<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 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 000-25847
---------------------
RAZORFISH, INC.
----------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3804503
------------ ---------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
107 Grand Street, 3rd Floor, New York, New York, 10013
---------------------------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(212) 966-5960
-------------------
(Registrant's Telephone Number, Including Area Code)
N/A
------
(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. [X] YES [_] NO
The number of shares outstanding of the Registrant's Class A Common Stock as
of August 10, 2000 was 95,005,096.
<PAGE>
RAZORFISH, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Interim Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1999
(audited) and June 30, 2000 1
Consolidated Statements of Operations for the
Three and Six Month Periods June 30, 1999 and 2000 2
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1999 and 2000 3
Notes to Consolidated Interim Financial
Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3. Qualitative and Quantitative Disclosures About
Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Exhibit Index 13
Signatures 17
Exhibit 27.1 Financial Data Schedule 18
<PAGE>
RAZORFISH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
----------- --------
(unaudited)
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 98,798 $ 89,610
Accounts receivable, net of allowance for doubtful accounts of $1,416
and $1,450 at December 31, 1999 and June 30, 2000, respectively 30,420 46,638
Unbilled revenues 15,667 21,611
Prepaid expenses and other current assets 3,731 9,409
Deferred tax assets 1,225 2,246
Due from affiliate 1,273 1,426
-------- --------
Total current assets 151,114 170,940
PROPERTY AND EQUIPMENT, net of accumulated depreciation and 15,428 19,327
amortization of $6,914 and $10,473 at December 31, 1999 and
June 30, 2000, respectively
INTANGIBLES, net of accumulated amortization of $3,641 and $7,793 at
December 31, 1999 and June 30, 2000, respectively 79,233 179,380
LOAN TO AFFILIATE 2,250 2,250
OTHER ASSETS 3,565 2,488
-------- --------
Total assets $251,590 $374,385
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Due to affiliate $ 97 $ -
Accounts payable and accrued expenses 36,086 35,201
Income taxes payable 9,132 3,141
Deferred revenues 2,464 3,687
Deferred rent 604 241
Current portion of long-term obligations 682 305
-------- --------
Total current liabilities 49,065 42,575
LONG-TERM OBLIGATIONS 1,760 1,448
MINORITY INTERST IN JOINT VENTURE - 1,431
DEFERRED TAX LIABILITY 191 1,588
OTHER LIABILITIES 2,221 2,729
-------- --------
Total liabilities 53,237 49,771
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par value; 10,000,000 shares authorized;
none issued or outstanding
Common stock: - -
Class A $.01 par value; 200,000,000 shares authorized; 88,811,621 and
94,856,970 issued at December 31, 1999 and June 30, 2000, respectively 888 945
Class B, $.01 par value; 50 shares authorized, issued, and outstanding at
December 31, 1999 and June 30, 2000 - -
Receivable from stockholder (533) (533)
Additional paid-in capital 200,297 316,282
Accumulated other comprehensive income 6 597
Retained earnings (deficit) (1,717) 7,911
Treasury stock at cost; 73,584 shares at December 31, 1999 and June 30, 2000 (588) (588)
-------- --------
Total stockholders' equity 198,353 324,614
-------- --------
Total liabilities and stockholders' equity $251,590 $374,385
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
1
<PAGE>
RAZORFISH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1999 2000 1999 2000
------- ------ ------- --------
<S> <C> <C> <C> <C>
Revenues $40,012 $76,560 $72,624 $140,676
Project personnel costs 19,579 36,391 35,254 66,254
------- ------- ------- --------
Gross profit 20,433 40,169 37,370 74,422
Sales and marketing 2,743 4,871 4,950 8,951
General and administrative 10,930 24,358 19,832 44,739
Merger -related costs 3,445 - 3,445 -
Non-cash compensation expense 27 - 54 -
Amortization of intangibles 837 2,166 1,629 4,152
------- ------- ------- --------
Income from operations 2,451 8,774 7,460 16,580
Other income, net 945 1,230 1,349 2,236
------- ------- ------- --------
Income before income taxes 3,396 10,004 8,809 18,816
Provision for income taxes 1,625 4,869 3,938 9,188
------- ------- ------- --------
Net income $ 1,771 $ 5,135 $ 4,871 $ 9,628
======= ======= ======= ========
Earnings per share:
Basic $.02 $.06 $.06 $.11
======= ======= ======= ========
Diluted $.02 $.05 $.05 $.10
======= ======= ======= ========
Weighted average common shares outstanding:
Basic 82,013 91,438 78,163 90,687
Diluted 94,546 96,508 90,254 97,585
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
2
<PAGE>
RAZORFISH, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1999 2000
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,871 $ 9,628
Adjustments to reconcile net income to net cash used in by operating activities--
Allowance for doubtful accounts 628 230
Depreciation and amortization 3,677 7,711
Realized gain on sale of investments (32) -
Non-cash capital contribution 55 -
Minority Interest 26 1,431
Tax benefit due to stock option exercise 1,200 4,915
Increase (decrease) in deferred tax assets (103) 926
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (15,898) (16,448)
Unbilled revenues (5,003) (5,944)
Prepaid expenses and other current assets (961) (5,370)
Due from affiliate (1,735) (159)
Other assets (270) 2,715
Accounts payable and accrued expenses 11,773 (175)
Deferred revenues (1,944) 1,223
Deferred tax liabilities (1,172) 2,037
Income taxes payable 767 (8,745)
Deferred rent 64 (363)
Due to related party (500) (97)
Other liabilities 565 -
---------- --------
Net cash used in operating activities (3,992) (6,485)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (4,578) (7,458)
Acquisitions of subsidiaries, net of cash acquired (3,005) -
Earn out payments associated with acquisitions - (1,000)
Proceeds from sale of marketable securities 5,302 -
---------- --------
Net cash used in investing activities (2,281) (8,458)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 1,654 5,421
Deferred registration costs 564 (76)
Payments under capital lease obligations 154 (181)
Proceeds from officer's loan 342 -
Proceeds from Initial Public Offering 48,322 -
Proceeds from exercise of Communicade's 10% option 25,303 -
Net borrowings (repayments) under lines of credit (4,972) -
Principal payments on long term debt (126) -
Repurchase of Treasury Stock (589) -
---------- --------
Net cash provided by financing activities 70,652 5,164
---------- --------
---------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (110) 591
