SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): October 19, 1999 (October 5,
1999)
Digital Courier Technologies, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-20771 87-0422824
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(State or Other (Commission (IRS Employer
Jurisdiction of Incorporation File Number) Identification No.)
136 Heber Avenue, Suite 204, Park City, Utah 84060
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (435) 655-3617
136 Heber Avenue, Suite 204, Park City, Utah 84060
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(Address of Principal Executive Offices) (Zip Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
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On October 5, 1999, Digital Courier Technologies, Inc. (the "Company")
acquired 100% of the issued and outstanding capital stock of DataBank
International Ltd., a St. Christopher and Nevis corporation, ("DataBank") (the
"Exchange") pursuant to the terms of a Stock Purchase and Exchange Agreement by
and among the Company, DataBank, and the stockholders of DataBank (the "Selling
Stockholders"), dated August 13, 1999 (the "Exchange Agreement").
The Exchange was consummated following approval of the Exchange
Agreement by the shareholders of the Company on October 5, 1999. Pursuant to the
Exchange Agreement, the Company issued 16,600,000 shares of its common stock in
exchange for all the issued and outstanding shares of DataBank. If DataBank
meets certain performance criteria, as defined in the Exchange Agreement, the
Company will be required to issue up to an additional 13,066,000 shares of
common stock to the Selling Stockholders.
The purchase price for DataBank was determined through arms-length
negotiations between the parties. The Company financed the acquisition of
DataBank through the issuance of shares of company common stock.
Donald Marshall serves as President and a board member of the Company,
and was also the Managing Director and a stockholder of DataBank. Mr. Marshall
did not serve as an officer or board member of the Company when the Company
negotiated and agreed to the Exchange or when the Company's Board of Directors
approved the Exchange. Upon closing of the DataBank acquisition on October 5,
1999, Mr. Marshall received 1,200,000 restricted shares of company common stock,
or approximately 3.4% of the total outstanding shares of company common stock.
Pursuant to the terms of the Exchange Agreement, Mr. Marshall will enter into a
two-year employment agreement, pursuant to which, among other things, he has
agreed not to compete with the business of the Company or DataBank for two years
after termination of his employment with the Company. The Company will pay Mr.
Marshall an annual salary of $150,000.
Except as set forth above, no material relationships exist between any
of the Selling Stockholders and the Company or any of the Company's affiliates,
directors, officers, or any associate of any director or officer of the Company.
Item 7. Financial Statements and Exhibits
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(a) Financial statements of businesses acquired.
Certain of the financial statements required pursuant to Rule 3-05 of
Regulation S-X were previously reported in the Company's proxy
statement filed pursuant to Section 14(a) of the Securities Exchange
Act of 1934, as filed with the Securities and Exchange Commission on
September 1, 1999, and pursuant to General Instruction B.3 of Form 8-K
are not required to be additionally reported herein.
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Exhibit 2.1 Unaudited DataBank International Ltd. Financial Statements
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(b) Pro forma financial information.
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Exhibit 2.2 Unaudited Pro Forma Condensed Consolidated Financial Data
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(c) Exhibits
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Exhibit 2.3 Stock Purchase and Exchange Agreement by and among Digital
Courier Technologies, Inc., DataBank International Ltd. and the
Selling Stockholders dated August 13, 1999, previously filed as
Annex I to the Company's proxy statement pursuant to Section
14(a) of the securities Exchange Act of 1934, as filed with the
Securities and Exchange Commission on September 1, 1999 and
incorporated herein by reference.
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SIGNATURES
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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.
DIGITAL COURIER TECHNOLOGIES, INC.
Dated: October 19, 1999 By:/s/ Mitchell Edwards
-----------------------------------------
Mitchell Edwards
Chief Financial Officer
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EXHIBIT 2.1
INDEX TO DATABANK INTERNATIONAL, LTD. FINANCIAL STATEMENTS
Title of Documents Page No.
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UNAUDITED FINANCIAL STATEMENTS
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Condensed Balance Sheet as of June 30, 1999 5
Condensed Statements of Operations for the Six Months Ended
June 30, 1999 and 1998 6
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 1999 and 1998 7
Notes to Condensed Financial Statements 8
4
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DATABANK INTERNATIONAL, LTD.
