<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 March 31, 2000
Commission File Number 0-22351
FirstQuote Inc.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 98-0162893
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(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
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(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 May 12, 2000 the Registrant had 13,346,967 shares of its common stock, par
value $0.001, issued and outstanding.
Transitional Small Business Disclosure Format: Yes __ No X
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<PAGE>
Part I-- Financial Information
Item 1. Financial Statements
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
---- ----
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,244,386 $ 1,093,629
Trade accounts receivable, net 726,610 616,168
Prepaid expenses 434,351 486,385
Other current assets 379,047 324,223
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Total current assets 8,784,394 2,520,405
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NON-CURRENT ASSETS
Property and equipment, net 1,452,749 1,525,400
Goodwill, net 3,029,739 3,307,110
Other assets 7,191 8,699
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Total non-current assets 4,489,679 4,841,209
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Total Assets $13,274,073 $ 7,361,614
=========== ===========
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
<PAGE>
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(cont.)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
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(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 1,545,745 $ 1,547,028
Accrued expenses 1,115,945 807,341
Current portion of capital lease obligations 107,238 142,626
Convertible loans from stockholders 170,000 --
Deferred income 969,171 895,747
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Total current liabilities 3,908,099 3,392,742
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LONG-TERM CAPITAL LEASE OBLIGATIONS
Capital lease obligations, net of current portion 16,032 29,177
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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: 1,923,716 shares issued and outstanding 1,924 1,924
Class C: 3,783,784 shares issued and outstanding 3,784 3,784
Class D: 197,815 shares issued and outstanding 198 198
Common Stock, $0.001 par value,
20,000,000 shares authorized;
7,689,466 and 6,423,409 shares issued and outstanding 7,689 6,423
Additional paid-in capital 24,212,419 16,703,758
Cumulative translation adjustment 1,394,309 907,495
Accumulated deficit (16,270,383) (13,683,894)
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Total stockholders' equity 9,349,942 3,939,695
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Total Liabilities and Stockholders' Equity $ 13,274,073 $ 7,361,614
============== ===============
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements
<PAGE>
FIRSTQUOTE INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------------
2000 1999
--------------------------------
<S> <C> <C>
REVENUE $ 1,277,310 $ 260,404
OPERATING EXPENSES
Cost of Revenue 1,026,168 361,180
Selling & Market Development Expenses 135,695 1,032
General & Administrative Expenses 2,166,269 999,908
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3,328,133 1,362,120
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OPERATING LOSS (2,050,823) (1,101,716)
OTHER INCOME AND EXPENSES
Interest Income / (Expense), net (8,921) 24,425
Foreign Exchange (Loss) / Gain, net (526,746) (498,030)
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(535,667) (473,605)
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NET LOSS APPLICABLE TO COMMON SHAREHOLDERS (2,586,490) (1,575,321)
============= =============
--
Basic and diluted net loss per common share $ (0.40) $ (0.27)
============= =============
Basic and diluted weighted average number of common shares 6,468,507 5,899,809
============= =============
</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 Ended
March 31,
----------------------------------
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (2,586,490) $ (1,575,321)
Adjustments to reconcile net loss to net cash used in operating activities:
Exchange loss / (gain) 526,746 498,030
Depreciation of property and equipment 225,547 143,371
Amortization of goodwill 277,370 --
Provision for doubtful debtors 55,263 21,022
Stock issued for license costs 31,250 31,250
Change in operating assets and liabilities
Trade accounts receivable (165,705) (50,351)
Prepaid expenses and other receivables (34,040) (37,551)
Trade accounts payable (1,283) 21,588
Accrued expenses 308,604 48,133
Deferred income 73,423 (12,759)
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Net cash used-in operating activities (1,289,315) (912,587)
CASH FROM INVESTING ACTIVITIES:
Purchase of equipment (152,896) (16,378)
Other non-current asset movements 1,508 (190,263)
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Net cash used in investing activities (151,388) (206,642)
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 455,000 7,000
Issuance of stock upon exercise of options 145,000 --
Advances from stockholders and related parties 170,000 --
Reimbursements of advances from stockholders and related parties -- (1,000,000)
Payment of capital lease obligations (48,531) (33,885)
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Net cash provided by financing activities 7,631,390 5,903,115
Effect of exchange rate changes on cash and cash equivalents (39,930) (57,701)
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,150,757 4,726,185
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,093,629 229,450
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CASH AND CASH EQUIVALENTS AT END OF YEAR $ 7,244,386 $ 4,955,635
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</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 March 31, 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 March
31, 2000 are not necessarily indicative of the operating results for the full
year.
NOTE 2 - ISSUANCE OF COMMON STOCK
During the three months ended March 31, 2000, 5,000 shares of Series A Preferred
stock were converted into 10,000 shares of Common Stock.
During the three months ended March 31, 2000, the Company issued 130,000 shares
of its Common Stock upon the exercise of 130,000 warrants previously issued with
the Series A Preferred stock and certain stock units. The warrants were
exercisable at $3.50.
During the three months ended March 31, 2000, the Company issued 65,000 shares
of its Common Stock upon the exercise of 65,000 options by employees of the
Company. The options carried strike prices ranging from $2.00 to $3.50.
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 Company converted 1,923,716 shares of Series B Preferred
Stock and 3,783,785 shares of Series B Preferred Stock to 5,707,501 shares of
its Common Stock.
<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
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www.firstquote.net.
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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 targeted 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 results of operations for the three months ended March 31, 2000 include
those of FirstQuote Stockdata.
