-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbQc7tU/W/oQdSJF3ieTZDu4+WyJzyPbbiRljX37ueiRYlm8UhD/h+3oj6SRVEYK EIeaXrRshb65FDU97FxuCw== 0000950124-00-000715.txt : 20000315 0000950124-00-000715.hdr.sgml : 20000315 ACCESSION NUMBER: 0000950124-00-000715 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991217 ITEM INFORMATION: FILED AS OF DATE: 20000214 DATE AS OF CHANGE: 20000314 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POPMAIL COM INC CENTRAL INDEX KEY: 0001044738 STANDARD INDUSTRIAL CLASSIFICATION: 5812 IRS NUMBER: 311487885 STATE OF INCORPORATION: MN FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-23243 FILM NUMBER: 544469 BUSINESS ADDRESS: STREET 1: 4801 WEST 81 STREET STREET 2: SUITE 112 CITY: BLOOMINGTON STATE: MN ZIP: 55437 BUSINESS PHONE: 6128379917 MAIL ADDRESS: STREET 1: 4801 WEST 81 STREET STREET 2: SUITE 112 CITY: BLOOMINGTON STATE: MN ZIP: 55437 FORMER COMPANY: FORMER CONFORMED NAME: CAFE ODYSSEY INC DATE OF NAME CHANGE: 19980526 FORMER COMPANY: FORMER CONFORMED NAME: HOTEL DISCOVERY INC DATE OF NAME CHANGE: 19970821 8-K/A 1 AMENDMENT TO FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A 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 17, 1999 PopMail.com, inc. (Exact name of registrant as specified in its charter) Minnesota 0-23243 31-1487885 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 4801 West 81st Street, Suite 112, Bloomington, MN 55437 (Address of principal executive offices) (Zip Code) (Former Name or Former Address, if Changed Since Last Report) Registrant's telephone number, including area code: (612) 837-9917 2 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (1) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors ROI Interactive, LLC We have audited the accompanying balance sheet of ROI Interactive, LLC as of June 30, 1999, and the related statements of earnings, changes in members' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ROI Interactive, LLC as of June 30, 1999, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Grant Thornton LLP Minneapolis, Minnesota January 21, 2000 2 3 ROI INTERACTIVE, LLC BALANCE SHEET
June 30, November 30, ASSETS 1999 1999 ---- ---- (unaudited) CURRENT ASSETS Cash $ 13,961 $ 48,129 Accounts receivable - less allowance for doubtful accounts of $2,600 at June 30, 1999 and November 30, 1999 243,477 291,406 Due from affiliate 32,282 90,302 Prepaid expenses 15,675 8,016 -------- -------- Total current assets 305,395 437,853 FURNITURE AND EQUIPMENT, AT COST Computer hardware 93,622 145,681 Computer software 12,612 12,965 Furniture and fixtures 6,059 6,059 -------- -------- 112,293 164,705 Less accumulated depreciation 28,490 41,442 -------- -------- 83,803 123,263 OTHER ASSETS Capitalized software development costs, less accumulated amortization of $8,662 and $13,745 at June 30, 1999 and November 30, 1999 27,935 22,852 Other 8,900 7,595 -------- -------- $426,033 $591,563 ======== ======== LIABILITIES AND MEMBERS' EQUITY CURRENT LIABILITIES Note payable $ 39,793 $129,695 Accounts payable 41,083 113,171 Accrued expenses 107,812 52,681 Sales tax payable 37,147 76,888 Deferred revenue 10,700 - Other 6,221 10,727 -------- -------- Total current liabilities 242,756 383,162 COMMITMENTS AND CONTINGENCIES - - MEMBERS' EQUITY 183,277 208,401 -------- -------- $426,033 $591,563 ======== ========
The accompanying notes are an integral part of these financial statements. 4 ROI INTERACTIVE, LLC STATEMENTS OF EARNINGS
Year ended Five months ended June 30, November 30, -------- ------------ 1999 1998 1999 ---- ---- ---- (unaudited) Revenues Product licenses $ 450,532 $ 127,288 $ 451,908 Website development 245,288 123,990 53,258 Hosting fees 35,276 6,196 49,577 Other 3,089 8,243 38,042 --------- --------- --------- Total revenue 734,185 265,717 592,785 Operating expenses 704,539 216,747 543,402 --------- --------- --------- Earnings from operations 29,646 48,970 49,383 Other expenses Interest expense 8,667 2,334 8,307 Other 2,501 - 4,926 --------- --------- --------- Earnings before income taxes 18,478 46,636 36,150 Income taxes 1,898 6,995 11,026 --------- --------- --------- NET EARNINGS $ 16,580 $ 39,641 $ 25,124 ========= ========= =========
