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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 2000
OR
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number: 000-29282
MEDICONSULT.COM, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 84-1341886
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1330 Avenue of the Americas, 17th Floor
New York, NY 10019
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(Address of principal executive offices, including zip code)
Registrant's Telephone No., including area code: (212) 841-7300
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
As of August 9, 2000, there were approximately 54,169,718 shares of the
Registrant's Common Stock outstanding.
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INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial statements
Unaudited Consolidated Balance Sheets - June 30, 2000 and
December 31, 1999 3
Unaudited Consolidated Statement of Operations - three and six
months ended June 30, 2000 and 1999 4
Unaudited Consolidated Statement of Cash Flows - six months ended
June 30, 2000 and 1999 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION 12
Item 1. Pending Legal Proceedings 12
Item 2. Changes in Securities 13
Item 6. Exhibits and Reports Filed on Form 8-K 13
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PART I. FINANCIAL INFORMATION
Mediconsult.com, Inc.
<TABLE>
<CAPTION>
Unaudited Consolidated Balance Sheets
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June 30, December 31,
2000 1999
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<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 6,590,110 $ 22,320,814
Accounts receivable 2,794,963 1,062,574
Unbilled revenue 2,945,307 3,433,663
Prepaid expenses and other current assets 678,230 556,646
------------ ------------
Total current assets 13,008,610 27,373,697
Fixed assets, net 3,894,321 2,291,772
Intangible assets, net 175,754,390 193,115,481
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Total assets $192,657,321 $222,780,950
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 8,412,908 $ 10,591,054
Advances from shareholder -- 314,979
Deferred revenue 1,404,600 322,488
Notes payable 2,334,549 4,974,100
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Total current liabilities 12,152,057 16,202,621
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Commitments and contingencies -- --
Stockholders' equity
Senior Preferred stock, $0.001 par value, 5,000,000
shares authorized, 1,000,000 shares designated, no
shares issued and outstanding at June 30, 2000 and
December 31, 1999, respectively -- --
Junior preferred stock, 4,000,000 shares designated,
no shares issued and outstanding at
June 30, 2000 and December 31, 1999, respectively -- --
Common stock, $.001 par value, 100,000,000 shares
authorized, 54,167,147 and 49,633,275 shares issued
and outstanding at June 30, 2000 and December 31,
1999, respectively 54,167 49,634
Additional paid-in capital 269,231,273 257,263,537
Deferred compensation (12,525,284) (16,051,925)
Accumulated deficit (76,254,892) (34,682,917)
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Total stockholders' equity 180,505,264 206,578,329
------------ ------------
Total liabilities and stockholders' equity $192,657,321 $222,780,950
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</TABLE>
See accompanying notes.
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Mediconsult.com, Inc.
<TABLE>
<CAPTION>
Unaudited Consolidated Statement of Operations
------------------------------------------------------------------------------------------------------------
Three Months Ended Six Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues $ 4,539,703 $ 812,116 $ 10,763,894 $ 1,299,420
------------ ----------- ------------ -----------
Operating expenses:
Product and content development 7,084,828 1,368,426 15,101,745 2,272,956
Marketing, sales and client services 3,327,309 836,902 8,302,428 1,574,507
General and administrative 2,038,218 829,821 4,036,274 1,486,172
Depreciation and amortization 11,118,802 387,748 21,858,116 506,865
Fair value of options granted to employees 952,214 391,398 1,634,558 543,766
Fair value of warrants granted to third parties 1,090,000 1,497,669 1,583,697 1,497,669
------------ ----------- ------------ -----------
Total operating expenses 25,611,371 5,311,964 52,516,818 7,881,935
------------ ----------- ------------ -----------
Loss from operations (21,071,668) (4,499,848) (41,752,924) (6,582,515)
Interest income, net 38,261 576,036 180,949 576,036
------------ ----------- ------------ -----------
Net loss (21,033,407) (3,923,812) (41,571,975) (6,006,479)
Dividends on preferred stock -- -- -- 945,505
Net loss attributed to common stockholders $(21,033,407) $(3,923,812) $(41,571,975) $(6,951,984)
============ =========== ============ ===========
Per common share data:
Basic and diluted net loss per share $(0.40) $(0.14) $(0.80) $(0.30)
============ =========== ============ ===========
Weighted average shares of common stock
outstanding used in computing basic
and diluted net loss per share 52,577,636 27,446,133 51,873,454 23,013,169
============ =========== ============ ===========
</TABLE>
See accompanying notes.
