<PAGE>
Exhibit 99.4
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of Powerize.com, Inc.
In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in stockholders' deficit and of cash flows present
fairly, in all material respects, the financial position of Powerize.com, Inc.
(the Company) at December 31, 1998 and 1999, and the results of its operations
and its cash flows for the period from March 17, 1997 (date of inception) to
December 31, 1997 and for the years ended December 31, 1998 and 1999, in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
On July 12, 2000, all of the Company's common stock was acquired by Hoover's,
Inc. and the Company was merged into Hoover's, Inc.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
May 31, 2000, except as to Note 14
which is as of July 13, 2000
<PAGE>
POWERIZE.COM, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 (Unaudited)
---------------------------- June 30,
1998 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 57,609 $ 155,011 $ 280,812
Accounts receivable, net of allowances of $0, and
$24,116, respectively 417,094 755,126 1,315,824
Prepaid expenses and other current assets 20,039 110,492 73,796
------------ ------------ ------------
Total current assets 494,742 1,020,629 1,670,432
Property and equipment, net 232,608 642,145 765,582
Prepaid license fees, net 757,224 435,742 325,782
Other assets 54,953 375,346 275,356
------------ ------------ ------------
Total assets $ 1,539,527 $ 2,473,862 $ 3,037,152
============ ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Line of credit $ 24,560 $ - $ -
Note payable--related party 185,252 - -
Accounts payable 493,400 1,724,094 4,544,490
Accrued expenses 272,289 769,994 1,913,387
Current portion of other liabilities - - -
Deferred revenue 696,363 637,987 934,110
Notes payable - - 3,638,679
------------ ------------ ------------
Total current liabilities 1,671,864 3,132,075 11,030,666
Note payable 50,000 - -
Convertible promissory note--related party 750,000 - -
------------ ------------ ------------
Total liabilities 2,471,864 3,132,075 11,030,666
------------ ------------ ------------
Commitments and contingencies
Stockholders' equity (deficit):
Preferred stock; $0.0001 par value; 15,000,000 shares
authorized; no shares issued and outstanding - - -
Common stock; $0.0001 par value; 50,000,000 shares
authorized; 3,254,833 and 6,235,346 shares issued and
outstanding, respectively 326 624 654
Additional paid-in capital 3,133,522 15,421,387 15,421,357
Deferred compensation (273,261) (830,505) (573,889)
Accumulated deficit (3,792,924) (15,249,719) (22,841,636)
------------ ------------ ------------
Total stockholders' deficit (932,337) (658,213) (7,993,514)
------------ ------------ ------------
Total liabilities and stockholders' deficit $ 1,539,527 $ 2,473,862 $ 3,037,152
============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-2
<PAGE>
POWERIZE.COM, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
March 17, 1997
(date of (Unaudited) (Unaudited)
inception) Three months Three Months
to Year ended ended ended
December 31 December 31 March 31 June 30,
-------------- --------------------------- -------------------------- -------------------------
1997 1998 1999 1999 2000 1999 2000
-------------- ----------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Subscription royalties $ -- $ 308,340 $ 1,137,543 $ 263,278 $ 328,421 $ 273,616 $ 357,178
Consulting and other 24,458 22,320 508,803 32,416 369,549 89,484 518,965
----------- ----------- ------------ ----------- ----------- ----------- -----------
Total Revenues
24,458 330,660 1,646,346 295,694 697,970 363,100 876,143
----------- ----------- ------------ ----------- ----------- ----------- -----------
Cost of Revenue
Subscription royalties
-- 515,913 121,870 215,276 126,633 27,378 170,326
Consulting and other
2,868 4,306 1,254,637 -- 1,052,712 256,895 1,298,496
----------- ----------- ------------ ----------- ----------- ----------- -----------
Total Cost of
Revenues 2,868 520,219 1,376,507 215,276 1,179,345 284,273 1,468,822
----------- ----------- ------------ ----------- ----------- ----------- -----------
Gross profit (loss)
21,590 (189,559) 269,839 80,418 (481,375) 78,827 (592,679)
----------- ----------- ------------ ----------- ----------- ----------- -----------
Operating Expenses:
Sales and marketing 132,953 919,094 6,291,506 362,686 1,073,293 561,649 2,529,399
Product development 352,621 1,654,859 3,232,950 605,149 609,994 762,838 602,977
General and
administrative 88,580 439,703 2,277,790 252,900 774,217 682,928 841,633
----------- ----------- ------------ ----------- ----------- ----------- -----------
Total operating
expenses 574,154 3,013,656 11,802,246 1,220,735 2,457,504 2,007,415 3,974,009
----------- ----------- ------------ ----------- ----------- ----------- -----------
Operating loss (552,564) (3,203,215) (11,532,407) (1,140,317) (2,938,879) (1,928,588) (4,566,688)
Interest (expense)
income, net (5,867) (31,278) 75,612 (15,573) (17,907) 24,220 (68,443)
----------- ----------- ------------ ----------- ----------- ----------- -----------
Net loss
$ (558,431) $(3,234,493) $(11,456,795) $(1,155,890) $(2,956,786) $(1,904,368) $(4,635,131)
=========== =========== ============ =========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-3
<PAGE>
POWERIZE.COM, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock Additional Deferred Accumu-
------------------------------ Paid-in Compen- lated
Shares Amount Capital sation Deficit
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at March 17, 1997
(date of inception) -- $ -- $ -- $ -- $ --
Issuance of common stock to
founders 2,437,500 244 545,506 -- --
Net loss -- -- -- -- (558,431)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1997 2,437,500 244 545,506 -- (558,431)