The accompanying notes are an integral part of these financial statements. 5 ROI INTERACTIVE, LLC STATEMENTS OF CHANGES IN MEMBERS' EQUITY FOR THE PERIOD FROM JULY 1, 1998 THROUGH NOVEMBER 30, 1999
Contributed Retained Capital Earnings Total ----------- -------- --------- Members' equity at July 1, 1998 $ 59,600 $ 7,097 $ 66,697 Members' contributions 100,000 - 100,000 Net earnings - 16,580 16,580 -------- ------- -------- Members' equity at June 30, 1999 159,600 23,677 183,277 Net earnings (unaudited) - 25,124 25,124 -------- ------- -------- Members' equity at November 30, 1999 (unaudited) $159,600 $48,801 $208,401 ======== ======= ========
The accompanying notes are an integral part of these financial statements. 6 ROI INTERACTIVE, LLC STATEMENTS OF CASH FLOWS
Year ended Five months ended June 30, November 30, -------- ------------ 1999 1998 1999 ---- ---- ---- Cash flows from operating activities: Net earnings $ 16,580 $ 39,641 $ 25,124 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 38,464 10,350 18,940 Changes in operating assets and liabilities: Accounts receivable (225,985) (63,472) (105,949) Prepaid expenses (14,259) 644 7,659 Other assets (400) - 400 Accounts payable and accrued expenses 130,260 21,219 16,957 Sales tax payable 32,926 16,071 39,741 Other liabilities (4,934) (13,105) (6,194) ---------- -------- ---------- Net cash provided by (used in) operating activities (27,348) 11,348 (3,322) Cash flows from investing activities: Purchase of furniture and equipment (95,256) (28,286) (52,412) ---------- -------- ---------- Net cash used in investing activities (95,256) (28,286) (52,412) Cash flows from financing activities: Net proceeds from note payable 39,793 - 89,902 Net proceeds (payments) - notes payable from members (57,275) 24,693 - Members' contributions 100,000 - - ---------- -------- ---------- Net cash provided by financing activities 82,518 24,693 89,902 ---------- -------- ---------- Net increase (decrease) in cash (40,086) 7,755 34,168 Cash at beginning of period 54,047 54,047 13,961 ---------- -------- ---------- Cash at end of period $ 13,961 $ 61,802 $ 48,129 ========== ======== ========== Supplemental disclosures Cash paid for interest $ 8,377 $ 2,463 $ 8,597 Cash paid for income taxes 7,635 8,923 17,380
The accompanying notes are an integral part of these financial statements. 7 ROI INTERACTIVE, LLC NOTES TO FINANCIAL STATEMENTS NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ROI Interactive, LLC (the "Company"), a Texas limited liability company, was incorporated on June 1, 1998. The Company is a "permission marketing" and affinity-based, e-mail communications and marketing company, concentrating primarily on the needs of businesses in the broadcast, media, sports and entertainment industries located throughout the United States. The financial statements as of November 30, 1999 and for the five months ended November 30, 1999 and 1998 are unaudited, but in the opinion of management include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation thereof. The results of operations for the five months ended November 30, 1999 and 1998 are not necessarily indicative of the results for the full year. A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: Furniture and Equipment Furniture and equipment is stated at cost less accumulated depreciation. Depreciation is provided using accelerated and straight-line methods for financial reporting purposes and accelerated methods for tax purposes over estimated useful lives of three to seven years. Software Development Costs Software development costs are capitalized once the technological feasibility of the project is established. The amount of software development costs capitalized is subject to limitations based on the net realizable value of the potential product. Costs capitalized are amortized on the straight-line method over three years, the estimated economic life of the product. Concentration of Credit Risk Financial instruments which potentially subject the Company to credit risk consist primarily of accounts receivable. The Company grants credit to customers in the ordinary course of business, but generally does not require collateral or any other security to support amounts due. The Company maintains an allowance for potential credit losses, which have historically been within management's expectations. 