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Mediconsult.com, Inc.
Unaudited Consolidated Statement of Cash Flows
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<TABLE>
<CAPTION>
Six Months Ended
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June 30, June 30,
2000 1999
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<S> <C> <C>
Cash flows from operating activities
Net loss $(41,571,975) $(6,006,479)
Adjustment to reconcile net loss to net cash used
in operating activities
Depreciation of fixed assets 1,361,886 173,508
Amortization of intangible assets 20,496,230 333,357
Fair value of options and warrants granted 3,218,255 2,041,435
Services received in exchange for common stock 1,600,000 --
Amortization of deferred compensation related to
interest in Pharma marketing 283,700 --
Changes in assets and liabilities
Accounts receivable (1,732,389) (726,511)
Unbilled revenue 488,356 (172,210)
Prepaid expenses and other current assets (121,584) (523,368)
Accounts payable and accrued expenses (2,178,146) 971,719
Deferred revenue 1,082,112 (107,000)
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Net cash used in operating activities (17,073,555) (4,015,549)
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Cash flows from investing activities
Fixed assets purchases (2,964,435) (1,138,271)
Purchase of businesses, net of cash acquired (215,382) (3,915,085)
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Net cash used in investing activities (3,179,817) (5,053,356)
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Cash flows from financing activities
Proceeds from advances from shareholder -- 315,000
Repayment of advances from stockholder (314,979) (513,600)
Proceeds from issuance of senior preferred stock -- 3,160,000
Proceeds from issuance of common stock in a
public offering -- 56,988,792
Proceeds from issuance of common stock in a
private offering 6,500,000 --
Proceeds from exercise of stock options 977,198 90,702
Payment of long-term debt (2,639,551) --
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Net cash provided by financing activities 4,522,668 60,040,894
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(Decrease)/Increase in cash (15,730,704) 50,971,989
Cash - beginning of period 22,320,814 135,053
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Cash - end of period $ 6,590,110 $51,107,042
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</TABLE>
See accompanying notes.
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MEDICONSULT.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
These consolidated financial statements are unaudited and reflect all
adjustments that, in the opinion of management, are necessary for a fair
presentation of the results for the interim period. The results of operations
for the current interim period are not necessarily indicative of results to be
expected for the current year or any other period. Certain amounts have been
reclassified to conform to the fiscal 2000 presentation.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, included in the Company's
Annual report on Form 10-K and first quarter 10-Q as filed with the Securities
and Exchange Commission.
2. STOCK OPTIONS
We have a 1996 Stock Option Plan (the "Plan") to provide incentives to
employees, directors and consultants. The maximum term of options granted under
the Plan is ten years. The Board of Directors has the exclusive power over the
granting of options and their vesting provisions. Stock options for common stock
comprise:
June 30, 2000
-----------------------------
Weighted
Average
# Exercise
Shares Price
-----------------------------
Outstanding - December 31, 1999 4,008,651 $4.50
Granted during the period 500,000 1.82
Exercised during the period (1,263,667) 0.66
Forfeited during the period (554,737) 6.90
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Outstanding - June 30, 2000 2,690,247 5.31
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Exercisable - June 30, 2000 713,058 $2.00
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During the three months ended June 30, 2000 and 1999 the fair values of the
options granted to employees were $500,000 and $384,118, respectively.
3. WARRANTS
On March 23, 2000 the Company and Andersen Consulting ("Andersen") entered into
a warrant agreement under which the Company issued Andersen warrants to purchase
1,503,425 shares of the Company's common stock at an exercise price of $3.8125
per share in connection with consulting services rendered by Andersen to the
Company under a consulting services agreement signed on September 10, 1999. The
warrants have a term of five years and vest over time, based upon consulting
services performed by Andersen on the Company's behalf. In connection with the
issuance of these warrants the Company reserved 1,503,425 shares of common stock
issuable upon exercising of these warrants.
