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EXHIBIT 99.2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Streamline.com simplifies the lives of busy suburban families by providing
Internet-based ordering and home delivery of a wide range of consumer goods and
services such as groceries, household goods, health and beauty care items,
dry-cleaning, video rentals and film processing. Streamline.com's typical
customer tends to be a dual income household with at least one child and access
to the Internet. Streamline.com also provides consumer packaged goods companies
insight into consumer Internet purchasing behavior to help facilitate the
development of their Internet merchandising capabilities and to broaden other
research and marketing programs.
Streamline.com has grown rapidly, with revenue increasing to $22.5 million in
1999 from $6.5 million in 1997. During this same period, Streamline.com's net
loss increased to $26.5 million in 1999 from $10.3 million in 1997.
Streamline.com expects to continue to incur losses as it executes its business
plan and will require additional financing early in the first quarter of 2001 in
order to continue operations.
On January 5, 2000, Streamline.com merged with Beacon Home Direct d/b/a
Scotty's Home Market ("Scotty's") in a transaction accounted for as a pooling
of interests. The consolidated financial statements of Streamline.com have
been restated to give retroactive effect to the acquisition of Scotty's and
will now become the historical consolidated financial statements of
Streamline.com. Scotty's common stock, warrants and options have been
retroactively restated in connection with the merger to reflect the merger
exchange ratio of .3984. Management's discussion and analysis of financial
condition and results of operations reflects the retroactive effect of the
acquisition of Scotty's.
As further described in the liquidity section, in September 2000, Streamline
sold substantially all of the assets of our Chicago and Washington D.C.
operations in order to obtain funding that would allow us to continue
operations. With the sale of these two facilities, we have shifted our focus
from national expansion to expansion within existing regional markets.
COMPONENTS OF REVENUE
Streamline.com has three primary sources of revenue. The majority of
Streamline.com's revenue is generated by the sale of consumer products and
services that Streamline.com aggregates in its fulfillment center and delivers
to its customers' homes on a weekly basis. Streamline.com's product and service
revenue is comprised of the retail prices Streamline.com charges its customers
for these products and services. The wholesale prices Streamline.com pays its
distributors and suppliers for such products and services are included as a cost
of revenue. Streamline.com's customers that select scheduled delivery service
also pay Streamline.com a monthly subscription fee of $30. In some cases,
customers pay delivery fees in addition to the amounts paid for the products
delivered to their homes. In addition, Streamline.com receives advertising,
research and marketing fees through arrangements with consumer packaged goods
companies and e-commerce companies. Revenue from products and services is
recognized upon delivery to the customer; subscription fees are recognized
monthly; and advertising, research and marketing fees are recognized over the
life of the applicable arrangement or as services are performed.
Results of Operations Comparison of Fiscal Years ended January 1, 2000, December
31, 1998 and December 31, 1997:
TOTAL REVENUE
Total revenue increased 79.3% to $22.5 million in the twelve months ended
January 1, 2000 from $12.5 million in the comparable period ended December 31,
1998. Total revenue increased 92.3% to $12.5 million in 1998 from $6.5 million
in 1997. The increase in each year was primarily due to the continuing
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expansion of Streamline.com's customer base, a corresponding increase in
subscription fees, customer orders and average order size and an increase in
fees derived from advertising, research and marketing.
PRODUCT AND SERVICE REVENUE, NET
Product and service revenue, net of returns increased 78.6% to $20.5 million in
the twelve months ended January 1, 2000 from $11.5 million in the comparable
period ended December 31, 1998. Product and service revenue, net of returns
increased 105.2% to $11.5 million in 1998 from $5.6 million in 1997. The
increase in revenue was the result of increases in Streamline.com's customer
base and corresponding increases in the number of invoices for product and
service revenue. The number of invoices increased 81.7% to approximately 189,000
in the twelve months ended January 1, 2000 from approximately 104,000 in the
comparable period ended December 31, 1998. Average product and service revenue
per invoice decreased slightly, to approximately $108 in the twelve months ended
January 1, 2000 from approximately $110 in the comparable period ended December
31, 1998. In 1998, the number of invoices increased 103.9% from approximately
51,000 in the period ended December 31, 1997. Average product and service
revenue per invoice increased slightly, to approximately $110 in the twelve
months ended December 31,1998 from approximately $109 in the comparable period
ended December 31, 1997. Product and service revenue, net as a percentage of
total revenue decreased to 91.1% in the twelve months ended January 1, 2000 from
91.4% in the comparable period ended December 31, 1998. Product and service
revenue, net increased as a percentage of revenue to 91.4% in the period ended
December 31, 1998 from 85.7% in the period ended December 31, 1997 as a result
of an increased customer base and a decline in advertising, marketing and
research fees as a percentage of total revenue.
