<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 2, 1999 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 000-26303
VIANT CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 77-0427302
(State or Other Jurisdiction (I.R.S. Employer
Incorporation or Organization) Identification No.)
89 SOUTH STREET, BOSTON, MA 02111
(Address of Principal Executive (Zip Code)
Offices)
617-531-3700
(Registrant's Telephone Number, Including Area Code)
NA
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
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 [ ] No [X].
As of July 2, 1999 there were 21,354,512 shares of Common Stock, $.001 par
value, outstanding.
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<PAGE>
VIANT CORPORATION
Form 10-Q
Table of Contents
July 2, 1999
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Operations for the Three and Six
Months Ended June 30, 1998 and July 2, 1999................. 1
Balance Sheet as of January 1, 1999 and
July 2, 1999................................................ 2
Statement of Cash Flows for the Six Months
Ended June 30, 1998 and July 2, 1999........................ 3
Notes to Financial Statements............................... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 5
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.................... 9
Item 4. Submission of Matters to a Vote of Security Holders.......... 9
Signatures .......................................................... 10
Exhibit 11.1......................................................... 11
Exhibit 27.1......................................................... 12
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
VIANT CORPORATION
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JULY 2, JUNE 30, JULY 2,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues ................................................... $ 4,512 $ 10,991 $ 8,605 $ 18,874
-------- -------- -------- --------
Operating expenses:
Professional services ........................................ 2,362 5,591 4,599 10,102
Sales and marketing .......................................... 631 1,661 1,217 2,877
General and administrative ................................... 2,118 4,779 3,927 8,297
Research and development ..................................... 295 850 463 1,540
-------- -------- -------- --------
Total operating expenses ................................. 5,406 12,881 10,206 22,816
-------- -------- -------- --------
Loss from operations ........................................... (894) (1,890) (1,601) (3,942)
Interest and other income (expense), net ....................... (10) 51 17 62
-------- -------- -------- --------
Net loss ....................................................... $ (904) $ (1,839) $ (1,584) $ (3,880)
-------- -------- -------- --------
-------- -------- -------- --------
Pro forma net loss per share - basic and diluted ............... $ (0.07) $ (0.10) $ (0.12) $ (0.22)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average shares used in computing pro forma
basic and diluted net loss per share ....................... 13,685 18,276 13,660 17,651
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
VIANT CORPORATION
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
January 1, 1999 July 2, 1999
--------------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................................ $ 18,209 $ 57,519
Short-term investments ............................................................... 602 464
Accounts receivable, net ............................................................. 5,472 11,665
Prepaid expenses and other current assets ............................................ 1,190 1,530
-------- --------
Total current assets ............................................................... 25,473 71,178
Property and equipment, net ............................................................ 4,048 4,672
Other assets ........................................................................... 232 227
-------- --------
Total assets ....................................................................... $ 29,753 $ 76,077
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt .................................................... $ 2,850 $ --
Current portion of capital lease obligation .......................................... 416 564
Accounts payable ..................................................................... 626 1,188
Accrued expenses ..................................................................... 2,907 3,891
Deferred revenues .................................................................... 1,052 2,034
-------- --------
Total current liabilities .......................................................... 7,851 7,677
Long-term debt, less current portion ................................................... 603 --
Capital lease obligations, less current portion ........................................ 1,634 1,791
-------- --------
Total liabilities .................................................................. 10,088 9,468
-------- --------
Stockholders' equity:
Convertible preferred stock:
Series D: no par value; 3,240,000 and 0 shares
authorized, respectively; 3,160,043 and 0 shares
issued and outstanding, respectively ............................................. 20,125 --
Series A: no par value; 5,746,874 and 0 shares
authorized, respectively; 5,746,874 and 0
shares issued and outstanding, respectively ...................................... 3,047 --
Series B: no par value; 1,499,925 and 0 shares
authorized, respectively; 1,499,925 and 0