---------- --------
Net increase (decrease) in cash and cash equivalents 64,269 (9,188)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 36,628 98,798
---------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 100,897 $ 89,610
========== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid - -
Interest paid - -
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES
Fair market value of common stock issued for earn out payments associated with acquisitions - 75,684
Fair market value of common stock issued for acquisitions 54,940 21,907
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements
3
<PAGE>
RAZORFISH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
($ in thousands, except per share amounts)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Razorfish, Inc. ("Razorfish"), together with its wholly owned subsidiaries
(the "Company"), is a leading provider of global digital solutions. Digital
solutions are business solutions that use digital technologies to enhance
communications and commerce between businesses and their consumers, suppliers,
employees, and other partners. These digital solutions utilize a wide variety
of platforms, including the World Wide Web, wireless, broadband, and satellite
communications and a variety of digital devices and information appliances,
including desktop PCs, mobile phones, pagers, personal digital assistants, and
backend ERP and legacy systems. The Company thereby creates for its clients
digital solutions and designs to help them fundamentally re-architect their
business models and identify and improve communications and commerce
opportunities. Razorfish currently has offices in New York, Boston, Los
Angeles, San Francisco, Santa Clara, Amsterdam, Frankfurt, Hamburg, Helsinki,
London, Mannheim, Milan, Oslo, Stockholm, and Tokyo.
On January 12, 2000, the Board of Directors authorized a 2-for-1 stock split of
the Company's Class A common stock effected as a 100% stock dividend on January
27, 2000 for stockholders of record on January 20, 2000. All references in the
accompanying unaudited interim consolidated financial statements and footnotes
have been retroactively restated to give effect to this stock split.
Principles of Consolidation
The accompanying unaudited consolidated financial statements of the Company have
been prepared pursuant to the rules of the Securities and Exchange Commission
(the "SEC"). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. These unaudited interim consolidated financial statements should
be read in conjunction with the audited consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K, as amended
(File No. 000-25847). In the opinion of management, the accompanying unaudited
interim consolidated financial statements reflect all adjustments, which are of
a normal recurring nature, necessary for a fair presentation of the results for
the periods presented.
The results of operations presented for the three and six month periods ended
June 30, 1999 and 2000 are not necessarily indicative of the results to be
expected for any other interim period or any future fiscal year.
SEGMENT REPORTING
The Company discloses business segments under SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information." SFAS No. 131 established
standards for the way public business enterprises report information about
operating segments in annual financial statements and requires those enterprises
to report selected information about operating segments in interim financial
statements. It also requires disclosures about products and services,
geographic areas, and major customers.
The Company is a provider of global digital solutions. The Company evaluated
its business activities that are regularly reviewed by executive management and
Board of Directors for which discrete financial information is available. As a
result of this evaluation, the Company determined that it has one operating
segment.
ACQUISITIONS
On January 24, 2000, Razorfish acquired all of the outstanding stock of
Stockholm-based Qb International Holding AB. Under the terms of the acquisition,
Razorfish issued 399,284 shares of its Common Stock and paid $2,939 in cash to
Qb International's stockholders in exchange for the entire equity interest of Qb
International Holding AB. Qb is a Swedish IT/Strategic consulting company. The
Qb acquisition strengthens Razorfish's expertise in change
4
<PAGE>
and knowledge management and will help the company meet the increased
demand for its services across Europe by adding 40 billable employees with
strong skills in management consulting and systems development.
On May 15, 2000, Razorfish issued 140,772 shares of its Common Stock in exchange
to acquire substantially all of the net assets of Limage Dangerouse Rotterdam
B.V. ("Limage"). Limage is an award winning visual communications agency based
in Rotterdam, The Netherlands. Founded in 1986, Limage is mainly focused on the
creation of (online) identities, interactive and graphic design. The Limage
acquisition strengthens Razorfish's presence in the Benelux region as a company
with premier strategic, creative, and technological capabilities to deliver
complex digital solutions and will help the company meet the increased demand
for its services across Europe by adding approximately 45 billable employees
with strong creative skills.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
Pro forma 1999 2000 1999 2000
------- ------- ------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $41,852 $76,649 $75,967 $141,456
Net Income $ 1,963 $ 5,161 $ 5,408 $ 9,988
Basic earnings per share $ .02 $ .06 $ .07 $ .11
======= ======= ======= ========
Diluted earnings per share $ .02 $ .05 $ .06 $ .10
======= ======= ======= ========
</TABLE>
On May 17, 2000 Razorfish, In. and Intervision Inc. an advertising agency
affiliated with Sony Group, entered into a 50/50 joint venture agreement
resulting in the incorporation of Intervision-Razorfish, Inc., located in Tokyo.
The joint venture with Intervision allows Razorfish rapid entry into the Asia-
Pacific region, which currently has a strong digital economy that is projected
to continue growing, complementing Razorfish's ongoing operations in North
America and Europe.
In February 2000, Razorfish issued an aggregate of 1,039,946 shares of Common
Stock, paid cash of $1.0 million, and agreed to issue 520,054 shares of Common
Stock for a total fair value of $72,323 to the former principals of Media,
Plastic, and CHBi in consideration for their agreement to amend their respective
acquisition agreements to remove the earn-out provisions contained therein. The
amounts associated with these transactions were accounted for as additional
purchase price and an adjustment to goodwill.