SUBSCRIPTION AND DELIVERY FEES
Revenue from subscription fees increased 48.1% to $0.8 million in the twelve
months ended January 1, 2000 from $543,000 in the comparable period ended
December 31, 1998. Revenue from subscription fees increased 157.2% to $543,000
in 1998 from $211,000 in 1997. The increases were primarily due to an increase
in the customer base to approximately 8,700 at January 1, 2000 from
approximately 5,300 at December 31, 1998 and 3,200 at December 31, 1997.
ADVERTISING, RESEARCH AND MARKETING FEES
Advertising, research and marketing fees increased 126.9% to $1.2 million in the
twelve months ended January 1, 2000 from $529,000 in the comparable period ended
December 31, 1998. These fees as a percentage of total revenue increased to 5.3%
in the twelve months ended January 1, 2000 from 4.2% in the comparable period
ended December 31, 1998. The increase in advertising, research and marketing
fees is primarily due to an increase in the number of consumer packaged goods
companies that became members of the Consumer Learning Center, a
Streamline-sponsored research center focused on better understanding the
Consumer Direct industry. Fees from advertising, research and marketing services
decreased 26.6% to $529,000 in 1998 from $721,000 in 1997. Advertising, research
and marketing fees as a percentage of total revenue decreased to 4.2% in 1998
from 11.1% in 1997. The decrease is primarily due to a reduction in the average
amount paid by participants resulting from shorter membership periods.
TOTAL OPERATING EXPENSES
Total operating expenses increased 87.4% to $49.9 million, or 222.2% of total
revenues, in the twelve months ended January 1, 2000 from $26.6 million, or
212.6% of total revenues, in the comparable period ended December 31, 1998.
Total operating expenses increased 57.3% to $26.6 million, or 212.6% of total
revenue, in 1998 from $16.9 million, or 260.0% of total revenue, in 1997. The
increase in operating expenses is a result of an increase in order volume, and
an increase in infrastructure and general and administrative costs incurred to
support Streamline.com's continued expansion. In 1999, these expenses further
increased due to the opening of Streamline.com's third facility in the
Washington, D.C. market in the fourth quarter. Total expenses decreased as a
percentage of total revenues due to achieving operational
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efficiencies, offsetting fixed costs with higher order volumes, and increased
advertising and marketing fee revenue.
COST OF REVENUE
The cost of revenue increased to $15.7 million, or 70.1% of total revenues, in
the twelve months ended January 1, 2000 from $9.0 million, or 71.6% of total
revenues in the comparable period ended December 31, 1998. The cost of revenue
increased to $9.0 million, or 71.6% of total revenue, in 1998 from $5.0 million,
or 76.0% of total revenue, in 1997. The declines in cost of revenue as a
percentage of total revenues are primarily a result of improved purchasing and
inventory management in the product and service category, a higher percentage of
subscription fees as a percentage of total revenue, continued efforts to improve
product assortment and the introduction of higher margin products.
FULFILLMENT CENTER OPERATIONS
Expenses attributable to fulfillment center operations increased 81.9% to $11.5
million, or 51.3% of total revenue, in the twelve months ended January 1, 2000
from $6.3 million, or 50.6% of total revenue, in the comparable period ended
December 31, 1998. Expenses attributable to fulfillment center operations
increased 52.6% to $6.3 million, or 50.6% of total revenue, in 1998 from $4.2
million, or 63.7% of total revenue, in 1997. These costs increased primarily as
a result of increased order volume. In 1999, these costs further increased as a
result of increased management and quality control staff levels in the Chicago
facility, the opening of Streamline.com's third facility in the Washington, D.C.
area, and a partnership with Genco, a third party warehouse management company.
Genco assumed the warehouse management functions in our Massachusetts and D.C.
facilities under a test outsourcing arrangement. The costs incurred under this
agreement were higher than expected and as a result the agreement was terminated
in the fourth quarter 1999.