Issuance of common stock at
$2.50 779,000 78 1,947,422 -- --
Issuance of common stock at
$3.00 85,833 9 257,490 -- --
Purchase of common stock -- -- -- -- --
Retirement of treasury stock (47,500) (5) (945) -- --
Deferred compensation on
employee stock options -- -- 384,049 (384,049) --
Amortization of deferred
compensation on employee
stock options -- -- -- 110,788 --
Net loss -- -- -- -- (3,234,493)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1998 3,254,833 326 3,133,522 (273,261) (3,792,924)
Issuance of common stock at
$3.00, net of issuance costs 358,773 36 1,056,960 -- --
Issuance of common stock at
$3.50, net of issuance costs 1,552,838 154 5,158,735 -- --
Issuance of common stock at
$5.00, net of issuance costs 728,000 73 3,359,020 -- --
Exercise of stock options 25,694 3 2,089 -- --
Issuance of common stock in
exchange for services 48,542 5 210,195 -- --
Conversion of note payable to
common stock 16,666 2 49,998 -- --
Conversion of note
payable--related party to
common stock 250,000 25 787,490 -- --
Deferred compensation on
employee stock options -- -- 1,062,390 (1,062,390) --
Amortization of deferred
compensation on employee
stock options -- -- -- 505,146 --
Fair value of warrants issued
to non-employees -- -- 600,988 -- --
Net loss -- -- -- -- (11,456,795)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1999 6,235,346 $ 624 $ 15,421,387 $ (830,505) $(15,249,719)
<CAPTION>
Treasury Stock
------------------------------
Shares Amount Total
------------ ------------ -----------
<S> <C> <C> <C>
Balance at March 17, 1997
(date of inception) -- $ -- $ --
Issuance of common stock to
founders -- -- 545,750
Net loss -- -- (558,431)
------------ ------------ ------------
Balance at December 31, 1997 -- -- (12,681)
Issuance of common stock at
$2.50 -- -- 1,947,500
Issuance of common stock at
$3.00 -- -- 257,499
Purchase of common stock 47,500 (950) (950)
Retirement of treasury stock (47,500) 950 --
Deferred compensation on
employee stock options -- -- --
Amortization of deferred
compensation on employee
stock options -- -- 110,788
Net loss -- -- (3,234,493)
------------ ------------ ------------
Balance at December 31, 1998 -- -- (932,337)
Issuance of common stock at
$3.00, net of issuance costs -- -- 1,056,996
Issuance of common stock at
$3.50, net of issuance costs -- -- 5,158,889
Issuance of common stock at
$5.00, net of issuance costs -- -- 3,359,093
Exercise of stock options -- -- 2,092
Issuance of common stock in
exchange for services -- -- 210,200
Conversion of note payable to
common stock -- -- 50,000
Conversion of note
payable--related party to
common stock -- -- 787,515
Deferred compensation on
employee stock options -- -- --
Amortization of deferred
compensation on employee
stock options -- -- 505,146
Fair value of warrants issued
to non-employees -- -- 600,988
Net loss -- -- (11,456,795)
------------ ------------ ------------
Balance at December 31, 1999 -- $ -- $ (658,213)
F-4
<PAGE>
Issuance of common stock at
$3.00, net of issuance costs -- -- -- -- --
Issuance of common stock at
$3.50, net of issuance costs -- -- -- -- --
Issuance of common stock at
$5.00, net of issuance costs -- -- -- -- --
Issuance of common stock 300,000 30 (30) -- --
Exercise of stock options -- -- -- -- --
Issuance of common stock in
exchange for services -- -- -- -- --
Conversion of note payable to
common stock -- -- -- -- --
Conversion of note
payable--related party to
common stock -- -- -- -- --
Deferred compensation on
employee stock options -- -- -- 132,977 --
Amortization of deferred
compensation on employee
stock options -- -- -- -- --
Fair value of warrants issued
to non-employees -- -- -- -- --
Net loss -- -- -- -- (2,956,786)
------------ ------------ ------------ ------------ ------------
Balance at March 31, 2000 (Unaudited) 6,535,346 $ 654 $ 15,421,357 $ (697,528) $(18,206,505)
Issuance of common stock at
$3.00, net of issuance costs -- -- -- -- --
Issuance of common stock at
$3.50, net of issuance costs -- -- -- -- --
Issuance of common stock at
$5.00, net of issuance costs -- -- -- -- --
Exercise of stock options -- -- -- -- --
Issuance of common stock in
exchange for services -- -- -- -- --
Conversion of note payable to
common stock -- -- -- -- --
Conversion of note
payable--related party to
common stock -- -- -- -- --
Deferred compensation on
employee stock options -- -- -- 123,639 --
Amortization of deferred
compensation on employee
stock options -- -- -- -- --
Fair value of warrants issued
to non-employees -- -- -- -- --
Net loss -- -- -- -- (4,635,131)
------------ ------------ ------------ ------------ ------------
Balance at June 30, 2000 (Unaudited) 6,535,346 $ 654 $ 15,421,357 $ (573,889) $(22,841,636)
<CAPTION>
Issuance of common stock at
$3.00, net of issuance costs -- -- --
Issuance of common stock at
$3.50, net of issuance costs -- -- --
Issuance of common stock at
$5.00, net of issuance costs -- -- --
Issuance of common stock -- -- --
Exercise of stock options -- -- --
Issuance of common stock in
exchange for services -- -- --
Conversion of note payable to
common stock -- -- --
Conversion of note
payable--related party to
common stock -- -- --
Deferred compensation on
employee stock options -- -- 132,977
Amortization of deferred
compensation on employee
stock options -- -- --
Fair value of warrants issued
to non-employees -- -- --
Net loss -- -- (2,956,786)
------------ ------------ ------------
Balance at March 31, 2000 (Unaudited) -- $ -- $ (3,482,022)
Issuance of common stock at
$3.00, net of issuance costs -- -- --
Issuance of common stock at
$3.50, net of issuance costs -- -- --
Issuance of common stock at
$5.00, net of issuance costs -- -- --
Exercise of stock options -- -- --
Issuance of common stock in
exchange for services -- -- --
Conversion of note payable to
common stock -- -- --
Conversion of note
