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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 13, 1999
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WEBHIRE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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<S> <C> <C>
DELAWARE 0-20735 04-293527
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
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91 HARTWELL AVENUE, LEXINGTON, MASSACHUSETTS 02421
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(781) 869-5000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 5. Other Events
For the general information of the current investors of Webhire, Inc.,
a Delaware corporation, as well as those persons who may purchase Webhire's
securities from time to time pursuant to effective registration statements filed
in accordance with the Securities Act of 1933, as amended, and in accordance
with the Securities and Exchange Commission rules and regulations requiring
companies to disclose risk factors in "plain english" under certain
circumstances, we are filing this Current Report on Form 8-K which contains
various risk factors related to the business, operations and strategies of
Webhire. Unless the context otherwise requires, all references herein to "we,"
"us," or "our company" refer to Webhire, Inc. and its subsidiaries.
RISK FACTORS
AN INVESTMENT IN WEBHIRE'S EQUITY SECURITIES INVOLVES VARIOUS RISKS.
CURRENT AND PROSPECTIVE INVESTORS IN WEBHIRE'S SECURITIES SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS. THESE RISK FACTORS ARE NOT EXHAUSTIVE AND
SHOULD BE READ TOGETHER WITH THE OTHER REPORTS AND DOCUMENTS THAT WE FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION, WHICH MAY INCLUDE ADDITIONAL OR MORE
CURRENT INFORMATION THAT IS IMPORTANT TO AN INVESTMENT IN WEBHIRE.
THE GROWTH IN DEMAND FOR AUTOMATED STAFFING SOFTWARE AND SERVICES IS UNCERTAIN.
Our future success is substantially dependent on broader recognition of
the potential benefits of automated staffing software and services and the
growth in demand for these products and services. It is difficult to assess the
size of the market that will develop and the rate at which it will develop. If
the market does not develop as we anticipate, or if it develops more slowly than
we expect, our business, operating results and financial condition will be
materially and adversely affected.
TO COMPETE EFFECTIVELY, WE MUST ADAPT QUICKLY TO ADVANCES IN TECHNOLOGY AND
CHANGES IN CUSTOMER REQUIREMENTS.
The market for automated staffing products and services is undergoing
rapid changes including continuing advances in technology and changes in
customer requirements and preferences. These market dynamics have been amplified
by the emergence of the Internet as a tool for staffing solutions. Our future
success will depend in significant part on our ability to continually improve
the performance, features and reliability of our software and services in
response to the evolving demands of the marketplace and competitive product
offerings. Any failure on our part to quickly develop products and services that
address changes in technology or customer demands will likely result in loss of
market share to a competitor.
OUR SUCCESS IS DEPENDENT ON INCREASED ACCEPTANCE OF THE INTERNET AND CORPORATE
INTRANETS FOR STAFFING SOLUTIONS.
One of our key business strategies is to capitalize on the increasing
use of the Internet and corporate intranets for staffing solutions. If the
market for these staffing solutions develops
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more slowly than expected, or if the necessary infrastructure to facilitate
commercial applications on the Internet and corporate intranets is not
developed, our business, operating results and financial condition will be
adversely affected.
OUR NEW PRODUCT INTRODUCTIONS MAY HAVE DEFECTS WHICH COULD RESULT IN ADVERSE
PUBLICITY OR HAVE OTHER NEGATIVE EFFECTS.
As the marketplace for staffing solutions continues to evolve, we plan
to develop and introduce new products and services to enable us to effectively
meet the changing needs of the market. Products as complex as those we offer may
contain undetected errors when first introduced or when new versions are
released. In the past, despite prior testing, we have discovered software errors
in some of our products after their introduction. Product defects may result in
adverse publicity, loss of or delay in market acceptance, or claims against us,
any one of which could have a material adverse effect on our business, financial
condition and results of operations.
INCREASED COMPETITION MAY EXERT DOWNWARD PRICING PRESSURE ON OUR PRODUCTS AND
SERVICES, RENDER OUR PRODUCTS OBSOLETE AND/OR RESULT IN LOSS OF MARKET SHARE.
The marketplace for staffing solutions is intensely competitive and
rapidly changing. The Company encounters direct competition from a number of
companies providing staffing solutions, including the following:
- other human resource staffing software companies;
- providers of general human resource information systems;
- agencies that provide or source full-time, contract and temporary
labor;
- information systems departments that develop custom software;
- providers of other client/server application software or document
management systems; and
- Internet-based staffing solution providers.
