SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
-------------
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 0-15586
DREAMLIFE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 52-1373960
- -------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
425 West 15th Street, 3rd Floor, New York, New York 10011
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 313-9400
- --------------------------------------------------------------------------------
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMAL FISCAL YEAR, IF CHANGED SINCE
LAST REPORT)
INDICATE BY CHECK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES |X| NO |_|
THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON
EQUITY AS OF AUGUST 14, 2001 WAS AS FOLLOWS: 56,132,098 SHARES OF COMMON STOCK
<Page>
PART I:
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DREAMLIFE, INC.
(A Development Stage Enterprise)
Balance Sheets
(in thousands, except share amounts)
<Table>
<Caption>
ASSETS
June 30, December 31,
2001 2000
-------- --------
(unaudited)
Current assets:
Cash and cash equivalents $ 1,557 $ 244
Prepaid expenses and other current assets 15 65
-------- --------
Total current assets 1,572 309
Property and equipment, net of accumulated depreciation of $937 and $553, respectively 558 975
Deferred costs -- 100
Security deposits 89 277
-------- --------
Total assets $ 2,219 $ 1,661
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 419 $ 260
Accrued expenses 1,762 1,386
Notes payable 2,400 1,500
Obligations under capital lease, current portion 6 81
-------- --------
Total current liabilities 4,587 3,227
Obligations under capital lease, net of current portion -- 1
Stockholders' deficit:
Common stock - $.01 par value. Authorized 100,000,000 shares;
issued 42,368,351 shares and 40,368,351 shares, respectively 423 403
Treasury stock, 22,408,396 and 0 shares, at cost -- --
Additional paid-in capital 36,259 34,399
Deferred compensation (137) (1,256)
Deficit accumulated during the development stage (38,913) (35,113)
-------- --------
Total stockholders' deficit (2,368) (1,567)
-------- --------
Total liabilities and stockholders' deficit $ 2,219 $ 1,661
======== ========
</Table>
See accompanying notes to financial statements.
2
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Statements of Operations
(in thousands, except per share amount)
<Table>
<Caption>
Period from
April 21, 1999
Three Months Three Months Six Months Six Months (date of
Ended Ended Ended Ended inception) to
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000 June 30, 2001
------------- ------------- ------------- ------------- -------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Interactive services revenue $ -- $ 13 $ 6 $ 27 $ 55
Commerce 2 -- 8 1 20
-------- -------- -------- -------- --------
Total revenue 2 13 14 28 75
Cost of revenues 5 12 12 18 60
-------- -------- -------- -------- --------
(3) 1 2 10 15
Expenses:
Noncash compensation expense $ 879 $ 548 $ 999 $ 1,634 $ 11,462
Write-down and amortization of intangible assets -- 594 -- 1,188 7,130
Advertising and marketing 4 846 142 1,454 3,426
General and administrative 1,214 2,906 2,738 5,545 17,588
-------- -------- -------- -------- --------
Total operating expenses 2,097 4,894 3,879 9,821 39,606
Operating Loss (2,100) (4,893) (3,877) (9,811) (39,591)
Other income (expense):
Loss on disposal of equipment (24) -- (24) -- (24)
Gain on settlements with vendors 264 -- 264 -- 264
Interest expense (120) -- (168) -- (183)
Interest income 4 82 5 202 621
-------- -------- -------- -------- --------
Net loss (1,976) (4,811) (3,800) (9,609) (38,913)
Beneficial conversion attributable to preferred stock -- -- -- -- 13,617
-------- -------- -------- -------- --------
Net loss to common stockholders $ (1,976) $ (4,811) $ (3,800) $ (9,609) $(52,530)
======== ======== ======== ======== ========
Basic and diluted net loss per common share $ (0.09) $ (0.12) $ (0.12) $ (0.24) $ (1.74)
======== ======== ======== ======== ========
Basic and diluted weighted average outstanding
common shares 21,311 40,368 30,787 40,368 30,267
======== ======== ======== ======== ========
</Table>
See accompanying notes to financial statements.
3
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Statements of Stockholders' (Deficit) Equity
Period from April 21, 1999 (date of inception)
to June 30, 2001
(in thousands, except share amounts)
<Table>
<Caption>
CONVERTIBLE PREFERRED STOCK CONVERTIBLE PREFERRED STOCK
COMMON STOCK SERIES A PAR VALUE $.01 SERIES B PAR VALUE $.01
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- -------- ---------- ---------- ---------- --------
Issuance of shares pursuant to
merger of dreamlife, inc. and
CYL 7,047,828 $ 70 -- $ -- -- $ --
Issuance of shares to members
of CYL pursuant to merger -- -- 99,059 1 -- --
Issuance of shares in private
placement, net of expenses -- -- -- -- 178,582 2
Issuance of shares to acquire
Concept Development, Inc. -- -- -- -- -- --
Issuance of shares pursuant to
exclusive license agreement -- -- -- -- -- --
Exercise of stock options 268,857 3 -- -- -- --
Issuance of common stock
options -- -- -- -- -- --
Deferred compensation expense -- -- -- -- -- --
Conversion of Convertible
Preferred Stock Series B 1,785,820 18 -- -- (178,582) (2)
Conversion of Convertible
Preferred Stock Series C 557,450 5 -- -- -- --
Distribution of discontinued
operations -- - -- -- -- --
Conversion of Convertible
Preferred Stock Series A 30,708,396 307 (99,059) (1) -- --
Net loss for the period from
April 21, 1999 (date of
inception) to
December 31, 1999 -- -- -- -- -- --
---------- ------ ---------- ---------- ---------- --------
Balance at December 31, 1999 40,368,351 403 -- -- -- --
Cancellation of stock options -- -- -- -- -- --
Deferred compensation expense -- -- -- -- -- --
Issuance of warrants -- -- -- -- -- --
Net loss for the year
ended December 31, 2000 -- -- -- -- -- --
---------- ------ ---------- ---------- ---------- --------
Balance at December 31, 2000 40,368,351 403 -- -- -- --
Cancellation of stock options* -- -- -- -- -- --
Deferred compensation expense* -- -- -- -- -- --
Reduction in shares
outstanding pursuant to
Contribution Agreement* (22,408,396) -- -- -- -- --
Issuance of shares in private --
placement* 2,000,000 20 -- -- -- --
Net loss for the six months
ended June 30, 2001* -- -- -- -- -- --