SALES AND MARKETING
Sales and marketing expenses increased 200.5% to $6.5 million, or 29.2% of total
revenue, for the twelve months ended January 1, 2000 from $2.2 million, or 17.4%
of total revenue, for the comparable period ended December 31, 1998. Sales and
marketing expenses increased 24.5% to $2.2 million, or 17.4% of total revenue,
in 1998 from $1.8 million, or 26.9% of total revenue, in 1997. The increases
were due to additional advertising and promotional activities undertaken to
acquire new customers. Expenses further increased in 1999 as a result of the
expansion into additional service areas, an increase in marketing and sales
staff and a non-cash charge resulting from a warrant earned under a marketing
agreement with one of the Company's significant shareholders in 1999 pursuant to
the satisfaction of specified marketing-related conditions.
TECHNOLOGY SYSTEMS AND DEVELOPMENT
Expenses attributable to technology systems and development increased 41.6% to
$5.0 million, or 22.1% of total revenue, for the twelve months ended January 1,
2000 from $3.5 million, or 27.9% of total revenue, for the comparable period
ended December 31, 1998. Expenses attributable to technology systems and
development increased 78.1% to $3.5 million, or 27.9% of total revenue, in 1998
from $2.0 million, or 30.2% of total revenue, in 1997. These costs increased
primarily due to the costs associated with acquiring, maintaining, enhancing and
integrating Streamline.com's technology systems.
GENERAL AND ADMINISTRATIVE
General and administrative costs increased 96.8% to $11.1 million, or 49.6% of
total revenues, for the twelve months ended January 1, 2000 from $5.7 million,
or 45.2% of total revenues, for the comparable period ended December 31, 1998.
General and administrative costs increased 37.5% to $5.7 million, or 45.2% of
total revenue, in 1998 from $4.1 million, or 63.2% of total revenue, in 1997.
These costs increased primarily due to the addition of necessary infrastructure
and corporate staff to support continued corporate growth and expansion into new
markets.
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OTHER INCOME (EXPENSE), NET
Other income (expense), net increased to income of $997,000 in the twelve months
ended January 1, 2000 from an expense of $(296,000) in the comparable period
ended December 31, 1998, primarily due to increased interest income from higher
cash balances from Streamline.com's initial public offering in June 1999, and
reduced interest costs associated with the pay down of debt. Furthermore, the
increase is attributable to the increased income in 1999 from higher cash
balances resulting from the Company's sale of common stock to an investor in
October 1998 allowing the Company to earn interest on a portion of these funds
in 1999.
Other income (expense), net increased 208.1% to an expense of $(296,000) in 1998
from an expense of $(95,000)in 1997, largely due to an increase in net interest
expense resulting from Streamline.com's issuance of senior discount notes in
1998. This was offset by interest income Streamline.com received from investing
the proceeds of debt and equity financing completed during the year. Other
expense in 1997 included losses incurred on the disposal of fixed assets.
MINORITY INTEREST
At December 31, 1997, Streamline.com held a majority interest in Streamline
Mid-Atlantic, Inc. Portions of Streamline Mid-Atlantic's net losses were
allocated to the minority interest. The allocation of the net losses of
Streamline.com's subsidiary, Streamline Mid-Atlantic, Inc., to the minority
interest decreased to $138,000 in 1998 from $265,000 in 1997. In 1998,
Streamline.com was allocated a percentage of net losses in excess of its
ownership percentage due to the minority interest being allocated all of its
allowable losses. In November 1998, Streamline.com acquired the remaining
minority interest and now reports 100% of the income or loss of this subsidiary
in its results of operations.
EXTRAORDINARY LOSS
On September 18, 1998, Streamline.com redeemed all of its outstanding discount
notes issued in April 1998 at a price of $7.0 million with the proceeds from the
issuance of Streamline.com's Series D Preferred Stock. The redemption resulted
in Streamline.com recording an extraordinary loss on the extinguishment of debt
of approximately $744,000. This loss included approximately $257,000 for a call
premium, and $452,000 for the unamortized discount value associated with the
warrants to purchase common stock issued in connection with the senior discount
notes and $35,000 for the issuance of common shares and remaining deferred
financing costs.
LIQUIDITY AND CAPITAL RESOURCES
For the twelve months ended January 1, 2000 operating activities used cash of
$22.3 million primarily attributable to the net loss incurred in the period, as
compared to $12.3 million for the twelve months ended December 31, 1998.
