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): October 7, 1998
Digital Data Networks, Inc.
(Exact name of registrant as specified in its charter)
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Washington 0-27704 91-1426372
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
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3102 Maple Avenue, Suite 230, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 969-7200
N/A
(Former name or former address, if changed since last report)
Page 1 of 6 Pages
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Item 5. Other Events.
On October 7, 1998, Digital Data Networks, Inc. ("Digital Data")
entered into a definitive Agreement and Plan of Merger (the "Agreement") with
Internet Sports Network, Inc. ("ISN"), pursuant to which ISN will merge (the
"Merger") with and into Digital Data, with Digital Data being the surviving
corporation. Under the Agreement, Digital Data will effect, prior to closing, a
1:1.627 reverse stock split, while ISN stockholders will exchange one share of
ISN common stock for one share of Digital Data common stock. Following the
completion of the Merger, the stockholders of ISN will own approximately 86% of
the issued and outstanding stock of Digital Data, and the stockholders and
option holders of Digital Data will own approximately 14% of the issued and
outstanding stock, in each case on a fully-diluted basis, excluding Digital
Data's publicly-traded warrants.
Following the completion of the Merger, the Board of Directors of the
surviving corporation (which will be re-named Internet Sports Network, Inc.)
will consist of five individuals, four of whom will be nominees of ISN and one
of whom will be a nominee of Digital Data.
The consummation of the transactions contemplated by the Agreement is
subject to several material conditions including, among others, the approval of
the Merger by the stockholders of Digital Data and ISN, the registration of the
shares issuable in the Merger, the completion of a $1,200,000 private offering
by ISN, the completion of a $250,000 investment by Digital Data in ISN, the
requirement that Digital Data have a minimum amount of cash or cash equivalents
at closing, and the absence of adverse changes to the businesses of Digital Data
and ISN. Although there can be no assurance that the Merger will be completed,
the parties expect, subject to the satisfaction of all conditions, to consummate
the Merger on or before January 31, 1999. A press release describing the merger
is attached hereto as Exhibit 99.1 and incorporated by reference herein.
This Current Report on Form 8-K contains forward-looking statements
which are based on Digital Data's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond Digital Data's control.
These statements include information regarding ISN's operations and prospects
and the completion of the Merger. Actual results could vary materially from
expected results due to a variety of factors, including but not limited to, the
general performance of ISN and Internet sports entertainment generally, and
other factors applicable to Digital Data and its business referred to in the
Securities and Exchange Commission filings of Digital Data. You should read
carefully Digital Data's Annual Report on Form 10-KSB for the year ended
December 31, 1997 and its Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 1998 and June 30, 1998.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release, dated October 8, 1998.
Page 2 of 6 Pages
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DIGITAL DATA NETWORKS, INC.
By: /s/ Donald B. Scott
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Donald B. Scott
Chairman of the Board and President
Date: October 9, 1998
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INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press release, dated October 8, 1998.
Page 4 of 6 Pages
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Page 6 of 6 Pages
Exhibit 99.1
N E W S R E L E A S E
DIGITAL DATA NETWORKS ANNOUNCES EXECUTION OF MERGER
AGREEMENT WITH INTERNET SPORTS NETWORK
AND SALE OF ASSETS OF ITS CANADIAN OPERATION
DALLAS, TEXAS - October 8 , 1998
Digital Data Networks, Inc. (OTC Bulletin Board: DIDA) ("Digital Data")
announced that, on October 7, 1998, it signed an agreement and plan of merger
(the "Agreement") with Internet Sports Network, Inc. ("ISN"), pursuant to which
ISN will merge (the "Merger") with and into Digital Data, with Digital Data
being the surviving corporation. Under the Agreement, Digital Data will effect,
prior to closing, a 1:1.627 reverse stock split, while ISN stockholders will
exchange one share of ISN common stock for one share of Digital Data common
stock. Following the completion of the Merger, the stockholders of ISN will own
approximately 86% of the issued and outstanding stock of Digital Data, and the
stockholders and option holders of Digital Data will own approximately 14% of
the issued and outstanding stock, in each case on a fully-diluted basis,
excluding Digital Data's publicly-traded warrants. The securities to be offered
in the Merger will be offered only by means of a registration statement
registered under the Securities Act of 1933 or an applicable exemption from
registration requirements.
Following the completion of the Merger, the Board of Directors of the surviving
corporation (which will be re-named Internet Sports Network, Inc.) will consist
of five individuals, four of whom will be nominees of ISN and one of whom will
be a nominee of Digital Data.
The consummation of the transactions contemplated by the Agreement is subject to
several material conditions including, among others, the approval of the Merger
by the stockholders of Digital Data and ISN, the registration of the shares
issuable in the Merger, the completion of a $1,200,000 private offering by ISN,
the completion of a $250,000 investment by Digital Data in ISN, the requirement
that Digital Data have a minimum amount of cash or cash equivalents at closing,
and the absence of adverse changes to the businesses of Digital Data and ISN.
Although there can be no assurance that the Merger will be completed, the
parties expect, subject to the satisfaction of all conditions, to consummate the
Merger on or before January 31, 1999.
ISN, a Nevada corporation (www.sportspool.com), is a sports entertainment and
information company that offers interactive competitive fantasy leagues, pools
and contests via the Internet. ISN members can play as individuals, in groups
and/or in privately created office pools. The Merger will enable a complete
launch of NHL, NFL, NBA and PGA Tour pools which, since beta testing started in
October 1997, has already attracted over 12,000 participants and an average of
750,000 hits per month. ISN also offers real time automatic statistical updates,
news, on-line commerce and content development for interactive TV. ISN recently
launched a contest for the NFL with a $1 million bonus prize and a new NHL
contest with a $5 million bonus prize, licensed by the NHL Players Association.
Partners to-date include AOL Canada, Beyond TV, and Big Brothers and Sisters of
Canada as marketing and distribution partners that could be expanded throughout
North America.
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In addition, Digital Data announced that it has sold the assets of DDN Digital
Data Networks (Canada), Inc. ("DDN Canada"), an unprofitable subsidiary of
Digital Data, to Pro Net Communications, Inc. ("Pro Net"), effective September
20, 1998. Principals in Pro Net include Peter Ciccone, the Company's former
Chief Operating Officer, and Stephen Willey, a former board member of Digital
Data. As part of the sale, Digital Data was released from approximately $114,000
of obligations owed to stockholders, and Pro Net assumed certain other
liabilities relating to DDN Canada's operation. DDN Canada markets
Internet-related services, including connectivity services, web page design and
development, and consulting and training services.
Digital Data operates a transit advertising company through its Transit Network
Division in Dallas, Texas.
This news release contains forward-looking statements which are based on Digital
Data's expectations and are subject to a number of risks and uncertainties,
certain of which are beyond Digital Data's control. These statements include
information regarding ISN's operations and prospects and the completion of the
Merger. Actual results could vary materially from expected results due to a
variety of factors, including but not limited to, the general performance of ISN
and Internet sports entertainment generally, and other factors applicable to
Digital Data and its business referred to in the Securities and Exchange
Commission filings of Digital Data. You should read carefully Digital Data's
Annual Report on Form 10-KSB for the year ended December 31, 1997 and its
Quarterly Reports on Form 10-QSB for the quarters ended March 31, 1998 and June
30, 1998.