---------- ------ ---------- ---------- ---------- --------
Balance at June 30, 2001* 19,959,955 $ 423 -- $ -- -- $ --
========== ====== ========== ========== ========== ========
<Caption>
DISTRIBUTION OF
CONVERTIBLE PREFERRED STOCK DISCONTINUED
SERIES C PAR VALUE $.01 ADDITIONAL OPERATION TO
--------------------------- PAID-IN COMMON DEFERRED
SHARES AMOUNT CAPITAL STOCKHOLDERS COMPENSATION
--------- --------- ---------- ------------ ------------
Issuance of shares pursuant to
merger of dreamlife, inc. and
CYL -- $ -- $ 4,169 $ (1,239) $ --
Issuance of shares to members
of CYL pursuant to merger -- -- (1) -- --
Issuance of shares in private
placement, net of expenses -- -- 15,064 -- --
Issuance of shares to acquire
Concept Development, Inc. 50,000 1 4,499 -- --
Issuance of shares pursuant to
exclusive license agreement 5,745 -- 517 -- --
Exercise of stock options -- -- (3) -- --
Issuance of common stock
options -- -- 14,362 -- (14,362)
Deferred compensation expense -- -- -- -- 8,572
Conversion of Convertible
Preferred Stock Series B -- -- (16) -- --
Conversion of Convertible
Preferred Stock Series C (55,745) (1) (4) -- --
Distribution of discontinued
operations -- -- (1,239) 1,239 --
Conversion of Convertible
Preferred Stock Series A -- -- (306) -- --
Net loss for the period from
April 21, 1999 (date of
inception) to
December 31, 1999 -- -- -- -- --
--------- --------- ---------- ------------ ------------
Balance at December 31, 1999 -- -- 37,042 -- (5,790)
Cancellation of stock options -- -- (3,476) -- 3,476
Deferred compensation expense -- -- -- -- 1,891
Issuance of warrants -- -- 833 -- (833)
Net loss for the year
ended December 31, 2000 -- -- -- -- --
--------- --------- ---------- ------------ ------------
Balance at December 31, 2000 -- -- 34,399 -- (1,256)
Cancellation of stock options* -- -- (120) -- 120
Deferred compensation expense* -- -- -- -- 999
Reduction in shares
outstanding pursuant to
Contribution Agreement* -- -- -- -- --
Issuance of shares in private
placement* -- -- 1,980 -- --
Net loss for the six months
ended June 30, 2001* -- -- -- -- --
--------- --------- ---------- ------------ ------------
Balance at June 30, 2001* -- $ -- $ 36,259 $ -- $ (137)
========= ========= ========== ============ ============
<Caption>
DEFICIT
ACCUMULATED
DURING THE
DEVELOPMENT
STAGE TOTAL
----------- ---------
Issuance of shares pursuant to
merger of dreamlife, inc. and
CYL $ -- $ 3,000
Issuance of shares to members
of CYL pursuant to merger -- --
Issuance of shares in private
placement, net of expenses -- 15,066
Issuance of shares to acquire
Concept Development, Inc. -- 4,500
Issuance of shares pursuant to
exclusive license agreement -- 517
Exercise of stock options -- --
Issuance of common stock
options -- --
Deferred compensation expense -- 8,572
Conversion of Convertible
Preferred Stock Series B -- --
Conversion of Convertible
Preferred Stock Series C -- --
Distribution of discontinued
operations -- --
Conversion of Convertible
Preferred Stock Series A -- --
Net loss for the period from
April 21, 1999 (date of
inception) to
December 31, 1999 (14,704) (14,704)
----------- ---------
Balance at December 31, 1999 (14,704) 16,951
Cancellation of stock options -- --
Deferred compensation expense -- 1,891
Issuance of warrants -- --
Net loss for the year
ended December 31, 2000 (20,409) (20,409)
----------- ---------
Balance at December 31, 2000 (35,113) (1,567)
Cancellation of stock options* -- --
Deferred compensation expense* -- 999
Reduction in shares
outstanding pursuant to
Contribution Agreement* -- --
Issuance of shares in private
placement* -- 2,000
Net loss for the six months
ended June 30, 2001* (3,800) (3,800)
----------- ---------
Balance at June 30, 2001* $ (38,913) $ (2,368)
=========== =========
</Table>
* Indicates unaudited amounts
See accompanying notes to financial statements
4
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
(in thousands)
<Table>
<Caption>
Period from
April 21, 1999
Six Months Ended Six Months Ended (date of inception)
June 30, 2001 June 30, 2000 to June 30, 2001
------------- ------------- ----------------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities:
Net loss $(3,800) $ (9,609) $(38,913)
Adjustments to reconcile net loss to net cash used in operating activities:
Noncash compensation expense 999 1,634 11,462
Depreciation and amortization 384 1,404 4,106
Write-down of intangible assets -- -- 3,961
Loss on disposal of assets 24 -- 24
Changes in:
Accounts receivable -- (7) --
Prepaid expenses and other 50 298 (15)
Deferred costs 100 -- 100
Cash held in escrow -- 100 --
Accounts payable and accrued expenses 535 396 2,181
------- -------- --------
Net cash used in operating activities (1,708) (5,784) (17,094)
------- -------- --------
Cash flows from investing activities:
Proceeds from sale (acquisitions) of property and equipment 9 (414) (1,311)
Payment of deferred costs -- (75) (100)
Acquisition of Concept Development, Inc. -- -- (2,113)
(Payment) reduction of security deposits 188 -- (89)
------- -------- --------
Net cash provided by (used in) investing activities 197 (489) (3,613)
------- -------- --------
Cash flows from financing activities:
Proceeds from line of credit 900 -- 2,400
Net proceeds from sale of Series B Convertible Preferred Stock -- -- 15,066
Net proceeds from sale of common stock 2,000 -- 2,000
Cash acquired pursuant to merger of dreamlife, inc. and Change Your Life.com -- -- 3,000
Payments under capital lease obligations (76) (51) (202)
------- -------- --------
Net cash provided by (used in) financing activities 2,824 (51) 22,264
------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,313 (6,324) 1,557
Cash and cash equivalents at beginning of period 244 10,459 --
------- -------- --------
Cash and cash equivalents at end of period $ 1,557 $ 4,135 $ 1,557
======= ======== ========
Supplemental information of noncash investing and financing activities:
Common stock dividend to effect USN Spin-Off $ -- $ -- $ 1,239
======= ======== ========
Computer equipment acquired under capital lease $ -- $ 17 $ 208
======= ======== ========
Issuance of Series C Convertible Preferred Stock in acquisition of Concept
Development, Inc. $ -- $ -- $ 4,500
======= ======== ========
Stock issued for exclusive license agreement $ -- $ -- $ 517
======= ======== ========
</Table>
See accompanying notes to financial statements.
