<PAGE>
U.S. SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission File Number 0-22351
FirstQuote Inc.
---------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 98-0162893
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12, Ave des Morgines, 1213 Petit-Lancy 1, Geneva, Switzerland N/A
------------------------------------------------------------- ---
(Address of principal executive offices) (Zip Code)
+41-22-879-0879
---------------
(Issuer's telephone number)
(not applicable)
----------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
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 7, 2000 the Registrant had 13,411,466 shares of its common stock,
par value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format: Yes No X
--- ---
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,983,109 $1,093,630
Trade accounts receivable, net 1,077,151 616,168
Prepaid expenses 540,352 486,385
Other current assets 438,981 324,223
----------- ----------
Total current assets 7,039,593 2,520,406
----------- ----------
NON-CURRENT ASSETS
Property and equipment, net 2,046,518 1,525,400
Goodwill, net 2,752,369 3,307,110
Other assets 5,736 8,699
----------- ----------
Total non-current assets 4,804,623 4,841,209
----------- ----------
Total Assets $11,844,216 $7,361,615
=========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
<PAGE>
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(cont.)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 1,914,167 $ 1,547,028
Accrued expenses 1,354,433 816,362
Current portion of capital lease obligations 75,037 142,626
Deferred income 1,250,601 895,747
------------ -------------
Total current liabilities 4,594,238 3,401,763
------------ -------------
LONG-TERM CAPITAL LEASE OBLIGATIONS
Capital lease obligations, net of current portion 13,439 29,177
------------ -------------
STOCKHOLDERS' EQUITY
Preferred Stock, $0.001 par value,
10,000,000 shares authorized;
Class A: 1,500 and 6,500 shares issued and outstanding 2 7
Class B: 0 and 1,923,716 shares issued and outstanding -- 1,924
Class C: 0 and 3,783,784 shares issued and outstanding -- 3,784
Class D: 197,815 shares issued and outstanding 198 198
Common Stock, $0.001 par value,
20,000,000 shams authorized; 13,408 6,423
13,408,466 and 6,423,409 shares issued and outstanding
Additional paid-in capital 24,245,157 16,703,758
Cumulative translation adjustment 1,110,426 898,475
Accumulated deficit (18,132,652) (13,683,894)
------------ -------------
Total stockholders' equity 7,236,539 3,930,675
------------ -------------
Total Liabilities and Stockholders' Equity $ 11,844,216 $ 7,361,615
============ =============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
<PAGE>
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
ended June 30, ended June 30,
-------------------------------- --------------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUE $ 1,417,819 $ 383,958 $ 2,695,129 $ 644,362
OPERATING EXPENSES
Cost of Revenue 1,000,609 478,352 2,026,777 839,532
Selling & Market Development Expenses 285,582 136,359 421,277 137,391
General & Administrative Expenses 2,342,721 1,124,652 4,508,990 2,124,560
----------- ----------- ----------- -----------
3,628,911 1,739,363 6,957,044 3,101,483
----------- ----------- ----------- -----------
OPERATING LOSS (2,211,092) (1,355,405) (4,261,915) (2,457,121)
OTHER INCOME AND EXPENSES
Interest Income / (Expense), net 86,355 33,484 77,434 57,909
Foreign Exchange (Loss) / Gain, net 262,469 (469,414) (264,277) (967,444)
----------- ----------- ----------- -----------
348,824 (435,930) (186,843) (909,535)
----------- ----------- ----------- -----------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS (1,862,268) (1,791,335) (4,448,758) (3,366,656)
=========== =========== =========== ===========
Basic and diluted net loss per common share $ (0.15) $ (0.29) $ (0.47) $ (0.56)
=========== =========== =========== ===========
Basic and diluted weighted average number
of common shares 12,454,466 6,097,634 9,532,747 5,992,193
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
<PAGE>
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
ended June 30, ended June 30,
--------------------------------- ---------------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,862,268) $(1,791,335) $(4,448,758) $(3,366,656)
Adjustments to reconcile net loss to net
cash used in operating activities:
Exchange loss / (gain) (262,469) 469,414 264,277 967,444
Depreciation of property and equipment 232,173 145,940 457,720 289,311