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Unless otherwise noted, references to "we," "our," and "us" refer to Mediconsult
and its subsidiaries.
OVERVIEW
The Company uses the Internet to educate and connect doctors and patients. Our
Web communities and interactive solutions educate physicians, empower patients
and enable more effective doctor-patient relationships. The Company provides
relevant tools, reliable services and quality medical information, that save
doctors time and improve health outcomes for their patients.
Our focus is on the chronic medical conditions that are responsible for the
majority of healthcare spending. By fostering communities centered on prevalent
medical conditions and health issues, we believe we create significant
opportunities for pharmaceutical and other healthcare companies to effectively
reach physician and patient audiences using Internet-based educational,
marketing and sponsorship programs.
BACKGROUND
For the period from the inception of our operations in April 1996 through
January 1997, our operating activities related primarily to the initial
development of the mediconsult.com Web site and operating infrastructure, and
the recruitment of employees. Since the launch of mediconsult.com in 1996,
we have focused on developing and organizing content in an easy to navigate
format, and improving the functionality of mediconsult.com. We continue to
refine our strategy of creating targeted online educational, marketing and
sponsorship programs for large pharmaceutical and other healthcare
organizations. We continue to develop and implement these types of programs for
our clients.
In 1999, we added new sites through subsequent acquisitions including
cyberdiet.com and heartinfo.com, and new Internet-based healthcare tools through
the acquisition of Mood Sciences.
In February 2000, the Company acquired Web Northstar Interactive, Corp., a
company that specializes in research evaluation. As consideration for the
acquisition, the company issued approximately 435 thousand shares for an
aggregate price of $2.8 million.
In March 2000, the Company acquired Storknet, a company dedicated to pregnancy
and parenting issues. As consideration for the acquisition the company issued
approximately 34 thousand shares for an aggregate price of $210,000.
In July 2000, the Company announced expense reductions targeted primarily at its
consumer Web site operations as part of an overall evaluation of potential cost
savings. These reductions further highlight the Company's shift toward building
its physician community and developing product offerings for its pharmaceutical
clients. The reductions will result in savings of over $1 million per month. As
part of this process, the Company has retained McFarland Dewey & Co. to assist
in reviewing strategic alternatives for specific consumer Web site properties.
The majority of expense reductions are targeted at those business units that are
the stand-alone consumer channels. The expense reductions will reduce the
Company's headcount by approximately 100 employees, about 45% of the total
workforce.
For further information, refer to the Consolidated Financial Statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999.
REVENUE SOURCES
Our main sources of revenue have historically been through client services
related to the development, support of online education marketing and
sponsorship programs for pharmaceutical, and other healthcare companies. These
services continue to be a source of revenue and typically include the design,
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development and management of customized Web sites relating to particular
pharmaceutical or other health-related products. Client services also include
marketing research, focus group testing and online testing of visitors'
preferences. Revenue from client services is recognized on the basis of
contractual commitments over the period of each engagement using the percentage-
of-completion method, based on labor hours and costs incurred as the measure of
progress towards completion. Revenue from support services, principally the
management of Web sites that we develop for our clients, is recognized ratably
over the periods services are provided, generally on a monthly basis. Payments
received from clients prior to the performance of client services are recorded
as unearned revenue.
We also provide advertising services involving the sale of advertising space on
the Company's Physicians' Online Web site. These services can be provided
separately or as part of a more comprehensive suite of client services.
Advertising services include banner advertisements, polls, surveys, registration
programs, coupons and other interactive forms of advertising. Revenue from
advertising sales is recognized ratably over the period in which the
advertisement is displayed, if no significant obligations remain. Mediconsult
does not recognize revenue from barter transactions with respect to its
advertising services.
In 1999, we expanded our focus on long-term strategic relationships with major
pharmaceutical manufacturers to include other Internet-based initiatives in
addition to marketing and sponsorship programs. The initial relationship in this
new strategic direction was entered into with Bristol-Myers Squibb Company to
develop innovative new approaches to electronic medical education.
