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SECTION CAPTIONED 'RISK FACTORS' CONTAINED IN THE @PLAN.INC ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 (COMMISSION FILE NO. 000-27923).
RISK FACTORS
There are statements in this report that are 'forward-looking statements'
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited to, statements
about our plans, objectives, expectations and intentions and other statements
contained in this report that are not historical facts. When used in this
report, the words 'expect,' 'anticipate,' 'intend,' 'plan,' 'believe,'
'estimate' and similar expressions are generally intended to identify
forward-looking statements. Because these forward-looking statements involve
risks and uncertainties, there are important factors that could cause actual
results to differ materially from those expressed or implied by these
forward-looking statements, including the following:
RISKS RELATED TO OUR BUSINESS AND OUR COMPANY
BECAUSE WE HAVE A LIMITED OPERATING HISTORY, IT IS DIFFICULT TO EVALUATE OUR
BUSINESS AND PROSPECTS.
We were incorporated in May 1996 and have a limited operating history. As a
result, we face many risks and difficulties frequently encountered by early
stage companies in new and rapidly evolving markets, including the Internet
advertising and electronic commerce markets. These risks include our ability to:
sustain revenue growth rates;
manage our expanding operations;
compete with companies that have longer operating histories, greater name
recognition and greater financial resources; and
expand our current client base.
We also depend on the growing use of the Internet for advertising, commerce
and communication, and on general economic conditions. We cannot assure you that
our business strategy will be successful or that we will successfully address
these risks.
WE HAVE A HISTORY OF LOSSES, AND WE ANTICIPATE CONTINUED LOSSES.
To date, we have not made a profit. We incurred net losses of approximately
$661,000 during our inception period from May 29, 1996 through December 31,
1996, $2.8 million in 1997, $1.9 million in 1998, and $2.1 million in 1999. As
of December 31, 1999, our accumulated deficit was $8.8 million. We expect to
continue incurring significant operating and net losses through at least 2000
and, as a result, we will need to generate significant revenues to achieve and
maintain profitability. Although our revenues have grown in recent quarters, we
cannot assure you that we will achieve sufficient revenues for profitability.
Even if we do achieve profitability, we cannot assure you that we can sustain or
increase profitability on a quarterly or annual basis in the future. Our results
of operations and financial condition will be harmed if revenues grow more
slowly than we anticipate, or if operating expenses exceed our expectations and
cannot be adjusted accordingly.
WE DEPEND ON SUBSCRIPTION RENEWALS BY OUR CLIENTS AND A DECREASE IN OUR CURRENT
RATE OF RENEWAL COULD CAUSE A DECLINE IN OUR REVENUE.
We derive all of our revenues from subscriptions to our systems. Because we
have a limited operating history, our subscription renewal rate is based on a
limited number of contracts and we
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are not sure that we will continue to experience our current rate of
subscription renewal. If our renewal rate percentage declines, our results of
operations and financial condition could be harmed. Our subscription renewal
rates may decline as a result of a consolidation in our client base, the
emergence of direct competition or if a significant number of our clients cease
operations.
OUR BUSINESS WILL BE HARMED IF OUR RELATIONSHIP WITH GALLUP IS TERMINATED
CAUSING UPDATES TO OUR DATABASE OR THE INTRODUCTION OF NEW PRODUCTS TO BE
DELAYED.
The methodology for the collection of data, the generation of a sample
population to be surveyed and the collection of data from that sample population
for our Web user database, our U.S. population database and our merchandising
vertical system are controlled and conducted by Gallup. We cannot be sure that
Gallup will continue to provide us services in a manner that allows us to
execute our business strategy. If our agreements with Gallup terminates for any
reason, we will need to find another firm to perform our research data
collection services and this could harm our business by delaying our ability to
update our database and introduce new products.
IF GALLUP EXPERIENCES PROBLEMS WITH THE TIMELY COLLECTION, PROCESSING, STORING
OR DELIVERY OF ACCURATE DATA, WE MAY LOSE CREDIBILITY WITH OUR CLIENTS.
The data that comprises our exclusively owned databases is collected and
statistically processed by Gallup and delivered to us on a quarterly basis.
Gallup could experience problems with, or make errors in, collecting,
processing, storing or delivering the data. In addition, Gallup could experience
problems with the computer systems that process and store the data. These
problems could result in inaccuracies or in delays in delivery or loss of, the
data from Gallup. These inaccuracies, delays or losses could cause us to lose
credibility with our clients or breach some client contracts which could cause
us to lose clients and could harm our business.