Investing activities used cash of $35.1 million in the twelve months ended
January 1, 2000, as compared to $2.4 million for the twelve months ended
December 31, 1998, primarily due to the purchase of marketable securities from
capital raised by the initial public offering, the purchase of property and
equipment to support the expansion of Streamline.com's operations, construction
costs for a new fulfillment center in Chicago and costs associated with
purchased and capitalized software for Streamline.com's customer ordering,
warehouse management and financial systems.
Financing activities provided cash of $52.1 million in the twelve months ended
January 1, 2000, as compared to $33.2 million in the twelve months ended
December 31, 1998. Net proceeds from Streamline.com's initial public offering,
including the exercise of the underwriters' over-allotment, net of underwriting
discounts and offering expenses, were approximately $45.0 million. Prior to its
initial public offering, Streamline.com financed its operations and capital
requirements primarily through the sale of redeemable convertible preferred
stock, the issuance of senior discount notes, the sale of common stock, and its
bank line of credit. In June 1999, Streamline.com entered into an agreement
whereby the Chicago fulfillment center would be sold to a third party (upon
satisfaction of certain conditions detailed in the
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contract of sale) and leased back to Streamline.com for an initial term of 20
years. This transaction took place in January 2000 with a selling price of
approximately $6.5 million.
Steamline.com has incurred cumulative losses through January 1, 2000 of
approximately $56.4 million and continues to have recurring operating losses and
negative cash flows from operating activities. The Company expects to incur
additional losses and will require additional financing early in the first
quarter of 2001 to continue its operations.
Streamline.com's initial plans for 2000 were based upon an aggressive expansion
strategy including the introduction of several new facilities and the
acquisition of a significant number of new customers by year end. In addition,
the 2000 plan included funding the operating losses of a Chicago fulfillment
center, which was acquired in connection with the Streamline.com's merger with
Scotty's on January 5, 2000. In order to implement the 2000 plan, the Company
anticipated the need for additional financing and engaged an investment banker
to assist in securing additional private funding which the Company had expected
to receive by the end of the second fiscal quarter.
In the event the Company was unable to secure additional financing, an
alternative plan was developed to significantly reduce cash expenditures
including delaying the capital expenditure costs and pre-opening expenses for
the planned facilities. In such circumstances the Company would significantly
reduce marketing expenditures, reduce corporate headcount costs including all
incentive compensation and reduce consulting and other miscellaneous spending.
Furthermore, most corporate capital projects would be postponed until additional
financing was obtained and the Company would pursue financing for certain asset
purchases which were not originally anticipated to be financed.
The Company continued with its expansion strategy including the opening of the
New Jersey facility, entering into a lease for the Minnesota facility and
continued use of external marketing resources. In addition, cash expenditures
through the first half of 2000 were higher than initially anticipated. This was
primarily a result of higher marketing costs associated with the opening of the
New Jersey location, lower than expected sales associated with lower customer
acquisition and the unexpected increase in the second quarter in the collateral
requirements associated with lease financing resulting in the Company funding
the majority of these purchases with working capital. Late in the second
quarter, in reaction to the inability to secure additional financing and the
increase in cash spending associated with these items, the Company began to
implement an alternative plan including the delay of most external marketing
activities, the delay of opening certain facilities, deferral of corporate
headcount increases, deferral of discretionary capital technology and reduced
consulting spending. However, the timing of implementation of these intiatives
would not result in the Company having sufficient cash flow savings to fund
operations through the year.
The Company continued its efforts to obtain a strategic or financing alternative
in the second and third quarters. This effort resulted in the Company entering
into a transaction during the third quarter of 2000, pursuant to which the
Company sold to Peapod, Inc. substantially all of the assets and operations of
their facilities in Washington, D.C. and Chicago for $11.6 million and Peapod
assumed certain capital and operating lease obligations. As a result of the
disposition of operations in those locations, the Company has been able to
significantly reduce their operating expenses. Furthermore, the Company has
implemented additional cost controlling initiatives including a hiring freeze,
reduction in marketing spending, further reduction of corporate administrative
costs and all non-essential capital expenditures. The Company expects that the
proceeds received should be able to fund operations through the end of the year.