MARKETING AND SALES INITIATIVES
Revenue is principally derived by developing programs and internet tools for
pharmaceutical companies. For the six months ended June 30, 2000, revenue from
Bristol-Myers Squibb and Eli Lilly and Company represented $8.1 million or 75%
of the company's total revenue. We develop the Web sites and educational tools
for these companies, and receive payment as services are performed. The loss of
Bristol-Myers Squibb or Eli Lilly and Company as a customer or any changes to
the existing relationships that are less favorable to us, will materially and
adversely affect our business, financial condition and results of operations.
STOCK OPTIONS AND WARRANTS
Stock options granted to employees are expensed over their vesting period, based
on their fair value at the date of grant, under Statement of Financial
Accounting Standards No. 123 "ACCOUNTING FOR STOCK-BASED COMPENSATION." As more
fully described below in "Results of Operations," we have recorded compensation
expense in connection with the vesting of stock options during the six month
periods ended June 30, 1999 and 2000, as well as deferred compensation expense
for the value of options granted that were not vested as of such dates.
Pursuant to an agreement dated July 28, 1998 with Arnhold and S. Bleichroeder,
Inc. to provide us with investment advisory services, we have issued to this
firm 100,000 shares of our common stock and warrants to purchase an aggregate of
400,000 shares of common stock with an exercise price of $1.22 per share, which
was the closing price of our common stock on the contract date. Of this amount,
warrants for 200,000 shares of common stock were delivered upon initial filing
of a prospectus and warrants for 200,000 shares of common stock
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are deliverable in 2000, if certain conditions are met. Warrants for 100,000
shares were delivered on March 15, 2000. Delivery of the warrants will result
in the recognition of an expense in the statement of operations equal
to the fair value of the warrants on the date of delivery in accordance with
EITF 96-18 "Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling Goods or Services". At
June 30, 2000, we have determined that the final 100,000 warrant shares will not
vest.
During the quarter ended June 30, 2000, the Company offered employees an
opportunity to cancel existing option grants in exchange for new, re-priced
option awards. The re-pricing offer was for the same number of shares cancelled;
however, vesting of the re-priced options began at the new grant date, and
vesting of the new options does not automatically accelerate upon a change in
control of the Company. Of those eligible for the re-pricing, 20 accepted the
offer, representing 571,800 option shares. The re-pricing was effective May 19,
2000. The net affect on the second quarter option expense as a result of the
re-pricing was an increase of $22,513.
RESULTS OF OPERATIONS
REVENUE. Revenue consists of fees received for the design, development and
implementation of on-line education, marketing and advertising programs,
including Web site development and implementation, advertising services, and Web
site support. Revenue was $4.5 million for the quarter ended June 30, 2000
compared to $0.8 million for the quarter ended June 30, 1999, an increase of
463%. Revenue was $10.8 million for the six months ended June 30, 2000 and $1.3
million for the six months ended June 30, 1999, an increase of 730%. The
period-to-period growth was primarily attributable to new product and client
initiatives focused on the delivery of electronic medical education over the
internet, and sponsorship programs.
PRODUCT AND CONTENT DEVELOPMENT. Product and content development costs include
expenses incurred to develop, enhance, manage, monitor and operate our Web sites
and to develop new products such as electronic medical education. Total product
and content development cost increased from $1.4 million for the quarter ended
June 30, 1999 to $7.1 million for the quarter ended June 30, 2000. Total
product and content development costs increased from $2.3 million for the six
months ended June 30, 1999 to $15.1 million for the six months ended June 30,
2000. These increases were primarily due to additional costs associated with
the development and implementation of specific client medical education and
sponsorship programs.