WE HAVE EXPERIENCED SIGNIFICANT GROWTH IN OUR BUSINESS IN RECENT PERIODS AND ANY
INABILITY TO MANAGE THIS GROWTH AND ANY FUTURE GROWTH COULD HARM OUR BUSINESS.
Our business has grown and we expect continued growth as we add new products
and hire new employees. This growth has placed, and our anticipated future
growth in our operations will continue to place a strain on our management
systems and resources. We cannot assure you that our management team will be
able to efficiently or successfully manage our growth. In addition, we will need
to hire additional financial and operations personnel. We expect that we will
need to continue to improve our financial and managerial controls and reporting
systems and procedures, and we will need to continue to expand, train and manage
our workforce.
IF WE ARE UNABLE TO ATTRACT AND RETAIN SALES AND CLIENT SERVICE PERSONNEL OR WE
ARE UNABLE TO ADEQUATELY TRAIN OUR SALES PERSONNEL IN A TIMELY MANNER, OUR
BUSINESS AND FUTURE REVENUE GROWTH WOULD BE HARMED.
Our business would be harmed if we were unable to attract, retain and
motivate highly qualified, experienced sales and client service personnel. We
need to hire additional sales and client service personnel to achieve our growth
objectives. Competition for these individuals is intense. Even if we are able to
hire additional sales personnel it typically takes months of training before
they are fully productive. We may be unable to attract, train and retain an
adequate number of individuals to meet our sales and client service objectives.
OUR BUSINESS AND FUTURE REVENUE GROWTH MAY SUFFER IF WE ARE NOT SUCCESSFUL AT
DEVELOPING AND INTRODUCING NEW PRODUCTS.
Our future growth depends in part on our ability to offer new products and
services on a timely and cost-effective basis. Our business may suffer if we
fail to develop and introduce new
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products or if our new products are not accepted by the market or are accepted
at a slower rate than we anticipate. In December 1998, we introduced the @plan
Kepler E-Business System for online retailers and consumer brand marketers. We
are currently launching our first highly targeted vertical system focusing on
the automotive, travel and merchandising e-commerce sector which is expected to
launch late in the first quarter 2000. In addition, we plan on launching
additional vertical systems covering additional vertical e-commerce sectors.
There are many costs and risks associated with developing and introducing these
and other new products, including:
significant market research data collection and software development costs;
need for additional sales, client service and other personnel;
diversion of management attention and resources; and
the lack of acceptance of new products in the marketplace.
We cannot assure you that we will be successful in developing and
introducing new products.
OUR FUTURE REVENUES MAY BE UNPREDICTABLE AND OUR QUARTERLY RESULTS ARE EXPECTED
TO FLUCTUATE.
Our operating results have varied on a quarterly basis and may fluctuate
significantly in the future as a result of a variety of factors, many of which
are outside our control. Due to these fluctuations, it is likely that in some
future quarters our operating results will fall below the expectations of
securities analysts and investors, which could cause the price of our common
stock to drop. Factors that may affect our quarterly operating results include:
market acceptance of the Web as an advertising medium;
the development of the electronic commerce market;
market acceptance of our products;
the amount and timing of operating costs and capital expenditures relating
to the expansion of our business, including those related to our
development of highly targeted vertical market research and planning
systems;
variations in product or client mix, as pricing may vary based on the
volume and type of subscriptions being sold to a client;
our ability to expand our client base and retain current clients;
new competitors entering our market;
general economic conditions as well as economic conditions specific to the
Internet;
our ability to attract, train and retain qualified sales and other
personnel;
technical difficulties or service interruptions; and
the magnitude and timing of strategic pricing changes, marketing decisions
or acquisitions.
Our limited operating history and the emerging nature of our markets make
prediction of future revenues difficult. Our expense levels are based, in part,
on our expectations with regard to future revenues, and to a large extent our
expenses are fixed, particularly in the short term. We cannot assure you that we
will be able to predict our future revenues accurately and we may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in our expectations could
cause significant declines in our quarterly operating results.
Due to all the foregoing factors, our quarterly revenues and operating
results are difficult to forecast. We believe that our quarterly revenues,
expenses and operating results could vary significantly in the future, and that
period-to-period comparisons should not be relied upon as indicators of future
performance.