shares issued and outstanding, respectively ...................................... 987 --
Series C: no par value; 2,830,408 and 0 shares
authorized, respectively; 2,759,625 and 0
shares issued and outstanding, respectively ...................................... 7,977 --
Preferred stock, $0.001 par value; 0 and 5,000,000 shares
authorized, respectively; no shares issued and outstanding ......................... -- --
Common stock; $0.001 par value; 25,000,000 and
50,000,000 shares authorized, respectively;
4,294,236 and 21,354,512 shares issued and outstanding,
respectively ....................................................................... 4 21
Additional paid-in capital ........................................................... 430 83,373
Accumulated deficit .................................................................. (12,905) (16,785)
-------- --------
Total stockholders' equity ......................................................... 19,665 66,609
-------- --------
Total liabilities and stockholders' equity ......................................... $ 29,753 $ 76,077
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
VIANT CORPORATION
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------------
JUNE 30, JULY 2,
1998 1999
-------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................................. $ (1,584) $ (3,880)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ...................................................... 405 826
Changes in operating assets and liabilities:
Accounts receivable, net ......................................................... (1,294) (6,193)
Prepaid expenses and other assets ................................................ (668) (335)
Accounts payable ................................................................. (858) 562
Accrued expenses ................................................................. 179 984
Deferred revenues ................................................................ (559) 982
-------- --------
Net cash used in operating activities .......................................... (4,379) (7,054)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments .................................................. (4,359) (1,247)
Maturity of short-term investments ................................................... 4,358 1,385
Purchases of property and equipment .................................................. (187) (1,074)
-------- --------
Net cash used in investing activities .......................................... (188) (936)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants ................................. -- 611
Proceeds from issuance of convertible preferred stock, net ........................... -- 45
Proceeds from issuance of common stock, net .......................................... -- 50,168
Proceeds from borrowings on lines of credit .......................................... 1,823 --
Principal payments on borrowings on lines of credit .................................. -- (3,453)
Principal payments on capital lease obligations ...................................... (32) (71)
-------- --------
Net cash provided by financing activities ...................................... 1,791 47,300
-------- --------
Net increase (decrease) in cash and cash equivalents ................................... (2,776) 39,310
Cash and cash equivalents at beginning of period ....................................... 5,559 18,209
-------- --------
Cash and cash equivalents at end of period ............................................. $ 2,783 $ 57,519
-------- --------
-------- --------
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest ............................................................... $ 49 $ 281
NONCASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital lease obligations ................................... $ 1,264 $ 376
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by Viant
Corporation (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the audited financial statements and
notes thereto for the year ended January 1, 1999 included in the Company's
Registration Statement on Form S-1, as amended (File No. 333-76049). The
accompanying unaudited financial statements reflect all adjustments (consisting
solely of normal, recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of results for the interim periods
presented. The results of operations for the three and six month periods ended
July 2, 1999 are not necessarily indicative of the results to be expected for
any future period or the full fiscal year.
During 1998, Viant changed its fiscal year to the 52-week period ending
on the Friday nearest to the last day of December of that year. Prior to
this, the fiscal year of Viant was the calendar year. Viant's fiscal year end
1998 ended on January 1, 1999.
2. NET LOSS PER SHARE
Viant computes net loss per share in accordance with SFAS No. 128,
"Earnings Per Share." Pro forma basic and diluted net loss per share is based
upon the weighted average number of common shares outstanding and assumes
the conversion of all outstanding shares of preferred stock into common
stock, as if they had converted immediately upon their issuance. The assumed
exercise of stock options is anti-dilutive and has been excluded from the
calculation.
3. CAPITAL STOCK
On June 18, 1999, the Company completed an initial public offering of
Common Stock which resulted in the issuance of 3,450,000 shares of Common
Stock. Proceeds to the Company, net of underwriting discounts and costs of
the offering, were approximately $50.2 million.
4. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 2000. The Company
anticipates that the adoption of SFAS No. 133 will not have a significant effect
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<PAGE>
on the financial condition of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. A number
of important factors, including those identified under the caption "Risk
Factors" in Viant's registration statement on Form S-1 (SEC File No.
333-76049) which hereby is incorporated by reference, as well as factors
discussed elsewhere in this form 10-Q, could cause Viant's actual results to
differ materially from those in forward-looking statement or financial
information. Actual results may differ materially from those results for a
number of reasons including the following: (i) Viant's limited operating
history; (ii) Viant's ability to recruit and retain qualified professionals;
(iii) Viant's ability to accurately estimate the time and resources for the
performance of our services; (iv) Viant's loss of a major client; (v) Viant's
need for additional capital in the future, which may not be available;
(vi) competitive factors; (vii) Viant's ability to keep up with technological
change; (viii) intellectual property claims; (ix) international factors.
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. All forward-looking
statements included in this document are made as of the date hereof, based on
information available to the Company on the date thereof, and the Company
assumes no obligation to update any forward-looking statements.
OVERVIEW
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions.
Viant derives substantially all of its revenues from services performed on a
fixed-price, fixed-time basis. Typically these engagements are of a short
predetermined time frame, generally lasting three to six months. To determine
the proposed fixed price for an engagement, Viant uses an estimation process
which takes into account the type and overall complexity of the project, the
anticipated number of consultants needed and their associated billing rates, and
the estimated duration of and risks associated with the engagement. All
fixed-price proposals are approved by a member of Viant's senior management
team. Revenues from fixed-price engagements are recognized using the percentage
of completion method (based on the ratio of costs incurred to the total
estimated project costs). Project costs are based on the direct payroll and
associated fringe benefits of the consultants on the engagement. Additionally,
the finance department personnel meet regularly with project managers to ensure
that the budgeted costs to complete, which are used to calculate revenue
recognition, reflect the actual status of the project and the anticipated costs
to complete. Provisions for estimated losses on contracts are made during the
period in which such losses become probable and can be reasonably estimated. To
date, such losses have not been significant. Viant reports revenue net of
reimbursable expenses.
Viant generally requires a client to pay 20% to 40% of the engagement fee in
advance. The remainder is billed to the client over the course of the
engagement.
Viant's revenues and earnings may fluctuate from quarter to quarter based on
such factors within and outside its control, including: the variability in
market demand for the Internet and for Internet professional services, the
length of the sales cycle associated with our service offerings, the number,
size and scope of our projects, and the efficiency with which we utilize our
employees. In addition revenues from a large client may constitute a significant
portion of total revenues in a particular quarter.
The number of Viant employees increased from 213 as of January 1, 1999 to
281 as of July 2, 1999. Personnel compensation and facilities costs represent a
high percentage of Viant's operating expenses and are relatively fixed in
advance of each quarter. Accordingly, if revenues do not increase at a rate
equal to expenses, Viant's business, financial condition or results of
operations could be materially and adversely affected. In addition, Viant's
liquidity may also be adversely affected if revenues do not increase at a rate
equal to these additional expenses, to the extent Viant is unable to reduce
operating expenses.
