<PAGE>
UNITED STATES
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 September 30, 2000
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 0-9428
DOCENT, INC.
------------
(Exact name of registrant as specified in its charter)
Delaware 77-0460705
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2444 Charleston
Mountain View, California 94043
------------------------- -----
(Address of principal executive offices) (Zip Code)
(650) 934-9500
--------------
(Registrant's telephone number including area code)
Not Applicable
--------------
(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 X No
As of September 30, 2000, Registrant had outstanding 8,128,000 shares of Common
Stock, no par value.
(This document contains a total of 19 pages)
<PAGE>
DOCENT, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations for the Three Months and Nine Months 4
Ended September 30, 2000 and September 30, 1999
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 5
2000 and September 30, 1999
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' 6
Deficit
Notes to Condensed Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Part II. Other Information 16-18
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
Exhibit Index 20
</TABLE>
<PAGE>
DOCENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
(in thousands, except per share amounts) (Unaudited)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 30,288 $ 12,773
Accounts receivables, net 5,793 809
Prepaid expenses and other current assets 805 583
----------- ------------
Total current assets 36,886 14,165
Property and equipment, net 3,419 964
Other assets 895 173
----------- ------------
Total assets $ 41,200 $ 15,302
=========== ============
Liabilities, Convertible Preferred Stock and
Stockholders' Deficit
Current liabilities:
Accounts payable $ 521 $ 988
Accrued liabilities 4,744 875
Deferred revenue 3,651 1,108
Notes payable and capital lease obligations, current 1,087 1,256
----------- ------------
Total current liabilities 10,003 4,227
Notes payable and capital lease obligations 781 1,117
----------- ------------
Total liabilities 10,784 5,344
----------- ------------
Convertible preferred stock, $0.001 par value; 27,284 shares
authorized; 24,895 and 18,391 issued
and outstanding 85,781 33,288
----------- ------------
Stockholders' deficit:
Common stock, $0.001 par value; 38,800 shares
authorized; 8,128 and 5,310 issued
and outstanding 8 5
Additional paid-in capital 63,618 11,218
Receivables from stockholders (2,105) (487)
Unearned stock-based compensation (27,524) (7,200)
Accumulated deficit (89,362) (26,866)
----------- ------------
Total stockholders' deficit (55,365) (23,330)
----------- ------------
Total liabilities, convertible preferred stock and
stockholders' deficit $ 41,200 $ 15,302
=========== ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE>
DOCENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------------
(in thousands, except per share amounts) 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue:
License $ 1,494 $ 62 $ 2,157 $ 103
Service and maintenance 1,369 148 3,170 279
---------- ------------- ---------- -----------
2,863 210 5,327 382
---------- ------------- ---------- -----------
Cost of Sales:
Cost of license 14 -- 25 4
Cost of service and maintenance 2,051 332 5,224 792
---------- ------------- ---------- -----------
Total cost of sales 2,065 332 5,249 796
---------- ------------- ---------- -----------
Gross margin 798 (122) 78 (414)
---------- ------------- ---------- -----------
Operating Expenses:
Research and development expenses 1,338 670 3,194 1,719
Sales and marketing expenses 8,958 2,090 20,634 5,555
General and administrative expenses 1,806 702 4,291 1,369
Stock-based compensation 4,447 364 22,974 843
---------- ------------ ---------- -----------
Total operating expenses 16,549 3,826 51,093 9,486
---------- ------------ ---------- -----------
Loss from operations (15,751) (3,948) (51,015) (9,900)
Interest expense and other expense (113) (116) (349) (227)
Interest income 318 58 819 97
---------- ------------- ---------- -----------
Net loss (15,546) (4,006) (50,545) (10,030)
Dividend accretion and deemed dividend on
convertible preferred stock (9,455) (131) (19,069) (131)
---------- ------------- ---------- -----------
Net loss attributable to common
stockholders $ (25,001) $ (4,137) $ (69,614) $ (10,161)
========== ============ ========== ===========
Net loss per share attributable to common
stockholders - basic and diluted $ (4.88) $ (1.03) $ (11.92) $ (2.70)
========== ============ ========== ===========
Weighted average common shares outstanding 5,119 4,022 5,841 3,757
========== ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE>
DOCENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------
September 30, September 30,
(in thousands) 2000 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (50,545) $ (10,030)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts 52 --
Depreciation and amortization 664 184
Amortization of deferred interest expense 80 64
Amortization of unearned stock-based compensation 8,300 448
Issuance of options in exchange for services 832 23
Issuance of convertible preferred stock and common stock
warrants in exchange for services 12,880 134
Issuance of common stock in exchange for services 962 238
Changes in operating assets and liabilities:
Accounts receivables (5,036) (210)
Prepaid expenses and other assets (336) (280)
Accounts payable (467) 426
Accrued liabilities 3,869 307
Deferred revenue 2,543 506
------------ ----------
Net cash used in operating activities (26,202) (8,190)
------------ ----------
Cash flows from investing activities
Purchases of property and equipment (2,964) (210)
------------ ----------
Net cash used in investing activities (2,964) (210)
------------ ----------
Cash flows from financing activities
Proceeds from issuance of convertible preferred stock, net 45,661 18,025
Proceeds from issuance of common stock, net 2,084 2
Proceeds from issuance of convertible preferred stock warrants - 157