5
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND BASIS OF PRESENTATION
dreamlife, inc. (a development stage enterprise) (the "Company" or
"Dreamlife") commenced development stage activities in April 1999
that included plans for an online network to focus on personal and
professional improvement. The Company launched its website
www.dreamlife.com on February 12, 2000. Since then, the Company has
derived insignificant revenues from fees for interactive products
and services and electronic commerce. The Company operates in one
business segment.
On January 31, 2001, the Board of Directors of Dreamlife approved a
change in the Company's business strategy. Under the new strategy,
the Company began to focus on the acquisition of Discovery Toys and
other potential acquisitions. In connection with the new strategy,
the Company began to re-evaluate the utilization of its website.
The interim financial statements of the Company as of and for the
three and six months ended June 30, 2001 and 2000, are unaudited.
Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
rules and regulations of the SEC relating to interim financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair
presentation of the financial position and the results of operations
and cash flows have been included in such unaudited financial
statements. The results of operations for the six months ended June
30, 2001, are not necessarily indicative of the results to be
expected for any future interim period or for the year ending
December 31, 2001.
Inherent in the Company's business are various risks and
uncertainties, including its limited operating history, historical
operating losses, dependence upon strategic alliances and the
limited history of the need for Internet access and enhanced
services.
(b) USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the 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
could differ from those estimates.
(c) RECOGNITION OF REVENUE
Revenue derived from interactive services, such as online courses,
is recognized when the service is provided.
Revenue derived from electronic commerce is recognized when the
products are delivered.
6
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(2) CHANGE IN ACCOUNTING ESTIMATES
On January 23, 2001, the Company entered into a Surrender Agreement with
the lessor of its office space, which provides for the early termination
of its lease. As such, beginning on February 1, 2001, the remaining
balance of leasehold improvements is being amortized over the six months
remaining on the lease, the estimated useful life of these improvements.
(3) COMMITMENTS
In April 2000, the Company entered into a one-year engagement letter with
Wit SoundView Corporation (Wit) whereby Wit SoundView Corporation and Wit
Capital Corporation will act as the Company's exclusive financial
advisors. In connection with this engagement letter, the Company has
agreed to pay a monthly retainer fee and to compensate Wit in connection
with specified business and financing transactions involving Dreamlife. As
of December 31, 2000, $100,000 of deferred costs related to fees owed Wit
for a pending acquisition. In April 2000, the Company issued to Wit a
five-year warrant to purchase 400,000 shares of common stock at $7.00 per
share. The fair value of the warrants, amounting to $833,000, was recorded
as a deferred charge, reflected as a reduction to stockholders' equity
pending the consummation of the related transaction. As a result of the
consummation of the Discovery Toys acquisition in July 2001, which is
being accounted for as a reverse acquisition, the Company is the acquiree
for accounting purposes and; therefore, the $933,000 of previously
deferred charges were expensed in the three months ended June 30, 2001.
(4) LOSS PER SHARE
Basic loss per share excludes dilution and is computed by dividing the
loss available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted loss per share reflects
the potential dilution that could occur if potentially dilutive securities
such as convertible preferred stock, stock options and warrants were
exercised or converted into common stock. Basic and diluted loss per share
were the same for the six months ended June 30, 2001 and 2000 since the
effect of all potential dilutive common stock equivalents was
antidilutive. As of June 30, 2001 and December 31, 2000, there were
options and warrants exercisable into 5,288,223 and 6,057,464 shares of
common stock, respectively.
(5) LOSS ON DISPOSAL OF EQUIPMENT
In May 2001, the Company sold its telephone equipment. In connection with
the disposition, the Company realized a loss of $24,000.
(6) GAIN ON SETTLEMENTS WITH VENDORS
In June 2001, the Company settled its obligations with two of its vendors,
America Online, Inc. and Yahoo! Inc. As a result of these settlements, the
Company realized a gain of approximately $264,000.
7
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(7) LINE OF CREDIT
Under the terms of a Grid Time Promissory Note signed on October 24, 2000
to the order of The Chase Manhattan Bank, the Company obtained a line of
credit for $1,500,000, which bore interest at the prime rate and was due
on November 30, 2000. On November 28, 2000, the maturity date of the note
was extended to January 31, 2001. On January 15, 2001, the principal
amount of the note was increased to $2.0 million and the maturity date was
extended to April 30, 2001. On March 13, 2001, the principal amount of the
note was further increased to $2.25 million.
On April 12, 2001, the Company obtained a $50,000 short-term loan from an
affiliate of CYL Development Holdings, LLC, a principal stockholder of the
Company, which expired on April 30, 2001. On April 26, 2001, the line of
credit with Chase Manhattan Bank was further increased to $2.4 million and
the maturity date was extended to August 31, 2001. A portion of the
proceeds of the increase in the line of credit was used to repay the
$50,000 short-term loan. An affiliate of CYL Development Holdings, LLC
provided credit support for the line of credit.
On July 18, 2001, the Company issued 2,400,000 shares of common stock to
CYL Development Holdings, LLC in exchange for cancellation of the $2.4
million promissory note described above. The promissory note was assigned
by The Chase Manhattan Bank to CYL Development Holdings, LLC (see note
13).
(8) CAPITAL LEASES
In May 2001, the Company renegotiated several of its capitalized equipment
leases. Under the new terms, ownership of the underlying equipment will be
transferred to the Company upon completion of monthly payments ending in
September 2001.
(9) EMPLOYMENT AGREEMENT
In July 2000, the Company entered into a compensation arrangement with
Peter A. Lund, Dreamlife's new Chief Executive Officer. Under the
agreement between Mr. Lund and Dreamlife, Mr. Lund will receive an annual
base salary of $300,000, subject to change at the discretion of the Board
of Directors. The agreement also provides for a discretionary bonus that
may be granted as determined by the Board of Director's and a guaranteed
deferred bonus of up to $3,000,000 payable in a lump sum on May 22, 2003.
The deferred bonus is subject to vesting requirements, based on continued
employment and is therefore being expensed over the two-year vesting
period. Mr. Lund also received grants of 2,400,000 stock options under the
Company's 1999 Stock Option Plan and 100,000 stock options from a
principal shareholder. As of June 30, 2001, $1,660,000 in unpaid bonus
expense is included in accrued expenses.
As a condition to the closing of the acquisition of Discovery Toys, Inc.