EARNINGS PER SHARE
Basic earnings per share is calculated as net income divided by the weighted
average common shares outstanding. Diluted earnings per share is calculated as
net income divided by the weighted average common shares outstanding including
the dilutive effects of potential common shares, which include the Company's
stock options. A reconciliation of the numerator and denominator of the
calculations for the three and six month periods ended June 30, 2000 and 1999,
respectively, is presented below.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
Diluted EPS Computation 1999 2000 1999 2000
------- ------- ------- -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Numerator: Net Income $ 1,771 $ 5,135 $ 4,871 $ 9,628
Denominator:
Weighted common shares outstanding 82,013 91,483 78,163 90,687
Potential common shares: common stock options 12,533 5,025 12,091 6,898
------- ------- ------- -------
Diluted common and common equivalent shares 94,546 96,508 90,254 97,585
======= ======= ======= =======
Basic earnings per share $ .02 $ .06 $ .06 $ .11
======= ======= ======= =======
Diluted earnings per share $ .02 $ .05 $ .05 $ .10
======= ======= ======= =======
</TABLE>
5
<PAGE>
COMPREHENSIVE INCOME
The Company accounts for comprehensive income under SFAS No. 130, "Reporting
Comprehensive Income." This statement established standards for reporting and
displaying comprehensive income and its components in a financial statement that
is displayed with the same prominence as other financial statements. The
components of comprehensive income are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1999 2000 1999 2000
------ ------ ------ -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net income $1,771 $5,135 $4,871 $ 9,628
Foreign currency translation adjustment (78) 449 (110) 591
------ ------ ------ -------
Comprehensive income (loss) $1,693 $5,584 $4,761 $10,219
====== ====== ====== =======
</TABLE>
LEGAL PROCEEDINGS
On March 17, 2000, a legal action was commenced against the Company by a former
consultant of a wholly owned subsidiary for, amongst other things, breach of
contract. The Company is reviewing the action and believes that the allegations
are baseless and without merit in law or fact. No assurance can be given,
however, that this matter will be resolved in the Company's favor.
On July 14, 2000, the Company was served with a complaint by IAM.com that
alleges that the Company did not fulfill its duties in connection with work
performed for IAM.com. The Company has sued IAM.com for recovery of monies owed
under the contract. The Company disputes IAM.com's allegations and believes that
IAM.com's action is without merit in law or fact. No assurances can be given,
however, that this matter will be resolved in the Company's favor.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards of derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement is effective for all quarters of fiscal
years beginning after June 15, 1999. In July 1999, the FASB issues SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB No. 133," which amends SFAS No. 133 to be effective
for all fiscal quarters of all fiscal years beginning after June 15, 2000. The
Company does not expect the adoption of this standard to have a material effect
on the Company's results of consolidated operations, financial position, or cash
flows.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements,"
which provides guidance related to revenue recognition based on interpretations
and practices followed by the SEC. SAB 101 was effective the first fiscal
quarter of fiscal years beginning after December 15, 1999 and requires companies
to report any changes in revenue recognition as a cumulative change in
accounting principle at the time of implementation in accordance with Accounting
Principles Board Opinion 20, "Accounting Changes". In June 2000, the SEC
issued SAB 101B, "Amendment: Revenue Recognition in Financial Statements," which
delayed implementation of SAB 101 until Razorfish's fourth fiscal quarter of
2000. Razorfish does not expect the implementation of SAB 101 to have a
material effect on its financial position or results of operations.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred
6
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after either December 15, 1998 or January 12, 2000. The Company does not expect
the application of FIN 44 to have a material impact on the Company's financial
position or results of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-
looking statements involve risks and uncertainties, and actual results could be
significantly different than those discussed in this Quarterly Report on Form
10-Q. All forward-looking statements included in this document are made as of
the date hereof, based on information available to the Company on the date
thereof, and the Company assumes no obligation to update any forward-looking
statements.
Overview
Razorfish is a leading provider of global digital solutions. Digital solutions
are business solutions that use digital technologies to enhance communications
and commerce between businesses and their consumers, suppliers, employees, and
other partners. Razorfish provides an integrated, end-to-end solution.
Razorfish's strategy, creative, and technology professionals carry out every
aspect of a solution from strategic consulting to design of information
architectures and user-interfaces to integration of backend Enterprise Resource
Planning (ERP) and legacy systems. These digital solutions utilize a wide
variety of platforms, including the World Wide Web, wireless, broadband and
satellite communications and a variety of digital devices and information
appliances, including desktop PCs, mobile phones, pagers and personal digital
assistants. Razorfish thereby creates for its clients digital solutions
designed to help them re-architect their traditional business models and
identify and improve communications and commerce opportunities.
Razorfish derives substantially all of its revenues from fees for services
generated on a project-by-project basis. Razorfish's services are provided on
both a fixed-time, fixed-price basis and on a time and materials basis.
Historically, Razorfish has not operated on a retainer basis; however, in the
future, Razorfish may utilize such arrangements.
Razorfish recognizes revenues for both time and materials-based arrangements and
fixed-time, fixed-price arrangements on the percentage-of-completion method of
accounting based on the ratio of costs incurred to total estimated costs. In
developing the fixed price of a project, Razorfish follows a process that
assesses the technical complexity of the project, the nature of the work, the
functions to be performed, and the resources required to complete the
engagement. Razorfish periodically reassesses its estimated costs for each
project, and provisions for estimated losses on unfinished projects are recorded
in the period in which such losses are determined. To date, such losses have not
been significant. Revenues exclude reimbursable expenses charged to clients.
