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SEC FILE NUMBER
1-11873
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CUSIP NUMBER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One): |_| Form 10-KSB |_| Form 20-F |_| Form 11-K |X| Form 10-QSB
|_| Form N-SAR
For Period Ended: March 31, 1999
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition
Period Ended: ___________________________________________________
Read Attached Instruction Sheet Before Preparing Form. Please Print or Type.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
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If the notification relates to a portion of the filing checked above, identify
the item(s) to which the notification relates:
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PART I - REGISTRANT INFORMATION
K2 Design, Inc.
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Full Name of Registrant
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Former Name if Applicable
30 Broad Street
16th Floor
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Address of Principal Executive Office (Street and Number)
New York, New York, 10004
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City, State and Zip Code
PART II - RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
|X|
(b) The subject annual report, or semi-annual report, transition report on
Form 10-K, Form 20-F, Form 11-K, Form N-SAR, or portion thereof, will
be filed on or before the fifteenth calendar day following the
prescribed due date; or the subject quarterly report or transition
report on Form 10-Q, or portion thereof, will be filed on or before
the fifth calendar day following the prescribed due date; and
|X| (c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
| |
SEC 1344(8-89) (Attach Extra Sheets if Needed)
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PART III - NARRATIVE
State below in reasonable detail the reasons why the Form 10-K, 11-K, 10-Q,
N-SAR, or the transition report or portion thereof, could not be filed within
the prescribed time period. (Attach Extra Sheets if Needed)
The Company was delayed in preparation of its Quarterly Report on Form
10-QSB due to inclusion of additional comparative analyses.
PART IV - OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
Neil S. Belloff, Esq. (212) 969-3000
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of
the Securities Exchange Act of 1934 or Section 30 of the Investment
Company Act of 1940 during the preceding 12 months (or for such
shorter) period that the registrant was required to file such reports)
been filed? If answer is no, identify report(s).
|X| Yes |_| No
(3) Is it anticipated that any significant change in results of operations
from the corresponding period for the last fiscal year will be
reflected by the earnings statements to be included in the subject
report or portion thereof?
|X| Yes
|_| No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the reasons
why a reasonable estimate of the results cannot be made. See Attachment
"A"
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K2 Design, Inc.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: May 17, 1999 By: /s/ Seth Bressman
--------------------------- -----------------------
Seth Bressman
Chief Financial Officer
INSTRUCTION: The form may be signed by an executive officer of the registrant or
by any other duly authorized representative. The name and title of the person
signing the form shall be typed or printed beneath the signature. If the
statement is signed on behalf of the registrant by an authorized representative
(other than an executive officer), evidence of the representative's authority to
sign on behalf of the registrant shall be filed with the form.
SEC 1344(8-89) (Attach Extra Sheets if Needed)
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Intentional misstatements or omissions of fact constitute Federal Criminal
Violations (see 18 U.S.C. 1001).
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GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17 CFR 240. 12b-25) of the
General Rules and Regulations under the Securities Exchange Act of
1934.
2. One signed original and four conformed copies of this form and
amendments thereto must be completed and filed with the Securities and
Exchange Commission, Washington, D.C. 20549, in accordance with Rule
0-3 of the General Rules and Regulations under the Act. The information
contained in or filed with the form will be made a matter of public
record in the Commission files.
3. A manually signed copy of the form and amendments thereto shall be
filed with each national securities exchange on which any class of
securities of the registrant is registered.
4. Amendments to the notifications must also be filed on Form 12b-25 but
need not restate information that has been correctly furnished. The
form shall be clearly identified as an amended notification.