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<PAGE>
RESULTS OF OPERATIONS
The following table sets forth the percentage of revenues of certain items
included in the Company's statement of income:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JULY 2, JUNE 30, JULY 2,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues .......................................... 100 % 100 % 100 % 100 %
---- ---- ---- ----
Operating expenses:
Professional services ............................... 52 51 53 54
Sales and marketing ................................. 14 15 14 15
General and administrative .......................... 47 43 46 44
Research and development ............................ 7 8 6 8
---- ---- ---- ----
Total operating expenses ........................ 120 117 119 121
---- ---- ---- ----
Loss from operations .................................. (20) (17) (19) (21)
Interest and other income (expense), net -- -- 1 --
---- ---- ---- ----
Net loss .............................................. (20)% (17)% (18)% (21)%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
COMPARISON OF THE SECOND FISCAL QUARTERS AND FIRST SIX MONTHS OF 1998 TO THE
SECOND FISCAL QUARTERS AND FIRST SIX MONTHS OF 1999
NET REVENUES. Revenues increased 144% from $4.5 million for the second
quarter of 1998 to $11.0 million for the second quarter of 1999. Revenues
increased 119% from $8.6 million for the first six months of 1998 to $18.9
million for the first six months of 1999. The increase in net revenues reflected
growing demand for Internet professional services and increases in both the size
and number of Viant's client engagements. Revenues derived from Viant's three
largest clients, as a percentage of total net revenues, increased from 46% for
the second quarter of 1998 to 51% for second quarter of 1999, reflecting
primarily an increase in business from one client. Revenues derived from Viant's
three largest clients, as a percentage of total net revenues, decreased slightly
from 49% for the first six months of 1998 to 48% for the first six months of
1999.
PROFESSIONAL SERVICES. Professional services expenses consist primarily of
compensation and benefits for employees engaged in the delivery of Internet
professional services and non-reimbursable expenses related to client projects.
Professional services expenses increased 133% from $2.4 million for the second
quarter of 1998 to $5.6 million for the second quarter of 1999. Professional
services expenses increased 120% from $4.6 million for the first six months of
1998 to $10.1 million for the first six months of 1999. These increases were
primarily due to the hiring of additional professionals during these periods.
Professional services expenses decreased as a percentage of revenues from 52%
for the second quarter of 1998 to 51% for the second quarter of 1999. This
decrease is primarily the result of increased utilization of the professional
staff. Professional services expenses increased as a percentage of revenues from
53% for the first six months of 1998 to 54% for the first six months of 1999.
This increase is primarily the result of lower utilization in the first quarter
of this year versus last year.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
compensation, benefits and travel costs for employees in the sales and marketing
groups, marketing program costs and an allocation of facilities costs. Sales and
marketing expenses increased $1.0 million or 163% for the second quarter of 1999
versus the second quarter of 1998 and $1.7 million or 136% for the first six
months of 1999 versus the first six months of 1998. Sales and marketing expenses
increased as a percentage of revenues from 14% for the second quarter and first
six months of 1998 to 15% for the second quarter and first six months of 1999.
Sales and marketing expense increases were primarily attributable to an
increase in the number of sales personnel and an overall increase in Viant's
marketing and branding efforts. Viant expects that the dollar amount of sales
and marketing expenses will continue to increase due to increases in advertising
and promotional activities.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of compensation, benefits and travel costs for employees in Viant's
management, human resources, finance and administration groups, and facilities
costs not allocated to sales and marketing or research and development. General
and administrative expenses increased $2.7 million or 126% for the second
quarter of 1999 versus the second quarter of 1998. General and administrative
expenses increased $4.4 million or 111% for the first six months of 1999 versus
the first six months of 1998. These increases were the result of increased
personnel and facilities costs in connection with the opening of additional
offices. General and administrative expenses decreased as a percentage of
revenues from 47% for the second quarter of 1998 to 43% for the second quarter
of 1999 and from 46% for the first six months of 1998 to 44% for the first six
months of 1999. This was the
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<PAGE>
result of higher revenue growth versus infrastructure support costs and better
operational efficiencies.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of compensation, benefits and an allocation of facilities costs for
employees associated with Viant's innovation groups. The innovation groups
enhance the knowledge and expertise of the strategic consulting, creative design
and technology disciplines. Research and development expenses increased $.6
million or 188% for the second quarter of 1999 versus the second quarter of
1998. Research and development expenses increased $1.1 million or 233% for the
first six months of 1999 versus the first six months of 1998. Research and
development expenses increased as a percentage of revenues from 7% for the
second quarter of 1998 to 8% for the second quarter of 1999 and from 6% for the
first six months of 1998 to 8% for the first six months of 1999. Research and
development expenses increased as the result of the addition of two innovation
groups after the first quarter of 1998 and additional personnel for these
innovation groups.