Proceeds from repayment of stockholder receivable 286 -
Repurchase of common stock (1) (8)
Proceeds from notes payable - 3,000
Payments of notes payable and capital lease obligations (741) (533)
Prepaid initial public offering costs (608) -
------------ ----------
Net cash provided by financing activities 46,681 20,643
------------ ----------
Net increase in cash and cash equivalents 17,515 12,243
Cash and cash equivalents, beginning of the period 12,773 2,968
------------ ----------
Cash and cash equivalents, end of period $ 30,288 $ 15,211
============ ==========
Supplemental disclosures of cash flow information:
Interest paid $ 213 $ 181
============ ==========
Income taxes paid $ 8 $ 1
============ ==========
Supplemental disclosures of noncash investing and financing activities:
Receivable from stockholders in connection with issuance of common
stock and convertible preferred stock $ 1,904 $ 8
============ ==========
Equipment acquired under capital leases $ 155 $ 10
============ ==========
Deferred interest expense related to warrants issued in connection with
subordinated loan and capital leases $ - $ 339
============ ==========
Unearned stock-based compensation $ 29,167 $ 1,792
============ ==========
Dividend accretion and deemed dividend on convertible preferred stock $ 19,069 $ 131
============ ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
DRAFT #2
DOCENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Convertible
Preferred Stock Common Stock Additional
--------------- ------------ Paid-In
Shares Amount Shares Amount Capital
------ ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1999................................. 18,391 $ 33,288 5,310 $ 5 $ 11,218
Issuance of Series E convertible preferred stock for cash
at $7.52 per share, net of issuance costs of $1,177....... 3,719 26,613 -- -- --
Issuance of common stock warrants in connection with Series E
convertible preferred stock financing..................... -- -- -- -- 179
Issuance of Series F convertible preferred stock for cash at
$7.52 per share, net of issuance costs of $675............ 2,600 18,761 -- -- --
Issuance of common stock warrants in connection with Series F
convertible preferred stock financing.................. -- -- -- -- 107
Issuance of Series D preferred stock upon exercise of
warrant................................................... 185 -- -- -- --
Unearned stock-based compensation........................... -- -- -- -- 27,757
Amortization of unearned stock-based compensation........... -- -- -- -- --
Gross compensation expense-options to non-employees......... -- -- -- -- 659
Stock-based compensation on acceleration of options upon
termination............................................... -- -- -- -- 363
Issuance of options in exchange for services................ -- -- -- -- 557
Amortization of non-employee stock-based compensation....... -- -- -- -- --
Issuance of common stock in exchange for services........... -- -- 144 1 1,083
Issuance of common stock for cash on exercise of options.... -- -- 1,611 1 2,114
Issuance of common stock for notes receivable on exercise
of options.................................................. -- -- 945 -- 1,834
Issuance of common stock upon exercise of warrant........... -- -- 119 1 36
Repurchase of common stock.................................. -- -- (1) -- (1)
Repayment of receivables from stockholders.................. -- -- -- -- --
Issuance of preferred stock warrants in exchange for
services.................................................... -- -- -- -- 12,556
Issuance of common stock warrants in exchange for services.. -- -- -- -- 324
Dividend accretion on Series D convertible preferred stock.. -- 6,089 -- -- (6,089)
Dividend accretion on Series E convertible preferred stock.. -- 862 -- -- (862)
Dividend accretion on Series F convertible preferred stock.. -- 168 -- -- (168)
Deemed dividend on Series E convertible preferred stock..... -- -- -- -- 5,505
Deemed dividend on Series F convertible preferred stock..... -- -- -- -- 6,446
Net loss.................................................... -- -- -- -- --
------- ---------- ------- -------- ---------
Balances, September 30, 2000 (unaudited).................... 24,895 $ 85,781 8,128 $ 8 $ 63,618
------- ---------- ------- -------- ---------
<CAPTION>
Receivables Unearned
from Stock-based Accumulated
Stockholders Compensation Deficit Total
------------ ------------ ------- -----
<S> <C> <C> <C> <C>
Balances, December 31, 1999................................. $ (487) $ (7,200) $(26,866) $(23,330)
Issuance of Series E convertible preferred stock for cash
at $7.52 per share, net of issuance costs of $1,177......... -- -- -- --
Issuance of common stock warrants in connection with Series E
convertible preferred stock financing..................... -- -- -- 179
Issuance of Series F convertible preferred stock for cash at
$7.52 per share, net of issuance costs of $675............ -- -- -- --
Issuance of common stock warrants in connection with Series F
convertible preferred stock financing..................... -- -- -- 107
Issuance of Series D preferred stock upon exercise of
warrant...................................................
Unearned stock-based compensation........................... -- (27,978) -- (221)
Amortization of unearned stock-based compensation........... -- 8,159 -- 8,159
Gross compensation expense-options to non-employees......... (133) 526
Stock-based compensation on acceleration of options upon
termination............................................... -- -- -- 363
Issuance of options in exchange for services................ -- (423) -- 134
Amortization of non-employee stock-based compensation....... -- 197 -- 197
Issuance of common stock in exchange for services........... -- (146) -- 938
Issuance of common stock for cash on exercise of options.... (70) -- -- 2,045
Issuance of common stock for notes receivable on exercise (1,834) -- -- --
of options................................................
