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): January 10, 2003
WARP TECHNOLOGY HOLDINGS, INC.
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(Exact Name of Registrant as Specified in Charter)
Nevada 000-33197 88-0467845
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(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification
Number)
535 West 34 Street, 5th Floor, New York, New York 10001
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(Address of Principal Executive Offices)
(212) 962-9277
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(Registrant's Telephone Number, including area code)
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On January 10, 2003 (the "Closing Date"), the Registrant, through its
wholly-owned subsidiary 6043577 Canada Inc., acquired one hundred percent (100%)
of the issued and outstanding capital stock of Spider Software, Inc. ("Spider"),
a privately held Canadian corporation, through a share exchange transaction (the
"Transaction") pursuant to a Share Exchange Agreement (the "Exchange Agreement")
dated as of December 13, 2002, by and among the Registrant, 6043577 Canada Inc.,
Spider, the Spider Insiders and the Sellers as Identified on Schedule A thereto.
Pursuant to the Exchange Agreement the Spider shareholders were issued
approximately 1,500,000 shares of the preferred stock of 6043577 Canada Inc.,
which in turn is convertible into shares of the Registrant's common stock on a 1
for 1 basis, and the Registrant forgave outstanding Spider promissory notes of
approximately $250,000, in exchange for one hundred percent (100%) of the issued
and outstanding capital stock of Spider. As of January 16, 2003, approximately
121,780 shares of the preferred stock of 6043577 Canada Inc. had been converted
to shares of the Registrant's common stock. A copy of the Exchange Agreement is
attached as an Exhibit hereto and is incorporated herein by reference.
In accordance with the terms and conditions of the Exchange Agreement,
the Registrant caused 6043577 Canada Inc. to issue .197707 shares of the
preferred stock of 6043577 Canada Inc. for each one (1) share of Spider common
stock acquired. The Registrant owns 100 percent of the voting common stock of
6043577 Canada Inc. The preferred stock of 6043577 Canada Inc. has no voting
rights or other preferences but is convertible on a 1 for 1 basis into the
common stock of the Registrant. As a result, following the closing of the
Transaction, Spider became a wholly-owned subsidiary of 6043577 Canada Inc. and
thereby a wholly-owned subsidiary of the Registrant.
Neither the preferred stock of 6043577 Canada Inc., nor the shares of
the Registrant's common stock issued upon conversion of such preferred stock
(collectively the "Consideration Shares") have been registered under the
Securities Act of 1933, as amended (the "Securities Act"). The Consideration
Shares were issued to the Spider stockholders pursuant to an exemption from
registration under Section 4(2) of the Securities Act. The Consideration Shares
are subject to restrictions on transfer under the Securities Act and may only be
transferred or resold pursuant to an effective registration statement or in
compliance with an exemption from such registration. The terms and conditions of
the Exchange Agreement were determined through arms-length negotiations between
the parties.
Under the terms and conditions of the Exchange Agreement, the following
transactions took place on or subsequent to the Closing Date:
o As of January 10, 2003, approximately 1,500,000 Consideration
Shares were issued to the Spider stockholders in exchange for
one hundred percent (100%) of the outstanding common stock of
Spider.
o With the exception of Mr. Greg Parker, all of the directors of
Spider resigned
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from their positions on the Board of Directors of Spider and
Mr. Karl Douglas, the Co-Chairman, CEO and President of
Registrant, and Mr. John Gnip, the Co-Chairman and COO of
Registrant, were appointed to the Board of Directors of
Spider. Subsequent to the Closing Date, the Board of Directors
of Spider consists of Messrs. Parker, Douglas and Gnip.
o Mr. Greg Parker was appointed as a member of the Registrant's
Board of Directors. Accordingly, following the Closing Date
the Registrant's Board of Directors consists of Messrs.
Douglas, Gnip, and Parker and Mr. Carlo Civelli.
o Mr. Greg Parker was appointed Chief Technology Officer of the
Registrant and Michael Corcoran was appointed Chief Engineer
of the Registrant.
Readers are referred to the Exchange Agreement, a copy of which is
attached as Exhibit 2.2 to this Report and which is incorporated herein by
reference, for its full text.
Between August 2002 and the Closing Date, the Registrant advanced to
Spider a total of approximately $250,000 pursuant to Note Purchase Agreements in
order to provide Spider with working capital to finance its operations prior to
the closing of the Transaction. Spider issued promissory notes to the Registrant
for all such advances. Subsequent to the Closing Date, the Registrant forgave
the repayment of the $250,000.