payable--related party to
common stock -- -- --
Deferred compensation on
employee stock options -- -- 123,639
Amortization of deferred
compensation on employee
stock options -- -- --
Fair value of warrants issued
to non-employees -- -- --
Net loss -- -- (4,635,131)
------------ ------------ ------------
Balance at June 30, 2000 (Unaudited) -- $ -- $ (7,993,514)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-5
<PAGE>
POWERIZE.COM, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
March 17,
1997 (date of (Unaudited)
inception) to Year ended Three months ended
December 31, December 31, March 31,
------------ ------------------------------ -------------------------------
1997 1998 1999 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss $ (558,431) $ (3,234,493) $(11,456,795) $ (1,155,890) $ (2,956,786)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization 16,109 273,098 555,697 114,955 176,999
Interest expense forgiven -- -- 12,265 -- --
Amortization of deferred
compensation on employee
stock options -- 110,789 505,146 32,004 114,302
Warrants issued to
non-employees in exchange
for services -- -- 246,768 104,000 58,107
Issuance of common stock in
exchange for services -- -- 210,200 -- --
Changes in assets and
liabilities:
Accounts receivable -- (417,094) (338,032) 73,756 (140,648)
Prepaid expenses and other
assets (21,778) (53,214) (90,453) (26,347) (87,759)
Prepaid license fees (41,968) (926,139) 321,482 -- (57,946)
Other assets -- -- (320,393) -- --
Accounts payable 89,369 404,031 1,230,694 82,205 1,013,543
Accrued expenses 72,120 92,982 474,146 (75,722) (184,573)
Other -- 828,802 (18,742) (27,018) 148,881
------------ ------------ ------------ ------------ ------------
Net cash used in
operating activities (444,579) (2,921,238) (8,668,017) (878,057) (1,915,880)
------------ ------------ ------------ ------------ ------------
Cash flows from investing
activities:
Purchase of property and
equipment (72,637) (238,295) (627,089) (96,541) (284,296)
------------ ------------ ------------ ------------ ------------
Net cash used in
investing activities (72,637) (238,295) (627,089) (96,541) (284,296)
------------ ------------ ------------ ------------ ------------
Cash flows from financing
activities:
Proceeds from the issuance of
common stock 545,750 2,204,998 9,932,016 1,894,499 --
Costs incurred in connection
with the issuance of common
stock -- -- (357,040) -- --
Proceeds from the exercise of
stock options -- -- 2,092 -- --
Proceeds from note payable 50,000 -- -- -- 2,550,000
Proceeds from note
payable--related party -- 910,000 -- -- 100,000
Repayment of note
payable--related party -- -- (160,000) (800,000) --
Repurchase of common shares -- (950) -- -- --
Net borrowings under line of
credit agreement -- 24,560 (24,560) (19,992) --
------------ ------------ ------------ ------------ ------------
Net cash provided by
financing activities 595,750 3,138,608 9,392,508 1,074,507 2,650,000
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in cash 78,534 (20,925) 97,402 99,909 449,824
Cash at beginning of period -- 78,534 57,609 57,609 155,010
------------ ------------ ------------ ------------ ------------
Cash at end of period $ 78,534 $ 57,609 $ 155,011 157,518 604,834
============ ============ ============ ============ ============
(Unaudited)
Three months ended
June 30,
---------------------------
1999 2000
------------ ------------
<S> <C> <C>
Cash flows from operating
activities:
Net loss $ (1,904,368) $ (4,635,131)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization 120,255 196,902
Interest expense forgiven -- --
Amortization of deferred
compensation on employee
stock options 231,810 114,302
Warrants issued to
non-employees in exchange
for services (16,158) 48,769
Issuance of common stock in
exchange for services 210,200 --
Changes in assets and
liabilities:
Accounts receivable (21,210) (420,049)
Prepaid expenses and other
assets (1,306,062) 145,583
Prepaid license fees (1,995) (9,975)
Other assets
Accounts payable 913,482 1,895,532
Accrued expenses 64,137 1,276,999
Other (8,508) 198,208
------------ ------------
Net cash used in
operating activities (1,718,417) (1,118,860)
------------ ------------
Cash flows from investing
activities:
Purchase of property and
equipment (46,738) (35,162)
------------ ------------
Net cash used in
investing activities (46,738) (35,162)
------------ ------------
Cash flows from financing
activities:
Proceeds from the issuance of
common stock 8,875,042 --
Costs incurred in connection
with the issuance of common
stock (352,232) --
Proceeds from the exercise of
stock options 2,082 --
Proceeds from note payable -- 500,000
Proceeds from note
payable--related party (160,000) 400,000
Repayment of note
payable--related party -- --
Repurchase of common shares -- --
Net borrowings under line of
credit agreement 16,745 --
------------ ------------
Net cash provided by
financing activities 8,381,637 900,000
------------ ------------
Net increase (decrease) in cash 6,616,482 (324,022)
Cash at beginning of period 157,518 604,834
------------ ------------
Cash at end of period 6,774,000 280,812
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-6
<PAGE>
POWERIZE.COM, INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS
THE COMPANY
Powerize.com, Inc. (the "Company"), formerly KnowledgeLink L.L.C., was founded
in Delaware as a limited liability corporation (L.L.C.) on January 3, 1997,
commenced operations on March 17, 1997 and was converted to a C-corporation in
Delaware on January 1, 1998. Each existing L.L.C. member unit held at the time
of the reorganization was converted to one share of the Company's common stock.
For presentation purposes, all L.L.C. member units are presented as common stock
for the period from March 17, 1997 (date of inception) to December 31, 1997.