Agreements entered into in connection with time and materials projects are
generally terminable by the client upon 30-days' prior written notice, and
clients are required to pay Razorfish for all time, materials and expenses
incurred by Razorfish through the effective date of termination. Agreements
entered into in connection with fixed-time, fixed-price projects, are generally
terminable by the client upon payment for work performed and the next progress
payment due. If clients terminate existing agreements or if Razorfish is unable
to enter into new engagements, Razorfish's business, financial condition, and
results of operations could be materially and adversely affected. In addition,
because a proportion of Razorfish's expenses is relatively fixed, a variation in
the number of client engagements can cause significant variations in operating
results from quarter to quarter.
Razorfish's projects vary in size and scope; therefore, a client that accounts
for a significant portion of Razorfish's revenues in one period may not generate
a similar amount of revenue in subsequent periods. No client accounted for more
than 10.0% of Razorfish's revenues in the periods ended December 31, 1999 or
June 30, 2000.
Razorfish does not believe that it will derive a significant portion of its
revenues from a limited number of clients in the near future. However, there is
a risk that the source of Razorfish's revenues may be generated from a small
number of clients. These clients may not retain Razorfish in the future. Any
cancellation, deferral, or significant reduction in work performed for these
principal clients or a significant number of smaller clients could have a
material adverse affect on Razorfish's business, financial condition, and
results of operations.
7
<PAGE>
Operating and other expenses
Razorfish's project personnel costs consist primarily of compensation and
related costs of personnel dedicated to customer assignments. Project personnel
costs also include fees paid to subcontractors for work performed in connection
with projects and non-reimbursed project travel expenses.
Razorfish's selling and marketing costs consist primarily of compensation and
related costs of sales and marketing personnel, travel expenses, and marketing
programs and promotion costs.
Razorfish's general and administrative costs consist primarily of compensation
and related costs of the management and administrative functions, including
finance and accounting, human resources and internal information technology, and
the costs of Razorfish's facilities and other general corporate expenses.
Seasonality
In general, the laws of the European countries in which Razorfish operates
mandate that all employees receive significantly more vacation days than in the
United States. For example, in Sweden, each employee must receive a minimum of
25 days paid vacation per year. These vacations are typically taken in the
third quarter, resulting in declining revenues during this period due to a
reduction in both billable hours and client demand.
Quarter-to-quarter fluctuations in margins
The Company's operating results and quarter-to-quarter margins may fluctuate in
the future as a result of many factors, some of which are beyond the Company's
control. Historically, the Company's quarterly margins have been impacted by:
. the number of client engagements undertaken or completed;
. a change in the scope of ongoing client engagements;
. seasonality;
. a shift from fixed-fee to time and materials-based contracts;
. the number of days during the quarter;
. utilization rates of employees;
. marketing and business development expenses;
. charges relating to strategic acquisitions;
. pricing changes in the information technology services market; and
. economic conditions generally or in the information technology services
market.
The Company expects this trend to continue.
8
<PAGE>
Results of operations
The following table sets forth certain consolidated
statement of operations data of the Company both in actual
dollars and as a percentage of revenues for the period
indicated:
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1999 2000
----- ----
(unaudited)
<S> <C> <C> <C> <C>
(dollars in millions) Percent of Percent of
Amount Revenue Amount Revenue
------ ---------- ------ ----------
Revenues ..................................................... $40.0 100 $76.6 100
Project personnel ................................................. 19.6 49 36.4 48
----- --- ----- ---
Gross profit .......................................... 20.4 51 40.2 52
Sales and marketing ........................................ 2.7 7 4.9 6
General and administrative ................................ 10.9 27 24.3 32
Merger related costs ....................................... 3.5 9 - -
Non cash compensation expense .............................. .0 - - -
Amortization of intangibles ................................ 0.8 2 2.2 3
----- --- ----- ---
Income from operations ......................................... 2.5 6 8.8 11
Other income, net .............................................. .9 2 1.2 2
----- --- ----- ---
Income before income taxes ............................ 3.4 8 10.0 13
Provision for income taxes ..................................... 1.6 4 4.9 6
----- --- ----- ---
Net income ........................................... $ 1.8 4 $ 5.1 7
===== === ===== ===
</TABLE>
Three Months Ended June 30, 2000 Compared to the Three Months Ended June 30,
1999
Revenues
The Company's revenues increased $36.5 million, or 91%, to $76.6 million for the
three months ended June 30, 2000 from $40.0 million for the comparable period in
1999. This increase in revenue was primarily due to the growth of the Company's
offices as a result of the increase in the number of projects completed, an
increase in the billing rates of the Company's employees, and revenues related
to the acquisition that was completed in the first quarter of 2000.
Project personnel costs
The Company's project personnel costs increased $16.8 million, or 86%, to $36.4
million for the three months ended June 30, 2000 from $19.6 million for the
comparable period in 1999. As a percentage of revenues, project personnel costs
decreased to 48% for the three months ended June 30, 2000 from 49% in the
comparable period in 1999 due to increased billing rates of the Company's
employees creating higher gross margins.
Sales and marketing
The Company's sales and marketing costs increased $2.1 million, or 78%, to $4.9
million for the three months ended June 30, 2000 from $2.7 million for the
comparable period in 1999. The increase in sales and marketing costs in
absolute dollar terms was primarily due to an increase in the number of
solutions managers who spend a portion of their time on sales and marketing
activities and an increase in spending on promotional activities. As a
percentage of revenues, sales and marketing expenses decreased to 6% for the
three months ended June 30, 2000 from 7% for the comparable period in 1999. The
decrease in sales and marketing costs as a percentage of revenue was primarily
due to revenue growth outpacing marketing efforts.
General and administrative
The Company's general and administrative expenses increased $13.4 million, or
123%, to $24.4 million for the three months ended June 30, 2000 from $10.9
million for the comparable period in 1999. As a percentage of revenues, general
and administrative expenses increased to 32% for the three months ended June 30,
2000 from 27% for the comparable period in 1999. The increase in general and
administrative expenses in absolute dollar terms and as a
9
<PAGE>
percentage of revenue was a result of the increase in the number of non-billable
employees and an increase in other types of general and administrative expenses,
such as salaries and bonuses, rent expense, equipment rental, and depreciation.