(see note 13), the Company and Peter A. Lund agreed to amend the Offer
Letter between them dated July 24, 2000. The amendment
8
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
accelerated the vesting of the unvested portion of the three million
dollar bonus provided for in the Offer Letter and extended the payment
dates of such bonus.
(10) SHARE CONTRIBUTIONS
On February 1, 2001, two of the Company's principal stockholders, Anthony
Robbins and CYL Development Holdings, LLC, agreed to contribute common
shares back to Dreamlife. The share contributions were effected on April
12, 2001. As a result of these contributions, Dreamlife's total number of
common shares outstanding was reduced from 40,368,351 to 17,959,955.
Anthony Robbins and his affiliates contributed 17,031,297 shares to the
Company and CYL Development Holdings, LLC contributed 5,377,099 shares to
the Company.
(11) EQUITY FINANCING
On June 12, 2001, the Company sold in a private placement 2,000,000 shares
of common stock at a purchase price of $1.00 per share. The private
placement resulted in net proceeds of $2.0 million. The shares were sold
pursuant to an exemption from the registration requirements of the
Securities Act of 1933. The Company has agreed to file a registration
statement under the Securities Act of 1933 to register the resale of the
shares of common stock issued within ninety days of the closing of the
financing.
(12) DEFERRED COMPENSATION
On April 16, 2001, Fredric D. Rosen resigned as a Director of Dreamlife.
At the time of his resignation, 20,000 of his stock options were not
vested and therefore were forfeited upon his resignation. As a result, the
Company reversed $120,000 in deferred compensation relating to those
options.
(13) SUBSEQUENT EVENTS
On July 18, 2001, the Company acquired Discovery Toys, Inc., a California
corporation, pursuant to a Stock Purchase Agreement dated as of July 18,
2001, by and among dreamlife, inc., Discovery Toys and the holders of all
of the issued and outstanding capital stock of Discovery Toys. Discovery
Toys is a direct seller of approximately 200 education toys, books, games
and software for children. Discovery Toys will operate as a wholly owned
subsidiary of Dreamlife. Pursuant to the Stock Purchase Agreement,
Dreamlife issued an aggregate of 33,772,143 shares of common stock to the
stockholders of Discovery Toys in exchange for all of the issued and
outstanding shares of capital stock of Discovery Toys. Subsequent to the
acquisition, the former stockholders of Discovery Toys hold a majority of
the voting interests in Dreamlife. Accordingly, this transaction will be
treated as a reverse acquisition for accounting purposes. Subsequent to
the acquisition the Company continues to evaluate the utilization of its
website in connection with the acquisition of Discovery Toys and other
potential acquisitions.
9
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
After giving effect to the issuance of the common stock pursuant to the
Stock Purchase Agreement and the issuance of the common stock pursuant to
the Note Exchange agreement described below, the Company has outstanding
56,132,098 shares of common stock. As a result of such issuances by the
Company, immediately after the acquisition, the former stockholders of
Discovery Toys will own approximately 60% of the voting power of Dreamlife
and the stockholders of Dreamlife immediately prior to the consummation of
the acquisition of Discovery Toys will own approximately 40% of the voting
power of Dreamlife.
As a condition to the closing of the acquisition described above and
pursuant to a Note Exchange Agreement dated as of July 18, 2001, the
Company issued 2,400,000 shares of common stock to CYL Development
Holdings, LLC in exchange for cancellation of a $2.4 million promissory
note, payable by Dreamlife. The promissory note, which was initially
issued by Dreamlife payable to The Chase Manhattan Bank, was assigned by
The Chase Manhattan Bank to CYL Development Holdings, LLC, a principal
stockholder in Dreamlife.
As a condition to the closing of the acquisition described above, the
Company and Peter A. Lund agreed to amend the Offer Letter between them
dated July 24, 2000. The amendment accelerated the vesting of the unvested
portion of the three million dollar bonus provided for in the Offer Letter
and modified the payment dates of such bonus.
(14) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In July 2001, the FASB issued Statement No. 141, "Business Combinations",
and Statement No. 142, "Goodwill and Other Intangible Assets". Statement
141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 as well as all
purchase method business combinations completed after June 30, 2001.
Statement 141 also specifies criteria that intangible assets acquired in a
purchase method business combination must meet to be recognized and
reported apart from goodwill, noting that any purchase price allocable to
an assembled workforce may not be accounted for separately. Statement 142
will require that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions of Statement 142. Statement 142
will also require that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of.
The Company has adopted the provisions of Statement 141 as of July 1, 2001
and will adopt Statement 142 effective January 1, 2002. Furthermore, any
goodwill and any intangible asset determined to have an indefinite useful
life that are acquired in a purchase business combination completed after
June 30, 2001 will not be amortized, but will continue to be evaluated for
impairment in accordance with the appropriate pre-Statement 142 accounting
literature. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 will continue to be amortized
prior to the adoption of Statement 142.
10
<Page>
DREAMLIFE, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
Statement 141 will require upon adoption of Statement 142, that the
Company evaluate its existing intangible assets and goodwill that were
acquired in a prior purchase business combination, and to make any
necessary reclassifications in order to conform with the new criteria in
Statement 141 for recognition apart from goodwill. Upon adoption of
Statement 142, the Company will be required to reassess the useful lives
and residual values of all intangible assets acquired in purchase business
combinations, and make any necessary amortization period adjustments by
the end of the first interim period after adoption. In addition, to the
extent an intangible asset is identified as having an indefinite useful
life, the Company will be required to test the intangible asset for
impairment in accordance with the provisions of Statement 142 within the
first interim period. Any impairment loss will be measured as of the date
of adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period.
In connection with the transitional goodwill impairment evaluation,
Statement 142 will require the Company to perform an assessment of whether
there is an indication that goodwill is impaired as of the date of
adoption. To accomplish this the Company must identify its reporting units
and determine the carrying value of each reporting unit by assigning the
assets and liabilities, including the existing goodwill and intangible
assets, to those reporting units as of the date of adoption. The Company
will then have up to six months from the date of adoption to determine the
fair value of each reporting unit and compare it to the reporting unit's
carrying amount. To the extent a reporting unit's carrying amount exceeds
its fair value, an indication exists that the reporting unit's goodwill
may be impaired and the Company must perform the second step of the
transitional impairment test. In the second step, the Company must compare
the implied fair value of the reporting unit's goodwill, determined by
allocating the reporting unit's fair value to all of it assets (recognized
and unrecognized) and liabilities in a manner similar to a purchase price
allocation in accordance with Statement 141, to its carrying amount, both
of which would be measured as of the date of adoption. This second step is
required to be completed as soon as possible, but no later than the end of
the year of adoption. Any transitional impairment loss will be recognized
as the cumulative effect of a change in accounting principle in the
Company's statement of earnings.