The Company is an Internet aggregator and distributor of business and financial
information. It offers "one-stop shopping" using directed-search and
advanced-filtering technology to provide users concise, relevant and organized
search results according to user-selected criteria. The Company offers free
access to a large portion of its content collection, most of which has
traditionally only been available for a fee.
The Company's operations are subject to certain risks and uncertainties
including, among others, actual and potential competition by entities with
greater financial resources; rapid technological changes; the success of the
Company's product-marketing and product-distribution strategies; the need to
manage growth; the need to retain key personnel and protect intellectual
property; and the availability of additional capital financing on terms
acceptable to the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
REVENUE RECOGNITION
The Company has royalty-based relationships with a number of content providers
to sell subscriptions to electronic publications to third parties. Royalties are
generally billed on an annual basis and royalty revenue from subscription sales
is recognized ratably over the subscription period which is generally 12 months.
Customers are frequently given a 30-60 day trial period where there is no charge
for the use of the subscription. The trial period is individually determined
based on the content provider. Subsequent to the expiration of the trial period
and once the customer has accepted the subscription, revenue is recognized based
on the number of days the subscription is outstanding for the month with the
remaining amount being deferred and recognized ratably over the remaining period
of the subscription.
The Company provides software consulting related to the Powerize.com intranet
services. Services are billed based on agreed upon rates and actual hours
incurred. Revenue is recognized as services are performed.
F-7
<PAGE>
PRODUCT DEVELOPMENT COSTS
Product development costs are included in research and development and are
expensed as incurred. Statement of Financial Accounting Standards (SFAS) No. 86,
"ACCOUNTING FOR THE COST OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE
MARKETED", requires the capitalization of certain software development costs
once technological feasibility is established, which the Company generally
defines as completion of a working model. Capitalization ceases when the
products are available for general release to customers, at which time
amortization of the capitalized costs begins on a straight-line basis over the
estimated product life, or on the ratio of current revenue to total projected
product revenue, whichever is greater. To date, the period between achieving
technological feasibility and the general availability of such software has been
short, and software development costs qualifying for capitalization have been
insignificant. Accordingly, the Company has not capitalized any software
development costs.
CASH AND CASH EQUIVALENTS
The Company considers all investments purchased with a maturity at date of
purchase of three months or less to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the respective assets,
generally 3-5 years. Upon retirement or disposition of property and equipment,
the cost and accumulated depreciation are removed from the accounts and any
resulting gain or loss is reflected in operations. Expenditures for normal
repairs and maintenance are charged to operations as incurred.
OTHER NON-CURRENT ASSETS
Other non-current assets consist primarily of the unamortized value ascribed to
certain warrants to purchase shares of the Company's common stock issued to
non-employee Company advisors and to a strategic partner in 1999. The value of
such warrants is being amortized over the three-year performance period of the
related agreements (see Note 9).
INCOME TAXES
Income taxes are accounted for utilizing the liability method. Deferred tax
assets are recognized for deductible temporary differences and operating loss
and tax credit carryforwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax basis. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and
rates on the date of enactment. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. The Company
has provided a full valuation allowance against its net deferred tax assets as
of December 31, 1998 and 1999.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration of
credit risk consist primarily of cash and accounts receivable. Management
believes that the Company's current practice limits the Company's exposure to
concentration of credit risk. The Company generates revenue primarily from large
multinational companies. In 1998, two customers individually comprised
approximately 53% and 25%, respectively, of total revenue. As of December 31,
1998 these customers accounted for 30% and 35%, respectively, of total accounts
receivable. In 1999 three customers individually comprised approximately 46%,
15% and 10%, respectively, of total revenue. As of December 31, 1999, four
customers accounted for 44%, 14%, 13% and 10%, respectively, of total accounts
receivable. The Company has not historically experienced any significant
difficulties with the collection of accounts receivable from these customers.
F-8
<PAGE>
FAIR-VALUE INFORMATION
The carrying amount of current assets and current liabilities approximates fair
value because of the short maturity of these instruments.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company periodically evaluates the recoverability of its long-lived assets.
This evaluation consists of a comparison of the carrying value of the assets
with the assets' expected future cash flows, undiscounted and without interest
costs. Estimates of expected future cash flows represent management's best
estimate based on reasonable and supportable assumptions and projections. If the
expected future cash flow, undiscounted and without interest charges, exceeds
the carrying value of the asset, no impairment is recognized. Impairment losses
are measured as the difference between the carrying value of long-lived assets
and their fair value, based on discounted future cash flows of the related
assets. The Company has not experienced any impairment losses to date.
STOCK-BASED COMPENSATION
The Company measures compensation expense for its employee stock-based
compensation using the intrinsic-value method and provides pro forma disclosures
of net loss as if the fair-value method had been applied in measuring
compensation expense. Under the intrinsic-value method of accounting for
stock-based compensation, when the exercise price of options granted to
employees is less than the fair value of the underlying stock on the date of
grant, deferred compensation is recognized for the difference and amortized to
compensation expense over the vesting period of the related stock options.
3. PREPAID LICENSE FEES
In April 1998, the Company entered into a license agreement with IBM Corporation
for a worldwide, perpetual, nonexclusive license to use and/or modify the source
code relating to an online publication delivery service and a premium content
search service. In addition, certain agreements between IBM and third-party
content providers were assigned to the Company. The total purchase price paid by
the Company for the license and certain related assets was $1,100,000. The
assets, consisting of accounts receivable and certain fixed assets, were
reflected at cost, which approximated fair value. The value assigned to the
license agreement of $816,000 has been recorded as a prepaid license fee and is
being amortized on a straight-line basis over the expected useful life of 36
months. The Company and a third party also entered into a hosting agreement
whereby the Company's customers will have access to the Web servers and other
equipment and service to provide connectivity and access to the Internet (see
Note 12).
Amortization of prepaid license fees was approximately $5,000, $206,000 and
$338,000 for the period from March 17, 1997 (date of inception) to December 31,
1997 and for the years ended December 31, 1998 and 1999, respectively.