Amortization of intangibles
Amortization of intangibles for the Company was $2.2 million for the three
months ended June 30, 2000 compared to $0.8 million for the comparable period in
1999. This increase was due to the amortization of intangibles resulting from
the purchase of Qb in January 2000 and Limage in May 2000, acquisitions closed
in the second and third quarters of 1999, and the consideration paid to the
principles of three companies acquired by the Company in previous years to amend
their respective acquisition agreements to remove the earn-out provisions
contained therein.
Income Taxes
The effective income tax rate was 48% and 49% for the three months ended June
30, 2000 and 1999, respectively, primarily the result of non-tax deductible
expenses, including amortization of intangibles and non-cash compensation
expense.
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
The following table sets forth certain consolidated
statement of operations data of the Company both in actual
dollars and as a percentage of revenues for the period
indicated:
<TABLE>
<CAPTION>
Six Months Ended June 30,
------------------------
1999 2000
----- ------
(unaudited)
<S> <C> <C> <C> <C>
(dollars in millions) Percent of Percent of
Amount Revenue Amount Revenue
------ ------- ------ ----------
Revenues .................................................. $72.6 100 $140.7 100
Project personnel .......................................... 35.2 49 66.3 47
----- --- ------ ---
Gross profit ................................ 37.4 51 74.4 53
Sales and marketing ................................... 5.0 7 8.9 6
General and administrative ............................. 19.8 27 44.7 32
Merger related costs .................................. 3.4 5 - -
Non cash compensation expense .......................... 0.1 - - -
Amortization of intangibles ........................... 1.6 2 4.2 3
----- --- ------ ---
Income from operations ..................................... 7.5 10 16.6 12
Other income, net .......................................... 1.3 2 2.2 2
----- --- ------ ---
Income before income taxes ................. 8.8 12 18.8 14
Provision for income taxes ................................. 3.9 5 9.2 7
----- --- ------ ---
Net income ................................. $ 4.9 7 $ 9.6 7
===== === ====== ===
</TABLE>
Revenues
The Company's revenues increased $68.1 million, or 94%, to $140.7 million for
the six months ended June 30, 2000 from $72.6 million for the comparable period
in 1999. This increase in revenue was primarily due to the growth of the
Company's offices as a result of the increase in the number of projects
completed, an increase in the billing rates of the Company's employees, and
revenues related to the acquisition that was completed in the first quarter of
2000.
Project personnel costs
The Company's project personnel costs increased $31.0 million, or 88%, to $66.3
million for the six months ended June 30, 2000 from $35.3 million for the
comparable period in 1999. As a percentage of revenues, project personnel costs
decreased to 47% for the six months ended June 30, 2000 from 49% in the
comparable period in 1999 due to increased billing rates of the Company's
employees creating higher gross margins.
Sales and marketing
10
<PAGE>
The Company's sales and marketing costs increased $4.0 million, or 81%, to $9.0
million for the six months ended June 30, 2000 from $5.0 million for the
comparable period in 1999. The increase in sales and marketing costs in
absolute dollar terms was primarily due to an increase in the number of
solutions managers who spend a portion of their time on sales and marketing
activities and an increase in spending on promotional activities. As a
percentage of revenues, sales and marketing expenses decreased to 6% for the six
months ended June 30, 2000 from 7% for the comparable period in 1999. The
decrease in sales and marketing costs as a percentage of revenue was primarily
due to revenue growth outpacing marketing efforts.
General and administrative
The Company's general and administrative expenses increased $24.9 million, or
126%, to $44.7 million for the six months ended June 30, 2000 from $19.8 million
for the comparable period in 1999. As a percentage of revenues, general and
administrative expenses increased to 32% for the six months ended June 30, 2000
from 27% for the comparable period in 1999. The increase in general and
administrative expenses in absolute dollar terms and as a percentage of revenue
was a result of the increase in the number of non-billable employees and an
increase in other types of general and administrative expenses, such as salaries
and bonuses, rent expense, equipment rental, and depreciation.
Amortization of intangibles
Amortization of intangibles for the Company was $4.2 million for the six months
ended June 30, 2000 compared to $1.6 million for the comparable period in 1999.
This increase was due to the amortization of intangibles resulting from the
purchase of Qb in January 2000 and Limage in May 2000 acquisitions closed in
the second and third quarters of 1999, and the consideration paid to the
principles of six companies acquired by the Company in previous years to amend
their respective acquisition agreements to remove the earn-out provisions
contained therein.
Income Taxes
The effective income tax rate was 45% and 49% for the six months ended June 30,
2000 and 1999, respectively, primarily the result of non-tax deductible
expenses, including amortization of intangibles and non-cash compensation
expense.
Liquidity and Capital Resources
Razorfish believes that cash generated by operations combined with the proceeds
of its initial public offering will be sufficient to meet its working capital
needs for the next twelve months.
The Company's net cash used in operating activities was $6.5 million for the six
months ended June 30, 2000 compared to net cash used in operating activities of
$4.0 million for the six months ended June 30, 1999. Net cash used in operating
activities during the period ended June 30, 2000 was mainly due to an increase
in unbilled revenues of $5.9 million, an increase in accounts receivable of
$16.4 million, and an increase in prepaid and other current assets of $5.4
million. These amounts were partially offset by non-cash compensation of
depreciation and amortization of $7.7 million, tax benefit due to stock option
exercises of $4.9 million, and an increase in deferred revenues of $1.2 million.
Net cash used in operating activities during the period ended June 30, 1999 was
mainly due to an increase in accounts receivable of $15.9 million, an increase
in unbilled revenues of $5.0 million, and an increase in deferred revenues of
$2.0 million. This was partially offset by an increase in accounts payable and
accrued expenses of $11.8 million, depreciation and amortization of $3.7
million, and an increase in income taxes payable of $.8 million.
