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): December 26, 2000
EarthWeb Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-25107 13-3899472
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
3 Park Avenue, New York, NY 10016
(Address of Principal Executive Offices) (Zip Code)
(212) 725-6550
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets.
On December 26, 2000 EarthWeb Inc. (the "Company") completed the sale of certain
assets of its content business to internet.com Corporation. These assets
primarily consisted of web sites which included Earthweb.com (www.earthweb.com),
Developer.com (www.developer.com), Datamation (www.datamation.com), CrossNodes
(www.crossnodes.com), SysOpt.com (www.sysopt.com), ERP Hub (www.erphub.com),
Open Source IT (www.opensourceit.com), Javascripts.com (www.javascripts.com),
JARS.com (www.jars.com), HTML Goodies (www.htmlgoodies.com), Gamelan
(www.gamelan.com), CodeGuru.com (www.codeguru.com), Intranet Journal
(www.intranetjournal.com), CIN (http://www.cin.earthweb.com/) and EarthWeb
Direct (www.earthwebdirect.com), and certain computer equipment, furniture and
fixtures and leasehold improvements related to the operations of those sites.
The consideration received for these assets was $500,000 in cash and a three
year commitment by internet.com to deliver advertising impressions on
internet.com's network of web sites in order to promote the Company's remaining
web sites; the Company has valued the internet.com commitment to deliver
advertising impressions at approximately $2.2 million.
The Company also announced on December 26, 2000 that it was exiting the paid
subscription portion of the content business and, as of the fourth quarter of
2000, is writing down the remaining assets of the content business that were not
purchased by internet.com. The unaudited pro forma condensed consolidated
financial statements filed herewith
have been prepared to give effect to these transactions, as well as, the
Company's exiting of the education courseware business that was described in the
Company's Form 8-K filing with the SEC dated December 11, 2000.
In connection with the transaction with internet.com it is anticipated that
internet.com will sublease from the Company one floor of the Company's office
space in New York. Such sublease is subject to the landlord's consent.
Item 7 (b). Pro forma Financial Information
The following unaudited pro forma condensed consolidated financial statements
have been prepared to give effect to the transactions described above in Item 2
and are based upon the historical results of EarthWeb Inc. and the preliminary
estimates and assumptions set forth in the notes to these statements, which
estimates and assumptions have been made solely for the purposes of developing
this pro forma information. The unaudited pro forma condensed consolidated
financial statements are not necessarily indicative of the results that would
have been achieved had these transactions been consummated as of the dates
indicated or that which may be achieved in the future.
The unaudited pro forma condensed consolidated balance sheet and unaudited pro
forma condensed consolidated statements of operations and the accompanying notes
thereto should be read in conjunction with the historical financial statements
of EarthWeb Inc. and notes thereto.
The unaudited pro forma condensed consolidated balance sheet as of September 30,
2000 gives effect to these transactions as if such transactions had occurred on
September 30, 2000.
The unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1999 gives effect to these transactions as if such
transactions had occurred on January 1, 1999.
The unaudited pro forma condensed consolidated statement of operations for the
nine months ended September 30, 2000 gives effect to these transactions as if
such transactions had occurred on January 1, 2000.
EarthWeb Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2000
(in thousands)
Pro forma Pro forma
ASSETS: EarthWeb Adjustments Total
-------------------------- -------------
Current assets:
Cash and cash equivalents $ 43,846 $ 500 1 (a) $ 44,346
Marketable securities 6,281 - 6,281
Accounts receivable 10,287 (1,400) 1 (b) 8,887
Prepaid expenses and other current assets 2,692 (570) 1 (b)
2,160 1 (a) 4,282
------------------------- -----------
Total current assets 63,106 690 63,796
Fixed assets, net 14,539 (9,062) 1 (c) 5,477
Intangible assets, net 68,595 (24,154) 1 (d) 44,441
Other assets 4,708 (650) 1 (b) 4,058
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Total Assets $ 150,948 $ (33,176) $ 117,772
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current Liabilities:
Accounts payable and accrued expenses $ 12,126 $ 7,250 1 (e) $ 19,376
Accrued interest 1,034 - 1,034
Amounts due under acquisition agreements 7,191 - 7,191
Deferred revenue 6,825 (614) 1 (f) 6,211
Leases payable - short term 1,427 437 1 (e) 1,864
Notes payable - short term 523 - 523
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Total current liabilities 29,126 7,073 36,199
Convertible notes payable 80,000 - 80,000
Leases payable - long term 895 1,244 1 (e) 2,139
Other long-term liabilities 2,036 - 2,036
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Total liabilities 112,057 8,317 120,374
Commitments and contingencies - - -
Stockholders' equity (deficit) 38,891 (41,493) 1 (g) (2,602)
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Total liabilities and stockholders' equity (deficit) $ 150,948 $ (33,176) $ 117,772
========================= ===========
EarthWeb Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For The Year Ended December 31,1999
(In Thousands, except per share data )
Pro Forma Adjustments
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LESS: LESS:
Content Education ADD: Pro Forma
EarthWeb Business (2) Business (3) Other Total
------------------- ---------------- --------------- ----------- ----------
Revenue $ 31,050 $ 12,894 $ 2,282 $ - $ 15,874
Cost of Revenues 10,968 8,155 1,262 - 1,551
------------------- ---------------- --------------- ---------- ----------
Gross Profit 20,082 4,739 1,020 - 14,323
------------------- ---------------- --------------- ---------- ----------
Operating Expenses:
Product Development 4,114 3,341 20 - 753