F-9
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
1998 1999
------------ -------------
<S> <C> <C>
Computer equipment and software $ 237,856 $ 810,725
Office furniture and equipment 69,076 106,558
Leasehold improvements 4,000 20,739
------------ -------------
310,932 938,022
Less accumulated depreciation (78,324) (295,877)
------------ -------------
$ 232,608 $ 642,145
============ =============
</TABLE>
Depreciation expense was approximately $11,000, $67,000 and $218,000 for the
period from March 17, 1997 (date of inception) to December 31, 1997 and for the
years ended December 31, 1998 and 1999, respectively.
5. LINE OF CREDIT AND NOTE PAYABLE
During 1998, the Company entered into a line of credit with a financial
institution which enables the Company to finance unpaid credit card balances
over six equal monthly installments. The line of credit provides for borrowings
of up to $60,000 at an interest rate of 15.9% per annum. As of December 31, 1998
and 1999, the outstanding balance on the line of credit was $24,560 and $0,
respectively.
In June 1997, the Company and the Maryland Department of Business and Economic
Development ("DBED") entered into an agreement in which DBED advanced the
Company $50,000. This amount was to be repaid based on royalties at percentages
of the Company's revenue as defined in the agreement. The maximum amount of
royalties due by the Company pursuant to this agreement was to be $150,000.
During 1999, the advance was converted into 16,666 shares of common stock at a
conversion price of $3.00 per share and the existing agreement was cancelled. No
royalties were paid under this agreement prior to the conversion.
6. RELATED-PARTY TRANSACTIONS
During 1998, the Company received net advances totaling $910,000 from an officer
who is also a director and major stockholder of the Company. In December 1998,
the Company converted $750,000 of the advances into a Subordinated Convertible
Promissory Note (the "Promissory Note"). The Promissory Note bears interest at a
rate of 8.5% per annum and is due in eight quarterly installments of principal
plus interest commencing on April 1, 1999. After January 1999, the Promissory
Note has an optional conversion which gives the related party the right at his
sole option, prior to the repayment of principal owed, to convert the
outstanding amount into common stock at a conversion price per share of $3.00.
If any amount of the principal balance of the Promissory Note is converted into
shares of common stock then no interest shall have deemed to have been accrued
or payable on such amount. In March 1999, the related party converted the
Promissory Note into 250,000 shares of the Company's common stock at a
conversion price of $3.00 per share. The accrued interest related to this
Promissory Note was recorded as additional paid-in capital. The current portion
of the advances of $160,000, plus accrued interest, was repaid in May 1999.
7. CAPITALIZATION
The original L.L.C. members and the Company entered into a Restricted Equity
Agreement (the "Equity Agreement") which shall remain in effect until the
earlier of ten years after the effective date or an initial public
F-10
<PAGE>
offering of the Company with proceeds of at least $5 million to the Company.
The certificates for the restricted shares issued to each individual under
the Equity Agreement are held in escrow by the Company until all shares vest
or the individual terminates his employment. Restricted shares vest monthly
on a pro rata basis over a three-year service period. At December 31, 1997,
1998 and 1999, 801,385, 472,213 and 103,475 restricted shares of common
stock, respectively, were outstanding. If a member involuntarily or
voluntarily terminates his employment, the Company has the option to
repurchase the unvested shares at the original issuance price. In addition,
the Company has the first right of refusal to purchase the vested restricted
stock at fair value.
In April 1998, the Company issued through a private placement 659,000 shares of
common stock at a purchase price of $2.50 per share for aggregate proceeds of
$1,647,500.
In June 1998, the Company and DBED entered into an agreement for the sale of
120,000 shares of common stock at $2.50 per share for aggregate proceeds of
$300,000. Under this agreement, DBED has the right to require the Company to
repurchase the shares at a price per share equal to the greater of (i) the fair
market value per share or (ii) the original purchase price appropriately
adjusted for any stock splits, stock dividends, recapitalization and
reclassifications, if the Company relocates its principal place of business
outside the State of Maryland prior to June 30, 2002. The Company has no
intention of relocating outside the State of Maryland prior to June 30, 2002
and, therefore, this amount has been classified within the stockholders' deficit
caption in the accompanying Balance Sheet.
In November 1998, the Company issued through a second private placement 65,833
shares of common stock at a purchase price of $3.00 per share for aggregate
proceeds of $197,499. In addition, the Company sold 20,000 shares of common
stock in November 1998 at $3.00 per share to third parties for aggregate
proceeds of $60,000.
In February 1999, DBED purchased an additional 66,667 shares of the Company's
common stock at $3.00 per share. The Company received cash proceeds of $200,000
in connection with the issuance of these shares. In addition, the $50,000 note
payable issued by the Company in 1997 (see Note 5) was converted into 16,666
shares of common stock.
In March 1999, the Company completed its second private placement, issuing an
additional 258,198 shares of common stock at a purchase price of $3.00 per share
for aggregate gross proceeds of $774,600 and 30,508 shares of common stock to
certain employees for aggregate gross proceeds of $82,360. In connection with
this issuance, the Company issued 3,400 shares of common stock to an investment
banking firm.
In May 1999, the Company issued, through a third private placement, 1,107,125
shares of common stock at a purchase price of $3.50 per share for aggregate
gross proceeds of $3,875,000. The gross proceeds were offset by commissions of
$341,000 paid to the investment banking firm responsible for placing these
shares and $11,240 in legal and other costs associated with the offering.
Additionally, in connection with this issuance, the Company issued 17,142
shares of common stock to the investment banking firm.