Liquidity and Capital Resources
Since inception, Viant has funded its operations and investments in property
and equipment through equity financings, bank borrowings and capital lease
financing arrangements. Viant's cash and cash equivalents were $57.5 million at
July 2, 1999.
Viant's cash and cash equivalents increased from $18.2 million at the end of
1998 to $57.5 million as of the end of the second quarter of 1999. This increase
is primarily from the net proceeds of $50.2 million from the issuance of
3,450,000 share of common stock in Viant's initial public offering on June 18,
1999. These proceeds were offset primarily by cash used for operating activities
of $7.1 million of which $3.9 million is the net loss for the period and $6.2
million is the increase in accounts receivable due primarily to increased
revenue. Additionally, Viant purchased $1.1 million in property and equipment
and paid off $3.5 million on the credit facility with their bank which expired
on July 3, 1999.
Viant believes that its current cash, cash equivalents and short-term
investments and available borrowings under its capital lease facility will be
sufficient to meet Viant's working capital and capital expenditure
requirements for at least the next 12 to 18 months. However, there can be no
assurance that Viant will not require additional financings within this time
frame or that such additional financing, if needed, will be available on
terms acceptable to Viant, if at all.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products worldwide
are coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish between the year 1900
and the year 2000. Accordingly, many companies, including Viant and Viant's
clients, potential clients, vendors and strategic partners, may need to upgrade
their systems to comply with applicable Year 2000 requirements.
Because Viant and its clients are dependent, to a very substantial degree,
upon the proper functioning of computer systems, a failure of these systems to
correctly recognize dates beyond January 1, 2000 would disrupt operations. We
may experience operational difficulties caused by undetected errors or defects
in our internal systems. Purchasing patterns of our clients and potential
clients may be affected by Year 2000 issues as companies expend significant
resources to correct their current systems for Year 2000 compliance and may
therefore defer new initiatives until they do so. We may become involved in
disputes regarding Year 2000 problems occurring in solutions we have developed
or implemented or arising from the interactions of our Internet solutions with
other software applications. Year 2000 problems could require us to incur delays
in providing our services to clients and unanticipated expenses.
To address these issues, Viant formed a Year 2000 assessment and contingency
planning committee, called the Y2K Committee, to review both its information
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technology systems and its non-information technology systems, and where
necessary, to plan for and supervise the remediation of those systems. The Y2K
Committee is headed by Viant's Chief Technology Officer. Viant has performed a
preliminary assessment of the Year 2000 readiness of its critical hardware and
software systems. The providers of these systems have either confirmed to Viant
that these systems are Year 2000 compliant or provided the information necessary
for Viant to plan and implement upgrades to make them Year 2000 compliant. Viant
has begun to implement upgrades and test these systems as part of its Year 2000
efforts. Based on the information received to date from these vendors, Viant
believes this process should be completed by September 1999.
Viant has initiated communication with other significant vendors to
determine the extent to which they are vulnerable to Year 2000 issues. Viant
has completed its discussions with these vendors regarding their Year 2000
remediation plans. Viant has held and continues to hold discussions with its
clients regarding their Year 2000 remediation plans. Based on discussions to
date, Viant believes that the Year 2000 problem will not materially impact
the operations of our significant clients or their plans to purchase our
services.
Based on work done to date, Viant believes that the cost of work and
materials to complete its Year 2000 program will be approximately $120,000,
of which approximately $15,000 has been spent as of July 2, 1999. This
includes the cost of material upgrades, software modifications and related
consulting fees.