Issuance of common stock upon exercise of warrant........... -- -- -- 37
Repurchase of common stock.................................. -- -- -- (1)
Repayment of receivables from stockholders.................. 286 -- -- 286
Issuance of preferred stock warrants in exchange for
services.................................................. -- -- -- 12,556
Issuance of common stock warrants in exchange for services.. -- -- -- 324
Dividend accretion on Series D convertible preferred stock.. -- -- -- (6,089)
Dividend accretion on Series E convertible preferred stock.. -- -- -- (862)
Dividend accretion on Series F convertible preferred stock.. -- -- -- (168)
Deemed dividend on Series E convertible preferred stock..... -- -- (5,505) --
Deemed dividend on Series F convertible preferred stock..... -- -- (6,446) --
Net loss.................................................... -- -- (50,545) (50,545)
--------- ------- --------- ----------
Balances, September 30, 2000 (unaudited).................... $ (2,105) $(27,524) $ (89,362) $ (55,365)
--------- ------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
DOCENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for annual
financial statements. In the opinion of management, the interim
condensed consolidated financial statements include all normal
recurring adjustments necessary for a fair presentation of the
information required to be included. Operating results for the three
and nine-month periods ended September 30, 2000 are not necessarily
indicative of the results that may be expected for any future periods,
including the full fiscal year. These unaudited condensed consolidated
financial statements should be read in conjunction with the Company's
audited consolidated financial statements in its Registration Statement
and Prospectus on Form S-1, filed with the Securities and Exchange
Commission on September 29, 2000.
2. Net Loss Per Share
Basic and diluted net loss per share is computed by dividing the net
loss for the period by the weighted average number of shares of common
stock outstanding during the period. The calculation of diluted net
loss per share excludes potential common shares if the effect is
antidilutive. Potential common shares are comprised of common stock
subject to repurchase rights, incremental shares of common and
preferred stock issuable upon the exercise of stock options or warrants
and shares issuable upon conversion of convertible preferred stock.
The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Net loss attributable to common
stockholders $ (25,001) $ (4,137) $ (69,614) $ (10,161)
================= ================= ================= ============
Basic and diluted shares:
Weighted average common shares
outstanding 7,071 5,186 6,154 5,171
Weighted average unvested common
shares subject to repurchase (1,952) (1,164) (313) (1,414)
----------------- ----------------- ----------------- ------------
Weighted average shares used to
compute basic and diluted net loss
per share $ 5,119 $ 4,022 $ 5,841 $ 3,757
================= ================= ================= ============
Net loss per share attributable to
common shareholders - basic and
diluted $ (4.88) $ (1.03) $ (11.92) $ (2.70)
================= ================= ================= ============
</TABLE>
Approximately 34,891,000 and 20,719,000 potential shares of common
stock were not included in the diluted net loss per share attributable
to common stockholders because to do so would be antidilutive, as at
September 30, 2000 and September 30, 1999, respectively.
7
<PAGE>
DOCENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. Balance Sheet Components (in thousands)
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accounts receivable, net:
Accounts receivable $ 5,845 $ 809
Less: Allowance for doubtful accounts (52) -
---------------- -------------------
$ 5,793 $ 809
================ ===================
Property and equipment, net:
Computer equipment and software $ 3,592 $ 1,063
Furniture and fixtures 856 277
Leasehold improvements 61 50
---------------- -------------------
4,509 1,390
Less: Accumulated depreciation and
amortization (1,090) (426)
---------------- -------------------
$ 3,419 $ 964
================ ===================
Accrued liabilities:
Other accrued liabilities $ 3,153 $ 246
Accrued payroll and related liabilities 1,591 629
---------------- -------------------
$ 4,744 $ 875
================ ===================
</TABLE>
4. Comprehensive income (loss)
The Company adopted the provisions of SFAS No. 130, Reporting
Comprehensive Income. This statement requires companies to classify
items of other comprehensive income by their nature in the financial
statements and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital
in the equity section of the balance sheet. There has been no
difference between the Company's net loss and its total comprehensive
loss through September 30, 2000.
5. Segment reporting
During the three months ended September 30, 2000, approximately
$138,000 of the Company's revenue was derived from customers in Europe.
During the nine months ended September 30, 2000, approximately $317,000
of the Company's revenue was derived from customers in Europe. As of
September 30, 2000, approximately $151,000 of the Company's long-lived
assets are held in Europe. During 1999, all revenue was generated from
customers located in and all long-lived assets were located in the
United States.
6. Recent Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS
No. 133 establishes a new model for accounting for derivatives and
hedging activities and supercedes and amends a number of existing
accounting standards. SFAS No. 133 requires that all derivatives be
recognized in the balance sheet at their fair market value and the
corresponding derivative gains or losses be either reported in the
statement of operations or as a deferred item depending on the type of
hedge relationship that exists with respect of such derivatives. In
July 1999, the Financial Accounting Standards Board issued SFAS No.
137, Accounting for Derivative Instruments and Hedging Activities--
Deferral of the Effective Date of FASB Statement No. 133, SFAS No. 137
deferred the effective date until the year beginning after
8
<PAGE>
June 30, 2000. In June 2000, the Financial Accounting Standards Board
issued SFAS No. 138, Accounting for Derivative Instruments and Hedging
Activities--An Amendment of FASB Statement No. 133. SFAS No. 138 amends
the accounting and reporting standards for certain derivatives and
hedging activities such as net settlement contracts, foreign currency
transactions and intercompany derivatives. The Company will adopt SFAS
No. 133 in its quarter ending March 31, 2001. To date, the Company has
not engaged in derivative or hedging activities.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements," which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements filed
with the SEC. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to
revenue recognition policies. The Company has complied with the
guidance in SAB 101 for all periods presented.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44 ("FIN 44") "Accounting for Certain Transactions
Involving Stock Compensation, an Interpretation of APB Opinion No. 25."