MARKETING, SALES AND CLIENT SERVICES. Marketing, sales and client service costs
include expenses incurred by the Company to obtain and maintain client
relationships. These costs include salaries and commissions paid to employees,
consultants and programming costs. Total marketing, sales and client service
costs increased from $0.8 million in the quarter ended June 30, 1999 to $3.3
million in the quarter ended June 30, 2000. Total marketing, sales and client
service costs increased from $1.6 million for the six months ended June 30, 1999
to $8.3 million for the six months ended June 30, 2000. These costs increased
as our activities in sponsorships and our medical educational programs
increased. Our focus on these activities directly relate to increased costs in
programming, consultant fees and sales commissions.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of salaries and related costs for general overhead costs
including finance, accounting, legal fees and other professional services.
Total general and administrative expenses increased from $0.8 million for the
quarter ended June 30, 1999 to $2.0 million for the quarter ended June 30, 2000.
Total general and administrative expenses increased from $1.5 million for the
six months ended June 30, 1999 to $4.0 million for the six months ended June 30,
2000. The increases were primarily attributable to increases in headcount,
office space and related overhead costs, over the prior year supporting the
growth of our operations.
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DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased
from $0.4 million for the quarter ended June 30, 1999 to $11.1 million for the
quarter ended June 30, 2000. Depreciation and amortization expense increased
from $0.5 million for the six months ended June 30, 1999 to $21.9 million for
the six months ended June 30,2000. Period-to-period increases are primarily due
to the amortization of goodwill from the Physicians' Online acquisition in
December 1999.
FAIR VALUE OF OPTIONS GRANTED TO EMPLOYEES. We have recorded compensation
expenses in connection with the vesting of employee stock options. The related
expense increased from $0.4 million for the quarter ended June 30, 1999 to $1.0
million in the quarter ended June 30, 2000. The related expense increased from
$0.5 million for the six months ended June 30, 1999 to $1.6 million for the six
months ended June 30, 2000. The compensation expense represents the
amortization of deferred compensation, which is measured based on the fair value
of options granted. This amount is amortized over the vesting period of the
applicable options.
FAIR VALUE OF WARRANTS GRANTED TO THIRD PARTIES. We recorded an expense in
connection with the vesting of warrants to Andersen Consulting LLP and Arnhold &
S. Bleichroeder, Inc. The related expense decreased from $1.5 million for the
quarter ended June 30, 1999 to $1.1 million for the quarter ended June 30, 2000.
The related expense increased from $1.5 million for the six months ended
June 30, 1999 to $1.6 million for the six months ended June 30, 2000.
INTEREST INCOME. The Company earned interest income of nil for the quarter
ended June 30, 2000 compared to $0.6 million for the quarter ended June 30,
1999. This decrease was primarily attributable to the lower cash balance during
the quarter ended June 30, 2000. Net interest income decreased from $0.6
million as of June 30, 1999 to $0.2 million as of June 30, 2000 due to the
decreased average cash on hand.
PREFERRED SHARES DIVIDEND. Preferred shares dividends were issued to senior
preferred stockholders and junior preferred stockholders. These costs were $0.9
million for the six months ended June 30, 1999 and nil for the six months ended
June 30, 1999.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED
The information and data contained in this quarterly report includes all
necessary adjustments, consisting only of normal recurring adjustments necessary
for fair presentation of this data. The results of operations for any quarter
are not necessarily indicative of the results of operations for any future
period.
We have a limited operating history upon which to evaluate our business and
predict revenue and planned operating expenses. Our quarterly operating results
may vary significantly in the foreseeable future due to a variety of factors,
many of which are outside of our control. The timing of electronic medical
education revenues is one of the most significant factors affecting quarterly
results. Once a contract is executed, a significant portion of our revenue is
derived from customized development and the implementation of projects, rather
than from recurring fees. As a result, we cannot predict with certainty when we
will perform the work necessary to receive payment for these projects.
LIQUIDITY AND CAPITAL RESOURCES
From inception until April 1999, we financed our operations primarily through
the private placement of equity securities and advances from our principal
stockholder. In February 1999, we received $3.2 million in proceeds from a
private placement of equity securities to certain unrelated investors. In April
1999, we received approximately $58 million in net proceeds from a public
offering of equity securities. In May 2000, we received $6.5 million in proceeds
from a placement of equity securities to McKesson HBOC, Inc. As of June 30,
2000, the cash and cash equivalents balance was $6.6 million.