8 NOTE A - BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued Revenue Recognition Product license revenue is recognized when a contract has been executed, the product has been delivered, all significant contractual obligations have been satisfied and collection of the related receivable is probable. Website development revenues are recognized as stages of development are completed, while hosting fees are recognized in the month the services are provided. The Company adopted Statement of Position (SOP) 97-2, Software Revenue Recognition, and SOP 98-4, Deferral of the Effective Date of a Provision of SOP 97-2, Software Revenue Recognition, as of June 1, 1998. SOP 97-2 and SOP 98-4 provide guidance for recognizing revenue on software transactions and supersede SOP 91-1, Software Revenue Recognition. The adoption of SOP 97-2 and SOP 98-4 did not have a material effect on the Company's financial results. In December 1998, the American Institute of Certified Public Accountants issued SOP 98-9 Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions. For the Company, SOP 98-9 amends SOP 98-4 to extend the deferral of the application of certain passages of SOP 97-2 provided by SOP 98-4 through June 30, 1999. All other provision of SOP 98-9 are effective for transactions entered into after June 30, 1999. The Company believe the adoption of SOP 98-9 will not have a material effect on its financial statements. Income Taxes The Company has elected to be taxed at the corporate rather than the member level. The difference between the statutory and effective tax rates is due to differences in depreciation for financial reporting and tax purposes. Advertising The Company expenses advertising costs as incurred. Advertising expense was approximately $24,000 for the year ended June 30, 1999 and $8,500 and $7,500 for the five month periods ended November 30, 1999 and 1998. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. 9 NOTE B - NOTE PAYABLE Note payable consists of an unsecured bank line-of-credit that provides for borrowings up to $50,000, with interest at 1% above the bank's prime lending rate (effective rate of 8.75% at June 30, 1999 and 9.5% at November 30, 1999). Effective August 2, 1999, the line availability was increased to $150,000. The line is due on February 2, 2000 and bears interest at 1% above the bank's prime lending rate. NOTE C - LEASE COMMITMENTS The Company conducts its operations in a leased facility with rental expense of approximately $23,000 for the year ended June 30, 1999. The Company's lease expired May 31, 1999; through July 31, 1999 the Company has been renting on a month-to-month basis. Beginning in August 1999, the Company has conducted its operations in a facility being rented by PopMail.com, inc. ("PopMail"). PopMail charges the Company approximately $3,500 per month, their proportionate share of the rental payments. NOTE D - SUBSEQUENT EVENT On December 3, 1999, the Company, became a wholly-owned subsidiary of PopMail. PopMail purchased substantially all of the assets and assumed substantially all of the liabilities of the Company. Due from affiliate represents acquisition related expenses to be reimbursed by PopMail at the closing of the purchase. NOTE E - MEMBERS' EQUITY The contributed capital portion of Members' equity represents capital contributions of individuals who have purchased a portion of the ownership of the Company. Each $10,000 contribution made during fiscal 1999 purchased a 1% share of the Company. 10 (2) PRO FORMA FINANCIAL INFORMATION. PRO FORMA UNAUDITED FINANCIAL STATEMENTS The following pro forma unaudited condensed combined financial statements are prepared to reflect the acquisition of substantially all of the assets and assumption of substantially all liabilities of ROI Interactive LLC (ROI) effective December 3, 1999 by the registrant, PopMail.com, inc. (PopMail) accounted for as a purchase. The pro forma unaudited condensed combined financial information consists of pro forma unaudited condensed combined statements of operations for the year ended January 3, 1999, and eleven months ended November 30, 1999, and a pro forma unaudited condensed combined