And finally, any unamortized negative goodwill existing at the date
Statement 142 is adopted must be written off as the cumulative effect of a
change in accounting principle.
As a result of the Discovery Toys acquisition in July 2001, the Company
has not yet assessed the impact of the implementation of these statements
on the Company's financial statements.
11
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
PLAN OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Certain statements in this report constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The words or phrases "can be," "expects," "may
affect," "may depend," "believes," "estimate," "project," and similar words and
phrases are intended to identify such forward-looking statements. Such
forward-looking statements are subject to various known and unknown risks and
uncertainties and dreamlife, inc. ("dreamlife") cautions you that any
forward-looking information provided by or on our behalf is not a guarantee of
future performance. Our actual results could differ materially from those
anticipated by such forward-looking statements due to a number of factors, some
of which are beyond our control, including those discussed under "Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31, 2000 (filed
with the Securities and Exchange Commission on April 17, 2001), including
without limitation, (i) our ability to secure additional financing or complete
additional strategic transactions, (ii) the volatile and competitive nature of
the Internet industry, (iii) changes in domestic and foreign economic and market
conditions, (iv) the effect of federal, state and foreign regulation on our
business, (v) intellectual property and other claims, (vi) our ability to
successfully implement and execute our acquisition strategy, and (vii) our
ability to maintain our relationships with our customers in addition to the
risks described below, as well as those discussed in our other public filings.
All such forward-looking statements are current only as of the date on which
such statements were made. We do not undertake any obligation to publicly update
any forward-looking statement to reflect events or circumstances after the date
on which any such statement is made or to reflect the occurrence of
unanticipated events.
"Dreamlife," the Dreamlife logo and "Quick Coach" are service marks of
dreamlife, inc. Other marks are the property of their respective owners.
OVERVIEW
We officially launched our website, www.dreamlife.com, in February 2000.
The site was designed to enable our users to reach personal and professional
goals by assessing, defining and pursuing their aspirations through the use of
technology, coaching, communities, courses, education tools and an interface
with experts and peer support. In January 2001, we changed our business
strategy. The change came in response to our inability to generate significant
revenues under our original business model, as well as the increasingly
difficult climate that business to consumer content-oriented sites face in the
capital markets. Under the new strategy, we began to focus on the acquisition
of Discovery Toys and other potential acquisitions. In connection with the new
strategy, we have continued to evaluate the utilization of the website.
12
<Page>
In February 2001, we announced that we had entered into a non-binding
letter of intent to acquire Discovery Toys, Inc., a leading direct seller of
educational toys, books, games and software for children. The transaction was
completed on July 18, 2001.
RESULTS OF OPERATIONS
REVENUES
We generated an immaterial amount of revenue during the first six months
of 2001. Revenues for the six months ended June 30, 2001 and the three months
ended June 30, 2001 were $14,000 and $2,000, respectively, compared to revenues
of $28,000 and $13,000 for the same periods in 2000. Revenues were primarily a
result of the sale of online courses and related products to the users of our
website. The decrease in 2001 was driven by a decline in the Company's marketing
and advertising expenditures.
Cost of revenues declined to $18,000 for the six months ended June 30,
2001 from $12,000 for the same period in 2000. Costs of revenues declined to
$5,000 from $12,000 for the three months ended June 30, 2001 and 2000,
respectively. Cost of revenues are comprised of revenue share amounts due to our
content providers and service fees due to our digital commerce service provider.
GAIN ON SETTLEMENT
In June 2001, the Company settled its obligations with two of its vendors,
America Online, Inc. and Yahoo! Inc. As a result of these settlements, the
Company realized a gain of approximately $264,000.
INTEREST INCOME
We earned interest of approximately $5,000 on our cash balances for the
six months ended June 30, 2001 versus $202,000 for the same period in 2000. For
the three months ended June 30, 2001, we earned interest of approximately $4,000
versus $82,000 for the same period in 2000. The decrease is primarily a result
of the significant decline in our cash balances.
EXPENSES
Operating expenses for the six months ended June 30, 2001 totaled $3.9
million, of which $166,000 related to non-cash compensation expense for
compensatory stock options previously granted to our directors and $933,000
relates to previously deferred acquisition-related costs which were expensed as
the Company is the acquiree for accounting purposes in the Discovery Toys
acquisition. The remaining $2.8 million of expenses primarily consisted of
internal salaries, business insurance, legal fees and other administrative
expenses. Operating expenses for the period decreased by approximately $5.9
million compared to the first six months of 2000 in which our operating expenses
were $9.8 million. Of this amount, $1.8 million of the decrease was driven by a
decline in non-cash items, including compensation expense for compensatory stock
options and amortization of intangible assets we acquired from our transactions
with the Concept Development and The Learning Annex. The remaining balance of
the intangible assets was written-off during the third quarter of 2000, as a
result of our decision to discontinue our relationship with The Learning Annex.
The remaining $4.1 million decrease in operating expenses was primarily driven
by a decline in advertising and marketing activities, a significant reduction in
our staffing levels, as well as other reductions in administrative expenses.
Operating expenses for the three months ended June 30, 2001 totaled $2.1
million, of which $46,000 related to non-cash compensation expense for
compensatory stock options previously granted to
13
<Page>
our directors and $933,000 relates to previously deferred costs which were
expensed as the Company is the acquiree for accounting purposes in the Discovery
Toys acquisition. The remaining $1.1 million of expenses primarily consisted of
internal salaries, business insurance, legal fees and other administrative
expenses. Operating expenses for the period decreased by approximately $2.8
million compared to the second quarter of 2000 in which our operating expenses
were $4.9 million. Of this amount, $0.3 million of the decrease was driven by a
decline in non-cash items, including compensation expense for compensatory stock
options and amortization of intangible assets we acquired from our transactions
with the Concept Development and The Learning Annex. The remaining $2.5 million
decrease in operating expenses was primarily driven by a decline in advertising
and marketing activities, a significant reduction in our staffing levels, as
well as other reductions in administrative expenses.
Interest expense in the 2001 periods related to the Company's notes
payable and capital lease obligations, which were not outstanding in the same
periods of 2000.