The Company's net cash used in investing activities was $8.5 million for the six
months ended June 30, 2000 compared to $2.3 million for the six months ended
June 30, 2000. Net cash used in investing activities for the period ended June
30, 2000 was mainly due to capital expenditures of $7.5 million, and cash paid
to extinguish earn-out agreements of $1.0 million. Net cash used in investing
activities for the period ended June 30, 1999 was mainly due to capital
expenditures of $4.6 million, net cash paid for acquisitions of $3.0 million
partially offset by sales of marketable securities of $5.3 million.
11
<PAGE>
The Company's net cash provided by financing activities was $5.2 million for the
six months ended June 30, 2000 compared to $70.7 million for the six months
ended June 30, 1999. Net cash provided for the period ended June 30, 2000 was
mainly due to proceeds received from the exercise of stock options of $5.4
million. Net cash provided from financing activities for the period ended June
30, 1999 was mainly due to proceeds from the exercise of Communicade's 10%
option of $25.3 million and proceeds from the initial public offering of $48.3
million. This was partially offset by deferred registration costs of $ .6
million.
Capital expenditures, earn-out payments and rent expenses
Razorfish's capital expenditures for the period ended June 30, 2000 were $7.5
million compared to $4.6 million for the comparable period in 1999. The
increase in capital expenditures during 2000 was due primarily to leasehold
improvements made to Razorfish's leased office space and to purchase computer
hardware and software and furniture and fixtures. Razorfish does not have any
material commitments for capital expenditures for the foreseeable future.
In February 2000, Razorfish issued an aggregate of 1,039,946 shares of Common
Stock , paid cash of $1.0 million, and agreed to issue 520,054 shares of Common
Stock for a total fair value of $72,323 to the former principals of Media,
Plastic, and CHBi in consideration for their agreement to amend their respective
acquisition agreements to remove the earn-out provisions contained therein. The
amounts associated with these transactions were accounted for as additional
purchase price and an adjustment to goodwill.
Currency fluctuation and the euro conversion
Razorfish does not believe that it is subject to material currency fluctuations
as a result of its international operations. Revenues from the operations of
its European subsidiaries are currently denominated primarily in the applicable
local currencies. Razorfish does not plan to repatriate such revenues to the
United States in the foreseeable future. Historically, Razorfish has not
experienced any material changes in quarter-to-quarter operating results due to
currency fluctuations. However, no assurance can be given that quarterly
results will not be impacted in the future, for financial reporting purposes
only, due to the conversion into dollars of non-dollar denominated revenues.
Eleven of the fifteen member states of the European Union have agreed to adopt
the euro as their common legal currency. On January 1, 1999, these members
began the process of converting their native currencies to the euro, and on that
date the euro commenced trading on currency exchanges and became available for
non-cash transactions. For the period from January 1, 1999 to January 1, 2002,
both the euro and the native currencies will be legal tender in the
participating member states. During this period, the conversion rates for
currencies will be determined by a formula that has been established by the
European Commission. On January 1, 2002, new euro-denominated bills and coins
will be fully deployed and all native bills and coins will be withdrawn by July
1, 2002.
In addition, as of January 1, 1999, the new European Central Bank gained the
authority to direct monetary policy with respect to the euro, including money
supply and official interest rates for the euro. Some of the rules and
regulations with regard to the euro have yet to be promulgated and completed by
the European Commission.
While the United Kingdom and Sweden, two of the countries in which Razorfish
operates, are members of the European Union, they are not participating in the
euro conversion; however, they may elect to convert to the euro at a later date.
Risks related to the conversion to the euro may not impact Razorfish directly,
but could have a materially adverse effect on its clients' businesses, which
could have an indirect effect on their demand for Razorfish's services.
Razorfish's management does not believe that the conversion to the euro will
have a material or adverse impact on its business.
Year 2000 Compliance
In late 1999, Razorfish completed the implementation of its plans to become
Year 2000 ready, through the final remediation and testing of its systems. As a
result of those planning and implementation efforts, Razorfish has not
experienced any significant disruptions in mission critical information
technology and non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. Razorfish is not aware of
any material problems resulting from Year 2000 issues, either with its services
or internal systems, or with the
12
<PAGE>
products and services of third parties. Razorfish will continue to monitor its
mission critical computer applications and those of its suppliers and vendors
throughout the year 2000 to ensure that any latent Year 2000 matters that may
arise are addressed properly.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards of derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement is effective for all quarters of fiscal
years beginning after June 15, 1999. In July 1999, the FASB issues SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB No. 133," which amends SFAS No. 133 to be effective
for all fiscal quarters of all fiscal years beginning after June 15, 2000. The
Company does not expect the adoption of this standard to have a material effect
on the Company's results of consolidated operations, financial position, or cash
flows.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements,"
which provides guidance related to revenue recognition based on interpretations
and practices followed by the SEC. SAB 101 was effective the first fiscal
quarter of fiscal years beginning after December 15, 1999 and requires companies
to report any changes in revenue recognition as a cumulative change in
accounting principle at the time of implementation in accordance with Accounting
Principles Board Opinion 20, "Accounting Changes". In June 2000, the SEC issued
SAB 101B, "Amendment: Revenue Recognition in Financial Statements," which
delayed implementation of SAB 101 until Razorfish's fourth fiscal quarter of
2000. Razorfish does not expect the implementation of SAB 101 to have a material
effect on its financial position or results of operations.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
Item 3. Qualitative and Quantitative Disclosures about Market Risk
Not applicable
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
On March 17, 2000, a legal action was commenced against the Company by
a former consultant of a wholly owned subsidiary for, amongst other
things, breach of contract. The Company is reviewing the action and
believes that the allegations are baseless and without merit in law or
fact. No assurance can be given, however, that this matter will be
resolved in the Company's favor.