In May 1999, the Company issued 428,571 shares of common stock at a price of
$3.50 per share and 700,000 shares of common stock at a price of $5.00 per share
to a Sevenson Environmental Services ("Sevenson") for aggregate gross proceeds
of $5,000,000. If the Company fails to complete an initial public offering by
March 31, 2000 at a price per share of at least $5.00 and an aggregate offering
amount of not less than $5,000,000 or does not complete an initial public
offering by April 30, 2000 of shares which, in any consecutive 10 day trading
period up to April 30, 2000 reach an average closing price per share of at least
$5.00 per share, then the Company will issue Sevenson an additional 300,000
shares of common stock. Under this agreement, 300,000 shares of common stock
were issued in May 1999 (see Note 13 "Subsequent Events - Financing"). The
issuance of these shares was recorded as an increase to common stock and paid-in
capital.
In connection with the issuances of common stock through the private placements
during 1999, the Company issued an additional 28,000 shares of common stock to
the investment banking firm and 48,542 shares of common stock to a third party,
representing a finders fee related to this investment. The value of the common
stock issued to the investment banking firm was recorded against the related
proceeds. The value of the common stock issued to the
F-11
<PAGE>
third party as a finders fee of $210,200 was recorded as a period cost with a
corresponding increase to common stock and paid-in capital during 1999. The
Company also issued warrants to purchase 193,549 shares of the Company's
common stock to the investment banking firm. The aggregate fair value of
these warrants of $696,800 was determined using the Black-Scholes valuation
model. The value of these warrants was recorded as a reduction of the related
proceeds.
In July 1999, the Board of Directors and the stockholders approved a one-for-two
reverse split of the Company's common stock. All share and per-share amounts in
the financial statements have been adjusted to give retroactive effect to this
reverse stock split.
8. STOCK-BASED COMPENSATION
EMPLOYEE STOCK OPTIONS
On February 9, 1998 the Company formally adopted the Company's 1998 Stock
Incentive Plan (the "Plan"). The Plan is administered by a committee appointed
by the Board of Directors, which has the authority to determine which officers,
directors, employees, and consultants are awarded options pursuant to the Plan
and to determine the terms and exercise prices of the stock options. Under the
Plan, the Company has reserved 500,000 shares of common stock for issuance of
qualified and non-qualified options. During 1999, the number of shares reserved
was increased to 875,000. At December 31, 1998, options to purchase 473,889
shares were outstanding and 53,472 shares were available for future grants. At
December 31, 1999, 814,861 shares were outstanding and 147,584 shares were
available for future grants, respectively.
Each qualified incentive stock option granted pursuant to the Plan has an
exercise price equal to the fair value of the underlying common stock at the
date of grant, a ten-year term and typically a three-year vesting period. The
Board of Directors determined the fair value of the underlying common stock
based on sales of the Company's common stock to third-party investors. A
non-qualified option granted pursuant to the Plan may contain an exercise price
that is below the fair value of the common stock at the date of grant. The term
of non-qualified options is also ten years. The Company records compensation
expense when the estimated fair value of the underlying common stock on the date
of grant is in excess of the exercise price of the options. As a result, for
certain non-qualified stock option grants, the Company recorded deferred
compensation of $384,050 and $1,062,390 during the years ended December 31, 1998
and 1999, respectively. These amounts are being amortized as a charge to
operations over the vesting period of the related options. For the years ended
December 31, 1998 and 1999, the Company recognized $110,789 and $505,146,
respectively, of compensation expense related to these options.
The following table summarizes the Company's activity for all of its stock
option awards:
<TABLE>
<CAPTION>
Range Weighted-
Number of Average
of Exercise Exercise
Options Prices Price
----------- ------------- ------------
<S> <C> <C> <C>
Balance at December 31, 1997 - $ - $ -
Granted 501,250 0.02-3.00 1.82
Exercised - - -
Canceled (27,361) 2.50 2.50
----------- ------------- ------------
Balance at December 31, 1998 473,889 0.02-3.00 1.78
Granted 398,750 0.02-5.00 1.29
Exercised (694) 3.00 3.00
Canceled (57,084) 1.00-3.50 2.56
----------- ------------- ------------
Balance at December 31, 1999 814,861 0.02-5.00 1.41
=========== ============= ============
</TABLE>
F-12
<PAGE>
At December 31, 1998, options to purchase 104,863 shares of the Company's common
stock were vested and exercisable, at a weighted-average exercise price of $1.52
per share. At December 31, 1999, 347,336 were vested and exercisable at a
weighted average exercise price of $1.42.
The following table summarizes additional information about stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------- --------------------------
Weighted-
Range Average Weighted- Weighted-
of Number Remaining Average Average
Exercise of Contractual Exercise Number Exercise
Prices Options Life Price Exercisable Price
------------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
$0.02 331,750 8.7 years $0.02 140,546 $0.02
$1.00 50,000 8.0 years $1.00 33,303 $1.00
$2.00-$5.00 430,111 8.7 years $2.76 173,487 $2.63
----------- ------------- ----------- ------------- -----------
811,861 8.7 years $1.50 347,336 $1.42
=========== =============
</TABLE>
Had compensation expense for the Plan been determined based on the fair value of
the related options at the grant dates, consistent with Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "ACCOUNTING FOR STOCK-BASED
COMPENSATION", the Company's net loss would have been increased to the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1998 1999
----------------- ------------------
<S> <C> <C>
Net loss, as reported $ (3,234,493) $ (11,456,795)
Pro forma net loss $ (3,269,284) $ (11,544,448)
</TABLE>
The fair value of each option was estimated on the date of grant using the
Black-Scholes valuation model. The following table shows the assumptions used
for the grants that occurred during all periods presented:
<TABLE>
<S> <C>
Expected volatility 0%
Risk free interest rates 4.5% to 5.6%
Dividend yield None
Expected lives 5 years
</TABLE>
The weighted average fair value per share for stock option grants that were
awarded in fiscal year 1998 and 1999 was $2.60 and $3.42, respectively. The
weighted-average fair value of non-vested stock that was converted from L.L.C.
member units at December 31, 1997 was $0.02 for fiscal year 1998.
