UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
August 24, 2010
(Date of Earliest Event Reported)
FUND.COM INC.
(Exact name of Registrant as specified in its charter)
|
Delaware
(State or other
jurisdiction of
incorporation or organization)
|
001-34027
(Commission File Number)
|
30-0284778
(I.R.S. Employer
Identification No.)
|
767 Third Avenue, 25th Floor, New York, New York 10017
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
(212) 224-8230
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
This Amendment on Form 8-K/A (the “
Amendment
”) amends the Current Report for Fund.com Inc., filed on Form 8-K, as initially filed with the Securities and Exchange Commission on November 4, 2010 (the “
Original Report
”). The purpose of this Amendment is to incorporate the Company’s revisions and responses to a letter of comment from the staff of the Securities and Exchange Commission dated as of November 8, 2010 under Item 4.02, Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
This Amendment is an amendment and restatement of the Original Report in its entirety in order to provide a complete presentation.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On August 24, 2010,
the Audit Committee of the Board of Directors (the “
Audit Committee
”) and management of Fund.com Inc. (the “
Company
”) determined, after consultation with its independent registered public accounting firm, that a restatement of its financial statements for the (i) fiscal quarter ended September 30, 2009, which was filed on Form 10-Q on
November 23, 2009; (ii) fiscal year ended December 31, 2009, which was filed on Form 10-K on
April 23, 2010; and (iii) fiscal quarter ended March 31, 2010, which was filed on Form 10-Q on May 24, 2010 is necessary to properly reflect the valuation of an investment into Vensure Employer Services, Inc. (“
Vensure
”) as it relates to the consideration used which was a $20.0 million face amount annuity contract from an unrelated third party payable in 2017 (the “
Financial Instrument
”) that was subsequently returned to the Company on August 18, 2010.
An additional restatement of the financial statements for the fiscal year ended December 31, 2009 will be made to reflect an inducement made by two shareholders of the Company in connection with the issuance of a note payable to IP Global Investors, Ltd. (“
IP Global
”). When it was disclosed, the Company was not aware that the transaction of the share transfer between the private parties had been consummated.
The Audit Committee also determined that certain account balances and the presentation of financial information was not accurately presented in the consolidated financial statements included in the Form 10-K for the year ended December 31, 2008, which was filed on May 7, 2009, Amendment 1 was filed on August 7, 2009 and Amendment 2 was filed on November 30, 2009, and Form 10-Q for the period ended March 31, 2009 which was filed on May 15, 2009. These include modifying the description of an asset, the combination of two classes of common stock into one for the purposes of calculating earnings per share and the addition of inception to date columns in both the Statement of Operations and the Statement of Cash Flows. There were no changes to reported earnings as a result of the restatement.
The Company and the Audit Committee determined that it should take this action to prevent future reliance on previously issued financial statements set forth in the above. Such financial statements should no longer be relied upon.
The Company believes that the proper presentation on its financial statements is to record the Vensure investment at the value of the consideration given. In addition, the Company believes that it is no longer appropriate to record as an asset advances from future revenues which were a part of the Vensure agreements that were rescinded. Accordingly, the financial statements will be restated to reflect the valuation of the financial instrument at September 30, 2009, December 31, 2009 and March 31, 2010.
As previously disclosed by the Company in its periodic reports filed with the Securities and Exchange Commission (the “
SEC
”), on November 2, 2009, effective September 29, 2009, the Company consummated an investment in Vensure pursuant to the terms and conditions of a securities purchase agreement (the “
Purchase Agreement
”). Under the terms of the Purchase Agreement, the Company exchanged the $20.0 million face amount Financial Instrument for 218,883.33 shares of Series A participating convertible preferred stock of Vensure, with a liquidation value of $1,000 per share (the “
Series A Preferred Stock
”). In addition, the Company, Vensure and their subsidiaries entered into an educational content agreement.
Subsequent to the closing of the Vensure transaction, there was a significant change of circumstances affecting both parties to the Purchase Agreement. These factors included: (i) Vensure’s inability to provide the Company with the audited financial statements of Vensure for the two years ended December 31, 2009, as required by the Purchase Agreement; and (ii) the focus of Company’s efforts and business strategy as a result of the expansion of the activities of its AdvisorShares Investments, LLC subsidiary and the recent acquisition of Weston Capital Management, LLC.
Management of the Company believes that present value techniques, and specifically the guidance set forth in ASC 820-10-55-5, will ultimately result in a determination that the fair value of the Financial Instrument may be significantly less than its original $20.0 million face amount, and that such Financial Instrument could be impaired and reduced by as much as $15.0 million. However, the final determination of the fair value of the Financial Instrument has not been completed nor have the independent auditors for the Company made any determination as to such fair value, including the extent of any reduction or impairment of the Financial Instrument, if any.