On July 14, 2000, the Company was served with a complaint by IAM.com
that alleges that the Company did not fulfill its duties in connection
with work performed for IAM.com. The Company has sued IAM.com for
recovery of monies owed under the contract. The Company disputes
IAM.com's allegations and believes that IAM.com's action is without
merit in law or fact. No assurances can be given, however, that this
matter will be resolved in the Company's favor.
Item 2. Changes in Securities and Use of Proceeds - Not applicable
Item 3. Defaults Upon Senior Securities - Not applicable
Item 4. Submission of Matters to a vote of Security Holders
-- The Annual Meeting ("Annual Meeting") of Stockholders
of the Razorfish was held on July 6, 2000. The 82,138,814 shares of
Common Stock ("Common Stock") present at the Annual Meeting out of a
then total of 94,161,724 shares outstanding and entitled to vote acted
as follows with respect to the following proposals:
Approved, by a vote of 81,750,315 shares of Common Stock for and
388,499 shares against the election of Jeffrey A. Dachis as a
director of Razorfish; 80,119,774 shares stock for and 2,019,040
shares against the election of Craig M. Kanarick as a director of
Razorfish, 80,131,972 shares of Common Stock for and 2,006,842
shares against the election of Michael S. Simmon as a director of
Razorfish, 80,397,049 shares of Common Stock for and 1,741,765
shares against the election of Carter F. Bales as a director of
Razorfish, 81,752,293 shares of Common Stock for and 386,521
shares against Pat A. Loconto as a director of Razorfish. In addition,
0 shares of Common Stock represented at the Meeting for other
purposes indicated no response to this item.
By a vote of 15,850,910 shares of Common Stock for and 36,053,598
against the Amendment of the 1999 Stock Incentive Plan to increase the
number of shares reserved for issuance under the 1999 Stock Incentive
Plan by 14,778,100 shares to 21,902,912 shares, 60,824 shares abstained
from voting on this Matter, and holders of 30,173,482 shares
represented at the meeting for other purposes indicated no response on
this item.
Item 5. Other Information - None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Merger, dated as of August 10, 1999, by and
between Razorfish, Razorfish Merger Sub and i-Cube.(2)
13
<PAGE>
3.1 Certificate of Incorporation of Razorfish, Inc. (the "Company"), as
amended.(2)
3.2 By-laws of Razorfish.(1)
4.1 Stockholders Agreement, dated as of October 1, 1998, among Razorfish,
Spray Ventures, Communicade, Jeffrey A. Dachis and Craig M. Kanarick.(1)
4.2 Amendment to Stockholders Agreement, dated February 3, 1999, among
Razorfish, Spray Ventures, Communicade, Jeffrey A. Dachis and Craig M.
Kanarick.(1)
4.6 Registration Rights Agreement, dated March 30, 1999, between
Razorfish and Communicade Inc.(1)
4.7 Specimen Common Stock Certificate of Razorfish.(1)
10.1 The Amended and Restated 1997 Stock Option and Incentive Plan.(1)
10.2 1999 Amended and Restated Stock Incentive Plan.(2)
10.3 Employment Agreement, dated April 15, 2000, between Jeffrey A. Dachis and
Razorfish.(5)
10.4 Non-competitive Agreement, dated September 18, 1996, between Razorfish
and Jeffrey A. Dachis.(1)
10.5 Employment Agreement, dated September 18, 1996, between Razorfish and
Craig M. Kanarick(1)
10.6 Non-competitive Agreement, dated September 18, 1996, between Razorfish
and Craig M. Kanarick.(1)
10.7 Employment Agreement, dated June 19, 1997, between Razorfish and Jean-
Philippe Maheu.(1)
10.8 Employment Agreement, dated June 1, 1997, between Razorfish and Evan
Orensten.(1)
10.9 Employment Agreement, dated October 1, 1998, between Razorfish and Per
Bystedt.(1)
10.10 Employment Agreement, dated October 1, 1998, between Razorfish and
Jonas Svensson.(1)
10.11 Employment Agreement, dated August 10, 1999, between Razorfish and
Michael Pehl.(4)
10.12 Letter Agreement, dated as of August 9, 1999, between Razorfish and
Lawrence P. Begley.(4)
10.13 Lease Agreement, dated October 28, 1996, between Razorfish and Man Yun
Real Estate Corporation.(1)
10.14 Lease Agreement, dated April 30, 1997, between Razorfish and Man Yun
Real Estate Corporation.(1)
10.15 Lease Agreement, dated December 23, 1998, between C.H.B.I. Razorfish
Limited and the Mayor and Commonality and Citizens of the City of
London.(1)
10.16 Lease Agreement, dated March 10, 1998, between J&R Bechelli and Alpha
Online, Inc., as amended by letter dated February 9,1999.(1)
10.17 Lease Agreement No. 731 100, dated April 12, 1996, between Spray
(f/k/a Spray Interative Media Agency AB) and Bojner Estate AB ("Boyner")
and the English translation thereof.(1)
10.18 Lease Agreement No. 741 100, dated September 30, 1997, between Spray
(f/k/a Spray Interative Media Agency AB) and Bojner Estate AB ("Bojner")
and the English translation thereof.(1)
10.19 Lease Contract No. 01009 001 024 ("Trygg-Hansa Lease"), dated April 30,
1998, between Spray and Trygg-Hansa ("Trygg-Hansa") and the English
translation thereof.(1)
14
<PAGE>
10.20 Supplement No. 1, dated April 30, 1998, to Trygg-Hansa Lease and the
English translation thereof.(1)
10.21 Supplement No. 2, dated August 18, 1998, to Trygg-Hansa Lease and the
English translation thereof.(1)