If financing is not received early in the first quarter of 2001, the Company
will be unable to continue operations. However, depending on the Company's
ability to generate sufficient increases in revenues or reduce certain costs the
Company may need cash for operations prior to that time.
The Company has limited options, beyond those currently being implemented to
reduce cash expenditures. The Company is still actively pursuing financing
and other strategic alternatives, however, no definitive arrangements exist
at this time. The Company has terminated their relationship with their
investment banker, but does not believe this will affect the Company's
ability to enter into a strategic or financing transaction.
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The accompanying financials have been prepared on a going-concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
MARKET AND INTEREST RATE RISK
To date, Streamline.com has not utilized derivative financial instruments or
derivative commodity instruments. Streamline.com invests its cash in high
quality (i.e.-A1/P1), short term commercial paper, corporate bonds, money market
funds and United States government securities, which are subject to minimal
credit, market, and interest rate risk, and have no debt. Due to its short-term
duration, the fair value of the Company's cash and investment portfolio at
January 1, 2000 approximated carrying value. Interest rate risk was estimated as
the potential decrease in fair value resulting from a hypothetical 10% increase
in interest rates for issues contained in the investment portfolio. The
resulting hypothetical fair value was not materially different from the year-end
carrying value. Therefore, Streamline.com believes the market and interest rate
risks associated with these financial instruments are not material.
ACQUISITIONS
In 1996, Streamline.com incorporated its subsidiary Streamline Mid-Atlantic,
Inc., for the purpose of acquiring substantially all of the assets of Shopping
Alternatives, Inc., a consumer direct company based in the Washington, D.C.
area. In 1997 Streamline Mid-Atlantic sold approximately 45% of its common stock
to third parties. In November 1998, Streamline.com acquired the outstanding
minority interest in Streamline Mid-Atlantic and it once again became a wholly
owned subsidiary. In connection with these transactions, Streamline.com recorded
$1.3 million of goodwill, which is being amortized, on a straight-line basis
over a five-year term.
SUBSEQUENT EVENTS
On September 7, 2000, the Company sold substantially all of the assets relating
to its operations in Washington, D.C. and greater Chicago markets (the
"Transferred Assets") pursuant to an Asset Purchase Agreement (the "Purchase
Agreement") by and among the Company, two of the Company's wholly-owned
subsidiaries and the buyer. Pursuant to the Purchase Agreement, the buyer agreed
to pay Streamline.com $11.6 million in cash and to assume certain capital and
operating lease obligations associated with the Transferred Assets.
Approximately $1.4 million of the purchase price is being held in escrow by the
buyer pending the Company's satisfaction of certain post-closing obligations and
approximately $200,000 of the purchase price is being held in escrow to secure
any indemnification obligations of Streamline.com pursuant to the Purchase
Agreement. Streamline expects to record a gain of approximately $2.5 million in
connection with this transaction during the third quarter of 2000. Streamline
will classify the portion of the gain associated with the sale of the Chicago
operations, historically accounted for as a pooling of interests as an
extraordinary item. The remaining gain will be included in other income.
Additionally, in September 2000, the Company terminated the lease for its
Minneapolis facility, resulting in a one-time charge of approximately $750,000
of which $350,000 was a cash payment and the remainder was the write-off of a
deposit.
YEAR 2000 COMPLIANCE
Streamline.com has experienced no year 2000 adverse effects on its internal
systems or any involved in its supply chain, including purchasing, distribution,
sales and accounting. Also, no errors were found related to date processing
before or after January 1, 2000, including treatment of year 2000 as a leap
year. Streamline.com will continue to monitor its hardware, software and
imbedded systems as they are added or modified.
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INFLATION AND SEASONALITY
While inflation or deflation has not had, and Streamline.com does not expect it
to have, a material impact upon operating results, there can be no assurance
that Streamline.com.'s business will not be affected by inflation or deflation
in the future. Streamline.com experiences seasonal fluctuations due to various
market conditions with average revenue per order declining slightly in the
second and third quarters.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This annual report contains forward-looking statements that involve risks and
uncertainties. Any statement (including statements to the effect that
Streamline.com "believes", "expects", "anticipates", "plans" and similar
expressions) that are not statements relating to historical matters should be
considered forward-looking statements. Our actual results may differ materially
from the results discussed in the forward looking statements as a result of
numerous important factors, including those discussed below.