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We have incurred substantial costs to design, develop and implement Internet-
based educational, marketing and sponsorship programs for our clients, to build
brand awareness and to grow our business. As a result, we have incurred
operating losses and negative cash flows from operations in each quarter since
we commenced operations. As of June 30, 2000, we had an accumulated deficit of
$76.3 million.
Net cash used in operating activities during the six months ended June 30, 1999
was $4.0 million, compared to net cash used in operating activities during the
six months ended June 30, 2000 of $17.1 million. This increase in cash used was
primarily attributable to net losses during this period, which were partially
offset by certain non-cash items of $27.1 million. This amount was comprised of
depreciation and amortization of $21.9 million, services rendered in exchange
for common stock of $1.6 million, deferred compensation amortization of $0.3
million and expenses related to stock options and warrants granted to
consultants and employees of $3.2 million. Net cash used reflected several
factors, including (1) increased operating expenses as our business volume
increased; (2) a higher level of work in progress due to revenue growth; (3) an
increase in accounts receivable of $1.7 million; and (4) decreases in accounts
payable of $2.2 million.
Net cash used in investing activities during the six months ended June 30, 1999
was $5.1 million, compared to net cash used in investing activities during the
six months ended June 30, 2000 of $3.2 million. This decrease in cash used was
primarily attributable to the reduction of acquisition activity and was offset
by increased fixed asset purchases.
Net cash provided by financing activities during the six months ended June 30,
1999 was $60.0 million, compared to net cash provided by financing activities
during the six months ended June 30, 2000 of $4.5 million. The net cash provided
by financing activities in the six months ended June 30, 2000, was the result of
a $6.5 million private placement of common stock to McKesson HBOC, Inc. in May
2000. The $60.0 million infusion during the six months ended June 30, 1999 was
principally due to the public offering completed in April 1999.
Our ability to generate significant revenue is uncertain. We incurred net
losses, before net interest income, of approximately $21.0 million and $4.5
million after accounting for non-cash items for the quarter ended June 30, 2000
and June 30, 1999, respectively. We expect losses from operations and negative
cash flow to continue for the foreseeable future and at least through the year
2000 as a result of our expansion plans. The rate that these losses will be
incurred may increase from current levels. Although we have experienced revenue
growth in recent periods, our revenue may not remain at its current level or
increase in the future. If our revenue does not increase and if our spending
levels are not adjusted accordingly, we may not generate sufficient revenue to
achieve profitability, which would have a material, adverse effect on our
business, financial condition and results of operations. Even if we achieve
profitability, we may not sustain or increase profitability on a quarterly or
annual basis in the future.
Our working capital requirements depend on numerous factors. We have experienced
a substantial increase in our expenditures since inception, consistent with
growth in our operations and staffing. Additionally, we will continue to
evaluate possible investments in businesses, products and technologies, the
expansion of our marketing and sales programs. If we experience a shortfall in
revenue in relation to expenses, or if our expenses precede increased revenue,
our business, financial condition and results of operation could be materially
and adversely affected.
We currently anticipate that our available cash resources will be sufficient to
meet our presently anticipated working capital, capital expenditure and business
expansion requirements through the end of the year. We may need to raise
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additional funds, however, in order to fund more rapid expansion, to develop new
or enhance existing services or products, to respond to competitive pressures or
to acquire complementary products, businesses or technologies. There can be no
assurance that any required additional financing will be available on terms
favorable to us, or at all. If additional funds are raised by the issuance of
equity securities, stockholders may experience dilution of their ownership
interest and these securities may have rights senior to those of the holders of
the common stock. If additional funds are raised by the issuance of debt, we may
be subject to certain limitations on our operations, including limitations on
the payment of dividends. If adequate funds are not available or not available
on acceptable terms, we may be unable to fund our expansion, successfully
promote our brand name, take advantage of acquisition opportunities, develop or
enhance services or respond to competitive pressures, any of which could have a
material adverse effect on our business, financial condition and results of
operations.