Viant's standard master services agreement does not warrant Year 2000
compliance other than the warranties provided by vendors of the software used
in its solutions. Viant has reviewed significant non-standard client
contracts to determine its exposure for failure to provide Year 2000
compliant solutions. Viant believes these contracts do not provide express or
implied warranties for Year 2000 compliance for its solutions. Nevertheless
under either contractual arrangement, Viant may become involved in disputes
regarding Year 2000 problems occurring in solutions it has developed or
implemented or arising from the interactions of its Internet solutions with
other software applications. Viant has tested for or received assurances of
Year 2000 compliance for the major software components used in its client
applications. Viant believes that its exposure for failure to provide Year
2000 compliant products would not have a material impact on its business or
operations.
Viant is developing contingency plans for critical individual information
technology systems and non-information technology systems to address Year
2000 risks not fully resolved by Viant's Year 2000 program. These contingency
plans should be completed by the fourth quarter of 1999. To the extent that
our assessment is finalized without identifying any material noncompliant
information technology systems operated by us or by our vendors, Viant feels
the most reasonably likely worst case Year 2000 scenario is a temporary
telecommunications failure which would impair communications among our
offices. Viant currently has contingency plans in place to address such a
disruption in its telecommunications systems and believes that such a
disruption would not have a material effect on our operations. However, a
prolonged telecommunications failure beyond our control could have a material
adverse effect on our business, results of operations and financial condition.
Viant believes that the Year 2000 risk will not present significant
operational problems for Viant. However, there can be no assurance that our Year
2000 program will prevent any material adverse effect on our operations,
financial condition or customer relations.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 17, 1999, the Securities and Exchange Commission declared
Viant's Registration Statement on Form S-1 (File No. 333-71043) effective. On
June 23, 1999, Viant closed its offering for an aggregate of 3,450,000 shares
of the Viant's Common Stock at an offering price of $16.00 per share. The
managing underwriters for the offering were Goldman, Sachs & Co. and Credit
Suisse First Boston. Net proceeds to Viant was $50,168,000, after deducting
underwriting discounts and commissions of $3,864,000 and offering expenses of
$1,168,000. None of the expenses incurred in the offering were direct or
indirect payments to directors or officers of Viant or their associates, or
to persons owning 10% or more of Viant's Common Stock or other affiliates of
Viant.
The primary purposes of the initial public offering were to increase its
equity capital, create a public market for its common stock and to facilitate
future access by Viant to public equity markets. Viant is using the majority
of the offering's proceeds for general corporate purposes including capital
expenditures and working capital. Viant used $3,453,000 to pay off the credit
facility with their bank which expired on July 3, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company solicited the consent of its stockholders through two
actions by written consent, one effective in April 1999 and the other
effective in June 1999. At the time of each of the solicitations, the Company
was not subject to Regulation 14A under the Securities Exchange Act of 1934,
as amended.
The first consent requested stockholder approval for a number of actions
taken by the board of directors from July 1997 to November 1998. There were
15,060,517 votes in favor and 2,480,512 votes not returned.
The Company's annual meeting of stockholders was held on April 30, 1999.
At the annual meeting, stockholders voted on four matters: (i) the election
of four directors by the holders of common and preferred stock for an
indefinite term; (ii) the approval to change the Company's state of
incorporation from California to Delaware by a merger with a wholly-owned
subsidiary; (iii) the adoption of the 1999 Stock Option Plan, under which
4,868,929 shares of common stock were reserved for issuance; and (iv) the
ratification of the appointment of PricewaterhouseCoopers, LLP as the
Company's independent auditors. The stockholders elected management's
nominees as directors in an uncontested election and approved all other
matters by the following votes, respectively:
(i) Election of directors:
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Votes Broker
Votes For Against Abstentions Non-Votes
- -------------------------------------------------------------------------------
William Davidow 3,679,688 0 0 0
Venetia Kontogouris 1,499,925 0 0 0
Kevin English 12,001,577 6,250 0 0
Robert Gett 3,655,478 6,250 0 0
- -------------------------------------------------------------------------------
Only holders of series of preferred stock were eligible to elect William
Davidow and Venetia Kontogouris to the board of directors. Only holders of
common stock were eligible to elect Robert Gett to the board of directors.