Sales and Marketing 27,715 19,516 793 720 (4) 8,126
General and Administrative 9,875 3,849 449 - 5,577
Depreciation 1,677 1,374 3 - 300
Amortization 12,218 4,560 - - 7,658
------------------- ---------------- --------------- ---------- ----------
Total Operating Expenses 55,599 32,640 1,265 720 22,414
------------------- ---------------- --------------- ---------- ----------
Loss From Operations (35,517) (27,901) (245) (720) (8,091)
Interest and other income (expense), net 804 - - - 804
------------------- ---------------- --------------- ---------- ----------
Net Loss $(34,713) $(27,901) $ (245) $ (720) $ (7,287)
=================== ================ =============== ========== ==========
Basic and diluted net loss per share $ (3.78) $ (0.79)
=================== ==========
Weighted average shares
used in computing basic and diluted net
loss per share 9,180 9,180
=================== ==========
EarthWeb Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For The Nine Months Ended September 30, 2000
(In Thousands, except per share data)
Pro Forma Adjustments
-------------------------------------------
LESS: LESS:
Content Education ADD: Pro Forma
EarthWeb Business (2) Business (3) Other Total
--------------- -------------- -------------- ------------- ------------
Revenue $ 51,187 $ 14,296 $ 3,215 $ - $ 33,676
Cost of Revenues 13,892 8,955 2,308 - 2,629
--------------- ------------ -------------- ------------- ------------
Gross Profit 37,295 5,341 907 - 31,047
--------------- ------------ -------------- ------------- ------------
Operating Expenses:
Product Development 6,782 4,355 8 - 2,419
Sales and Marketing 31,659 17,586 1,137 540 (4) 13,476
General and Administrative 9,515 3,792 317 - 5,406
Depreciation 3,482 2,828 3 - 651
Amortization 17,645 7,821 - - 9,824
--------------- ------------ -------------- ------------- ------------
Total Operating Expenses 69,083 36,382 1,465 540 31,776
--------------- ------------ -------------- ------------- ------------
Loss From Operations (31,788) (31,041) (558) (540) (729)
Interest and other income (expense), net (1,791) (183) - - (1,608)
--------------- ------------ -------------- ------------- ------------
Net Loss $(33,579) $(31,224) $(558) $ (540) $(2,337)
=============== ============ ============== ============= ============
Basic and diluted net loss per share $(3.30) $(0.23)
=============== ============
Weighted average shares
used in computing basic and diluted net
loss per share 10,174 10,174
=============== ============
Pro Forma Adjustments and Assumptions:
The pro forma adjustments to the unaudited pro forma condensed consolidated
balance sheet, assuming these transactions occurred on September 30, 2000, are
as follows:
1 (a) Adjustment to record the consideration received from the sale of certain
of the Company's web sites and other assets to internet.com, including a
commitment from internet.com to deliver advertising impressions on its network
of websites to promote the Company's remaining websites over a three year
period.
1 (b) Adjustment to write down accounts receivable, certain prepaid expenses,
other current assets and other assets to net realizable value, as a result of
these transactions.
1 (c) Adjustment for sale of certain computer equipment and other hardware,
furniture and fixtures and leasehold improvements to internet.com and to write
down the remaining computer equipment and other hardware, software and furniture
and fixtures to net realizable value, as a result of these transactions.
1 (d) Adjustment to reflect the sale of certain intangibles assets related
to specific web sites sold to internet.com and to write off certain intangible
assets that were related to the Content Businesses which were not purchased by
internet.com.
1 (e) Adjustment to accrue costs related to employee severance and transition
bonuses, professional fees and other costs related to the transaction and
commitments for facility leases for offices that will be vacated.
1 (f) Adjustment to record assumption of deferred advertising revenue
obligations by internet.com.
1 (g) Adjustment to record the loss on sale and disposition of assets and the
write-offs relating to the decision to exit the content and education
businesses.
The pro forma adjustments to the unaudited pro forma condensed consolidated
statement of operations, assuming these transactions occurred on January 1, 1999
and January 1, 2000, are as follows:
(2) - Reflects results of operations of (1) the portion of the content business
that was sold to internet.com (2) the paid subscription business that was
exited and (3) the remaining assets of the content business
that were not purchased by internet.com.
(3) - Reflects results of the Education Courseware business that was exited, as
reported in the Company's Form 8-K filed on December 11, 2000.
(4) - Adjustment to record the cost of advertising impressions, to be delivered
on internet.com's network of websites, received from internet.com as
consideration for the sale of certain of the Company's assets.
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.
EARTHWEB INC.
(Registrant)
By: /s/ Michael P. Durney
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Senior Vice President and Chief Financial
Officer
Exhibit Index
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Exhibit No. Item
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2.1* Asset Purchase Agreement dated as of December 22, 2000
by and between internet.com Corporation and EarthWeb
Inc.
* The exhibits to the Asset Purchase Agreement are not being filed herewith. The
Asset Purchase Agreement filed herewith briefly describes the contents of each
exhibit to the Asset Purchase Agreement. The Registrant undertakes to furnish
supplementally a copy of any omitted exhibit to the Commission upon request.
Pursuant to Item 601(b)(2) of Regulation S-K, set forth below is a list of the
omitted exhibits.
Exhibit A Web Sites
Exhibit B Domain Names and Trademarks
Exhibit C Assumed Contracts and Liabilities
Exhibit D Excluded Assets
Exhibit E Form of Trademark Assignment
Exhibit F Transitional Services Agreement
Exhibit G Employees
Exhibit H Severance Plan
Exhibit I Expedited Treatment Domain Names
Exhibit J Form Letter to List Companies