FIN 44 clarifies the application of Opinion No. 25 for (a) the
definition of employee for purposes of applying Opinion No. 25, (b) the
criteria for determining whether a plan qualifies as a noncompensatory
plan, (c) the accounting consequences of various modifications to the
terms of a previously fixed stock option or award, and (d) the
accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions
cover specific events that occur either after December 15, 1998, or
January 12, 2000. The adoption of FIN 44 did not have a material impact
on the financial statements.
In various areas, including revenue recognition and stock-based
compensation, accounting standards and practices continue to evolve.
The FASB continues to address revenue and other related accounting
issues. The management of the Company believes it is in compliance with
all of the rules and related guidance as they currently exist. However,
any changes to generally accepted accounting principles in these areas
could impact the Company's accounting for its operations.
7. Subsequent Events
In October 2000 and November 2000, Docent sold 9,200,000 shares of
common stock in its initial public offering with proceeds, net of
commissions, of $94.1 million. In conjunction with the initial public
offering, all outstanding shares of the Company's preferred stock
converted into shares of common stock on a one-to-one basis.
9
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's Condensed Consolidated Financial Statements and related
Notes thereto contained elsewhere within this document. Operating results
for the three and nine-month periods ended September 30, 2000 are not
necessarily indicative of the results that may be expected for any future
periods, including the full fiscal year. Reference should also be made to
the Annual Consolidated Financial Statements, Notes thereto, Management's
Discussion and Analysis of Financial Condition and Results of Operations,
and Risk Factors contained included in our Registration Statement on Form
S-1, filed with and deemed effective by the Securities and Exchange
Commission on September 29, 2000.
This discussion contains forward-looking statements that involve risks
and uncertainties. These statements relate to our future plans, objectives,
expectations and intentions, and the assumptions underlying or relating to
any of these statements. These statements may be identified by the use of
words such as "believe," "expect," "anticipate," "intend," plan," " will"
and similar expressions. Our actual results could differ materially from
those discussed in these statements. Factors that could contribute to such
differences include those discussed in this document such as our statement
that we believe our cash will last through the foreseeable future, that we
expect to incur substantial operating losses, and increase our research and
development, sales and marketing, and general and administrative expenses,
and those discussed in our registration statement on Form S-1 (File No.,
333-34546). Except as required by law, we undertake no obligation to update
any forward-looking statements, whether as a result of new information,
future events or otherwise.
Overview
General
Docent was incorporated in June 1997 to develop eLearning products,
including its current knowledge exchange eHub platform.
Sources of Revenue and Revenue Recognition
We generate revenue from the sale of our products and services to our
knowledge exchange eHub constituents, which are enterprises, content
providers and professional communities, and from our reseller partners. To
date, we have primarily generated revenue from direct sales to our domestic
enterprise customers.
Enterprise customers have the option of purchasing licenses for the
Docent Enterprise software or alternatively using our Application Service
Provider offerings. Our license agreements are time-based or perpetual. Our
time-based licenses require license holders to pay a monthly fee, which is
based on the number of participants and includes maintenance and support.
Our perpetual licensees pay an initial fee based on the number of
participants and may enter into annual maintenance contracts that include
the right to receive periodic upgrades, error corrections, and telephone
and Web-based support. Our Application Service Provider offerings allow
enterprise customers to host their knowledge exchange solutions on our
servers. We charge an initial set-up fee plus an ongoing monthly fee, which
includes access to telephone and Web-based support. Customers with
perpetual or time-based licenses can also outsource the hosting of their
system on our servers for a monthly fee.
In conjunction with the licensing of our Docent Enterprise software,
we offer professional services in areas such as implementation and
training. In the future, we expect to act as a reseller of third party
content to our enterprise customers and to receive commission revenue on
these sales. To date, most of our enterprise customer revenue has been
based on perpetual software licenses and professional services.
We typically sign multi-year royalty agreements with our content
providers to deliver their content over the Web. Under these agreements, we
receive a minimum annual payment and a percentage of the revenue they
receive in excess of the minimum payment for content which they or third
parties, such as resellers or professional communities described below,
provide to customers. For that minimum payment, we provide our software and
application hosting. In the first year of the agreement, as part of the
minimum payment, we also provide professional services such as marketing,
implementation and training. During subsequent years, these services are
available for an additional fee. To date, almost all of our revenue from
content providers has consisted of the minimum annual payments. Except as
required by law, undertake no obligation to update any forward looking
statements.
We have generated small amounts of revenue to date, and expect to
generate additional revenue, from professional communities in two ways:
directly from the professional community and indirectly from content
providers. We typically sign multi-year royalty agreements with our
professional community customers under which we receive a minimum annual
payment. For that minimum payment, we provide our software and application
hosting. In the first year of the agreement as part of the minimum payment,
we also provide professional services in
10
<PAGE>
areas such as marketing, implementation and training. During subsequent years,
these professional services are available for an additional fee. Because the
professional communities usually provide their members with access to content
from our content providers, our content providers would receive revenue which
is included in the calculation of the royalties we are entitled to receive
from our content providers as described above. In late 1999, we entered into
our first agreements with these professional communities and almost all of our
revenue to date from them has consisted of minimum annual payments.