In addition, competition may increase from new market entrants, through
consolidations in the software industry or through cooperative relationships
among companies. An increase in competition could result in price reductions,
render our existing software and services obsolete or unmarketable and/or result
in loss of market share.
OUR OPERATING RESULTS MAY BE SUBJECT TO SIGNIFICANT QUARTERLY FLUCTUATIONS.
Our results of operations have been, and may in the future be, subject
to significant quarterly fluctuations. Such fluctuations could be due to a
variety of factors, including the following:
- the fact that our product revenue consists of a relatively small
number of large dollar transactions and, as a result, our product
revenue may fluctuate
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significantly from one quarter to another if the number of
transactions completed in one quarter varies slightly from the number
completed in another quarter;
- the introduction of new products by us or our competitors;
- the capital spending patterns of our customers;
- our sales incentive strategy which is based in part on annual sales
targets;
- general economic conditions;
- the fact that a substantial portion of our product revenue often
occurs during the last few weeks of each quarter and, as a result,
any delays in orders or shipments are more likely to result in
revenue not being recognized until the following quarter; and
- our current expense levels are based in part on our expectations of
future revenue and, as a result, net income for a given period could
be disproportionately affected by any reduction in revenue.
To the extent our level of revenue in the future decreases from past
levels or in some future quarter our revenue or operating results are below the
expectations of stock market securities analysts and investors, our
profitability and the price of our common stock is likely to be materially and
adversely affected.
WE MUST MANAGE OUR GROWTH IN ORDER TO ACHIEVE DESIRED RESULTS.
The evolution of the our business and the expansion of our customer
base has resulted in substantial growth in the number of our employees and the
scope of our operations of the last few years. Our future results of operations
will depend in part on the ability of our officers and other key employees to
continue to implement our operational, customer support, and financial control
systems and to expand, train, and manage our employee base.
WE CURRENTLY DERIVE MOST OF OUR REVENUE FROM A SINGLE PRODUCT.
We currently derive most of our revenue from our Webhire Enterprise
product (formerly Restrac Hire). As a result, any factor adversely affecting
sales of this product could have a material adverse effect on our results of
operations.
ONE LARGE STOCKHOLDER BENEFICIALLY OWNS APPROXIMATELY 37% OF OUR OUTSTANDING
STOCK, IS REPRESENTED ON OUR BOARD OF DIRECTORS AND HAS RIGHTS TO PARTICIPATE IN
CERTAIN WEBHIRE TRANSACTIONS; THE STOCKHOLDER'S INTERESTS COULD CONFLICT WITH
YOURS AND SIGNIFICANT SALES OF STOCK HELD BY IT COULD HAVE A NEGATIVE EFFECT ON
OUR STOCK PRICE.
SOFTBANK beneficially owns approximately 37% of our outstanding common
stock. In addition, Yahoo! Inc., of which SOFTBANK owns approximately 27.8%,
owns approximately 2.0% of our outstanding common stock. As a result of their
stock ownership, SOFTBANK and its affiliate have significant control over all
matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions,
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and their interests could conflict with those of other stockholders. Such
concentration of ownership may also have the effect of delaying or preventing a
change in control of Webhire. In addition, sales of significant amounts of
shares held by these entities, or the prospect of these sales, could adversely
affect the market price of our common stock.
SOFTBANK has the right to nominate two members of our board of
directors, which currently consists of an aggregate of 5 members (one of whom is
a SOFTBANK representative), and so long as it continues to hold 10% of our
outstanding common stock, it is entitled to nominate one director each time a
class of directors in which one of its representatives serves is subject to
election. Further, one of SOFTBANK's directors is entitled to serve as a member
of the board's audit and compensation committees. As a result of SOFTBANK's
board representation, it has significant influence in all Webhire matters
requiring board approval.
In addition, in the event we propose to enter into a joint venture for
operations in the United Kingdom, Continental Europe or Japan or a business
transaction with any competitor of SOFTBANK's affiliate ZDNet, we are required
by the terms of the stock purchase agreement pursuant to which SOFTBANK acquired
our common stock to offer SOFTBANK or one of its affiliates the opportunity to
participate in the transaction on terms and conditions mutually acceptable to us
and them. As a result of these requirements, potential third parties may be
reluctant to negotiate joint ventures or business transactions with us because
they know SOFTBANK and its affiliates will be given the opportunity to
participate in such transactions.