Amortisation of goodwill 277,370 -- 554,741 --
Provision for doubtful debtors 27,136 19,782 82,399 40,804
Stock issued for license costs 31,250 31,250 62,500 62,500
Change in operating assets and liabilities
Trade accounts receivable (377,677) (226,068) (543,382) (276,419)
Prepaid expenses and other receivables (197,185) (166,017) (231,225) (203,568)
Trade accounts payable 368,422 178,292 367,139 199,880
Accrued expenses 238,487 65,326 538,071 113,459
Deferred income 281,431 115,138 354,854 102,379
----------- ----------- ----------- -----------
Net cash used-in operating activities (1,243,329) (1,158,279) (2,541,664) (2,070,866)
CASH FROM INVESTING ACTIVITIES:
Purchase of equipment (825,942) (148,894) (978,838) (165,272)
Other non-current asset movements 1,454 10,959 2,962 (179,304)
----------- ----------- ----------- -----------
Net cash used in investing activities (824,488) (137,934) (975,876) (344,576)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common and Preferred Stock -- -- 7,155,180 7,000,000
Commission on issuance of Common and
Preferred Stock -- -- (245,259) (70,000)
Issuance of stock upon exercise of warrants 22,750 471,275 477,750 478,275
Issuance of stock upon exercise of options 10,000 -- 155,000 --
Advances from stockholders and related parties (170,000) -- -- --
Reimbursements of advances from stockholders
and related parties -- -- -- (1,000,000)
Payment of capital lease obligations (34,795) (44,996) (83,327) (78,881)
----------- ----------- ----------- -----------
Net cash provided by financing activities (172,045) 426,279 7,459,344 6,329,394
Effect of exchange rate changes on cash and
cash equivalents (21,415) (133,952) (52,325) (191,653)
NET INCREASE IN CASH AND CASH EQUIVALENTS (2,261,277) (1,003,886) 3,889,479 3,722,299
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7,244,386 4,955,635 1,093,630 229,450
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,983,109 $ 3,951,749 $ 4,983,109 $ 3,951,749
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
<PAGE>
FIRSTQUOTE INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at June 30, 2000, and for all periods
presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these unaudited condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1999 audited
financial statements. The results of operations for the three months ended June
30, 2000 are not necessarily indicative of the operating results for the full
year.
NOTE 2 - ISSUANCE OF COMMON STOCK
In March 2000, the Company issued 1,061,057 shares of its Common Stock to a
number of existing and additional venture capital and private investors for a
total consideration of $7,155,180.
In April 2000, the holders of 1,923,716 shares of Series B Preferred Stock and
3,783,785 shares of Series C Preferred Stock converted those shares into
5,707,501 shares of Common Stock.
During the six months ended June 30, 2000, the holders of 5,000 shares of
Series A Preferred stock converted those shares to into 10,000 shares of Common
Stock.
During the six months ended June 30, 2000, the Company issued 136,500 shares of
its Common Stock upon the exercise of 136,500 warrants previously issued with
the Series A Preferred stock and certain stock units. The warrants were
exercisable at $3.50.
During the six months ended June 30, 2000, the Company issued 70,000 shares of
its Common Stock upon the exercise of 70,000 options by employees of the
Company. The options carried strike prices ranging from $2.00 to $3.50.
<PAGE>
Item 2. Management's Discussion And Analysis Or Plan Of Operation
Background
FirstQuote is a European technology provider of financial information and
electronic brokerage solutions. The Company offers a comprehensive range of
real-time market data and electronic brokerage systems for both the
institutional and individual investor. The financial information systems are
offered via the Internet or through virtual private networks using Internet
technology. The Company also provides related network services to users of its
financial information and electronic brokerage products. Further description of
the Company's activities and products can be found at www.firstquote.com or at
------------------
www.firstquote.net.
------------------
Effective May 7, 1999, the Company amended its Certificate of Incorporation to
change its corporate name to FirstQuote Inc.
Effective December 24,1999, the Company acquired 100% of Stockdata Amsterdam BV,
a company located in Amsterdam, for a consideration of up to $3,750,000.
