTER, used by
more community banks and savings and loans than any other call report software;
Y9 REPORTER, a quarterly reporting system for bank holding companies; 2900
REPORTER; Financial Manager; 1099 Reporter; RISKREPORTER; RISK MONITOR; Bank
EIS; and Gap Manager. In addition to this suite of products, DPSC markets
Netzee's Internet banking products and services.
Glenn W. Sturm, chief executive officer of Netzee, Inc., said,
"Netzee's mission is to become invaluable to our banking customers by providing
an integrated product line, comprehensive marketing services and top quality
customer service. We believe that the DPSC name stands for high quality,
reliable products; extensive community banking experience; and first-rate
customer service. As a result, I believe that DPSC represents a wonderful fit
with Netzee's customer centered strategy."
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NETZ Acquires DPSC Software
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December 15, 1999
Netzee intends to keep DPSC's software unit intact as a separate
division of Netzee managed by vice presidents Ken Lemoine and Phil Templer, both
experienced veterans of DPSC. Bruce R. Gall, founder and chief executive officer
of DPSC, will remain with Netzee in an executive capacity. Netzee also plans to
utilize DPSC's sales, marketing and customer service operations and to add
DPSC's 22 employees to Netzee's operations. In addition, Netzee gains a Los
Angeles base of operation as a result of the acquisition.
Bruce R. Gall, founder and chief executive officer of DPSC, said, "We
have spent over 17 years creating mission critical software products for the
banking industry as well as building strong relationships with our customers. We
believe that quality products and personal, attentive service have uniquely
positioned DPSC with the approximately 7,000 financial institutions we serve. As
a result, we believe that our customers will look to us as an Internet banking
and e-commerce provider they can trust. Netzee offers the products and services
our customers demand including a secure, stable and scalable platform. We are
proud to join the Netzee team at this critical and very exciting time for the
community banking industry."
In connection with this transaction, Netzee also announced that it has
received a commitment for a $15 million line of credit from The InterCept Group,
Inc., an approximate 39% shareholder of Netzee. The line of credit will bear
interest at prime plus 2% with a term of three years and will be secured by
substantially all assets of Netzee. The proceeds will be used to fund working
capital needs, and the attainment of the line of credit is subject to
preparation and completion of definitive legal documentation. In connection with
this commitment, Netzee has terminated a previous line of credit. This
termination has resulted in the recognition of an extraordinary non-cash loss of
approximately $4.6 million in the fourth quarter of 1999 related to warrants
issued in connection with the previous line of credit.
ABOUT NETZEE, INC.
Netzee, Inc. was founded in 1999 as a subsidiary of The InterCept
Group, Inc. In 1999 Netzee strengthened its offerings through the acquisition of
companies including SBS Corporation, an Internet and telephone banking provider;
the Internet banking divisions of The Bankers Bank and The Independent
BankersBank; Call Me Bill, LLC, a bill payment service; and Dyad Corporation, a
developer of proprietary loan application, approval and fulfillment software.
Netzee became a public company in November 1999, raising approximately $61.6
million from its initial public offering.
Netzee provides over 650 institutional customers with one or more of
its products. Its products and services include full-service Internet banking,
e-commerce services, custom web site design and hosting, implementation and
marketing services, telephone banking, bill payment and Internet access service.
All of Netzee's products and services are supported by a help desk and 24x7
emergency support services.
This release contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E the Securities Exchange Act of 1934, as amended. These
statements include all statements that are not statements of historical fact
regarding the intent, belief or expectations of Netzee and its management with
respect to, among other things: (1) whether we can successfully combine the
operations we have acquired, and operations we may acquire, to create or
continue improvements in our financial condition; (2) the anticipated impact of
certain events and circumstances; (3) trends affecting Netzee's operations,
financial condition and business; (4) Netzee's growth and operating strategies
and (5) the continued and future acceptance of and demand for our products and
services by our customers. The words "may," "will," "anticipate," "believe,"
"intend," "plan," "allow," "strategy" and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements are not
guarantees of future performance and actual results may differ materially from
those projected in the forward-
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NETZ Acquires DPSC Software
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December 15, 1999
looking statements as a result of risks related to the integration of acquired
assets and businesses; the Company's ability to achieve, manage or maintain
growth and execute its business strategy successfully; its dependence on
developing, testing and implementing enhanced and new products and services;
Netzee's ability to sell its products and services to financial institution
customers and their customers; Netzee's ability to respond to competition; the
volatility associated with Internet-related companies; and various other factors
discussed in detail in the Company's filings with the Securities and Exchange
Commission, including the "Risk Factors" section in Netzee's Registration
Statement on Form S-1 (Registration No. 333-87089), as declared effective by the
Securities and Exchange Commission on November 8, 1999. Netzee undertakes no
obligations to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results.
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