Revenue for the three months ended March 31, 2000 was $1,277,310, an increase of
391% over that of $260,404 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 for its clients.
Revenue for the first quarter of 2000 is 125% above that of the fourth quarter
of 1999. Comparable revenue excluding FirstQuote Stockdata increased 42% on a
quarter to quarter basis and 186% compared to the corresponding prior year
period.
Cost of revenue for the three months ended March 31, 2000 was $1,026,168, an
increase of 184% above the amount of $361,180 for the corresponding prior year
period. Cost of revenue as a percentage of revenue has decreased from 139% in
the prior year to 80%, 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 three months ended March 31, 2000
were $135,695. Comparable expenses in the prior year period were insignificant.
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 three months ended March 31, 2000
were $2,166,269, an increase of 117% from the amount of $999,908 for the
corresponding prior year period. Staff costs represent the major component of
this expense and have increased 118% from $466,937 to $1,019,373. Operating
expenses have increased 65% from $389,599 to $643,979, and depreciation charges
(excluding amortisation of goodwill) have
<PAGE>
increased by 57% from $143,371 to $225,542. Amortisation of goodwill related to
the acquisition of FirstQuote Stockdata amounted to $277,370 for the three
months ended March 31, 2000.
Operating loss for the three months ended March 31, 2000 was $2,050,823, an
increase of 86% from the amount of $1,101,716 for the prior year period.
Expressed as a percentage of revenue the operating loss has improved from 423%
to 161% 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 1.6641 at March 31, 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. Percentage changes in
revenues and costs expressed in the Company's functional currencies are higher
than those expressed in this report in USD.
Net loss for the three months ended March 31, 2000 was $2,586,490, compared with
$1,575,321 for the corresponding prior year period.
Liquidity and Financial Condition
As of March 31, 2000, the Company had working capital of $4,876,295 and
stockholders' equity of $9,349,941.
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 three months ended March 31, 2000, the Company also received $455,000
following the exercise of 130,000 warrants at $3.50. As at May 12, 2000, a
further 158,131 such warrants are in existence, all exercisable at $3.50.
During the three months ended March 31, 2000, the Company also received $145,000
following the exercise of 65,000 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 net `cash burn'
rate from operations was approximately $485,000 per month during the first
quarter of 2000 compared with an average of approximately $461,000 per month
during the fourth quarter of 1999.
The plan of operations for the next 12 months will require increases in the
amounts of operating and capital expenditure above those incurred to date. As of
the date of this report, and subsequent to the recently concluded private
placement, the Company believes that it has sufficient capital in order to
finance operations and capital expenditures for the remainder of the current
fiscal year. However, should additional capital be required, at this time there
are no firm commitments or agreements 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.
Year 2000 Compliance
Subsequent to the efforts invested in ensuring that its systems were compliant
with the information processing requirements of the next millenium, the Company
experienced no adverse effects resulting from the passage of time to January
1.2000.
The Company estimates that it has spent to date approximately $100,000 in
internal and equipment costs resulting from year 2000 issues. No further
expenditure is planned to address other date-specific processing issues that may
arise.
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
<PAGE>
"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 Company's recent commencement of commercial and
marketing 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.
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<PAGE>
PART II - Other Information
Item 1. Legal Proceedings.
Inapplicable.
Item 2. Changes in Securities and Use of Proceeds
During the three months ended March 31, 2000, 5,000 shares of Series A
Preferred stock were converted into 10,000 shares of Common Stock.
During the three months ended March 31, 2000, the Company issued
130,000 shares of its Common Stock upon the exercise of 130,000
warrants previously issued with the Series A Preferred stock and
certain stock units. The warrants were exercisable at $3.50.
During the three months ended March 31, 2000, the Company issued 65,000
shares of its Common Stock upon the exercise of 65,000 options by
employees of the Company. The options carried strike prices ranging
from $2.00 to $3.50.
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 connection with
the sale of 721,350 shares of Series C Preferred Stock, the Company
paid a finders' fee to a non-affiliated party consisting of $245,259
and a warrant to purchase 36,067 common shares of the Company at an
exercise price of $6.80 per share.
In April 2000, the Company converted 1,923,716 shares of Series B
Preferred Stock and 3,783,785 shares of Series B Preferred Stock to
5,707,501 shares of its Common Stock.
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.
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(Registrant)
Dated: May 12, 2000 By /s/ Neil Gibbons
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Neil Gibbons
Chief Executive Officer
/s/ Mark Benn
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Mark Benn
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,244,386
<SECURITIES> 0
<RECEIVABLES> 829,388
<ALLOWANCES> 102,778
<INVENTORY> 0
<CURRENT-ASSETS> 8,784,394
<PP&E> 2,902,398
<DEPRECIATION> 1,442,458
<TOTAL-ASSETS> 13,274,073
<CURRENT-LIABILITIES> 3,908,098
<BONDS> 0
0
5,907
<COMMON> 7,689
<OTHER-SE> 9,336,344
<TOTAL-LIABILITY-AND-EQUITY> 13,274,073
<SALES> 1,277,310
<TOTAL-REVENUES> 1,277,310
<CGS> 0
<TOTAL-COSTS> 3,328,133
<OTHER-EXPENSES> 535,667
<LOSS-PROVISION> 55,263
<INTEREST-EXPENSE> 12,823
<INCOME-PRETAX> (2,586,490)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,586,490)
<EPS-BASIC> (0.40)
<EPS-DILUTED> (0.40)
</TABLE>