THE TERMS AND TIMING OF FUTURE FINANCINGS ARE UNCERTAIN
In order to continue operations, Streamline.com will require additional
sources of financing early in the first quarter of 2001. Also, it is possible
that Streamline.com will require additional sources of financing earlier than
anticipated as a result of unexpected cash needs or opportunities, or
disappointing operating results. Additional funds may not be available on
satisfactory terms when needed, whether in the next twelve months or
thereafter. If funds are not available on a timely basis, the Company has
limited options, beyond those currently being implemented, to reduce cash
expenditures. Therefore, if additional financing is not received early in the
first quarter of 2001, the Company will be unable to continue operations.
STREAMLINE.COM OPERATES IN A HIGHLY COMPETITIVE MARKET
Streamline.com competes in a highly competitive marketplace with a variety of
traditional retailers, consumer direct companies and other delivery services.
In the geographic markets we are in or expect to be in within the next 12 to
18 months we compete or expect to compete directly with other consumer direct
retailers that have similar services, pricing strategies and product
selections. Some of our current and potential competitors are larger than we
are and have substantially greater financial resources. It is possible that
increased competition or improved performance by our competitors may reduce
our market share or adversely affect our business and financial performance
in other ways.
THE LEASE FOR OUR WESTWOOD FACILITY EXPIRES ON OCTOBER 31, 2000
The Company is headquartered in Westwood, Massachusetts, where it leases
approximately 67,000 square feet of commercial space. The Company's lease for
the Westwood facility expires on October 31, 2000. There can be no assurance
that the Company will be able to secure an extension of this lease prior to its
expiration or that any extension that the Company does secure will contain terms
favorable to the Company, including without limitation the duration thereof. In
the event that the Company is unable to secure an extension of this lease or
secures an extension for less time than is required by the Company or on other
unfavorable terms, the Company's operations could be substantially disrupted.
OUR SUCCESS DEPENDS ON OUR ABILITY TO OPEN NEW CONSUMER RESOURCE CENTERS
An important part of our business strategy is to aggressively increase the
number of CRC's and the number of customers served out of new and existing
CRC's. For this strategy to be successful we need to successfully market to
and acquire customers, identify and lease new sites for CRC's, hire and train
employees and adapt our management and operational systems to meet the needs
of our expanded operations. These tasks may be difficult to accomplish and if
we are unable to accomplish any of these tasks our future revenue could be
materially adversely affected.
OUR OPERATING RESULTS MAY VARY FROM QUARTER TO QUARTER
Our operating results have fluctuated from quarter to quarter in the past,
and we expect that they will continue to do so in the future. Our revenues
may not continue at rates similar to the rates reported in recent periods,
and our operating results may fall short
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of either a prior fiscal period or investor's expectations. Factors that could
cause these quarterly fluctuations include the following:
- customer demand being lower than anticipated;
- seasonality (we typically experience lower average order sizes in the
second and third quarters);
- one-time charges associated with acquisitions; and
- the level of marketing and advertising expenses associated with acquiring
new customers.
A significant portion of our operating expenses, such as rent expense and
employee salaries, do not vary directly with revenue and are difficult to adjust
in the short term. As a result, if sales in a particular quarter are below our
expectations for that quarter, Streamline.com could not proportionately reduce
operating expenses for that quarter, and therefore a revenue shortfall would
have a disproportionate effect on our expected net loss for the quarter.
The market price of our common stock is based in large part on professional
securities analysts' expectations that our business will continue to grow and
that Streamline.com will achieve certain revenue levels. If our financial
performance in a particular quarter does not meet the expectations of securities
analysts, this may adversely affect the views of those securities analysts
concerning our growth potential and future financial performance. If the
securities analysts that regularly follow us lower their ratings or lower their
projections for our future growth and financial performance, the market price of
our stock is likely to drop significantly. In addition, in those circumstances
the decrease in the stock price would probably be disproportionate to the
shortfall in our financial performance.
RAPID GROWTH COULD STRAIN OUR OPERATIONS
Streamline.com has experienced rapid growth in orders, revenues, and number
of employees in the past several years. This growth has placed significant
demands on our management and operational systems. If we are not successful
in continually upgrading our operational and financial systems, expanding our
management team and increasing and effectively managing our employee bases
this growth is likely to result in operational inefficiencies and ineffective
management of our business and employees, which in turn will adversely affect
our business and financial performance.