LIQUIDITY AND CAPITAL RESOURCES
We had $1,557,000 in cash and cash equivalents at June 30, 2001, compared
to $244,000 at December 31, 2000.
For the six months ended June 30, 2001, cash used in operating activities
was $1,708,000, of which internal salaries and benefits expenses totaled
approximately $640,000 and other operating expenses totaled approximately
$1,068,000.
For the six months ended June 30, 2001, cash provided by investing
activities was $197,000 from a reduction in the security deposit for our office
space and proceeds from the sale of telephone equipment.
Cash provided by financing activities was approximately $2,824,000,
consisting of proceeds of $900,000 from a line of credit with The Chase
Manhattan Bank and $2,000,000 from a private equity placement, partially offset
by $76,000 for payments under capital lease obligations.
We believe that we will need additional financing to meet cash
requirements for our operations, and the availability of such financing when
needed, on terms acceptable to us, or if at all, is uncertain. If we are unable
to raise additional financing or generate sufficient cash flow, we may be unable
to continue as a going concern.
Our financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should we be unable to
continue as a going concern. We believe our ability to continue as a going
concern is dependent upon our ability to generate sufficient cash flow to meet
our obligations on a timely basis, to obtain additional financing or refinancing
as may be required, and ultimately to achieve profitable operations.
We believe that we will continue to incur operating losses through at
least 2001. In October 2000, the Company obtained a $1.5 million line of credit
from The Chase Manhattan Bank. On January 15, 2001, our line of credit with The
Chase Manhattan Bank was increased to $2.0 million and the maturity date was
extended to April 30, 2001. On March 13, 2001, the line of credit was further
increased to $2.25 million. On April 26, 2001, the line of credit was further
increased to $2.4 million and the maturity date was extended to August 31, 2001.
14
<Page>
On April 12, 2001, the Company obtained a $50,000 short-term loan from an
affiliate of CYL Development Holdings, LLC, a 12.8% stockholder, which expired
on April 30, 2001. On April 30, 2001, the Company repaid this loan, utilizing a
portion of the proceeds of the increase in the line of credit with The Chase
Manhattan Bank.
On July 18, 2001, the Company issued 2,400,000 shares of common stock to
CYL Development Holdings, LLC in exchange for cancellation of the $2.4 million
promissory note described above. The promissory note was assigned by The Chase
Manhattan Bank to CYL Development Holdings, LLC.
On June 12, 2001, the Company sold in a private placement 2,000,000 shares
of common stock at a purchase price of $1.00 per share. The private placement
resulted in net proceeds of $2.0 million. The shares were sold pursuant to an
exemption from the registration requirements of the Securities Act of 1933. The
Company has agreed to file a registration statement under the Securities Act of
1933 to register the resale of the shares of common stock issued within ninety
days of the closing of the financing.
As of May 2000, we entered into a compensation arrangement with Peter A.
Lund, our new Chief Executive Officer. Under an agreement between Mr. Lund and
Dreamlife, Mr. Lund will receive an annual base salary of $300,000, subject to
change at the discretion of the Board of Directors. The agreement also provides
for a discretionary bonus that may be granted as determined by the Board of
Directors and a guaranteed deferred bonus of up to $3,000,000 payable in a lump
sum on May 22, 2003. The deferred bonus is subject to vesting requirements based
on continued employment and is therefore being expensed over the two-year
vesting period. Mr. Lund also received stock option grants under our 1999 Stock
Option Plan and from a principal shareholder.
As a condition to the closing of the acquisition of Discovery Toys, Inc.
described below, the Company and Peter A. Lund agreed to amend the Offer Letter
between them dated July 24, 2000. The amendment accelerated the vesting of the
unvested portion of the three million dollar bonus provided for in the Offer
Letter and extended the payment dates of such bonus.
On February 1, 2001, two of the Company's principal shareholders, Anthony
J. Robbins and his affiliates and CYL Development Holdings, LLC agreed to
contribute back shares to the Company. The share contributions were effected on
April 12, 2001. As a result of these contributions, our total number of common
shares outstanding was reduced by 22,408,396. Anthony Robbins and his affiliates
contributed 17,031,297 shares to the Company and CYL Development Holdings, LLC
contributed 5,377,099 shares to the Company.
SUBSEQUENT EVENTS
On July 18, 2001, dreamlife acquired Discovery Toys, Inc., a California
corporation, pursuant to a Stock Purchase Agreement dated as of July 18, 2001,
by and among dreamlife, Discovery Toys and the holders of all of the issued and
outstanding capital stock of Discovery Toys (the "Discovery Toys Stockholders").
Discovery Toys is a direct seller of approximately 200 educational toys, books,
games and software for children. Discovery Toys will operate as a wholly owned
subsidiary of dreamlife. dreamlife will apply its resources and talent by
providing ongoing motivational training and educational tools for the more than
20,000 Educational Consultants who represent Discovery Toys in both the United
States and Canada. Pursuant to the Stock Purchase Agreement, dreamlife issued an
aggregate of 33,772,143 shares of common stock to the stockholders of Discovery
Toys in exchange for all of the
15
<Page>
issued and outstanding shares of capital stock of Discovery Toys. Dreamlife
issued the shares to the Discovery Toys stockholders pursuant to an exemption
from the registration requirements of the Securities Act of 1933 under section
4(2) of the Securities Act of 1933. Subsequent to the acquisition, the former
Discovery Toys stockholders hold a majority of the voting interests in
dreamlife. Accordingly, this transaction will be treated as a reverse
acquisition for accounting purposes. As this business combination has been
finalized, the $933,000 of previously deferred acquisition-related charges
related to the agreement with Wit were expensed in the three month period ended
June 30, 2001.
As part of the transactions contemplated by the Stock Purchase Agreement,
the Board of Directors of dreamlife amended and restated its By-Laws. The
Amended and Restated By-Laws provide that the Board of Directors shall consist
of nine members. The initial members of the Board of Directors following the
Company's acquisition of Discovery Toys consists of two groups, the dreamlife
directors and the Discovery Toys directors. The dreamlife directors are Jonathan
C. Klein, Peter A. Lund, Anthony J. Robbins and Charles D. Peebler, Jr. The
Discovery Toys directors are Julius Koppelman, William S. Walsh, Anthony R.
Calandra and James M. Cascino. There is one vacancy on the Board of Directors to
be filled by the vote of a majority of the directors (the "Outside Director").