The financial results are reported in U.S. dollars, which are affected by
changes in the value of the various foreign currencies in which we make payments
in relation to the U.S. dollar. We cannot however anticipate operating exposures
through foreign currency exchange option or forward contracts relating to
foreign currency. The primary currency for which we have foreign currency
exchange rate exposure is the Canadian dollar.
FORWARD LOOKING STATEMENTS
When used in this Quarterly Report on Form 10-Q, in documents incorporated
herein and elsewhere by us from time to time, the words "believes,"
"anticipates," "expects" and similar expressions are intended to identify
forward-looking statements concerning our business operations, economic
performance and financial condition, including in particular, our business
strategy and means to implement the strategy, our objectives, the amount of
future capital expenditures required, the likelihood of our success in
developing and introducing new products and expanding the business, and the
timing of the introduction of new and modified products or services. For those
statements, we claim the protection of the safe harbor for forward looking
statements contained in the Private Securities Litigation Reform Act of 1995.
These forward looking statements are based on a number of assumptions and
estimates which are inherently subject to significant risks and uncertainties,
many of which are beyond our control and reflect future business decisions which
are subject to change. A variety of factors could cause actual results to differ
materially from those anticipated in our forward-looking statements, including
the following factors: (a) those set forth in our Form 10-K for the period
ended December 31, 1999, incorporated herein by reference, and elsewhere herein;
and (b) those set forth from time to time in our press releases and reports and
other filings made with the Securities and Exchange Commission. We caution that
such factors are not exclusive. Consequently, all of the forward-looking
statements made in this document are qualified by these cautionary statements
and readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this Quarterly Report on Form 10-
Q. We undertake no obligation to publicly release the results of any revisions
of such forward-looking statements that may be made to reflect events or
circumstances after the date hereof, or thereof, as the case may be, or to
reflect the occurrence of unanticipated events.
PART II. OTHER INFORMATION
ITEM 1. PENDING LEGAL PROCEEDINGS
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There are no significant pending legal proceedings outside the scope of the
normal course of business.
ITEM 2. CHANGES IN SECURITIES
Sales of Unregistered Securities
The Company issued in a private placement 2,600,000 shares of common stock to
McKesson HBOC, Inc. on May 3, 2000.
The sales and issuance of these securities were exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended, as a private placement.
ITEM 6. EXHIBITS AND REPORTS FILED ON FORM 8-K
(a)
Exhibit
Number Description
------- -----------
2.1 Northstar Agreement and Plan of Merger (6)
3.1 Amended and Restated Certificate of Incorporation (1)
3.2 Amended and Restated By-laws(1)
4.1 Specimen common stock certificate(4)
4.2 Form of Investor Senior Preferred Stock Warrant (4)
4.3 Form of Warrant issued to Arnhold and S. Bleichroeder, Inc. (4)
4.4 Form of Warrant issued to Andersen Consulting (6)
10.1 Amended and Restated Mediconsult 1996 Stock Option Plan (2)
10.2 Amended and Restated Physicians' Online 1994 Stock Option Plan (2)
10.3 Escrow Agreement, dated June 14, 1999, among
Mediconsult.com, Inc., Cyber-Tech, Inc., Andre Pilevsky, Daniel
Rader, M.D and SunTrust Bank (3)
10.4 Escrow Agreement, dated December 16, 1999, among Mediconsult.com,
Inc., Physicians' Online, Inc., Jason Fisherman as
representative, and The Wilmington Trust Company (2)
10.5 Worldwide Web Server Agreement dated November 6, 1996
between Tvisions Inc. and Mediconsult.com Limited (5)
10.6 Operating Agreement of Pharma Marketing, LLC, Dated
September 7,1999(1)
10.7 Service Agreement, dated September 7, 1999, between
Pharma Marketing, LLC and Mediconsult.com., Inc.(1)