We generate revenue from our reseller partners who purchase content
providers and resell them to their customers. To date, resellers have
typically sold both perpetual licenses to our software and annual maintenance
agreements. They usually provide additional professional services themselves,
but may also resell some of our professional services. Generally, they receive
a discount from our list prices. When they resell content from our content
providers, our content providers would receive revenue that is included in the
calculation of the royalties we are entitled to receive from our content
providers as described above. We have only recently entered into agreements
with reseller partners and have received little revenue to date from them.
In accordance with the American Institute of Certified Public Accountants
("AICPA") Statement of Position 97-2, as amended we recognize revenue from
licensing of our software if all of the following conditions are met:
. There is persuasive evidence of an arrangement;
. We have delivered the product to the customer;
. Collection of the fees is probable; and
. The amount of the fee to be paid by the customer is fixed or
determinable.
For arrangements involving customer acceptance, revenue recognition is
deferred until the earlier of the end of the acceptance period or until
written notice of acceptance is received from the customer.
For arrangements involving significant modification and customization of
our software product, we recognize revenue using the percentage-of-completion
method. However, where there are customer acceptance clauses which we do not
have an established history of meeting or which are not considered to be
routine, we recognize revenue when the arrangement has been completed and
accepted by the customer.
For arrangements which include multiple elements, such as product
license, maintenance and support, hosting and professional services, we
allocate revenue to all undelivered elements, usually maintenance and support,
hosting and professional services, based on objective evidence of the fair
value of those elements. Fair value is specific to us and represents the price
for which we sell each element separately. Any amount remaining is allocated
to the delivered elements, generally only the product license, and recognized
as revenue when the conditions discussed above are met.
We recognize revenue from fees for ongoing maintenance and support
ratably over the period of the maintenance and support agreement, which is
generally one year. We recognize revenue allocated to, or fees generated from,
the separate selling of professional services as the related services are
performed. Fees associated with hosting services, including any initial set-up
fee, are recognized ratably over the period of the hosting agreement, which is
generally one year.
For arrangements with our content providers, the minimum fee is allocated
among the separate elements, including professional services and hosting,
based on the fair value of each of these elements. Any minimum royalty amount
is recognized as revenue ratably over the period in which it is earned, which
is generally one year. Any royalty over and above the minimum is recognized
upon receipt of a revenue report from the content provider.
Revenue from sales through resellers are recognized upon sale to end
users provided all the conditions for revenue recognition set forth above have
been met.
Customer billings which have not been recognized as revenue in accordance
with the above policies are shown on the balance sheet as deferred revenue.
Costs and expenses
11
<PAGE>
Our cost of license revenue includes the cost of manuals and product
documentation, production media and shipping costs. Our cost of service and
maintenance revenue includes salaries and related expenses of our professional
services organization and charges related to hosting activities and other
third party services.
Research and development, sales and marketing, and general and
administrative expense categories include direct costs such as salaries,
employee benefits, travel and entertainment, and allocated communication,
information technology, rent and depreciation. Sales and marketing expenses
also include sales commissions and expenditures related to public relations,
advertising, trade shows and marketing campaigns. General and administrative
expenses also include costs such as legal and financial services fees.
Stock-based compensation consists of two components. The first component
is amortization of unearned stock-based compensation recorded in connection
with stock option grants to our employees. This amount represents the
difference between the deemed fair value of our common stock for accounting
purposes on the date these stock options were granted and the exercise price
of those options. This amount is included as a component of stockholders'
equity and is being amortized on an accelerated basis by charges to operations
over the vesting period of the options, consistent with the method described
in Financial Accounting Standards Board Interpretation No. 28. The second
component is the fair value of common stock and other equity instruments
issued to non-employees in exchange for services. We use the Black-Scholes
pricing model to estimate the fair value of other equity instruments granted
to non-employees.
History of Losses
We have incurred significant costs to develop our technology and products
and for our engineering, sales, marketing, professional services and
administration departments. As a result, we have incurred significant losses
since inception and as of September 30, 2000, had an accumulated deficit of
$89.4 million. We believe our success is contingent on increasing our customer
and partner base, continually enhancing our Docent Enterprise product and
expanding the number of our eHub members. We intend to continue to invest
heavily in sales, marketing, research and development, and administrative
personnel and infrastructure. We therefore expect to continue to incur
substantial operating losses for the foreseeable future.
Results of Operations
Three and Nine Months Ended September 30, 1999 and 2000
Revenue
Total revenue increased $2.7 million, from $210,000 for the three months
ended September 30, 1999 to $2.9 million for the three months ended September
30, 2000. Total revenue increased $4.9 million, from $382,000 for the nine
months ended September 30, 1999 to $5.3 million for the nine months ended
September 30, 2000. The increases in revenue were primarily attributable to
increases in the number of customers and revenue per customer. The growth in
our customer base is primarily due to the increased market acceptance of our
product and an increase in the size of our sales and marketing organization
and partners. The growth in revenue per customer is a reflection of the
evolution of our business strategy toward focusing on larger enterprise
opportunities.
Total license revenue increased $1.4 million, from $62,000 for the three
months ended September 30, 1999 to $1.5 million for the three months ended
September 30, 2000. Total license revenue increased $2.1 million, from
$103,000 for the nine months ended September 30, 1999 to $2.2 million for the
nine months ended September 30, 2000. The increase in revenue was primarily
attributable to increases in the number of customers and revenue per customer
as described above.
Total service and maintenance revenue increased $1.2 million, from
$148,000 for the three months ended September 30, 1999 to $1.4 million for the
three months ended September 30, 2000. Total service and maintenance revenue
increased $2.9 million, from $279,000 for the nine months ended September 30,
1999 to $3.2 million for the nine months ended September 30, 2000. The
increase in revenue was primarily attributable to increases in the number of
customers and revenue per customer described above. To a lesser extent, the
increase was due to the cumulative effect of renewals of annual maintenance
agreements.
