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) May 13, 2004
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ICEWEB, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-27866 13-2640971
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(State of other jurisdiction (Commission File Number) (IRS Employer
or incorporation) Identification No.)
205 Van Buren Street, Herndon, VA 20170
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(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (703) 964-8000
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620 Herndon Parkway, Herndon, VA 20170
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 13, 2004, the Company, through its wholly-owned subsidiary,
Propster, Inc., completed the acquisition of substantially all of the assets of
DevElements, Inc. The assets acquired consisted of:
o software and related documentation consisting of the Propster suite
of software products and the DEX suite of software products, objects
and source codes controlled by DevElements;
o all products in source code and object code;
o existing license agreements between DevElements and its customers
relating to products acquired;
o generic code pertaining to products and derivative works;
o third party software licenses;
o customer contracts;
o cash, hardware, furniture, equipment, supplies, contractual
benefits, contract rights and other assets not specifically
excluded.
Assets excluded from sale consisted of certain rights reserved by
DevElements to license Propster software to its current landlord and Bernstein
Management. The Company assumed liabilities scheduled as part of the agreement,
which were current or future liabilities associated with the assets acquired and
certain other liabilities for professional services, lessor obligations and
other debt obligations of DevElements. Simultaneously with the acquisition, the
Company, acting through its Propster subsidiary, acquired 19% of the capital
stock interest of DevElements, with the balance retained by current management
and stockholders of DevElements.
In consideration for the purchase of the assets, the Company paid to
DevElements $100,000 and agreed to the assumption of liabilities up to an
aggregate of $150,000. In exchange for the 19% interest in DevElements, the
Company issued to the shareholders of DevElements 1,500,000 shares of its common
stock and options to purchase 1,500,000 shares of common stock exercisable at a
price of $0.34 per share and expiring May 13, 2009. In addition, IceWEB issued
to the shareholders options to purchase 500,000 shares, based on DevElements
satisfying certain performance criteria, exercisable at 85% of the closing price
for IceWeb Common Stock on the date of grant of said additional options and
expiring five years from the date of grant. The performance criteria will be
satisfied assuming the Company and DevElements collectively receive contracts,
task orders and other work assignments involving billing of at least $840,000
during the six-month period ending November 13, 2004. The Company has agreed to
register the common shares on a demand basis provided that the underlying shares
under the option to purchase 1,500,000 shares are exercised and subject to
certain other limited restrictions.
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Propster will assume DevElements liability to Sun Trust Bank in the
amount of $150,000. It is further agreed that the Company will either pay the
liability in its entirety following the Closing Date or take action with Sun
Trust Bank to remove Andrew Hill as a personal guarantor. A total of $250,000 is
to be distributed. Of this, $250,000 is to pay off the Sun Trust Bank line of
credit, and $100,000 is to be distributed to DevElements shareholders.
In connection with the transactions, the Company entered into
employment contracts with Andrew Hill, Joseph Luby, Chris McDonald, Bonnie
Edenfield and Eric Eggleston, all of whom will work full time for the Company
and its subsidiaries. Subsequent to the closing date, the following individuals
will share in the profits earned from the Propster software in the following
manner:
o Based on percentages noted below, the individuals shall be paid 50%
of the gross profit earned from the sale, licensing or third party
use of the Propster software during the 12-month period after the
Closing Date.
o Based on percentages noted below, the individuals shall be paid 50%
of the gross proceeds paid as a result of asset sales of the
Propster software during the 18-month period after the Closing Date.
Joseph Luby 14%; Bonnie Edenfield 11%; Steve McPherson 10%; Shadi McPherson 7%;
Carl Kullback 5%; Scot Haberman 5%; Jamie Stroud 5%; Remel Pubh 4%; Kit Wood 4%;
Chris MacDonald 4%; Stephen Hackley 4%; Andrew Hill 4%; Darryl Draper 3%; Brian
Ramey 3%; and Michael Graham 2%.
DevElements, Inc. is a professional IT consultancy that designs,
develops and implements Web-based employee productivity solutions for
organizations with operational efficiency goals. By combining leading edge
technologies with an innovative approach to business process management, our
staff builds solutions that capitalize on an organization's strengths and
empower their employees to do their jobs better, faster and cheaper. From Highly
creative, interactive, sales-focused Web sites to knowledge management and
employee information systems, DevElements solutions embody the vision of the
paperless workplace.
DevElements was incorporated in the State of Virginia in June 1999. At
the time of acquisition, DevElements employed 30 people. Over the last five
years, revenues have increased from $800,000 in 1999 to $2,900,000 in 2003.
DevElements has been profitable every year since inception.
Some current customers of DevElements include Drake, Beam and Morin;
Center for Executive Options; Environmental Resource Management; United
Association of Journeymen; Democratic Governors Association; Computer and
Communications Industry Association; eSentio; Wiley, Rein & Fielding; Arnold &
Porter; Cassidy, Pinkard & Irving, Gene Logic; Network Alliance.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Financial Statements for the period specified in item 310 of
Regulation S-B will be filed by amendment within the
prescribed period.
(b) Pro Forma Financial Information.
Pro Forma Financial Information required pursuant to item
310(d) of Regulation S-B will be filed by amendment within the
prescribed period.
(c) Exhibits.
10.1 Asset and Stock Purchase Agreement
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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.
ICEWEB, INC.
By: /s/ John R. Signorello
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John R. Signorello
Chairman and CEO
DATED: June 25, 2004
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