SEC 1344(8-89) (Attach Extra Sheets if Needed)
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Attachment "A"
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Revenues $ 1,444,063 $ 2,140,382
Direct salaries and costs 1,412,891 1,465,602
Selling, general and administrative expenses 632,544 534,217
Depreciation 96,010 89,008
----------- -----------
Income (loss) from continuing operations before interest and other income,
net, income taxes and discontinued operations (697,382) 51,555
Interest and other income, net 25,226 40,463
----------- -----------
Income (loss) before income tax provision and discontinued operations (672,156) 92,018
Provision for income taxes 9,325 5,294
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Loss from continuing operations (681,481) 86,724
Loss from discontinued operations - (48,805)
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Net income (loss) $ (681,481) $ 37,919
=========== ===========
Income (loss) per share from continuing operations
Basic $ (0.20) $ 0.02
Diluted $ (0.20) $ 0.02
Loss per share from discontinued operations
Basic $ -- $ (0.01)
Diluted $ -- $ (0.01)
Net income (loss) per share
Basic $ (0.20) $ 0.01
Diluted $ (0.20) $ 0.01
Weighted average basic common shares outstanding 3,459,205 3,680,671
=========== ===========
Weighted average diluted common shares outstanding 3,459,205 3,716,841
=========== ===========
</TABLE>
SEC 1344(8-89) (Attach Extra Sheets if Needed)
<PAGE>
Revenues
Revenues for the three months ended March 31, 1999 and 1998 were approximately
$1,444,000 and $2,140,000, respectively, or a decrease of approximately 33%. Net
revenues (i.e., gross revenues less pass-through expenses such as media
placement costs) during the same periods were approximately $492,000 and
$1,157,000, respectively, or a decrease of 57%. This decrease in net revenues
was primarily attributable to reduced internet/intranet development and reduced
banner revenues during the three months ended March 31, 1999 as compared to the
three months ended March 31, 1998. During the three months ended March 31, 1999,
VarsityBooks.com, Inc., Standard & Poor's and NCR Corporation accounted for
approximately 62%, 12% and 11%, respectively, of the Company's gross revenues.
During the three months ended March 31, 1998, Standard & Poor's, Bell Atlantic
and Planet Direct, Inc., accounted for approximately 24 %, 13 %and 10%,
respectively, of the Company's gross revenues. Accordingly, although the Company
has increased its efforts to maintain and enhance client relationships, loss of
major clients without a comparable replacement could cause quarterly results to
fluctuate and could have a material adverse effect on the Company's financial
condition. See "Fluctuations in Quarterly Operating Results."
Direct Salaries and Costs
Direct salaries and costs include all direct labor costs and other direct costs
related to project performance, such as independent contractors, freelance
labor, supplies, and printing and equipment costs. As a percentage of revenues,
direct salaries and costs increased for the three months ended March 31, 1999 as
compared to the same period in 1998. Part of the reason for this increase is due
to the 33% decrease in sales during the three months ended March 31, 1999 as
compared to the same period in 1998, with direct salaries remaining
approximately the same for both periods. In absolute dollars, direct salaries
and costs decreased by approximately $53,000 from approximately $1,466,000 for
the 1998 quarter to approximately $1,413,000 for the 1999 quarter. In the 1999
period, direct salaries and costs consisted primarily of approximately $918,000
of media placement costs, and approximately $417,000 paid as direct labor costs.
In the 1998 period, direct salaries and costs consisted primarily of
approximately $935,000 paid as media placement costs and approximately $405,000
paid as direct labor costs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended March 31
1999 and 1998 were approximately $633,000 (43.8% of revenues) and $534,000
(25.0% of revenues), respectively, and consisted primarily of labor costs,
professional fees, occupancy costs, travel, office expenses and supplies and
marketing and advertising, among other things. The Company's selling, general
and administrative costs have increased due to increased compensation costs as
well as increased public relations and printing costs.
Depreciation
Depreciation expense was approximately $96,000 and $89,000 in the three months
ended March 31, 1999 and 1998, respectively, and related to depreciation of
equipment, furniture and fixtures, and leasehold improvements. The Company's
depreciation expenses in 1999 have increased as a result of recent purchases of
computer equipment and peripherals.
Income Taxes
The Company currently has a net operating loss carry forward of approximately $2
million.
Operating Loss
The operating loss of ($697,382) during the three months ended March 31, 1999 as
compared to operating income of $51,555 during the three months ended March 31,
1998, was primarily due to a reduction in internet/intranet development revenue,
as well as a reduction in banner revenue. In addition, selling general and
administrative costs have increased due to increased compensation costs, public
relations costs and printing costs.
SEC 1344(8-89)