Three customers accounted for 23%, 13% and 10% of the Company's revenue
for the three months ended September 30, 2000. One customer accounted for 13%
of the Company's revenue for the nine months ended September 30, 2000. Three
customers accounted for 35%, 20% and 10% of the Company's revenue for the
three
12
<PAGE>
month period ended September 30, 1999. Four customers accounted for 19%, 13%,
11% and 10% of the Company's revenue for the nine month period ended September
30, 1999.
Costs and Expenses
Cost of license revenue has not materially changed for the three and nine
month periods ended September 30, 1999 and 2000, and consisted primarily of
the fixed costs of delivering the software. Cost of service and maintenance
revenue increased $1.7 million, or 518%, from the three months ended September
30, 1999 to the three months ended September 30, 2000. Cost of service and
maintenance revenue increased $4.4 million, or 560%, from the nine months
ended September 30, 1999 to the nine months ended September 30, 2000. These
increases are due to the growth in personnel in our professional services
organization.
Research and development. Research and development expenses increased
$668,000, or 100%, from the three months ended September 30, 1999 to the three
months ended September 30, 2000. Research and development expenses increased
$1.5 million, or 86%, from the nine months ended September 30, 1999 to the
nine months ended September 30, 2000. The increases were primarily
attributable to increases in the number of research and development personnel.
To date, all software development costs have been expensed in the period
incurred. We believe that continued investment in research and development is
critical to attaining our strategic objectives and, as a result, we expect
research and development expenses to increase in future periods.
Sales and marketing. Sales and marketing expenses increased $6.9 million,
or 329%, from the three months ended September 30, 1999 to the three months
ended September 30, 2000. Sales and marketing expenses increased $15.1
million, or 271%, from the nine months ended September 30, 1999 to the nine
months ended September 30, 2000. The increases were primarily attributable to
an increase in the number of employees in our sales and marketing
organizations, and, to a lessor extent, to increased marketing expenses.
Expenses relating to sales and marketing personnel increased $5.6 million for
three months ended September 30, 2000 and increased $12.1 million for nine
months ended September 30, 2000, when compared to the same periods in fiscal
1999. Expenses relating to marketing activities including advertising, trade
shows, promotional materials and public relations, increased $1.3 million for
the three months ended September 30, 2000 and $3.0 million for the nine months
ended September 30, 2000, when compared to the same periods in fiscal 1999. We
believe our sales and marketing expenses will continue to increase in absolute
dollar amounts in future periods as we expect to continue to expand our sales
and marketing efforts.
General and administrative. General and administrative expenses increased
$1.1 million, or 157%, from the three months ended September 30, 1999 to the
three months ended September 30, 2000. General and administrative expenses
increased $2.9 million, or 213%, from the nine months ended September 30, 1999
to the nine months ended September 30, 2000. The increases were primarily
attributable to an increase in administrative employees and in the amount of
outside professional service fees. Expenses relating to general and
administrative personnel increased $1.0 million for the three months ended
September 30, 2000 and increased $2.3 million for the nine months ended
September 30, 2000, when compared to the same periods in fiscal 1999. Fees for
outside professional services, such as attorneys and accountants, increased
$583,000 for the nine months ended September 30, 2000, when compared the same
period in fiscal 1999. We believe general and administrative expenses will
continue to increase in absolute dollars, as we expect to add personnel to
support our expanding operations, incur additional costs related to the growth
of our business and assume the responsibilities of a public company.
Stock-based compensation. In connection with the issuance of common stock
and the granting of stock options and warrants to our employees and non-
employees, we recorded stock-based compensation totaling approximately $55.1
million as of September 30, 2000. Stock-based compensation expense relating to
the common stock, options and warrants was $4.4 million for the three months
ended September 30, 2000, $23.0 million for the nine months ended September
30, 2000, $364,000 for the three months ended September 30, 1999, and $843,000
for the nine months ended September 30, 1999. As of September 30, 2000, we had
an aggregate of $27.5 million of deferred stock-based compensation to be
amortized.
The amortization of the remaining deferred stock-based compensation is
expected to result in additional charges to operations as follows: $4.8
million in the remaining three months ending December 31, 2000; $12.1 million
in 2001; $6.4 million in 2002; $3.3 million in 2003; and $873,000 in 2004.
Interest income and other expense, net
13
<PAGE>
Interest income and other expense, net consists of interest income,
interest expense and other non-operating expenses. Interest income and other
expense, net increased $147,000 from the three month period ended September
30, 1999 to the three month period ended September 30, 2000. Interest income
and other expense, net increased $600,000 from the nine month period ended
September 30, 1999 to the nine month period ended September 30, 2000. Interest
income increased from a higher average invested cash proceeds from financing
activities.
Liquidity and Capital Resources
Since inception, we have funded our operations primarily through the sale
of equity securities, through which we have raised net proceeds of $78.0
million through September 30, 2000. As of September 30, 2000, we had
approximately $30.3 million of cash and cash equivalents and outstanding
equipment leases and notes payable of $1.9 million.