Accordingly, the Company will: (i) remove as an asset any advances from future revenues, (ii) make a final determination of the fair value of the Financial Instrument, which determination shall be subject to audit by the Company’s independent auditors, and (iii) record the inducement in connection with the note payable to earnings. Specifically:
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1.
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The balance sheets for the periods September 30, 2009, December 31, 2009 and March 31, 2010 will no longer contain an asset, advances for future revenues;
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2.
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The balances sheets for the periods September 30, 2009, December 31, 2009 and March 31, 2010 will record the investment in the Series A Preferred Stock based upon the value given;
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3.
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The Statement of Operations for the period ending September 30, 2009 will reflect an impairment of the Series A Preferred Stock to its reduced fair value; and
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4.
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The Statement of Operations for the year ending December 31, 2009 will reflect a similar impairment of the Series A Preferred Stock.
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As additionally reported on Form 8-K filed on August 24, 2010, on August 18, 2010, the Company and Vensure entered into an Agreement of Rescission (the “
Rescission Agreement
”) under which the parties agreed to rescind,
ab initio
, all of the transactions contemplated by the Purchase Agreement, as a result of which (a) Vensure and its subsidiary assigned back to the Company the Financial Instrument, (b) the Company assigned and transferred back to Vensure its Series A Preferred Stock, and (c) the parties agreed to release each other from all further obligations under the Purchase Agreement and related educational content agreement.
In addition, the Statement of Operations for the year ending December 31, 2009 will reflect as a charge to earnings of $8,800,000 with a corresponding amount increasing Additional Paid in Capital in the Shareholders’ Equity section. This is related to the inducement provided by the shareholders in connection with the IP Global note. This restatement will have no affect on the assets or net equity of the company.
The Company will properly reflect the combination of two classes of common stock into one for purposes of calculating Earnings Per Share and the restatement of the statement of cash flows to correct the presentation of accrued interest income, minority interest, and presentation of certain Venture related items as non-cash for the year ended December 31, 2008 and the period ended March 31, 2009. Specifically:
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1.
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The consolidated balance sheets as of December 31, 2008 and 2007 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the year ended December 31, 2008, the period from September 20, 2007 (inception) through December 31, 2007 and for the period from September 20, 2007 (inception) through December 31, 2008 will be restated to reflect corrections to previously reported amounts.
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2.
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The consolidated balance sheets as of March 31, 2009 and 2008 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for the period ended March 31, 2009 and the period from September 20, 2007 (inception) through March 31, 2009 will be restated to reflect corrections to previously reported amounts.
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As indicated above, the Audit Committee and management has discussed this matter with its independent registered public accounting firm, and the Company will work diligently with its independent registered public accounting firm to include the restated financial statements as at December 31, 2008, March 31, 2009, September 30, 2009, December 31, 2009 and March 31, 2010, and for the periods then ended, in amendments to such reports, to be filed with the SEC as soon as practical.
On December 2, 2010, the Company provided Jewett, Schwartz, Wolfe & Associates
with a copy of the disclosures it is making in response to Item 4.02 on this Form 8-K/A, and has requested that Jewett, Schwartz, Wolfe & Associates furnish the Company with a letter addressed to the SEC stating whether it agrees with the above statements as promptly as possible. Such letter is filed herewith as Exhibit 16.1 and is incorporated herein by reference.
Complete Description
The foregoing description of the new financial statements is not a complete summary. The new financial statements, which should be relied upon, will be contained in amendments to the December 31, 2008, March 31, 2009, September 30, 2009, December 31, 2009 and March 31, 2010 reports to effect the aforementioned restatements. You are urged to read the complete documents on the website of the SEC at
www.sec.gov
when such amended reports are filed with the SEC as soon as practical.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
As previously disclosed by the Company in its Current Report on Form 8-K filed with the SEC on October 19, 2010, on October 13, 2010, the Board of Directors of the Company resolved by unanimous written consent to change the Company’s fiscal year end, formerly ending December 31
st
, to September 30
th
. In order to avoid the time and expense associated with filing an audited transition report for the period ended September 30, 2010 with the SEC while simultaneously responding to comments from the SEC in connection with the Company’s historical financial statements, on October 26, 2010, the Board of Directors of the Company resolved by unanimous written consent to rescind its prior approval of the Company’s change in fiscal year end. As a result of the foregoing, the Company’s fiscal year end was changed from September 30
th
to December 31
st
.
Item 9.01 Financial Statements and Exhibits.
(a)
Financial statements of businesses acquired
.
Not applicable.
(b)
Pro forma financial information
.
Not applicable.
(c)
Shell company transactions
.
Not applicable.
(d)
Exhibits
.
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Exhibit Number
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Description
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16.1
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Letter from Jewett, Schwartz, Wolfe & Associates dated as of December 3, 2010
.
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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.
FUND.COM, INC.
(Registrant)
By: /
s/ Gregory Webster
____________________________________________
Name: Gregory Webster
Title: Chief Executive Officer
Date: December 3, 2010
6
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