10.8 Membership Investment Agreement, dated September 7,
1999, between Pharma Marketing, LLC and Mediconsult.com,
Inc.(1)
10.9 Letter agreement dated December 30, 1998 among the
Company, Pharmaceutical Information Associates, Ltd.,
VirSci Corporation and Pharmaceutical Information.Net, Inc. (4)
10.10 Consulting Agreement dated March 3, 1997 between the
Company and IBM Canada (3)
10.11 Source Code License Agreement dated February 26, 1999
between Tvisions, Inc. and Mediconsult.com Limited (4)
10.12 Agreement between Bristol-Myers Squibb Company and
Mediconsult.com Limited, dated as of September 30, 1999 (1)
10.13 Project Order pursuant to Agreement between Bristol-
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Myers Squibb Company and Mediconsult.com Limited, dated
as of September 30, 1999 (6)
10.14 Agreement between the Company and Novartis Pharma AG (4)
10.15 Exclusive Sponsorship Agreement dated as of January 15,
1999 between InterNational Council on Infertility
Information Dissemination and Mediconsult.com Limited (4)
10.16 Perc Pilot Program Agreement, dated February 25, 2000, by and
between Eli Lilly and Company and Mediconsult.com Limited (6)
10.17 Internet Consulting and Software Services Agreement
between Mediconsult, Ltd. and Eli Lilly and Company. (6)
10.18 Employment Agreement effective as of January 1, 1999,
between 3542491 Canada Inc. and David J. Austin (4)
10.19 Employment Agreement effective as of January 1, 1999,
between Mediconsult.com Limited and Robert A. Jennings (4)
10.20 Employment Agreement effective as of January 1, 1999, between
3542491 Canada Inc. and Ian Sutcliffe (4)
10.21 Employment Agreement dated as of April 1, 1999 between
the Company and E. Michael Ingram (4)
10.22 Employment Agreement, dated June 14, 1999, between
Mediconsult.com (US), Ltd. and Andre Pilevsky (3)
10.23 Employment Agreement, dated September 7, 1999, between
Pharma Marketing, LLC and Timothy J. McIntyre.
10.24 Noncompetition Agreement, dated June 14, 1999, between
Mediconsult.com (US), Ltd. and Andre Pilevsky (3)
10.25 Noncompetition Agreement, dated June 14, 1999, between
Mediconsult.com (US), Ltd. and Sharon Weinberg (3)
10.26 Noncompetition Agreement, dated June 14, 1999, between
Mediconsult.com (US), Ltd. and Daniel Rader, M.D(3)
10.27 Stock Purchase Agreement dated as of February 26, 1999
between the Company and the Investors named therein (4)
10.28 Registration Rights Agreement dated February 26, 1999,
among the Company and the Investors named therein (4)
10.29 Stockholders' Agreement dated February 26, 1999 among the
Company, the Founders identified therein and the Investors
identified on Schedule 1 thereto (4)
10.30 Registration Rights Agreement dated as of February 26,
1999 between the Company and Arnhold and S. Bleichroeder, Inc.(4)
10.31 Registration Rights Agreement, dated as of March 23, 2000,
between the Company and Andersen Consulting (6)
27.1 Financial Data Schedule*
___________
* Filed electronically herewith.
(1) Exhibits are incorporated by reference to Mediconsult's Annual
Report on Form 10-K (File No. 000-29282) filed April 10, 2000.
(2) Exhibits are incorporated by reference to the Annexes to
Mediconsult's joint information/proxy statement/prospectus on
Schedule 14C (File No. 000-29282) filed November 19, 1999.
(3) Exhibits are incorporated by reference to Mediconsult's Current
Report on Form 8-K (File No. 333-73059) filed June 29, 1999.
(4) Exhibits are incorporated by reference to Mediconsult's
Registration Statement on Form S-1 (Registration No. 333-73059)
filed April 2, 1999.
(5) Exhibits are incorporated by reference to Mediconsult's
Registration Statement on Form 10-SB (File No. 333-21883) filed
December 16, 1996.
(6) Exhibits are incorporated by reference to Mediconsult's Quarterly
Report on Form 10-Q (file No. 000-29282) filed May 15, 2000.
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(b) The company filed a current report on from 8-K on June 26, 2000, in
conjunction with the change in the company's independent auditors.
SIGNATURES
Mediconsult.com, Inc.
Date: August 14, 2000 Signature: /s/ E. Michael Ingram
----------------------------
E. Michael Ingram
Chief Financial Officer
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