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 19, 2001
BREAKAWAY SOLUTIONS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 000-27269 04-3285165
--------------------- ---------------------- ----------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
2 SEAPORT LANE
BOSTON, MASSACHUSETTS 02210
--------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(617) 275-3000
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
-----------------
(Former Name or Former Address, if Changed Since Last Report)
SPECIAL NOTE REGARDING CERTAIN STATEMENTS AND REFERENCES
This Current Report on Form 8-K contains forward-looking statements
which reflect the current judgment of Breakaway Solutions, Inc., a Delaware
corporation (the "Registrant"), on certain issues relating to the Registrant's
recently announced secured financing transaction with ICG Holdings, Inc., a
Delaware corporation. Because these statements apply to future events, they are
subject to risks and uncertainties that could cause the actual results to differ
materially. Important factors which could cause actual results to differ
materially include: the Registrant's ability to raise additional capital; equity
dilution; likely variation in the Registrant's quarterly revenues and operating
results; the Registrant's ability to retain personnel and customers; the
Registrant's ability to realize benefits from acquisitions and strategic
alliances; the adoption and acceptance of application hosting services by
growing enterprises; product acceptance and customer demand; competition; risks
in conducting business outside the United States; and the other risks described
under the heading "Factors that May Affect Future Results" in the Registrant's
Annual Report on Form 10-K for the period ended December 31, 1999 and in the
Registrant's Quarterly Report on Form 10-Q for the period ended September 30,
2000, on file with the Securities and Exchange Commission, which factors are
incorporated herein by reference.
ITEM 5. OTHER EVENTS
On January 19, 2001, Breakaway Solutions, Inc., a Delaware corporation
(the "Registrant"), entered into definitive agreements with respect to a secured
financing (the "Financing") with ICG Holdings, Inc., a Delaware corporation
("ICG Holdings"). ICG Holdings is an affiliate of Internet Capital Group, Inc.,
a Delaware corporation and the Registrant's largest stockholder. Pursuant to the
Financing, the Registrant borrowed $5.0 million from ICG Holdings at an interest
rate of 12% per annum (or 18% after an event of default). ICG Holdings advanced
the funds to the Registrant on the 11th and 12th of January, 2001. Principal and
interest are due and payable in full on March 12, 2001 and are fully secured by
substantially all of the Registrant's assets. In connection with the Financing,
the Registrant also agreed to issue to ICG Holdings warrants to purchase up to
9,737,447 shares of the Registrant's common stock, $0.000125 par value per
share, at a per share exercise price of $0.6875, such shares and exercise
price subject to adjustment in certain events.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BREAKAWAY SOLUTIONS, INC.
Date: January 22, 2001 By: /s/ Gordon Brooks
--------------------------------
Gordon Brooks
President and
Chief Executive Officer