F-13
<PAGE>
OTHER STOCK OPTIONS
In April 1997, the Company entered into an agreement with the University of
Maryland relative to a lease of certain space in connection with a
technology-advancement program established by the University. Pursuant to this
arrangement, the Company granted options to purchase 25,000 shares of the
Company's common stock to the University of Maryland. No expense was recorded
relative to this option grant since the Company was in the earliest phases of
development and the value of these options was determined to be deminimis.
During 1999, these options were exercised by the university.
In March and May 1999, the Company issued warrants to purchase 76,250 shares
of common stock to five advisors for past and future services. The aggregate
fair value of these warrants on the date of grant of $171,900 was determined
using the Black-Scholes valuation model. The Company recorded $156,300 in
expense for the year ended December 31, 1999 and the remaining $15,600 will be
amortized over the related service periods.
On March 30, 1999, the Company granted options to purchase 247,500 shares of
common stock to certain employees with an exercise price of $0.02 per share.
The stock option grants are subject to certain performance objectives which
must be achieved in 1999 or the stock option grants will be terminated. Once
the performance objectives are achieved, the stock options generally vest over
a two- to three-year period. Management determined that the performance
criteria underlying 220,000 of these options was achieved through December 31,
1999. As a result, management recorded deferred compensation of $998,940 based
on the difference between the $0.02 exercise price and the fair market value
of the underlying common stock on the date such performance criteria were met.
The Company amortized $332,941 of the deferral to compensation expense for the
year ended December 31, 1999.
In May 1999, the Company issued to three of its non-employee directors
warrants to purchase 5,000 shares each of the Company's common stock at an
exercise price of $0.02 per share. These warrants vest over a one-year period.
The Company recorded deferred compensation of $74,700 based on the difference
between the exercise price and $5.00 per share which represents the fair value
of the Company's common stock at the date of grant as determined by the Board
of Directors. The Company amortized $46,688 of this amount to compensation
expense for the year ended December 31, 1999.
9. 401(K) PLAN
Effective January 1, 1998, the Company adopted the Powerize.com, Inc. 401(k)
Plan (the "401(k) Plan") that qualifies as a deferred-salary arrangement under
Section 401 of the Internal Revenue Code. Under the 401(k) Plan, participating
employees may defer a portion of their pretax earnings not to exceed 15% of
their total compensation or $10,000. The Company, at its discretion, may make
matching contributions for the benefit of eligible employees and/or make
additional "profit sharing" contributions to the Plan. To date the Company has
not made any contributions to the 401(k) Plan.
10. INCOME TAXES
As the Company incurred pretax losses for the years presented herein, there
are no income taxes provided in the accompanying statements of operations. At
December 31, 1999, the Company had net operating loss carryforwards ("NOLs")
of approximately $12,700,000 that begin to expire in 2018. The realization of
the benefits of the NOLs is dependent on sufficient taxable income in future
years. Lack of future earnings, a change in the ownership of the Company, or
the application of the alternative minimum tax rules could adversely affect
the Company's ability to utilize the NOLs. The Company had no temporary
differences as of December 31, 1997 based on its limited operating activity
during the period from March 17, 1997 (date of inception) to December 31,
1997. The Company's net deferred tax assets at December 31, 1998 and December
31, 1999 were as follows:
F-14
<PAGE>
<TABLE>
<CAPTION>
1998 1999
---------------- ---------------
<S> <C> <C>
Net operating loss carryforwards $ 1,087,354 $ 4,897,790
Accrued expense 32,708 286,485
Deferred compensation-stock 32,708 405,280
Depreciation 46,086 (459)
Tax credits - 184,962
---------------- ---------------
1,198,856 5,774,058
Valuation allowance (1,198,856) (5,774,058)
---------------- ---------------
Net deferred tax asset $ - $ -
================ ===============
</TABLE>
A valuation allowance has been recorded to completely offset the carrying
value of the deferred tax assets due to significant uncertainty as to the
Company's ability to utilize these loss carryforwards prior to their
expiration.
11. COMMITMENTS
LEASE COMMITMENTS
The Company conducts its operations using leased office facilities. The leases
terminate at various dates through fiscal year 2000. Future minimum rental
payments under non-cancelable operating leases as of December 31, 1999 are as
follows:
<TABLE>
<CAPTION>
Year ending December 31,
-------------------------------
<S> <C>
2000 $ 318,143
2001 84,374
------------------
$ 402,517
==================
</TABLE>
Rent expense for the period from March 17, 1997 (date of inception) to
December 31, 1997 and for the years ended December 31, 1998 and 1999 was
approximately $4,000, $58,000 and $272,000, respectively.
COMMITMENTS FROM STRATEGIC RELATIONSHIPS
In May 1999, the Company entered into strategic relationships with Inktomi
Corporation ("Inktomi"), Bell and Howell Information and Learning Company
("Bell and Howell") and Lotus Development Corporation ("Lotus"). Additionally,
on June 30, 1999 the Company entered into a strategic relationship with
Netscape Communications Corporation ("Netscape").
