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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 July 21, 1998
(Date of earliest event reported: July 6, 1998)
VERIO INC.
(Exact name of registrant as specified in its charter)
Delaware 0-24219 84-1339720
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation)
8005 South Chester Street, Suite 200, Englewood, Colorado 80112
(Address of Principal Executive Offices) (Zip Code)
(303) 645-1900
(Registrant's telephone number, including area code)
Not applicable.
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 6, 1998, the Registrant completed the acquisition of NTX, Inc.,
a California corporation d/b/a TABNet ("TABNet"). The acquisition was completed
pursuant to a Securities Purchase and Cancellation Agreement, dated as of July
6, 1998 (the "Agreement"), pursuant to which the Registrant purchased from seven
individuals all of the outstanding shares of capital stock of, and all rights to
acquire capital stock or other equity interests in, TABNet. The total amount of
funds required by the Registrant to purchase the shares and rights pursuant to
the terms of the Agreement consists of (i) initial cash payments, made on July
6, 1998, in the aggregate amount of $45,500,000 plus (ii) additional amounts of
up to a maximum of $43,200,000, if any, contingent upon TABNet meeting certain
financial performance goals for the period from June 1, 1998 through December
31, 1998 (as described in more detail below). Of the initial $45,500,000 initial
payment, $10,500,000 was deposited into escrow to secure the indemnification
obligations to the Registrant of the selling stockholders and the rightsholders
in respect of representations, warranties, covenants and certain other matters
set forth in the Agreement.
The Registrant used funds available as part of its existing cash
resources in order to fund the initial payment. The Registrant currently has
sufficient cash resources to fund the remaining contingent purchase price
payments if and to the extent they become payable. If the Registrant uses such
cash for other purposes prior to any contingent purchase price payments becoming
payable, the Registrant might be required to secure additional financing in
order to fund such payments. Such additional financing might be raised through
the issuance of debt or equity securities, borrowings under bank or other credit
facilities or through the proceeds from other sources of financing.
Under the Agreement, the Registrant may be required to make the
additional purchase price payments of up to a total of $43,200,000, contingent
upon TABNet's achieving specified aggregate recurring revenue and aggregate
EBITDA levels during the period from June 1, 1998 through December 31, 1998 (the
"Earnout Period"). TABNet recorded recurring revenues of approximately $433,000,
and EBITDA of approximately $133,000, for the month of May 1998, reflecting an
average month-over-month growth rate in recurring revenues of approximately 12
percent per month and in EBITDA of approximately 7 percent per month for the
first five months of 1998. The maximum contingent payment amount of $43,200,000
will be payable only if TABNet records aggregate recurring revenue of at least
$12,900,000, and aggregate EBITDA of at least $4,800,000, during the Earnout
Period. This would require that TABNet achieve, during the Earnout Period, both
(i) average month-over-month growth in recurring revenue of approximately 37
percent and (ii) average month-over-month growth in EBITDA of approximately 42
percent. In order to receive any portion of the contingent purchase price,
TABNet must record aggregate recurring revenue of at least $5,500,000
(reflecting average month-over-month growth of at least 15 percent), or
aggregate EBITDA of at least $2,000,000 (reflecting average month-over-month
growth of at least 20 percent), during the Earnout Period. At those minimum
growth levels, the total additional payments would be $5,400,000, if only one of
such criteria is met, or $10,800,000, if both such criteria are met, with the
amount of the additional payments increasing if and to the extent that either
TABNet's recurring revenue or EBITDA growth exceeds the respective minimum
level. In order to receive contingent purchase price payments in excess of
$27,000,000, TABNet must achieve both an aggregate recurring revenue threshold
of at least $9,200,000 (reflecting average month-over-month growth of at least
28 percent) and an aggregate EBITDA threshold of at least $3,400,000 (reflecting
average month-over-month growth of at least 33 percent) during the Earnout
Period, with the amount of the additional payments increasing, up to the maximum
of $43,200,000, if and to the extent that TABNet's recurring revenue or EBITDA
exceeds the respective threshold.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The acquisition described in Item 2 of this Form 8-K will be accounted
for as a purchase. It is impractical to provide the required audited financial
statements at the time of the filing of this Form 8-K. Audited financial
statements will be filed as an amendment to this Form 8-K under cover of Form 8
as soon as practicable but not later than September 21, 1998.
(b) Pro Forma Financial Information.
It is impractical to provide the required pro forma financial
information at the time of the filing of this Form 8-K. Pro forma financial
information will be filed as an amendment to this Form 8-K under cover of Form 8
as soon as practicable but not later than September 21, 1998.
(c) Exhibits.
Not applicable.
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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.
VERIO INC.
By: /s/ Justin L. Jaschke
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Justin L. Jaschke
Chief Executive Officer
Dated: July 21, 1998
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