Stockdata is engaged in the distribution of real-time market data products to
the Benelux region, primarily through the use of datacast technologies via cable
networks. The company's name was changed to FirstQuote Stockdata BV upon
acquisition.
Regarding the Company's plan of operations for the 2000 fiscal year, it will
continue to target strategic alliances in key European financial centers from
which to leverage its growth. It plans to market its financial market
information, analytical tools and electronic brokerage systems both under its
own product names and as co-branded implementations with institutional clients.
Currency Exchange Rates: Although the Company reports its results in US dollars,
virtually all of its revenues and expenses are denominated in other currencies,
primarily Swiss francs, Euros and Pounds sterling. Consequently, the Company's
net results are directly affected by changes in the exchange rate between the US
dollar on the one hand, and the Swiss franc, Euros or Pounds sterling on the
other. Transactions of the Company and its subsidiaries are recorded based on
the functional currency of each particular company. The Company's main operating
subsidiary maintains a Swiss franc functional currency and has a US dollar
denominated current account with its parent company. This results in foreign
exchange differences being recorded based on variations in the USD/CHF rate of
exchange, which are carried forward on consolidation.
Assets and liabilities of the Company and its subsidiaries are translated at the
exchange rate in effect at each year-end. Income statement accounts are
translated at the average rate of exchange prevailing during the year.
Translation adjustments arising from differences in exchange rates from period
to period are included in the cumulative translation adjustment account in
stockholders' equity.
Results of Operations
The Company acquired FirstQuote Stockdata on December 24,1999. FIrstQuote
Stockdata has been included in the consolidated operating results for all
periods subsequent to December 24,1999.
Revenue for the six months ended June 30, 2000 was $2,695,129, an increase of
318% over that of $644,362 for the corresponding prior year period. Revenue is
comprised primarily of the provision of financial market data services and
related network services, the development and operation of market data enabled
web-sites, as well as transaction related revenue linked to the provision of
outsourced electronic brokerage services. Without giving effect to the
consolidation of FirstQuote Stockdata, the Company had a 161% increase in
revenue during the six month period ended June 30, 2000 over the prior year
period.
Revenue for the second quarter of 2000 increased 11% above that of the first
quarter of 2000 and 269% over that for the three months ended June 30, 1999.
Without giving effect to the consolidation of FirstQuote Stockdata, the Company
had a144% increase in revenue during the three month period ended June 30, 2000
over the prior year period.
Cost of revenue for the six months ended June 30, 2000 was $2,026,777, an
increase of 141% above the amount of $839,532 for the corresponding prior year
period. Cost of revenue as a percentage of revenue has decreased from 130% in
the prior year to 75%, reflecting the economies of operation at a larger scale.
Cost of revenue includes content acquisition costs, network expenses, and
commissions.
Selling & Market Development expenses for the six months ended June 30, 2000
were $421,277, an increase of 207% above the amount of $137,391 for the
corresponding prior year period. Corporate and product marketing expenses have
increased in conjunction with the corporate name change to FirstQuote and the
continued rollout of the Company's services in Europe.
General and administrative expenses for the six months ended June 30, 2000 were
$4,508,990, an increase of 112% from the amount of $2,124,560 for the
corresponding prior year period. Staff costs represent the major
<PAGE>
component of this expense and have increased 104% from $1,059,245 to $2,160,712.
Office expenses have increased 79% from $284,269 to $508,124, and depreciation
charges (excluding amortisation of goodwill) have increased by 58% from $289,311
to $457,720. Amortisation of goodwill related to the acquisition of FirstQuote
Stockdata amounted to $554,741 for the six months ended June 30, 2000.
Operating loss for the six months ended June 30, 2000 was $4,261,915, an
increase of 73% from the amount of $2,457,121 for the prior year period.
Expressed as a percentage of revenue the operating loss has improved from 381%
to 158% of revenue.