10.22 Personal Guarantee for Premises, dated April 29, 1998, made by Lars T.
Andersson and per Bystedt in favor of Trygg-Hansa with respect to Trygg-
Hansa Lease and the English translation thereof.(1)
10.23 Personal Guarantee for Premises, dated April 29, 1998, made by Johan
Ihrfelt and Jonas Svensson in favor of Trygg-Hansa with respect to Trygg-
Hansa Lease and the English translation thereof.(1)
10.24 Rent Contract Covering Business Premises, dated February 3, 1998,
between Spray Interactive Media AB and DEGI Deutsche Gesellschaft fur
Immobilienfonds mbH and the English translation thereof.(1)
10.25 Rental Agreement for Office Space No. 910539, dated April 25, 1997,
between Spray Interactive Media Oy and Valtion Kiinteistolaitos (State
real property Authority)/Uusimaa ("State Real Property Authority") and
the English translation thereof.(1)
10.26 Rental Agreement for Office Space No. 910539, dated May 14, 1997,
between Spray Interactive Media Oy and State Real Property Authority and
the English translation thereof.(1)
10.27 Lease Contract, dated June 17, 1998, between Spray Geelmuyden.Kiese
A.S. and Kongensgate 2 ANS and the English translation thereof.(1)
10.28 Subscription and Exchange Agreement, dated as of October 1, 1998,
among Razorfish, Spray Ventures AB and Communicade.(1)
10.29 First Amendment to the Subscription and Exchange Agreement, dated
November 25, 1998, among Razorfish, Spray Ventures AB, Spray Network AB
and Communicade.(1)
10.30 Second Amendment to the Subscription and Exchange Agreement, dated
December 10, 1998, among Razorfish, Spray Ventures AB, Spray Network AB
and Communicade.(1)
10.31 Stock Purchase Agreement, dated as of October 1, 1998, among
Communicade, Jeffrey A. Dachis and Craig M. kanarick.(1)
10.32 Stock Purchase Agreement, dated October 23, 1998, among Communicade
and Spray Ventures AB.(1)
10.33 Amendment to Stock Purchase Agreement, dated December 10, 1998,
between Communicade and Spray Ventures AB.(1)
10.34 Loan Agreement, dated September 18, 1996, between Razorfish and
Omnicom Finance Inc.(1)
10.35 Forms of Voting Agreements.(2)
10.36 Letter Agreement dated August 8, 1995 between i-Cube and Silicon
Valley Bank.(2)
10.37 Promissory Note dated August 8, 1998 between i-Cube and Silicon Valley
Bank.(2)
10.38 Commercial Security Agreement dated August 8, 1995 between i-Cube and
Silicon Valley Bank.(2)
10.39 Negative Pledge Agreement dated August 8, 1995 between i-Cube
and Silicon Valley Bank.(2)
10.40 Letter Agreement dated October 7, 1996 between i-Cube and Silicon
Valley Bank.(2)
10.41 Promissory Note dated July 31, 1997 between i-Cube and Silicon Valley
Bank.(2)
15
<PAGE>
10.42 Loan Modification Agreements between Registrant and Silicon Valley
Bank dated August 6, 1996, August 7, 1996 and August 28,1997,
respectively.(2)
10.43 Lease Agreement dated november 20, 1996 between i-Cube, RR&C
Development Company and Patrician Associates, Inc.(2)
10.44 Lease Agreement dated as of July 14, 1995 between i-Cube and
Riverfront Office Park Joint Venture.(2)
10.45 Amendment No. 1 to Lease Agreement dated as of July 14, 1995 between
i-Cube and Riverfront Office Park Joint Venture.(2)
10.46 Sublease dated as of June 19, 1995 between i-Cube and MathSoft Inc.(2)
18.1 Letter re: Change in Certifying Accountant.(3)
21.1 Subsidiaries of Razorfish.(4)
27.1 Financial Data Schedule.
(1) Filed as an exhibit to Razorfish's Registration Statement on Form S-1 or
amendments thereto declared effective by the Securities and Exchange
Commission on April 26, 1999 (File No. 333-71043) and incorporated herein by
reference.
(2) Filed as an exhibit to Razorfish's Registration Statement on Form S-4 or
amendments thereto declared effective by the Securities and Exchange
Commission on October 1, 1999 (File No. 333-87031) and incorporated herein
by reference.
(3) Filed as an exhibit to Razorfish's Report on Form 8-K/A that was filed with
the Securities and Exchange Commission on December 10, 1999 and incorporated
herein by reference.
(4) Filed as an exhibit to Razorfish's Report on Form 10-K that was filed with
the Securities and Exchange Commission on March 30, 2000 and incorporated
herein by reference.
(5) Filed as an exhibit hereto.
(b) Reports on Form 8-K:
On each of February 14 and February 17, 2000, the Company Filed forms 8-K/A
to report its consolidated financial statements, including balance sheet,
statement of operations, statement of stockholders' equity and statement of
cash flows, and its pro forma financial statements and related exhibits in
connection with its acquisition of Lee Associates, Inc. on December 1, 1999.
On June 30, 2000 Razorfish filed form 8-K to report that
PricewaterhouseCoopers, LLP ("PWC") resigned its position as Razorfish's
independent certified public accountant due to a conflict with the
Securities and Exchange Commission rule requiring that a partner of an
accounting firm who has a close relative holding an important position with
an audit client be geographically separated from the relative and from the
engagement team by at least 500 miles to mitigate the presumption of
impairment of independence.
On July 25, 2000 Razorfish filed form 8-K to report the audit committee of
Razorfish's Board of Directors has appointed Arthur Andersen, LLP as
Razorfish's independent public accountants for the fiscal year ended
December 31, 2000.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York, state of
NewYork, on May 15, 2000.
RAZORFISH, INC.
By: /s/ Jeffrey A. Dachis
-------------------------------------
Jeffrey A. Dachis
President and Chief Executive Officer
By: /s/ John J. Roberts
-------------------------------------
John J. Roberts
Chief Financial Officer
(Principal Financial and Accounting
Officer)
17
