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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 31, 2000
SYNBIOTICS CORPORATION
(Exact name of registrant as specified in its charter)
Commission file number 0-11303
California 95-3737816
(State or other jurisdiction (I.R.S. Employer
of incorporation ) Identification No.)
11011 Via Frontera
San Diego, California 92127
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (858) 451-3771
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Item 2. Acquisition or Disposition of Assets
------------------------------------
On December 31, 2000 we agreed to sell 84% of the outstanding common stock of
W3COMMERCE inc. ("W3"), our wholly-owned Internet marketing services subsidiary,
back to the ten original owners of W3; the transaction was completed on January
1, 2001. In conjunction with the disposition, our $2,813,000 convertible note
payable, issued to the original owners in conjunction with our January 12, 2000
acquisition of W3, was converted into 1,000,000 unregistered shares of our
common stock at a conversion rate of $2.8125 per share. 750,000 of those
unregistered shares totalling $328,000 (valued at $0.4375 per share) were
transferred to us as consideration for our 84% of W3. In addition, we
contributed $1,917,000 to the capital of W3, representing all of our outstanding
cash advances to W3 as of December 31, 2000, net of the cash on hand held by W3
as of December 31, 2000, and the original owners of W3 cancelled the
contingencies that would have entitled them to receive up to an additional
800,000 shares of our common stock if certain per share stock price targets for
our common stock were reached prior to January 12, 2003.
The original owners of W3, who were also involved in the present transaction,
include Colin Lucas-Mudd (who had been a director of Synbiotics Corporation) and
his wife.
Item 5. Other Events
------------
In conjunction with the disposition of our investment in W3, Colin Lucas-Mudd,
President and Chief Executive Officer of W3, resigned from our board of
directors.
Item 7. Financial Statements and Exhibits
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a) Financial statements of businesses acquired
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Not applicable.
b) Pro forma financial information
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The following unaudited pro forma condensed consolidated
balance sheet as of September 30, 2000 and the unaudited pro
forma condensed consolidated statement of operations for the
nine months ended September 30, 2000 give effect to the
disposition of our investment in W3 as of September 30, 2000
for the unaudited pro forma condensed consolidated balance
sheet and as of January 1, 2000 for the unaudited pro forma
condensed consolidated statement of operations. The unaudited
pro forma condensed consolidated financial statements are based
on our historical consolidated financial statements, giving
effect to the disposition and the assumptions and adjustments
as discussed in the accompanying notes to the unaudited pro
forma condensed consolidated financial statements.
These unaudited pro forma condensed consolidated financial
statements have been prepared by our management based upon our
unaudited condensed consolidated balance sheet as of September
30, 2000 and the related unaudited condensed consolidated
statement of operations for the nine months ended September 30,
2000. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the historical
financial statements and notes thereto, and the narrative
sections included elsewhere in this Form 8-K. The unaudited pro
forma condensed consolidated financial statements are not
necessarily indicative of what actual results of operations
would have been for the period had the transaction occurred on
the dates indicated and do not purport to indicate future
financial position nor the results of future operations.
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Synbiotics Corporation
Pro Forma Condensed Consolidated Balance Sheet (unaudited)
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<TABLE>
<CAPTION>
September 30, Pro Forma
2000 Adjustments Pro Forma
-------------- -------------- -------------
<S> <C> <C> <C>
Assets:
Current assets:
Cash and equivalents $ 1,715,000 $ 1,715,000
Securities available for sale 617,000 617,000
Accounts receivable 3,845,000 $ (89,000)(1) 3,756,000
Inventories 6,766,000 6,766,000
Deferred tax assets 454,000 (15,000)(1) 439,000
Other current assets 1,151,000 (16,000)(1) 1,135,000
------------- -------------
Total current assets 14,548,000 14,428,000
Property and equipment, net 2,839,000 (208,000)(1) 2,631,000
Goodwill 17,988,000 (2,839,000)(1) 15,149,000
Deferred tax assets 8,417,000 (280,000)(1) 8,137,000
Deferred debt issuance costs 39,000 39,000
Other assets 3,647,000 (365,000)(1) 3,282,000
------------- -------------
$ 47,478,000 $ 43,666,000
============= =============
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable and accrued expenses $ 6,320,000 (64,000)(1) 6,256,000
Current portion of long-term debt 1,200,000 1,200,000
Deferred revenue 263,000 (21,000)(1) 242,000
Other current liabilities 1,000,000 1,000,000
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Total current liabilities 8,783,000 8,698,000
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Long-term debt 10,743,000 (2,943,000)(2) 7,800,000
Deferred revenue 787,000 787,000
Other liabilities 1,635,000 1,635,000
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13,165,000 10,222,000
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Mandatorily redeemable common stock 2,510,000 2,510,000
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Non-mandatorily redeemable common stock and other
shareholders' equity:
Common stock 40,065,000 2,484,000 (2) 42,549,000
Common stock warrants 1,003,000 1,003,000
Accumulated other comprehensive loss (1,466,000) (6,000)(1) (1,472,000)
Accumulated deficit (16,582,000) (3,262,000)(1)(2) (19,844,000)
------------- -------------
Total non-mandatorily redeemable common stock and
other shareholders' equity 23,020,000 22,236,000
-------------- -------------
$ 47,478,000 $ 43,666,000
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</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements.