WE DEPEND ON KEY PERSONNEL WHO MAY NOT CONTINUE TO WORK FOR US.
Our future success depends to a significant extent on our senior
management and other key employees, many of whom have acquired specialized
knowledge and skills with respect to our operations. As a result, if any of
these individuals were to leave Webhire, we could face substantial difficulty in
hiring qualified successors and could experience a loss of productivity while
any such successor obtains the necessary training and experience. We also
believe that our future success will depend in large part on our ability to
attract and retain additional key employees. Competition for qualified personnel
in the high tech industry is intense. If we do not succeed in attracting new
personnel, or retaining and motivation existing personnel, our business will be
adversely affected.
THE SUCCESSFUL OPERATION OF OUR BUSINESS DEPENDS IN LARGE PART ON OUR
RELATIONSHIPS WITH THIRD PARTIES.
A key element of our business strategy is to develop relationships with
leading industry organizations in order to increase our market presence, expand
distribution channels and broaden our product line. We believe that our
continued success depends in large part on our ability to maintain such
relationships and cultivate additional relationships. There can be no assurance
that our existing strategic partners, such as Yahoo! Inc., will not discontinue
their relationships with us, or that we will be able to successfully develop
additional strategic
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relationships.
In addition, certain technology incorporated in our software is
licensed from third parties on a nonexclusive basis. The termination of any of
these licenses, or the failure of the third party licensers to adequately
maintain or update their products, could result in delay in our ability to ship
certain of our products while we seek to implement technology offered by
alternative sources. In addition, any required replacement licenses could prove
more costly than our current license relationships and might not provide
technology as powerful and functional as the third-party technology we currently
license. Also, any such delay, to the extent it becomes extended or occurs at or
near the end of a fiscal quarter, could have a material adverse effect on our
results of operations for that quarter. While it may be necessary or desirable
in the future to obtain other licenses relating to one or more of our products
or relating to current or future technologies, we may not be able to do so on
commercially reasonable terms or at all.
OUR PRODUCTS RELY ON A SINGLE INTERFACE AND A SINGLE SERVER PLATFORM; MATERIAL
CHANGES TO THAT INTERFACE OR PLATFORM, OR BROAD ACCEPTANCE OF A NEW INTERFACE OR
PLATFORM, COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
At the present time, our products support client (workstation)
platforms utilizing Microsoft's Windows family of software products, including
Windows 95, Windows 98 and Windows NT. If Microsoft fundamentally changes the
architecture of its software products and as a result users of our software
applications experience significant performance degradation or if our products
become incompatible with future versions of Microsoft's Windows Operating
System, our business, financial condition and results of operations could be
materially adversely affected. In addition, if a new client platform or other
interface gains broad acceptance in the marketplace, there can be no assurance
that our architecture will be compatible with such an interface. If it is not,
our business, financial condition and results of operations could be materially
adversely affected.
Certain of our products operate exclusively on Microsoft's NT Server
and Internet Information Server (IIS) platforms. If Microsoft fundamentally
changes the architecture of its server product and as a result users of our
software applications experience significant performance degradation or if our
products become incompatible with future versions of Microsoft's NT Server or
IIS, our business, financial condition and results of operations could be
materially adversely effected. In addition, if a new type of server gains broad
acceptance in the marketplace, there can be no assurance that our architecture
will be compatible with such a server. If it is not, our business, financial
condition and results of operations could be materially adversely affected.
IT IS DIFFICULT TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.
We regard our intellectual property rights as critical to our success
and rely on a combination of copyright and trade secret laws, employee and third
party non-disclosure
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agreements and other methods to protect these rights. We cannot be assured that
the measures we have taken to protect our proprietary rights will be adequate to
prevent misappropriation of our technology or independent development by others
of similar technology. Our inability to protect our proprietary rights would
have a material adverse effect on our business, financial condition and results
of operations.
WE MAY BE SUBJECT TO COSTLY INTELLECTUAL INFRINGEMENT CLAIMS.