balance sheet as of November 30, 1999. The pro forma unaudited condensed combined statements of operations give effect to the acquisition as if the transaction had occurred on December 29, 1997. The pro forma unaudited condensed combined balance sheet gives effect to the acquisition as if it had occurred on November 30, 1999. The PopMail column of the pro forma unaudited condensed combined statements of operations are presented to reflect the previous merger between Cafe Odyssey, Inc. and PopMail, which was effective September 1, 1999, as if it had occurred on December 29, 1997. The pro forma unaudited condensed combined financial statements give effects to certain adjustments, including: (1) the issuance of 2,750,000 PopMail common shares; (2) the elimination of affiliated balance sheet items, and (3) resulting goodwill created by the acquisition as well as related amortization expense. The periods presented conform to the fiscal year of the registrant. 11 ROI INTERACTIVE, LLC PRO FORMA UNAUDITED CONDENSED COMBINED BALANCE SHEET NOVEMBER 30, 1999
Pro forma Pro forma ASSETS PopMail ROI adjustments combined ------- --- ----------- -------- CURRENT ASSETS Cash and cash equivalents $ 348,272 $ 48,129 $ - $ 396,401 Accounts receivable, net 163,463 291,406 - 454,869 Due from affiliate - 90,302 (90,302)(1) - Inventories 101,979 - - 101,979 Other current assets 196,846 8,016 - 204,862 ------------ ----------- ----------- ------------ Total current assets 810,560 437,853 (90,302) 1,158,111 PROPERTY AND EQUIPMENT, NET 15,711,033 123,263 - 15,834,296 OTHER ASSETS 489,339 30,447 - 519,786 GOODWILL 29,223,557 - 6,038,797 (1) 35,262,354 ------------ ----------- ----------- ------------ $ 46,234,489 $ 591,563 $ 5,948,495 $ 52,774,547 ============ =========== =========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes payable $ 1,695,000 $ 129,695 $ - $ 1,824,695 Accounts payable 1,442,905 165,852 - 1,608,757 Convertible promissory notes payable 2,150,000 - - 2,150,000 Current portion of long-term obligations 3,193,833 - - 3,193,833 Accrued expenses 617,045 87,615 - 704,660 ------------ ----------- ----------- ------------ Total current liabilities 9,098,783 383,162 - 9,481,945 DEFERRED RENT 3,620,578 - - 3,620,578 LONG-TERM OBLIGATIONS, less current portion 562,045 - - 562,045 COMMITMENTS AND CONTINGENCIES - - - - SHAREHOLDERS' EQUITY Preferred stock 26,238,750 - - 26,238,750 Common stock 104,329 - 27,500 (1) 131,829 Additional paid-in capital 32,928,205 159,600 (159,600)(1) 39,057,601 6,129,396 (1) Retained earnings (deficit) (25,918,201) 48,801 (48,801)(1) (25,918,201) Less common stock subscribed (400,000) - - (400,000) ------------ ----------- ----------- ------------ 32,953,083 208,401 5,948,495 39,109,979 ------------ ----------- ----------- ------------ $ 46,234,489 $ 591,563 $ 5,948,495 $ 52,774,547 ============ =========== =========== ============
12 ROI INTERACTIVE, LLC NOTES TO PRO FORMA UNAUDITED CONDENSED COMBINED BALANCE SHEET NOVEMBER 30, 1999 (1) Reflects the issuance of shares and transaction expenses to effect the acquisition of ROI by PopMail, the elimination of shareholders equity accounts of ROI, and costs incurred by ROI to be reimbursed by PopMail as follows:
Common stock ------------ PopMail common stock issued, par value of $.01 2,750,000 Price per share/fair value per warrant 2.25 (a) ---------- Total 6,187,500 Plus transaction expenses of ROI acquisition 150,000 ---------- Total consideration and costs 6,337,500 Net book value of ROI assets less liabilities (208,401) Elimination of ROI costs to be reimbursed (90,302) ---------- Goodwill created $6,038,797 ==========
(a) The price per share is based on the closing price of the PopMail common stock on December 3, 1999. 13 ROI INTERACTIVE, LLC PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS ELEVEN MONTHS ENDED NOVEMBER 30, 1999