Foreign exchange gains and losses arise essentially from the revaluation of
amounts due by FirstQuote SA to FirstQuote Inc., which are denominated in US
dollars. The functional currency of FirstQuote SA is the Swiss Franc, and the
resultant loss on revaluation in Swiss Francs is carried forward in
consolidation. The USD/CHF rate of exchange was 1.3760 at December 31, 1998,
1.5915 at December 31, 1999 and 1.6343 at June 30, 2000.
The continued increase in the value of the US Dollar against most European
currencies has resulted in revenues and costs reported in US Dollars being lower
than had the value of the USD remained more constant.
Net loss for the six months ended June 30, 2000 was $4,448,758, compared with
$3,366,656 for the corresponding prior year period.
Liquidity and Financial Condition
As of June 30, 2000, the Company had working capital of $2,445,357 and
stockholders' equity of $7,236,541.
In January 2000 the Company obtained bridge financing of $510,000 from three of
its existing financial investors, essentially to finance the acquisition of
Stockdata, and pending the closing of a private placement of 1,061,057 of its
Common shares for a total amount of $7,155,180, which was concluded during March
2000. Two thirds of the bridge financing was converted to common shares as part
of the private placement and the remaining $170,000 was repaid during April 2000
at the option of the Company.
During the six months ended June 30, 2000, the Company also received $477,750
following the exercise of 136,500 warrants at $3.50. As at August 7, 2000, a
further 153,631 such warrants are in existence, all exercisable at $3.50.
During the six months ended June 30, 2000, the Company also received $155,000
following the exercise of 70,000 employee stock options at strike prices varying
between $2.00 and $3.50.
The Company continues to generate negative cashflows from operations since its
cost base exceeds its revenues from operating activities. The negative cash flow
from operations was approximately $519,000 per month during the second quarter
of 2000, compared with $485,000 per month during the first quarter of 2000 and
$461,000 per month during the fourth quarter of 1999.
The Company will require, at least, $3,000,000 of additional capital over the
next 12 months in order to fund the planned operating and capital expenditure.
The Company intends to pursue the required capital through the sale of
additional securities. However, there are no commitments or understandings on
the part of any party to provide any additional debt or equity capital to the
Company and there can be no assurance that the Company will be able to obtain
additional capital. The Company's inability to increase revenue or obtain
additional debt or equity capital on a timely basis will, in all likelihood,
materially adversely affect its future planned growth of operations and
revenues.
Safe Harbor
This report contains various forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks, uncertainties and assumptions referred to herein, including, without
limitation, the early stage nature of the Company's operations and the risks and
uncertainties concerning the market acceptance of its services and products;
technological changes; increased competition; and general economic conditions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated, or projected. The Company cautions potential
investors not to place undue reliance on any such forward-looking statements,
all of which speak only as of the date made.
<PAGE>
PART II - Other Information
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes in Securities and Use of Proceeds
In April 2000, the holders of 1,923,716 shares of Series B Preferred
Stock and 3,783,785 shares of Series C Preferred Stock converted those
shares to 5,707,501 shares of Common Stock. The shares were issued
pursuant to Rule 506 under the Securities Act of 1933, as amended.
There was no underwriter involved in this issuance.
During the three months ended June 30, 2000, 5,000 shares of Series A
Preferred stock were converted into 10,000 shares of Common Stock. The
shares were issued pursuant to Rule 506 under the Securities Act of
1933, as amended. There was no underwriter involved in this issuance.
During the three months ended June 30, 2000, the Company issued 6,500
shares of its Common Stock upon the exercise of 6,500 warrants
previously issued with the Series A Preferred Stock. The warrants were
exercisable at $3.50. The shares were issued pursuant to Rule 506 under
the Securities Act of 1933, as amended. There was no underwriter
involved in this issuance.
Item 3. Defaults Upon Senior Securities
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Inapplicable.
Item 5. Other Information
Inapplicable.
Item 6. Exhibits and Reports on From 8-K.
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports of Form 8-K
Inapplicable.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRSTQUOTE INC.
---------------
(Registrant)
Dated: August 14, 2000 By /s/ Neil Gibbons
---------------------------
Neil Gibbons
, Chief Executive Officer
/s/ Mark Benn
-------------
Mark Benn
Chief Financial Officer
