Business Context and Reporting Period
This Form 8-K Current Report, dated April 7, 2011, covers Marchex, Inc.'s entry into a material definitive agreement and the subsequent completion of an acquisition. On April 7, 2011, Marchex acquired Jingle Networks, Inc., a provider of mobile voice search performance advertising and technology solutions in North America.
Key Financial Metrics and Transaction Details
The filing details the consideration payable for the acquisition of Jingle Networks, Inc., rather than Marchex's standalone operating results for a specific period. The total consideration structure is as follows:
- Closing Consideration: $16.7 million in cash (net of cash acquired) and 1,019,103 shares of Marchex Class B common stock.
- Future Consideration: $18.0 million payable on the first anniversary of closing and $18.0 million payable on the 18-month anniversary.
- Payment Flexibility: Future Consideration may be paid in cash, shares, or a combination. If paid in shares, the amount is increased by 5%.
- Financial Statements: Financial statements for the acquired business and pro forma financial information are not included in this initial filing and will be filed by amendment within 71 calendar days.
Material Changes and Transaction Terms
The primary material change is the expansion of Marchex's business through the acquisition of Jingle Networks. Key terms include:
- Indemnification: Jingle stockholders must indemnify Marchex for certain liabilities, subject to limitations. Marchex retains the right to offset Future Consideration to satisfy these obligations.
- Registration: Marchex agreed to file a Form S-3 registration statement within 30 days of closing (or future issuance) to register the Class B common stock issued.
- Closing Date: The merger officially closed on April 7, 2011.
Guidance, Outlook, and Risks
The filing includes a Safe Harbor Disclosure regarding forward-looking statements. Management notes that actual results could differ materially from projections due to risks and uncertainties. Specific risks are referenced in Marchex's Annual Report on Form 10-K for the year ended December 31, 2010. The company undertakes no obligation to update forward-looking statements. No specific revenue guidance or financial outlook for the combined entity is provided in this text.
Investor Verification Checklist
- Verify the final allocation of Future Consideration between cash and stock once determined by Marchex.
- Review the upcoming amendment to this 8-K for the required financial statements of Jingle Networks and pro forma financial information.
- Examine the Merger Agreement (to be filed as an exhibit to the next periodic report) for detailed representations, warranties, and indemnification limitations.
- Confirm the issuance of the Form S-3 registration statement within the required 30-day window.