Cash used in operating activities was $26.2 million in the nine months
ended September 30, 2000, and $8.2 million in the nine months ended September
30, 1999. The cash used during these periods was primarily attributable to net
losses of $50.5 million during the nine months ended September 30, 2000, and
$10.0 million in the nine months ended September 30, 1999. During the first
nine months of 2000, these net losses required lower cash use due to non-cash
compensation charges related to various equity instruments granted to
employees and non-employees. Total expenses in relation to these grants were
$23.0 million in the nine months ended September 30, 2000.
In addition, changes in operating assets and liabilities generated cash
of $410,000 in the nine months ended September 30, 2000, and $749,000 in the
nine months ended September 30, 1999. The charges during the periods primarily
were the result of increases in accounts payable, accrued liabilities and
deferred revenue offset by increases in accounts receivable and prepaid
expenses as we expanded our business. During the first nine months of 2000,
accounts receivable increased $5.2 million due the increase in revenue.
Investment in property and equipment, excluding equipment acquired under
capital leases, was $3.0 million in the nine months ended September 30, 2000,
and $210,000 in the nine months ended September 30, 1999.
Cash provided by financing activities was $46.7 million during the nine
months ended September 30, 2000, and $20.6 million in the nine months ended
September 30, 1999. The funding resulted primarily from net proceeds from the
sale of convertible preferred stock and, to a lesser extent, from bank
borrowings during the nine months ended September 30, 1999 . These amounts
were partially offset by payments on capital lease obligations and notes
payable of $741,000 in the nine months ended September 30, 2000, and $533,000
in the nine months ended September 30, 1999.
As of September 30, 2000, we did not have any material commitments for
capital expenditures. Our principal commitments consisted of obligations of
$1.7 million under operating leases and $192,000 under capital leases.
In October and November 2000, Docent sold 9,200,000 shares of common
stock in its initial public offering with proceeds, net of commissions, of
$94.1 million. In conjunction with the initial public offering, all
outstanding shares of the Company's preferred stock converted into shares of
common stock on a one-to-one basis. Proceeds from the initial offering include
proceeds from shares issued upon exercise of the underwriters' over-allotment.
We currently anticipate that our available cash resources, combined with
the net proceeds from our offering, will be sufficient to meet our presently
anticipated working capital, capital expenditure and business expansion
requirements for the foreseeable future. However, we may need to raise
additional to support a more rapid expansion, develop new or enhanced
applications and services, respond to competitive pressures, acquire
complementary businesses or technologies, or take advantage of unanticipated
opportunities.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 establishes a new model for accounting for derivatives and hedging
activities and supercedes and amends a number of existing accounting
standards. SFAS No. 133 requires
14
<PAGE>
that all derivatives be recognized in the balance sheet at their fair market
value and the corresponding derivative gains or losses be either reported in
the statement of operations or as a deferred item depending on the type of
hedge relationship that exists with respect of such derivatives. In July 1999,
the Financial Accounting Standards Board issued SFAS No. 137, Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date
of FASB Statement No. 133. SFAS No. 137 deferred the effective date until the
year beginning after June 30, 2000. In June 2000, the Financial Accounting
Standards Board issued SFAS No. 138, Accounting for Derivative Instruments and
Hedging Activities--An Amendment of FASB Statement No. 133. SFAS No. 138
amends the accounting and reporting standards for certain derivatives and
hedging activities such as net settlement contracts, foreign currency
transactions and intercompany derivatives. The Company will adopt SFAS No. 133
in its quarter ending March 31, 2001. To date, the Company has not engaged in
derivative or hedging activities.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements,"
which provides guidance on the recognition, presentation and disclosure of
revenue in financial statements filed with the SEC. SAB 101 outlines the basic
criteria that must be met to recognize revenue and provides guidance for
disclosure related to revenue recognition policies. We have complied with the
guidance in SAB 101 for all periods presented.
In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44 ("FIN 44") "Accounting for Certain Transactions
Involving Stock Compensation, an Interpretation of APB Opinion No. 25". FIN 44
clarifies the application of Opinion No. 25 for (a) the definition of employee
for purposes of applying Opinion No. 25, (b) the criteria for determining
whether a plan qualifies as a noncompensatory plan, (c) the accounting
consequences of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000, but
certain conclusions cover specific events that occur after either December 15,
1998, or January 12, 2000. The adoption of FIN 44 did not have a material
impact on the financial statements.
In various areas, including revenue recognition and stock-based
compensation, accounting standards and practices continue to evolve. The FASB
continues to address revenue and other related accounting issues. The
management of the Company believes it is in compliance with all of the rules
and related guidance as they currently exist. However, any changes to
generally accepted accounting principles in these areas could impact the
Company's accounting for its operations.
<PAGE>
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market and Currency Risk
All of our revenue and capital spending is denominated in U.S.
dollars. As of September 30, 2000, we were exposed to interest rate
risk on the balance outstanding on our equipment loan and subordinated
debt facility. The table below presents principal amounts by expected
maturity and the weighed average interest rates of debt obligations
which are sensitive to changes in interest rates.
<TABLE>
<CAPTION>
Expected Maturity Date
----------------------
2000 2001 2002 Total
------- ------- -------- --------
<S> <C> <C> <C> <C>
(in thousands)
Equipment loan......................................................... $ 36 $ 12 $ -- $ 48
Weighted average interest rate......................................... 8.5% 8.5% 8.5% 8.5%
Subordinated debt facility............................................. $ 343 $ 1,080 $ 363 $ 1,786
Weighted average interest rate......................................... 12.2% 12.2% 12.2% 12.2%
</TABLE>
We believe that the fair value of our current borrowings
approximates their carrying value due to the fact that the interest rates
charged approximate a market rate.