Business of Spider
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The Registrant is operated as a holding company with two operating
subsidiaries: WARP Solutions, Inc. ("WARP") and Spider. Spider was formed as a
Canadian Incorporated Company in June of 2000.
Spider is an information technology company that produces computer
software that seeks to improve the speed and reliability of the transactions and
information requests that are processed in servers on the Internet and Intranet
network systems. Internet and Intranet network systems are collectively referred
to herein as "networks."
Network traffic today consists largely of frequent requests for dynamic
content through network infrastructure. Such requests for dynamic content
require frequent and real-time database queries. How quickly and reliably an
enterprise's network infrastructure processes requests for dynamic content can
determine the satisfaction levels of the customers or employees who use the
network.
Currently, network infrastructure generally consists of four layers: i)
the internet network, ii) the web server layer, iii) the application layer, and
iv) the database layer. Network systems that offer dynamic content such as
travel sites, browser based corporate applications such as
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CRM, ERP and Supply Chain Management applications, and eCommerce applications
such as retail merchandise sites all require that requests for dynamic content
traverse all four network layers. The application and database layers are
generally the slowest, with 100 simultaneous transactions per central processing
unit instance at 10 second intervals being typical. This can cause response
times to be slow as each request and response have to traverse the four layers
of infrastructure. In effect, to the "core" of the infrastructure and back.
The Spider's SpiderCache Software (the "SpiderCache") eliminates the
need for repeated dynamic content requests to traverse through the application
and database layers of the infrastructure by storing (i.e. caching) the
responses for the most frequently requested information in the memory and on
hard disk on the web server away from the core of the infrastructure and
diverting such requests to memory for processing. In doing so, SpiderCache
reduces the amount of application server and data server infrastructure required
to process dynamic content transactions. Additionally, the time required to
process such transactions (i.e. latency) can be dramatically shortened. Thus,
SpiderCache creates greater network response speed and increases network
efficiency by accelerating the processing of dynamic content requests at the
application server and database server levels of the infrastructure. The result
is increased performance and reduced dependency on high end server
infrastructure and software licenses.
Registrant believes that there is a growing market for its technology
and product. With broadband connectivity being more common, the volume of
transactions being processed over networks is increasing. Registrant believes
that the increase in the number of broadband connections and the related
increase in transaction processing have contributed to application congestion in
the applications layers and database layers of network enabled applications.
Registrant believes that the SpiderCache product can help relieve such
application congestion by increasing a network's efficiency through better
management of the flow and processing of dynamic transaction requests.
At present, the SpiderCache software is considered to be a mid-stage
product. Spider believes that the product has gone through substantial customer
requested feature enhancements, and will require approximately one year of
customer requested feature enhancements to reach maturity. Spider believes,
despite the relative immaturity of its product, that it will be able to attract
customers to the SpiderCache product because of its potential performance and
cost saving benefits.
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The central philosophy behind Spider's technology strategy is to
increase the performance in the delivery of content, and to increase the
capacity of the server stack, and then to distribute this content in order to
optimize the network.
Revenue Model
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Spider derives its revenue from the sale of the SpiderCache product
either through channel sales to end-users or, on a limited basis, by direct
sales to end users. Generally, all end users will enter into a maintenance
agreement with Spider under which Spider will be paid an annual service fee for
the maintenance, support and upgrades of the SpiderCache product and any future
Spider products.
Marketing
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Spider's current marketing effort consists mainly of direct contact
with potential channel resellers or direct customers. Such contact generally
take place either by telephone or in person. Spider is not currently engaged in
any general advertising campaigns. Spider's current internal sales force
consists of one direct Spider employee. Spider's sales efforts are currently
focused on developing its OEM and channel reseller network.
Competition
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There is significant competition among static and dynamic content
acceleration technology producers and service providers. IBM Corp., Oracle Corp.
and BEA Systems, Inc. have each added functions to their application server
products which increase the efficiency, on a limited basis, of static and
dynamic content delivery. Static caching vendors such as Volera, InfoLibria and
Network Appliances Corp. have developed frequent "time-to-live" ("TTL") cache
refresh based architectural approaches to dynamic content acceleration. Service
vendors such as Akamai Technologies, Inc. have developed approaches to dynamic
content acceleration which it offers to customers on an outsourcing basis.
Chutney Technologies, Zend, and other development stage companies, are also
developing technologies for dynamic content acceleration.
The technology industry in general is highly competitive and Spider
expects significant competition for its dynamic content acceleration technology.