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Synbiotics Corporation
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
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<TABLE>
<CAPTION>
Nine Months
Ended
September 30, Pro Forma
2000 Adjustments Pro Forma
-------------- ------------- --------------
<S> <C> <C> <C>
Revenues:
Net sales $ 25,356,000 $ 25,356,000
Internet revenues 134,000 $ (134,000)(1)
License fees 182,000 182,000
Royalties 6,000 6,000
-------------- --------------
25,678,000 25,544,000
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Operating expenses:
Cost of sales 12,439,000 12,439,000
Research and development 1,618,000 1,618,000
Selling and marketing 7,950,000 (1,119,000)(1) 6,831,000
General and administrative 5,133,000 5,133,000
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27,140,000 26,021,000
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Loss from operations (1,462,000) (477,000)
Other income (expense):
Interest, net (913,000) 130,000 (1) (783,000)
Equity in losses of W3 (110,000)(3) (110,000)
-------------- --------------
Loss before income taxes (2,375,000) (1,370,000)
(Benefit from) provision for income taxes 58,000 243,000 (1) 257,000
(44,000)(3)
-------------- --------------
Loss before extraordinary item $ (2,433,000) $ (1,627,000)
============== ==============
Basic and diluted loss before extraordinary item per share $ (0.27) $ (0.18)
============== ==============
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements.
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Synbiotics Corporation
Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)
--------------------------------------------------------------------------------
Pro Forma Adjustments:
Pro forma adjustments have been made to the historical amounts in the unaudited
pro forma condensed consolidated financial statements as follows:
(1) Adjustment to eliminate the assets, liabilities, revenues and expenses of
W3COMMERCE inc. ("W3") which were included in the condensed consolidated
financial statements of Synbiotics Corporation ("the Company") as of and for the
nine months ended September 30, 2000.
(2) Adjustment to record the conversion of the $2,813,000 convertible note
payable, which had been issued to the original owners of W3 in conjunction with
the Company's January 12, 2000 acquisition of W3, into 1,000,000 unregistered
shares of the Company's common stock at a conversion rate of $2.8125 per share.
750,000 of these unregistered shares totalling $328,000 (valued at $0.4375 per
share) were then transferred to the Company as consideration for 84% of W3. In
addition, $130,000 of accrued interest was subsumed.
(3) Adjustment to record the equity in losses of W3 and the associated
additional benefit from income taxes.
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c) Exhibits
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2.10 Stock Purchase Agreement Among the Registrant, W3COMMERCE
inc., and Colin Lucas-Mudd, Donna Lucas-Mudd, Edward Burnel-
Cohen, Regan Carey, Mark Brunel-Cohen, Tim Mudd, Steven Usrey,
Drew Keene and Kimberley Lind, dated as of December 31, 2000.
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.
SYNBIOTICS CORPORATION
Date: January 15, 2001 /s/ Michael K. Green
------------------------------
Michael K. Green
Senior Vice President - Finance and Chief
Financial Officer
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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM 8-K
UNDER
SECURITIES EXCHANGE ACT OF 1934
SYNBIOTICS CORPORATION
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EXHIBIT INDEX
Exhibit No. Exhibit
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2.10 Stock Purchase Agreement Among the Registrant, W3COMMERCE inc., and
Colin Lucas-Mudd, Donna Lucas-Mudd, Edward Brunel-Cohen, Regan
Carey, Rigdon Currie, Mark Brunel-Cohen, Tim Mudd, Steven Usrey,
Drew Keene and Kimberley Lind, dated as of December 31, 2000.
