================================================================================ 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 ================================================================================ 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 --------------------------------- a) Financial statements of businesses acquired ------------------------------------------- Not applicable. b) Pro forma financial information ------------------------------- 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. -1- Synbiotics Corporation Pro Forma Condensed Consolidated Balance Sheet (unaudited) - ---------------------------------------------------------- September 30, Pro Forma 2000 Adjustments Pro Forma -------------- -------------- ------------- 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 ------------- ------------- Total current liabilities 8,783,000 8,698,000 ------------- ------------- 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 ------------- ------------- 13,165,000 10,222,000 ------------- ------------- Mandatorily redeemable common stock 2,510,000 2,510,000 ------------- ------------- 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 ============== ============= See accompanying notes to pro forma condensed consolidated financial statements. -2- Synbiotics Corporation Pro Forma Condensed Consolidated Statement of Operations (unaudited) - -------------------------------------------------------------------- Nine Months Ended September 30, Pro Forma 2000 Adjustments Pro Forma -------------- ------------- -------------- 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 -------------- -------------- 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 -------------- -------------- 27,140,000 26,021,000 -------------- -------------- 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) ============== ============== See accompanying notes to pro forma condensed consolidated financial statements. -3- 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. -4- c) Exhibits -------- 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 -5- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. EXHIBITS TO FORM 8-K UNDER SECURITIES EXCHANGE ACT OF 1934 SYNBIOTICS CORPORATION EXHIBIT INDEX Exhibit No. Exhibit - ----------- ------- 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.