Inktomi provides its search technology and indexing capability for the content
available on the Company's Web site as well as certain marketing services
through the inclusion of the Company's logo on all documents distributed by
Inktomi to its customers. Additionally, Inktomi markets the Company's research
option to its customers and encourages its customers to become users of the
Company's content. The agreements with Inktomi set forth minimum annual fees
for each of these services, payable on a quarterly basis, over the three-year
term of the agreements. The agreements with Inktomi establish royalties to be
paid based upon future revenues generated by the Company. Royalties will be
determined based on revenues derived from users' access to the content
contained in the Company's content collection or from Web pages originated by
the Company. Further, the Company will be required to pay certain service fees
for the use of Inktomi's search technology on a per-query basis. The
agreements also provide that Inktomi's subscribers will have access to the
Company's content collection. The agreements provide that Inktomi will pay the
Company an annual fee payable in quarterly installments over the term of the
agreements as well as royalties based on the number of searches that Inktomi's
subscribers make relative to the Company's available content. In connection
with the Inktomi agreements, the Company issued Inktomi a warrant to purchase
233,200 shares of common stock at an exercise price of $3.50 per share. One
half, or 116,600 shares, of
F-15
<PAGE>
the common stock underlying the warrant are non-forfeitable and were
exercisable immediately upon execution of the agreements. The other half, or
116,600 shares, of the common stock underlying the warrant vest upon the
achievement of certain performance criteria, as defined in the agreements. The
fair value of $429,000 attributable to the portion of the warrant that vests
upon the execution of the agreements was determined using the Black-Scholes
valuation model. This fair value will be amortized to expense over the
three-year term of the agreements. No value has been ascribed to the portion
of the warrant that vests upon the achievement of certain performance criteria
because such criteria have not been achieved.
Under its agreements with the Company, Bell and Howell will provide the
Company with content from business journals and newspapers. The term of the
Bell & Howell agreement is for one year and expires on July 1, 2000. However,
the Company can terminate this agreement if it does not receive $17 million in
financing from the date of the agreement through October 31, 1999. In
addition, if the Company completes an initial public offering, then a warrant
to purchase that number of shares of the Company's common stock equal to $1.25
million at the initial public offering price per share will be issued to Bell
& Howell. This warrant will be exercisable, at the initial public offering
price per share, for one year following such initial public offering. No value
has been ascribed to this warrant in the financial statements as the event
giving rise to the issuance of the warrant has not yet occurred. Included in
accounts payable at December 31, 1999 is $250,000 related to non-refundable
royalty pre-payments associated with the content to be provided by Bell and
Howell (see Note 3).
Under a three year agreement with Lotus, 1) Lotus will embed portions of the
Company's technology into its Domino Extended Search version 2.0; 2) the
Company will be the primary source of external business content provided to
the Domino Extended Search user base; 3) the Company will receive certain
marketing support from Lotus; and 4) Lotus will pay the Company a development
fee and a royalty on sales of its Domino Extended Search.
The Company has contracted with Netscape to provide content and certain
services related to accessing their content on a customized basis for use by
Netscape Web site users. In return, the Company has received the ability to
display, on the Netscape Web site, direct links to the Company's Web site.
This potential traffic to the Company's Web site is expected to generate
future revenues through advertising and access to the Company's
content-subscription-service offerings. This agreement provides for a minimum
amount payable to Netscape on a quarterly basis over the two-year term of the
agreement. Additionally, the Company will be required to pay royalties as set
forth in the agreement for revenue generated as a result of this relationship.
Further, the Company will be entitled to receive certain royalties for revenue
generated by Netscape as a result of this relationship.
The remaining aggregate future minimum payments under the strategic
relationships entered into by the Company subsequent to December 31, 1999 to
expand its content base and increase traffic to its Web site are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
-------------------------------
<S> <C>
2000 $ 1,616,000
2001 1,238,000
2002 479,000
---------------
Total $ 3,333,000
===============
</TABLE>
OTHER COMMITMENTS
In conjunction with the transaction with IBM (see Note 3), the Company entered
into an agreement with a third party under which the Company must pay a
minimum monthly basic usage charge for the utilization of the third party's
Internet hosting services. Future minimum payments under this non-cancelable
agreement as of December 31, 1999 are as follows:
F-16
<PAGE>
<TABLE>
<CAPTION>
Year ending December 31,
-------------------------------
<S> <C>
2000 $ 1,255,940
2001 420,660
2002 36,750
---------------
$ 1,713,350
===============
</TABLE>
There was no hosting expense for the period from March 17, 1997 (date of
inception) to December 31, 1997 and $240,200 and $540,550 of hosting
expense for the years ended December 31, 1998 and 1999, respectively.
12. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
March 17,
1997 (Date of
inception) to Year Ended
December 31, December 31,
-------------- ------------------------------
1997 1998 1999
-------------- --------------- --------------
<S> <C> <C> <C>
Cash paid for:
Interest $ 1,933 $ 2,296 $ 8,526
============== =============== ===============
Non-cash investing and financing activities:
Conversion of notes payable to common stock $ - $ - $ 837,517
Accrued interest converted to notes payable $ - $ 25,252 $ 16,601
Fair value of warrants issued to non-employees $ - $ - $ 600,988
============== =============== ===============
</TABLE>
13. SUBSEQUENT EVENTS - FINANCING
On January 25, 2000, a subordinated convertible promissory note was provided
by a third party for $500,000. The interest on the outstanding principal is at
a rate of 9% per annum. The note may be converted into shares at the rate of 1
share for each $3.50 of principal and interest surrendered for conversion.
In January, 2000, one of the Company's shareholders, Sevenson Environmental
Services, Inc., provided $200,000 in financing through a note with a
conversion price of $2.00 per common share. In March 2000, an additional
$1,300,000 was advanced through a second note with total potential borrowings
of up to $2,500,000.
During the period from January 1, 2000 to May 31, 2000, five investors signed
subordinated convertible promissory notes that provided $650,000 in cash to
the Company. For each note, the interest rate is 8% per annum and the note is
convertible at the rate of one share for each $3.50 of principal and interest
surrendered for conversion.
In 2000, the Company issued additional 300,000 shares of common stock to
Sevenson Environmental Services, Inc. for no additional consideration in
accordance with the agreement dated April 26, 1999 between Sevenson
Environmental Services, Inc. and the Company.
14. SUBSEQUENT EVENT - MERGER
The Company signed an agreement, dated July 12, 2000, to be acquired by
Hoovers, Inc. for up to $2,646,314 in cash and up to 1,877,327 shares of
Hoover's, Inc. common stock.
F-17