Pro forma Pro forma PopMail ROI adjustments combined ------- --- ----------- --------- Net revenues $ 11,088,767 $ 1,017,843 $ - $ 12,106,610 Costs and expenses: Food, beverages and retail costs 2,875,717 - - 2,875,717 Restaurant operating expenses 7,619,205 - - 7,619,205 Restaurant depreciation 1,187,965 - - 1,187,965 Amortization of goodwill 9,240,324 - 1,845,188 (1) 11,085,512 Pre-opening expenses 572,932 - - 572,932 General, administrative and development expenses 3,593,710 995,122 - 4,588,832 ------------ ----------- ----------- ------------ Total costs and expenses 25,089,853 995,122 1,845,188 27,930,163 ------------ ----------- ----------- ------------ Income (loss) from operations (14,001,086) 22,721 (1,845,188) (15,823,553) Interest expense, net 1,030,704 14,722 - 1,045,426 ------------ ----------- ----------- ------------ Income (loss) before income taxes (15,031,790) 7,999 (1,845,188) (16,868,979) Income taxes - 5,720 (5,720) - ------------ ----------- ----------- ------------ Net income (loss) (15,031,790) 2,279 (1,839,468) (16,868,979) Preferred stock dividends and accretion ( 3,338,461) - - (3,338,461) ------------ ----------- ----------- ------------ Income (loss) attributable to common shareholders $(18,370,251) $ 2,279 $(1,839,468) $(20,207,440) ============ =========== =========== ============ Basic and diluted net loss per share Net loss $ (1.33) $ (1.20) ============ ============ Loss attributable to common shareholders $ (1.62) $ (1.44) ============ ============ Basic and diluted weighted average outstanding shares 11,329,510 - 2,750,000 14,079,510 ============ =========== =========== ============
14 ROI INTERACTIVE, LLC PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS YEAR ENDED JANUARY 3, 1999
Pro forma Pro forma PopMail ROI adjustments combined ------- --- ----------- -------- Net revenues $ 6,982,126 $ 345,155 $ - $ 7,327,281 Costs and expenses: Food, beverage and retail costs 1,897,492 - - 1,897,492 Restaurant operating expenses 5,038,104 - - 5,038,104 Restaurant depreciation 940,186 - - 940,186 Amortization of goodwill 9,862,172 - 2,012,932 (1) 11,875,104 Pre-opening expenses 732,851 - - 732,851 Loss on impairment of restaurant related assets 2,000,000 - - 2,000,000 Selling, general, administrative and development expenses 5,413,022 287,724 - 5,700,746 ------------- ---------- ------------- ------------- 25,883,827 287,724 2,012,932 28,184,483 ------------- ---------- ------------- ------------- Income (loss) from operations (18,901,701) 57,431 (2,012,932) (20,857,202) Interest expense (net) 111,530 2,382 - 113,912 ------------- ---------- ------------- ------------- Income (loss) before income taxes (19,013,231) 55,049 (2,012,932) (20,971,114) Income taxes - 8,529 (8,529) - ------------- ---------- ------------- ------------- Net income (loss) $ (19,013,231) $ 46,520 $ (2,004,403) $ (20,971,114) ============= ========== ============= ============= Basic and diluted net loss per share $ (0.84) $ (1.95) ============= ============= Basic and diluted weighted average outstanding shares 8,000,131 - 2,750,000 10,750,131 ============= ========== ============= =============
15 ROI INTERACTIVE, LLC NOTES TO PRO FORMA UNAUDITED CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 3, 1999 AND ELEVEN MONTHS ENDED NOVEMBER 30, 1999 The pro forma unaudited condensed combined statements of operations reflect amortization of goodwill associated with the transaction. (1) Reflects goodwill arising from the merger of $6,038,797 amortized on a straight-line basis over three years. 16 (3) EXHIBITS. The following documents are filed as an exhibit to this Form 8-K/A and are incorporated herein by reference:
Exhibit No. Description --- ----------- 23.1 Consent of Grant Thornton LLP.
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. POPMAIL.COM, INC. Date: February 14, 2000 By: /s/ Stephen King --------------------------------- Name: Stephen King Title: Chief Executive Officer EX-23 2 CONSENT OF GRANT THORNTON 1 EXHIBIT 23 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated January 21, 2000, accompanying the financial statements of ROI Interactive, LLC as of June 30, 1999 and for the year then ended included in this Form 8-K of PopMail.com, inc. We hereby consent to the incorporation by reference of said report in the Registration Statements of PopMail.com, inc. on Forms S-3 (File No. 333-80241, File No. 333-85243, File No. 333-88199, File No. 333-96109 and File No. 333-93317) and on Forms S-8 (File No. 333-62729 and File No. 333-62747). /s/ Grant Thornton LLP Minneapolis, Minnesota February 14, 2000 -----END PRIVACY-ENHANCED MESSAGE-----