The person so selected shall serve until the next annual meeting of
stockholders. If any dreamlife director or Discovery Toys director is unable to
serve or, once having commenced to serve, is removed or withdraws from the Board
of Directors, the replacement of that director will be nominated by the majority
of the remaining directors of the group to which such director shall have been a
member, or the sole remaining director of such group if applicable. If the
Outside Director is unable to serve or, once having commenced to serve, is
removed or withdraws from the Board of Directors, the replacement of such
director will be filled by the vote of a majority of the remaining directors.
The Amended and Restated By-laws also provide that the dreamlife directors and
the Discovery Toys directors shall each have the right to nominate four persons
as directors of dreamlife. Initially, Peter A. Lund shall serve as the Chairman
of the Board of Directors and Julius Koppelman and Anthony J. Robbins shall
serve as Vice-Chairmen of the Board of Directors. Prior to the consummation of
the acquisition described above, H. Peter Guber and Bruce L. Stein resigned as
members of the Board of Directors of dreamlife.
This agreement provides that dreamlife shall use reasonable commercial
efforts to file a Registration Statement with the Securities and Exchange
Commission for the public sale of the shares of dreamlife common stock issued
pursuant to the Stock Purchase Agreement within ninety days of the date of the
Stock Purchase Agreement. Additionally, dreamlife, Anthony J. Robbins, Robbins
Research International Inc. and CYL Development Holdings, LLC agreed to
terminate the Stockholder Agreement by and among them dated May 27, 1999
pursuant to a Termination Agreement dated July 18, 2001. After giving effect to
the issuance of the common stock pursuant to the Stock Purchase Agreement and
the issuance of the common stock pursuant to the Note Exchange Agreement
described below, dreamlife has outstanding 56,132,098 shares of common stock. As
a result of such issuances by the Company, immediately after the acquisition,
the former stockholders of Discovery Toys will own approximately 60% of the
voting power of dreamlife and the stockholders of dreamlife immediately prior to
the consummation of the acquisition of Discovery Toys will own approximately 40%
of the voting power of dreamlife.
As a condition to the closing of the acquisition described above,
dreamlife issued 2,400,000 shares of common stock to CYL Development Holdings,
LLC in exchange for cancellation of a $2,400,000 promissory note, payable by
dreamlife. Dreamlife issued the shares to CYL Development Holdings pursuant to
an exemption from the registration requirements of the Securities Act of 1933
under section 4(2) of the Securities Act of 1933. The promissory note, which was
initially issued by dreamlife payable to The Chase Manhattan Bank, was assigned
by The Chase Manhattan Bank to CYL Development Holdings, LLC. CYL Development
Holdings, LLC is a principal stockholder in dreamlife.
As a condition to the closing of the acquisition described above,
dreamlife and Peter A. Lund agreed to amend the Offer Letter between them dated
July 24, 2000. The amendment accelerated the vesting of the unvested portion of
the three million dollar bonus provided for in the Offer Letter and extended the
payment dates of such bonus.
16
<Page>
In connection with the restructuring of dreamlife's business and
operations, dreamlife entered into an amendment to the Content Provider
Agreement and License dated as of April 23, 1999 by and among dreamlife, Anthony
J. Robbins and Robbins Research International Inc. Pursuant to this amendment,
dreamlife assigned and transferred to the Robbins Group all of its right, title
and interest in all property rights pursuant to the Content Provider Agreement
and License and any property or rights derived therefrom. In consideration of
the aforementioned assignment and transfer, the Robbins Group agreed to
extinguish certain obligations of dreamlife under the Content Provider Agreement
and License. dreamlife retained the exclusive right and license to use any
content relating to the Robbins Property now existing or developed in the
future, royalty-free, for the limited purpose of training over the Internet
employees or consultants of any entity engaged principally in the direct selling
of products or services with respect to which dreamlife directly or indirectly
owns an equity interest of more than fifty percent, subject to certain limited
retained rights of the Robbins Group to use such content in Internet training.
The amendment further provides that Anthony J. Robbins shall make up to two
appearances at sales meetings or conventions for employees and/or consultants of
dreamlife or any of its affiliates in any twelve month period.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
None.
17
<Page>
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On June 12, 2001, the Company sold in a private placement 2,000,000 shares
of common stock at a purchase price of $1.00 per share. The private placement
resulted in net proceeds of $2.0 million. The shares were sold to accredited
investors pursuant to an exemption from the registration requirements of the
Securities Act of 1933 under Section 4(2) and/or Rule 506 of Regulation D of the
Securities Act of 1933. The Company has agreed to file a registration statement
under the Securities Act of 1933 to register the resale of the shares of common
stock issued within ninety days of the closing of the financing.
See "Part I, Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Subsequent Events" for a description of
dreamlife's issuance of common stock in connection with the Discovery Toys
acquisition and to CYL Development Holdings LLC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit
Number Description and Method of Filing
------ --------------------------------
2.1 Stock Purchase Agreement dated as of July 18, 2001,
among dreamlife, inc., Discovery Toys, Inc. and the
Discovery Toys, Inc. shareholders named therein (1)
2.2 Note Exchange Agreement dated as of July 18, 2001,
between dreamlife, inc. and CYL Development Holdings,
LLC (1)
3.1(i) Restated Certificate of Incorporation (2)
3.1(ii) Amended and Restated By-laws (1)
3.2(i) Certificate of Amendment to Certificate of Incorporation
dated June 18, 1987 (3)
3.3(i) Certificate of Amendment to Certificate of Incorporation
dated November 17, 1989 (4)
3.4(i) Certificate of Amendment to Certificate of Incorporation
filed November 3, 1999 (5)
3.5(i) Certificate of Amendment to Certificate of Incorporation
filed December 13, 1999 (6)
4.1 Registration Rights Agreement dated as of July 18, 2001,
among dreamlife, inc. and the Discovery Toys, Inc.
shareholders named therein (1)
4.2 Termination Agreement dated July 18, 2001, among
dreamlife, inc., Anthony J. Robbins, Robbins Research
International, Inc. and CYL Development Holdings, LLC
(1)
10.1 Grid Time Promissory Note to The Chase Manhattan Bank
for $2,000,000 dated January 15, 2001 (7).
10.2 Grid Time Promissory Note to The Chase Manhattan Bank
for $2,250,000 dated March 9, 2001 (7)
10.3 Grid Time Promissory Note to The Chase Manhattan Bank
for $2,400,000 dated April 26, 2001 (8)
10.4 Surrender Agreement by and between CFG/AGSCB 75 Ninth
Avenue, LLC and dreamlife, inc. dated January 23, 2001
(7)
10.5 Grid Time Promissory Note to Van Beuren Management, Inc.
for $50,000 dated April 12, 2001 (7)
10.6 Modification to Peter A. Lund Offer Letter dated July
18, 2001, between
18
<Page>
dreamlife, inc. and Peter A. Lund (1)
10.7 Amendment to Content Provider and License Agreement
dated as of July 10, 2001 among Anthony J. Robbins,
Robbins Research International, Inc. and dreamlife, inc.