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WE MAY EXPERIENCE CLIENT DISSATISFACTION OR BE EXPOSED TO LIABILITY FOR
SUPPLYING INACCURATE INFORMATION TO OUR CLIENTS.
Our data may contain inaccuracies as a result of data collection or software
errors, among other reasons. Our clients may become dissatisfied with our
systems, or we may face liability if we supply inaccurate information. Any
client dissatisfaction with our data would hinder our ability to attract new
clients and retain existing clients. If we face liability for supplying
inaccurate data, our business may suffer.
OUR REPUTATION AND THE ATTRACTIVENESS OF OUR SYSTEMS COULD BE IMPAIRED BY A
FAILURE OF OUR COMPUTING SYSTEMS AND OUR INTERNET SERVICE PROVIDER'S COMPUTING
SYSTEMS.
The performance of our server and networking hardware and software
infrastructure is critical to our business, reputation and ability to attract
and retain clients. Any system failure that causes an interruption in service or
a decrease in responsiveness of our processing or data storage capabilities
could impair our reputation and the attractiveness of our products. We entered
into an agreement with UUNet for our Internet connectivity. Any interruption in
the service that UUNet provides, or any failure of UUNet to handle higher
volumes of Internet users, would harm our business.
Despite precautions taken by us and our Internet service provider, the
occurrence of natural disasters or other unanticipated problems at our or their
facilities could result in interruption in the availability of our systems or
significant damage to our equipment. Even though we have implemented network
security measures, our servers are vulnerable to computer viruses, break-ins and
similar disruptions from unauthorized tampering. The occurrence of any of these
events could result in interruptions, delays, the loss or corruption of our data
or cessations in the availability of our systems, which could harm our business
and our reputation.
WE HAVE EXPERIENCED AND MAY AGAIN EXPERIENCE SYSTEM CAPACITY CONSTRAINTS THAT
COULD RESULT IN CLIENT DISSATISFACTION OR A LOSS OF CLIENTS.
An increase in the number of our clients, the addition of new products or
spikes in client demand, either unexpected or in connection with new data
releases, could strain the capacity of our computer systems, which could lead to
slower response time or system failures. Our business could be harmed by system
failures or slowdowns that reduce the speed and responsiveness of our data
processing and diminish the experience for our clients. We face risks related to
our ability to scale up to our expected client levels while maintaining superior
performance. We may need to purchase additional servers to maintain adequate
data processing speeds.
THE LOSS OF SERVICES OF OUR KEY EXECUTIVES WOULD LIKELY HURT OUR BUSINESS.
Our future success depends to a significant extent on the continued service
of Mark K. Wright, our Chief Executive Officer and Chairman of our Board of
Directors, and Karl A. Spangenberg, our President and Chief Operating Officer.
We have no employment agreements with either of these executives. The loss of
the services of either of Messrs. Wright or Spangenberg would likely hurt our
business.
WE FACE COMPETITION FROM MORE ESTABLISHED PROVIDERS OF INTERNET MARKET RESEARCH
TOOLS THAT COULD CAUSE A LOSS OF CLIENTS OR CAUSE US TO REDUCE THE PRICES WE CAN
CHARGE TO OUR CLIENTS.
Our market, namely providing market research tools for Internet advertisers,
advertising agencies, Web publishers, online retailers and consumer brand
marketers, is new and rapidly evolving. Competition for clients is intense and
is expected to increase in the future as existing competitors develop new
solutions, potential competitors become active in the market and our industry
consolidates. We cannot assure you that we will be able to compete successfully
or that
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competitive pressures will not harm our business. We believe that our ability to
compete depends upon many factors both within and beyond our control, including
the following:
the timing and market acceptance of new products and enhancements to
existing products developed either by us or our competitors;
our client service and support efforts;
our sales and marketing efforts; and
the ease of use, performance, price and reliability of products developed
either by us or our competitors.
Most of our competitors have longer operating histories, greater name
recognition, larger client bases and significantly greater financial, technical
and marketing resources than we do. This may allow them to respond more quickly
than we can to new or emerging technologies and changes in client requirements.