As the number of human resource application software products and
services in our industry increases and these solutions further overlap, the
likelihood that our current or future products may become subject to
infringement claims increases. Although we are not currently the subject of any
intellectual property litigation, there has been substantial litigation
regarding copyright, patent and other intellectual property rights involving
computer software companies. Any claims or litigation, with or without merit,
could be costly and could result in a diversion of management's attention, which
could have a material adverse effect on our business, financial condition and
results of operations. Adverse determinations in such claims or litigation may
require us to obtain a license and/or pay damages, which could also have a
material adverse effect on our business, financial condition and results of
operations.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS.
Although we have not experienced any product liability claims to date,
the sale and support of our products and the incorporation of products from
other companies may entail the risk of product liability claims. Our license
agreements with our customers typically contain provisions intended to limit our
exposure to such claims. For example, we limit our contractual warranties on
"Year 2000" compliance to objective performance standards that we have tested,
and we do not make any warranties for nonconformance if our software products
are combined with other software or data that is not conducive to accurately
calculating, comparing or sequencing date and time data between the twentieth
and twenty-first centuries. There can be no guarantee, however, that such
provisions will be effective in limiting our exposure. A successful product
liability action brought against us could adversely affect our business,
financial condition and results of operations.
THE YEAR 2000 PROBLEM COULD AFFECT OUR PRODUCTS, OUR INTERNAL INFORMATION
SYSTEMS AND/OR OUR CUSTOMERS.
OUR PRODUCTS. We believe, based on an internal assessment, that the
current versions of our software products that are licensed to customers are
Year 2000 compliant. In addition, we expect the software that is used in our
service offerings is to be compliant by December 31, 1999. We also limit our
contractual warranties on Year 2000 compliance to objective performance
standards that we have tested, and we make no warranties for nonconformance
if our software products are combined with other software or data that are
not conducive to accurately calculating, comparing or sequencing date and
time data between the twentieth and twenty-first centuries. Nonetheless, in
the event that the
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current versions of our licensed software products are not Year 2000 compliant,
or that the software that is used in our service offerings is not Year 2000
compliant, there can be no assurance that we will not be required to defend our
products or services or negotiate resolutions of claims based on Year 2000
issues.
OUR INTERNAL INFORMATION SYSTEMS. We have attempted to make an
assessment with regard to whether our own internal information systems are Year
2000 compliant and have upgraded certain systems to make them Year 2000
compliant. In addition, we plan to seek assurances from our existing vendors
whose systems are not warranted to be Year 2000 compliant that such systems are
Year 2000 compliant. To the extent any of our internal information systems fail
to be Year 2000 compliant, however, we may be required to incur unanticipated
expenses to address associated problems.
CUSTOMERS. Year 2000 issues are affecting the purchasing patterns of
customers and potential customers in a variety of ways. Many companies are
expending significant resources to replace or remedy their current hardware and
software systems for Year 2000 compliance. These expenditures may result in
reduced funds available to purchase our software products. We do not believe
that there is any practical way to ascertain the extent of such a reduction in
purchasing resources of our customers. Any such reduction could, however, have a
material adverse effect on our business, operating results and financial
condition.
GENERAL. The Year 2000 issue is pervasive and complex, as virtually
every computer operation will be affected in some way. Consequently, no
assurance can be given that Year 2000 compliance can be achieved without
significant additional costs.
ANTI-TAKEOVER PROVISIONS COULD MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO
ACQUIRE US.
Our board of directors has the authority to issue up to 5,000,000
shares of preferred stock and to determine the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
any further vote or action by the stockholders. The rights of the holders of
common stock may be subject to, and may be adversely affected by, the rights of
the holders of any preferred stock that may be issued in the future. The
issuance of preferred stock may have the effect of delaying, deferring or
preventing a change of control of Webhire without further action by the
stockholders any may adversely affect the voting and other rights of the holders
of common stock. We have no present plans to issue shares of preferred stock.
Further, certain provisions of our charter documents, including provisions
eliminating the ability of stockholders to take action by written consent,
providing for a staggered Board of Directors and limiting the ability of
stockholders to raise matters at a meeting of stockholders without giving
advance notice, may have the effect of delaying or preventing changes in control
or management of Webhire, which could have an adverse effect on the market price
of our stock.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned hereunto duly authorized.
WEBHIRE, INC.
By: /s/ Martin J. Fahey
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Dated: October 13, 1999 Name: Martin J. Fahey
Title: President and Chief Executive
Officer