Many of Spider's competitors, including some of those identified above, have
been in business for a number of years, have established customer bases, are
larger, and have greater financial resources than Spider. There can be no
assurance as to the degree to which we will be able to successfully compete in
Spider's industry.
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Employees
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At present Spider has five full time employees including Greg Parker,
who is also the Chief Technology Officer of the Registrant.
Forward Looking Statements
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Certain statements in this Form 8-K and in other filings by the
Registrant with the Securities and Exchange Commission (the "Commission") may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The words believe", "expect",
"intend", "anticipate", "estimate", "may increase", variations of such words,
and similar expressions or future or conditional verbs such as "will", "should",
(W)ould", and "could" identify forward-looking statements, but their absence
does not mean that the statement is not forward-looking. Such forward-looking
statements include those relating to future opportunities, the outlook of
customers, the reception of new products and technologies, and the success of
new initiatives. In addition, such forward-looking statements involve known and
unknown risks, uncertainties, and other factors which may cause the actual
results, performance or achievements of the Registrant to be materially
different from any future results expressed or implied by such forward-looking
statements. Such factors include: (i) demand for the Registrant's products; (ii)
the actions of current and potential new competitors; (iii) changes in
technology; (iv) the nature and amount of the Registrant's revenues and
expenses; and (v) overall economic conditions and other risks detailed from time
to time in the Registrant's periodic earnings releases and reports filed with
the Commission, as well as the risks and uncertainties discussed in this Form
8-K and the Registrants Annual Report on Form 10-KSB.
Item 6. Resignation of Director.
On the Closing Date, in connection with the Transaction, the Board of
Directors of the Registrant appointed Mr. Greg Parker to serve as a director of
the Registrant to fill a vacancy on its Board of Directors. The following is
biographical information on Mr. Parker:
Greg Parker, Age 40: On January 2, 2003, Mr. Parker was appointed Chief
Technology Officer of the Registrant and on January 10, 2003 Mr. Parker was
appointed to the Board of Directors of the Registrant. Mr. Parker has over 17
years of experience in the technology industry. Mr. Parker co-founded and has
been the CEO and President of Spider since June 2000. Prior to founding Spider,
from 1999 to 2000, Mr. Parker was the Director of Technology and Development at
Branium.com, a leading-edge Internet company delivering educational multimedia
content. From 1998 to 1999, Mr. Parker was the Director of Product Planning and
Strategy for Enlogix Inc., a provider of utility billing and customer
relationship management solutions for over three million consumers. From 1992 to
1998, Mr. Parker was head of IT Planning and Architecture for Westcoast Energy
Inc., a multinational energy company. From 1989 to 1992, Mr. Parker was a Senior
Consultant/Product Developer at Oracle Corporation. Mr. Parker holds an Honors
BSc in Astrophysics and Computer Science from the University of Toronto.
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Item 7. Financial Statement and Exhibits.
(a) Financial Statements of the Business Acquired
The financial statements responsive to this Item 7(a) shall be filed by
an amendment to this Current Report on Form 8-K.
(b) Pro Forma Financial Information
The financial statements responsive to this Item 7(b) shall be filed by
an amendment to this Current Report on Form 8-K.
(c) Exhibits.
The following Exhibits are hereby filed as part of this Current Report
on Form 8-K:
Exhibit Description
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2.2 Form of Share Exchange Agreement dated as of December 13, 2002 by and
among WARP Technology Holdings, Inc., 6043577 Canada Inc., Spider
Software Inc., the Spider Insiders and the Persons Identified on
Schedule A thereto.
10.7 Form of Put and Call Agreement dated as of December 13, 2002, by and
among Warp Technology Holdings, Inc., 6043577 Canada Inc., and all of
the Shareholders of Spider Software Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
WARP Technology Holdings, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: January 24, 2003
WARP TECHNOLOGY HOLDINGS, INC.
By: /s/ Karl Douglas
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Karl Douglas, CEO and President
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EXHIBIT INDEX
The following Exhibits are filed herewith:
Exhibit Description
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2.2 Form of Share Exchange Agreement dated as of December 13, 2002 by and
among WARP Technology Holdings, Inc., 6043577 Canada Inc., Spider
Software Inc., the Spider Insiders and the Persons Identified on
Schedule A thereto.
10.7 Form of Put and Call Agreement dated as of December 13, 2002, by and
among Warp Technology Holdings, Inc., 6043577 Canada Inc., and all of
the Shareholders of Spider Software Inc.
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