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings
-----------------
<PAGE>
Not applicable.
Item 2. Changes in Securities
---------------------
During the quarter ended September 30, 2000, options to purchase
2,099,904 shares of common stock to our employees, consultants, and 4 directors
---------
under our 1997 Stock Plan.
During the quarter ended September 30, 2000, we sold 2,598,875 shares
of Series F convertible preferred stock at $7.52 per share for net proceeds of
approximately $18.8 million.
During the quarter ended September 30, 2000, we issued a warrant to
purchase 14,772 shares of common stock.
During the quarter ended September 30, 2000, employees, consultants and
5 members of the board of directors exercised options for 1,732,086 shares of
common stock. Also during the period, the company issued 119,044 shares of
common stock and 185,000 shares of Series D Preferred Stock pursuant to the
exercise of warrants held by investors.
The sale of the above securities was deemed to be exempt from
registration under the Securities Act of 1933 (the "Act") in reliance upon
Section 4(2) of the Act or Rule 701 promulgated under Section 3(b) of the Act.
Use of Proceeds
On October 4, 2000, we completed the initial public offering of our
common stock. The managing underwriters in the offering were Deutsche Banc Alex.
Brown, Dain Rauscher Wessels and Thomas Weisel Partners LLC. The shares of the
common stock sold in the offering were registered under the Securities Act of
1933, as amended, on a Registration Statement on Form S-1 (No. 333-34546). The
Securities and Exchange Commission declared the Registration Statement effective
on September 29, 2000.
The offering commenced on September 29, 2000 and terminated on October
4, 2000 after we had sold 8,000,000 of the shares of common stock registered
under the Registration Statement. We sold the remaining 1,200,000 of the shares
of common stock registered under the Registration Statement on November 1, 2000.
The initial public offering price was $11.00 per share for an aggregate public
offering of $101,200,000. We paid a total of $7,084,000 in underwriting
discounts and commissions. In addition, we incurred costs and expenses, other
than underwriting discounts and commissions, totaling approximately $2,300,000
in connection with the offering.
After deducting the underwriting discounts and commissions and the
offering expenses, the estimated net proceeds to us from the offering were
approximately $91,816,000. The proceeds of the offering were predominantly held
in a money market account as of October 4, 2000.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) At our annual meeting of stockholders, held on July 18, 2000, the
following matters were submitted to a vote of the stockholders:
(1) The election of directors as follows.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
David R. Ellett: 22,021,031 0 2,041
Kevin G. Hall: 22,021,031 0 2,041
Jos C. Henkens: 22,021,031 0 2,041
Ali Kutay: 22,021,031 0 2,041
David Mandelkern: 22,017,573 1,058 2,041
Pardner Wynn: 22,021,031 0 2,041
</TABLE>
(2) An amendment to our 1997 Stock Option Plan to increase the
number of shares reserved for issuance under the Plan from
7,300,000 shares of our common stock to 8,300,000.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
22,021,072 0 0
</TABLE>
(3) The Amended and Restated Articles of Incorporation to be
effective upon the closing of our public offering.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
22,021,072 0 0
</TABLE>
(4) The adoption of our 2000 Omnibus Equity Plan to be
effective upon the closing of our public offering.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
22,016,289 1,458 3,325
</TABLE>
(5) The adoption of our 2000 Employee Stock Purchase Plan to
be effective upon the closing of our initial public
offering
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
22,016,289 1,458 3,325
</TABLE>
(6) An amendment to our bylaws to be effective upon the
closing of our public offering.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
22,019,614 1,458 0
</TABLE>
(7) The adoption of a form of indemnification agreement for
use by our officers and directors to be effective upon the
closing of the public offering.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
22,019,614 1,458 0
</TABLE>
(b) We solicited the consent of our stockholders as of August 2000 to
approve the following:
17
<PAGE>
The Amended and Restated Certificate of Incorporation authorizing
2,659,574 shares of Series F preferred Stock.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
17,923,283 0 7,220,052
</TABLE>
(c) We solicited the consent of our stockholders as of August 2000 to
approve the following:
The Amended and Restated Certificate of Incorporation increasing
the authorization of Series F preferred stock to 4,000,000 shares
of Series F preferred stock.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN/NOT VOTE
--- ------- ----------------
<S> <C> <C> <C>
17,242,484 0 7,900,851
</TABLE>
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits:
(a) The exhibits listed on the accompanying index to exhibits are
filed or incorporated by reference (as stated therein) as part of
this report on 10Q.
(b) No reports on Form 8-K were filed by Docent, Inc. during the
three months ended September 30, 2000.
18
<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.
Date: November 14, 2000
Docent, Inc.
------------
(Registrant)
BY: /s/ DONALD E. LUNDGREN
----------------------
Donald E. Lundgren
Vice President and Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
-------------
3.1 Amended and restated Certificate of Incorporation, filed as Exhibit 3.2 to
the Registrant's registration statement on Form S-1 (File No. 333-34546)
and incorporated herein by reference.
3.2 Amended and restated Bylaws of the Registrant filed as Exhibit 3.3 to the
Registrant's registration statement on Form S-1 (File No. 333-34546) and
incorporated herein by reference.
4.1 Form of Common Stock Certificate, filed as Exhibit 4.1 to the Registrant's
registration statement on Form S-1 (File No. 333-34546) and incorporated
herein by reference.
4.2 Amended and restated Investor Rights Agreement, dated August 29, 2000.
27 Financial Data Schedule
20