(ii) Approval of reincorporation:
Votes Broker
Votes For Against Abstentions Non-Votes
--------- ------- ----------- ---------
12,007,827 0 0 0
(iii) Adoption of the 1999 Stock Option Plan:
Votes Broker
Votes For Against Abstentions Non-Votes
--------- ------- ----------- ---------
11,120,944 886,883 0 0
(iv) Ratification of PricewaterhouseCoopers, LLP as independent
auditors:
Votes Broker
Votes For Against Abstentions Non-Votes
--------- ------- ----------- ---------
12,007,827 0 0 0
The second consent requested stockholder approval for (i) the adoption
of the Amended and Restated Certificate of Incorporation, including, among
other provisions, the authorization of 50,000,000 shares of common stock and
5,000,000 shares of preferred stock, and the increase in the number of shares
required to amend provisions of the Certificate of Incorporation and Bylaws;
(ii) the adoption of the Amended and Restated Bylaws, eliminating the power
of the stockholders to act by written consent; (iii) the amendment of the
1999 Stock Option Plan to add provisions for automatic annual increases in
the number of shares reserved and make certain other changes; and (iv) the
adoption of the 1999 Employee Stock Purchase Plan, under which 200,000
shares of common stock were reserved for issuance. There were 15,698,853
votes in favor and 2,176,692 votes not returned.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
11.1 Computation of shares used in computing Basic and Diluted Net
Income (Loss) per Share.
27.1 Financial data schedule.
- ----------------------------------------------------------------------
Page 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIANT CORPORATION
By /s/ Robert L. Gett
------------------------------------
Robert L. Gett
President and Chief Executive Officer
Director
Date: August 12, 1999
By /s/ M. Dwayne Nesmith
------------------------------------
M. Dwayne Nesmith
Vice President and
Chief Financial Officer
- ----------------------------------------------------------------------
Page 10
<PAGE>
Date: August 11, 1999
EX-11.1
COMPUTATION OF EARNINGS PER SHARE
EXHIBIT 11.1
VIANT CORPORATION
ARTICLE 6.01 OF REGULATION S-K
VIANT CORPORATION
COMPUTATION OF SHARES USED IN COMPUTING BASIC AND DILUTED
NET INCOME (LOSS) PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JUNE 30, JULY 2, JUNE 30, JULY 2,
1998 1999 1998 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net loss ................................................... $ (904) $ (1,839) $ (1,584) $ (3,880)
Basic net (loss) per share:
Weighted average common shares outstanding ............... 13,685 18,276 13,660 17,651
Shares used in computing per share amount ................ 13,685 18,276 13,660 17,651
---------------------------------------------------------------
Basic net (loss) per share ............................... $ (0.07) $ (0.10) $ (0.12) $ (0.22)
---------------------------------------------------------------
---------------------------------------------------------------
</TABLE>
Page 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-02-1999
<PERIOD-END> JUL-02-1999
<CASH> 57,055
<SECURITIES> 464
<RECEIVABLES> 12,684
<ALLOWANCES> (1,019)
<INVENTORY> 0
<CURRENT-ASSETS> 71,178
<PP&E> 6,816
<DEPRECIATION> (2,144)
<TOTAL-ASSETS> 76,077
<CURRENT-LIABILITIES> 7,677
<BONDS> 0
0
0
<COMMON> 21
<OTHER-SE> 83,373
<TOTAL-LIABILITY-AND-EQUITY> 76,077
<SALES> 0
<TOTAL-REVENUES> 18,874
<CGS> 0
<TOTAL-COSTS> 10,102
<OTHER-EXPENSES> 12,714
<LOSS-PROVISION> 110
<INTEREST-EXPENSE> 281
<INCOME-PRETAX> (3,880)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,880)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,880)
<EPS-BASIC> (0.22)
<EPS-DILUTED> (0.22)
</TABLE>