(1)
- ----------
(1) Incorporated by reference to the registrant's Current Report on Form
8-K filed on August 1, 2001.
(2) Incorporated by reference from Exhibit 3.1 to the registrant's
Registration Statement No. 33-4532-W on Form S-18.
(3) Incorporated by reference from Exhibit 3(b) to the registrant's 1987
Annual Report on Form 10-K.
(4) Incorporated by reference to Exhibit 3(c) to the registrant's 1988
Annual Report on Form 10-K.
(5) Incorporated by reference to the registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999.
(6) Incorporated by reference to the registrant's Form 8-K/A dated May
27, 1999 and filed with the Securities and Exchange Commission as of
June 11, 1999.
(7) Incorporated by reference to the registrant's Annual Report on Form
10-K for the year ended December 31, 2000.
(8) Incorporated by reference to the registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2001.
(b) Reports on Form 8-K
On January 17, 2001 Dreamlife filed a report on Form 8-K dated
January 15, 2001 under Item 5 (Other Events) and Item 7 (Financial Statements,
PRO FORMA Information and Exhibits) to report the increase of the $1.5 million
short-term financing previously received to $2.0 million and the extension of
the maturity date to April 30, 2001.
On February 2, 2001 Dreamlife filed a report on Form 8-K dated
February 1, 2001 under Item 5 (Other Events) and Item 7 (Financial Statements,
PRO FORMA Information and Exhibits) to report the proposed transaction among
dreamlife, inc., Discovery Toys, Inc. and certain other parties.
On March 14, 2001, Dreamlife filed a report on Form 8-K dated March
14, 2001 under Item 5 (Other Events) and Item 7 (Financial Statements, PRO FORMA
Information and Exhibits) to report the increase of the $2.0 million short-term
financing previously received to $2.25 million.
On May 3, 2001, Dreamlife filed a report on Form 8-K dated April 30,
2001 under Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma
Information and Exhibits) to report the increase of the $2.25 million short-term
financing previously received to $2.4 million and the extension of the maturity
date to August 31, 2001.
On June 13, 2001, Dreamlife filed a report on Form 8-K dated June
12, 2001 under Item 5 (Other Events) and Item 7 (Financial Statements, Pro Forma
Information and Exhibits) to report the private placement of $2.0 million of
common stock of dreamlife, inc.
On August 1, 2001, Dreamlife filed a report on Form 8-K dated July
18, 2001 under Item 1. (Changes in Control of Registrant), Item 2 (Acquisition
or Disposition of Assets) and Item 7 (Financial Statements, Pro Forma
Information and Exhibits) to report the acquisition of all of the outstanding
capital stock of Discovery Toys, Inc.
19
<Page>
SIGNATURES
In accordance with 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.
DREAMLIFE, INC.
Dated: August 14, 2001 By: /s/ Philicia G. Levinson
--------------- ----------------------------------------------
Philicia G. Levinson
Senior Vice President,
Chief Financial Officer, Secretary and
Treasurer
20
<Page>
EXHIBIT INDEX
Exhibit
Number Description and Method of Filing
------ --------------------------------
2.1 Stock Purchase Agreement dated as of July 18, 2001,
among dreamlife, inc., Discovery Toys, Inc. and the
Discovery Toys, Inc. shareholders named therein (1)
2.2 Note Exchange Agreement dated as of July 18, 2001,
between dreamlife, inc. and CYL Development Holdings,
LLC (1)
3.1(i) Restated Certificate of Incorporation (2)
3.1(ii) Amended and Restated By-laws (1)
3.2(i) Certificate of Amendment to Certificate of Incorporation
dated June 18, 1987 (3)
3.3(i) Certificate of Amendment to Certificate of Incorporation
dated November 17, 1989 (4)
3.4(i) Certificate of Amendment to Certificate of Incorporation
filed November 3, 1999 (5)
3.5(i) Certificate of Amendment to Certificate of Incorporation
filed December 13, 1999 (6)
4.1 Registration Rights Agreement dated as of July 18, 2001,
among dreamlife, inc. and the Discovery Toys, Inc.
shareholders named therein (1)
4.2 Termination Agreement dated July 18, 2001, among
dreamlife, inc., Anthony J. Robbins, Robbins Research
International, Inc. and CYL Development Holdings, LLC
(1)
10.1 Grid Time Promissory Note to The Chase Manhattan Bank
for $2,000,000 dated January 15, 2001 (7).
10.2 Grid Time Promissory Note to The Chase Manhattan Bank
for $2,250,000 dated March 9, 2001 (7)
10.3 Grid Time Promissory Note to The Chase Manhattan Bank
for $2,400,000 dated April 26, 2001 (8)
10.4 Surrender Agreement by and between CFG/AGSCB 75 Ninth
Avenue, LLC and dreamlife, inc. dated January 23, 2001
(7)
10.5 Grid Time Promissory Note to Van Beuren Management, Inc.
for $50,000 dated April 12, 2001 (7)
10.6 Modification to Peter A. Lund Offer Letter dated July
18, 2001, between dreamlife, inc. and Peter A. Lund (1)
10.7 Amendment to Content Provider and License Agreement
dated as of July 10, 2001 among Anthony J. Robbins,
Robbins Research International, Inc. and dreamlife, inc.
(1)
- ----------
(1) Incorporated by reference to the registrant's Current Report on Form
8-K filed on August 1, 2001.
(2) Incorporated by reference from Exhibit 3.1 to the registrant's
Registration Statement No. 33-4532-W on
21
<Page>
Form S-18.
(3) Incorporated by reference from Exhibit 3(b) to the registrant's 1987
Annual Report on Form 10-K.
(4) Incorporated by reference to Exhibit 3(c) to the registrant's 1988
Annual Report on Form 10-K.
(5) Incorporated by reference to the registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999.
(6) Incorporated by reference to the registrant's Form 8-K/A dated May
27, 1999 and filed with the Securities and Exchange Commission as of
June 11, 1999.
(7) Incorporated by reference to the registrant's Annual Report on Form
10-K for the year ended December 31, 2000.
(8) Incorporated by reference to the registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2001.
22