It may also allow them to devote greater resources than we can to the
development, promotion and sale of their products and services. These
competitors may also engage in more extensive research and development,
undertake more far-reaching marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to existing and potential employees,
strategic partners, advertisers and Web publishers. We cannot assure you that
our current and potential competitors will not develop products or services that
are of equal or superior quality to ours or that achieve greater market
acceptance or that may be offered at lower prices. In addition, current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products or services to address the needs of our prospective customers. It
is possible that new competitors may emerge and rapidly acquire significant
market share. Increased competition is likely to result in price reductions,
reduced gross margins and loss of market share, all of which will harm our
business. Please see 'Business -- Competition for Our Internet Clients' for
detailed information about our competition.
ANY FAILURE BY US TO PROTECT OUR INTELLECTUAL PROPERTY COULD HARM OUR BUSINESS
AND COMPETITIVE POSITION.
Our success and our competitive position are dependent on our internally
developed methods, technologies and trademarks which we generally protect
through a combination of copyright, trademark and trade secrecy laws,
confidentiality agreements with third parties, and license agreements with
consultants, vendors and customers. Despite these protections, a third party
could, without authorization, copy or otherwise take information from our
database. Our agreements with employees, consultants and others who participate
in development activities could be breached. We may not have adequate remedies
for any breach, and our trade secrets may otherwise become known or
independently developed by competitors. We have filed applications for several
trademarks in the United States. We cannot assure you that any of our trademark
applications will be approved. Even if these applications are approved, the
trademarks may be successfully challenged by others or invalidated.
WE WILL LOSE CLIENTS OR FAIL TO ATTRACT NEW CLIENTS IF THE INTERNET DOES NOT
CONTINUE TO DEVELOP AS AN ADVERTISING MEDIUM.
Our future success depends on an increase in the use of the Internet as an
advertising medium. We would lose clients or fail to attract new clients if the
market for Internet advertising fails to develop or develops more slowly than we
expect. The Internet advertising market is new and rapidly evolving, and it
cannot yet be compared with traditional advertising media to gauge its
effectiveness and value to advertisers. As a result, demand and market
acceptance for our systems is uncertain. Many of our current or potential
clients have little or no experience using the Internet for advertising
purposes, and they have allocated only a limited portion of their advertising
budgets to Internet advertising. The adoption of Internet advertising,
particularly by those entities that have historically relied upon traditional
media for advertising, requires accepting a new way of conducting business,
exchanging information and advertising products and services.
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Clients may find that Internet advertising is less effective for promoting their
products and services relative to traditional advertising media. In addition,
most of our current and potential Web publisher clients have little or no
experience in generating revenues from the sale of advertising space on their
Web sites.
THE INTERNET MARKET RESEARCH INDUSTRY IS NEW AND CHANGING QUICKLY AND OUR
SYSTEMS MAY NOT BE ACCEPTED BY OUR EXISTING AND FUTURE CLIENTS.
To date, no industry consensus has emerged as to what information tools will
be essential to buying and selling Internet advertising as well as to the
development of electronic commerce. Our existing and future clients may
challenge or refuse to accept the market research information that our systems
provide. Our clients may not be satisfied with our methodology for data
collection or may feel that our databases do not represent Internet users. Our
clients might turn to other current or future providers of market research
systems.
THE FAILURE OF INDUSTRY INITIATIVES TO SUPPORT OUR METHODOLOGIES OR THEIR
ENDORSEMENT OF OTHER METHODOLOGIES MAY RESULT IN A DECLINE IN SALES OF
SUBSCRIPTIONS FOR OUR SYSTEMS.
Key industry organizations, including the Internet Advertising Bureau, the
Media Ratings Council, the Advertising Research Foundation and FAST Forward,
have begun initiatives focusing on standards for Internet market research and
audience measurement. To the extent that some or all of these trade groups do
not support our methodologies or endorse other methodologies, our business and
financial condition could be harmed.
TECHNOLOGICAL CHANGE MAY RENDER OUR SYSTEMS OBSOLETE.
The Internet, the Internet advertising and electronic commerce markets are
characterized by rapidly changing technologies, evolving industry standards,
frequent new product and service introductions, and changing client demands. Our
systems may be rendered obsolete by those developments. Our future success
depends on our ability to adapt to rapidly changing technologies, to enhance our
existing products and to develop and introduce a variety of new products to
address our clients' changing needs. We may experience difficulties that could
delay or prevent the successful design, development, introduction or marketing
of our products. In addition, our new products or enhancements must meet the
requirements of our current and prospective clients and must achieve significant
market acceptance. Delays in introducing new products and enhancements may cause
clients to forego purchases of our products and purchase those of our
competitors.
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