CONDENSED BALANCE SHEETS
AS OF JUNE 30, 1999
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 454,288
Trade accounts receivable 426,554
------------
Total current 880,842
------------
PROPERTY AND EQUIPMENT:
Computer and office equipment 156,753
Furniture, fixtures and leasehold improvements 51,233
------------
207,986
Less accumulated depreciation and amortization (21,220)
------------
Net property and equipment 186,766
------------
$ 1,067,608
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 81,606
------------
Total current liabilities 81,606
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STOCKHOLDERS' EQUITY:
Common stock 1
Retained earnings 986,001
------------
Total stockholders' equity 986,001
------------
$ 1,067,608
============
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DATABANK INTERNATIONAL, LTD.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND
THE PERIOD FROM APRIL 2, 1998 (Date of Inception) THROUGH JUNE 30, 1998
(Unaudited)
1999 1998
----------------------------
NET SALES $9,018,266 $ 31,704
COST OF SALES 4,780,302 14,676
----------------------------
Gross margin 4,237,924 17,028
GENERAL AND ADMINISTRATIVE EXPENSES 1,072,634 85,000
----------------------------
NET INCOME (LOSS) $3,165,290 $ (67,972)
============================
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<TABLE>
DATABANK INTERNATIONAL, LTD.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
Increase (Decrease) in Cash
<CAPTION>
1999 1998
----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,165,289 $ (67,972)
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 15,003 --
Changes in operating assets and liabilities
Increase in accounts receivable (195,537) --
Decrease in prepaid expenses 1,000 --
Increase (decrease) in accounts payable (1,546,972) 85,000
Decrease in dividends payable (62,440) --
----------------------------
Net cash provided from operating activities 1,376,343 17,028
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (129,723) --
----------------------------
Net cash used in investing activities (129,723) --
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (1,981,454) --
Proceeds from share issuance -- 1
----------------------------
Net cash used by financing activities (1,981,454) 1
----------------------------
NET INCREASE IN CASH (734,834) 17,029
CASH AT BEGINNING OF PERIOD 1,189,122 --
----------------------------
CASH AT END OF PERIOD $ 454,288 $ 17,029
============================
</TABLE>
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DATABANK INTERNATIONAL, LIMITED
NOTE TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - INTERIM CONDENSED FINANCIAL STATEMENTS
The accompanying interim condensed financial statements as of June 30,
1999 and for the six months ended June 30, 1999 and for the period from April 2,
1998 (date of inception) through June 30, 1998 are unaudited. In the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation have been included. The financial statements
are condensed and, therefore, do not include all disclosures normally required
by generally accepted accounting principles. These financial statements should
be read in conjunction with the Company's annual financial statements for the
period April 2, 1998 through December 31, 1998, included in Digital Courier
Technologies, Inc.'s proxy statement for the Special Meeting of Stockholders
held on October 5, 1999. The results of operations for the six months ended June
30, 1999 are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 1999.
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EXHIBIT 2.2
DIGITAL COURIER TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
RELATING TO THE ACQUISITION OF
DATABANK INTERNATIONAL, LTD.
The following unaudited pro forma condensed consolidated financial data
is based upon the historical consolidated financial statements of Digital
Courier Technologies, Inc. and subsidiaries ("DCTI") as adjusted to give effect
to the issuance of common stock in connection with the merger of the Company
with Databank International, Ltd. ("DataBank") as if the transaction had
occurred on June 30, 1999, for purposes of the unaudited pro forma condensed
consolidated balance sheet and July 1, 1998 for purposes of the unaudited pro
forma condensed consolidated statement of operations for the year ended June 30,
1999.
The pro forma adjustments are based upon information set out in this
document and its attachments and information from the Company's books and
records that management of the Company believes are reasonable and accurate. The
unaudited pro forma condensed consolidated balance sheet as of June 30, 1999 and
the unaudited pro forma condensed consolidated statement of operations for the
year ended June 30, 1999, are not necessarily indicative of the results of
operations of DCTI, or its financial position, had the sale actually occurred on
June 30, 1999 or July 1, 1998. The unaudited pro forma adjustments are described
in the accompanying notes to unaudited pro forma condensed consolidated
financial data.
This unaudited pro forma condensed consolidated financial data should
be read in conjunction with the consolidated financial statements of DCTI and
the related notes thereto, and the financial statements of DataBank and the
related notes thereto, included in DCTI's proxy statement for the Special
Meeting of Stockholders held on October 5, 1999 and DCTI's annual report for the
year ended June 30, 1999 filed on Form 10-K.
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<TABLE>
DIGITAL COURIER TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
As Of June 30, 1999
<CAPTION>
Historical Historical Pro Forma
Digital Courier DataBank Adjustments Pro Forma
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<S> <C> <C> <C> <C><C>
CURRENT ASSETS:
Cash $ 2,381,356 $ 454,288 $ -- $ 2,835,644
Trade accounts receivable, net 650,096 426,554 -- 1,076,650
Other receivables 800,000 -- -- 800,000
Prepaid software lease 903,456 -- -- 903,456
Prepaid advertising 458,772 -- -- 458,772
Receivable from officer 56,000 -- -- 56,000
Prepaid expenses and other current assets 196,658 -- -- 194,658
--------------------------------------------------- -------------
Total current assets 5,444,338 880,842 -- 6,325,180
--------------------------------------------------- -------------
PROPERTY AND EQUIPMENT:
Computer and office equipment 6,314,571 156,753 -- 6,471,324
Furniture, fixtures and leasehold
improvements 998,199 51,233 -- 1,049,432
--------------------------------------------------- -------------
7,312,770 207,986 -- 7,520,756
Less accumulated depreciation
and amortization (3,604,888) (21,220) -- (3,626,108)
--------------------------------------------------- -------------
Net property and equipment 3,707,882 186,766 -- 3,894,648
--------------------------------------------------- -------------
GOODWILL, net 30,927,702 -- 96,538,998 (b) 127,466,700
PREPAID SOFTWARE LICENSE, net of current
portion 3,387,960 -- -- 3,387,960
OTHER ASSETS 3,907,865 -- -- 3,907,865
--------------------------------------------------- -------------
Total assets $ 47,375,747 $ 1,067,608 $ 96,538,998 $ 144,982,353
=================================================== =============
CURRENT LIABILITIES:
Notes payable $ 2,210,614 $ -- $ -- $ 2,210,614
Current portion of capital lease obligations 1,102,084 -- -- 1,102,084
Accounts payable 330,510 81,606 -- 412,116
Accrued rental payments for vacated facilities 34,200 -- -- 34,200
Other accrued liabilities 1,689,968 -- -- 1,689,968
--------------------------------------------------- -------------
Total current liabilities 5,367,376 81,606 -- 5,448,982
--------------------------------------------------- -------------
CAPITAL LEASE OBLIGATIONS, net of current
portion 432,704 -- -- 432,704
--------------------------------------------------- -------------
STOCKHOLDERS' EQUITY:
Preferred stock 3,600,000 -- -- 3,600,000
Common stock 1,856 1 (1) (a) --
-- -- 1,660 (b) 3,516
Additional paid in capital 72,759,439 -- 97,523,340 (b) 170,282,779
Warrants outstanding 1,363,100 -- -- 1,363,100
Stock subscription receivable (12,000) -- -- (12,000)
Accumulated earnings (deficit) (36,136,728) 986,001 (986,001) (a) (36,136,728)
--------------------------------------------------- -------------
Total stockholders' equity 41,575,667 986,002 96,538,998 139,100,667
--------------------------------------------------- -------------
Total liabilities and stockholders' $ 47,375,747 $ 1,067,608 $ 96,538,998 $ 144,982,353
=================================================== =============
</TABLE>
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<TABLE>
DIGITAL COURIER TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended June 30, 1999
<CAPTION>
Historical
Digital Historical Pro Forma
Courier DataBank Adjustments Pro Forma
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<S> <C> <C> <C> <C>
NET SALES $ 3,970,641 $ 12,677,946 $ -- $ 16,648,587
COST OF SALES 2,562,371 7,234,287 -- 9,796,658
------------------------------------------------ ------------
Gross margin 1,408,270 5,443,659 -- 6,851,929
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OPERATING EXPENSES:
General and administrative 3,273,641 1,208,231 -- 4,481,872
Depreciation and amortization 4,389,763 -- 19,307,800 (c) 23,697,563
Acquired in-process research and
Development 3,700,000 -- -- 3,700,000
Research and development 1,906,893 -- -- 1,906,893
AOL agreement 5,558,137 -- -- 5,558,137
Selling 3,248,092 -- -- 3,248,092
------------------------------------------------ ------------
Total operating expenses 22,076,526 1,208,231 19,307,800 42,592,557
------------------------------------------------ ------------
PROFIT (LOSS) FROM OPERATIONS (20,668,256) 4,235,428 (19,307,800) (35,740,628)
------------------------------------------------ ------------
OTHER INCOME (EXPENSE):
Interest and other income 63,846 -- -- 63,846
Interest and other expense (760,303) -- -- (760,303)
------------------------------------------------ ------------
Other income, net (696,457) -- -- (696,457)
------------------------------------------------ ------------
LOSS FROM CONTINUING OPERATIONS $(21,364,713) $ 4,235,428 $(19,307,800) $(36,437,085)
================================================ ============
LOSS FROM CONTINUING OPERATIONS
PER COMMON SHARE (Basic and
Diluted): $ (1.63) -- -- $ (1.23)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (Basic and
Diluted) 13,130,216 -- 16,600,000 (d) 29,730,216
</TABLE>
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DIGITAL COURIER TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
DESCRIPTION OF THE TRANSACTION
- ------------------------------
These financial statements assume that DCTI acquired 100% of DataBank's
common stock as described herein.
(1) BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed consolidated balance
sheet has been prepared assuming that the acquisition of DataBank occurred on
June 30, 1999. The unaudited pro forma condensed consolidated statements of
operations has been prepared assuming that the acquisition had occurred on July
1, 1998, the first day of the Company's most recent fiscal year.
(2) PRO FORMA ADJUSTMENTS
(a) Adjustment to eliminate equity of DataBank International, Ltd.
(b) Adjustment to record the initial issuance of 16,600,000 shares
of common stock to acquire DataBank at June 30, 1999, pro
forma date of acquisition and resultant goodwill as follows:
Total shares issued 16,600,000
Average price for common stock $5.875
--------------------
Total purchase price $97,525,000
Less: Assets acquired (1,067,608)
Add: Liabilities assumed 81,606
--------------------
Goodwill $96,538,998
====================
(c) Adjustment to record goodwill amortization on $96,538,998 over
a five year life for 1 year. ($96,538,998 x 20% =
$19,307,800).
(d) Adjustment to record increase in common stock outstanding for
loss per share calculations as follows:
Shares issued to acquire DataBank 16,600,000
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