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 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 0-25779
TheStreet.com, Inc.
-------------------
(Exact name of Registrant as specified in its charter)
Delaware 06-1515824
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(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
14 Wall Street, 14th Floor
New York, New York 10005
------------------------
(Address of principal executive offices)
(212) 321-5000
--------------
(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 .
------- --------
Number of shares of Common Stock outstanding at November 8, 2000:
Common Stock, par value $0.01 per share 26,812,534
--------------------------------------- ----------
(Class) (Number of Shares)
<PAGE>
TheStreet.com, Inc.
Form 10-Q
For the Nine Months Ended September 30, 2000
Part I - FINANCIAL INFORMATION.................................................1
Item 1. Condensed Consolidated Financial Statements.....................1
Condensed Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999...........................................1
Condensed Consolidated Statements of Operations for the Three
and Nine Months Ended September 30, 2000 and 1999...............2
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 2000 and 1999........................3
Notes to Condensed Consolidated Financial Statements............4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................5
Item 3. Quantitative and Qualitative Disclosures About Market Risk.....26
PART II - OTHER INFORMATION...................................................27
Item 1. Legal Proceedings..............................................27
Item 2. Changes in Securities and Use of Proceeds......................27
Item 3. Defaults Upon Senior Securities................................27
Item 4. Submission of Matters to a Vote of Security Holders............27
Item 5. Other Information..............................................28
Item 6. Exhibits and Reports on Form 8-K...............................28
SIGNATURES....................................................................29
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
<TABLE>
<CAPTION>
THESTREET.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
September 30, 2000 December 31, 1999
---------------------- ----------------------
(unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 61,077,537 $ 108,239,811
Short-term investments 29,070,806 11,175,322
Accounts receivable, net of allowance for doubtful
accounts of $444,512 and $300,000 as of September 30,
2000 and December 31, 1999, respectively. 4,165,169 2,467,164
Other receivables 1,767,029 2,607,162
Prepaid expenses and other current assets 5,143,557 4,122,057
---------------------- ----------------------
Total current assets 101,224,098 128,611,516
Property and equipment, net of accumulated depreciation
and amortization of $3,401,768 and $769,707 as of
September 30, 2000 and December 31, 1999, respectively. 14,579,537 10,199,653
Other assets 333,387 410,717
Goodwill and intangibles, net of accumulated amortization
of $612,631 and $0 as of September 30, 2000 and
December 31, 1999, respectively. 2,246,326 2,078,349
Long-term investment 2,250,000 2,250,000
---------------------- ----------------------
Total assets $ 120,633,348 $ 143,550,235
====================== ======================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current portion of capital lease obligation $ 753,268 $ -
Accounts payable 7,675,873 4,290,538
Accrued expenses 8,482,810 6,675,541
Deferred revenue 4,341,416 2,858,945
Other current liabilities 1,201,528 242,456
---------------------- ----------------------
Total current liabilities 22,454,895 14,067,480
Long term portion of capital lease obligation 1,251,833 -
Deferred rent 2,162,716 2,182,100
Minority Interest 11,723,853 15,886,741
---------------------- ----------------------
Total liabilities 37,593,297 32,136,321
---------------------- ----------------------
Stockholders' equity
Common Stock; $0.01 par value;
100,000,000 shares authorized; 26,810,701 and
25,248,434 shares issued and outstanding at September
30, 2000 and December 31, 1999, respectively. 268,107 252,484
Additional paid-in capital 180,070,555 174,363,323
Deferred compensation (2,482,098) (5,450,860)
Advertising receivable (9,032,245) (10,042,062)
Accumulated comprehensive income (759,305) (20,618)
Accumulated deficit (85,024,963) (47,688,353)
---------------------- ----------------------
Total stockholders' equity 83,040,051 111,413,914
---------------------- ----------------------
Total liabilities and stockholders' equity $ 120,633,348 $ 143,550,235
====================== ======================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
THESTREET.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------------------- -----------------------------------------
2000 1999 2000 1999
-------------------------------------- --------------------- -------------------
(unaudited) (unaudited)
Net revenues:
<S> <C> <C> <C> <C>
Advertising & E-Commerce revenues $ 3,722,267 $ 2,141,675 $ 11,287,103 $ 5,005,883
Subscription revenues 2,111,364 1,350,937 6,276,261 2,997,917
Other revenues 407,653 455,430 1,437,433 1,195,475
-------------------------------------- --------------------- -------------------
Total net revenues 6,241,284 3,948,042 19,000,797 9,199,275
Cost of revenues 4,051,110 2,664,024 11,987,058 6,344,947
-------------------------------------- --------------------- -------------------
Gross profit 2,190,174 1,284,018 7,013,739 2,854,328
-------------------------------------- --------------------- -------------------
Operating expenses:
Product development expenses 4,266,961 1,735,726 14,832,692 4,561,979
Sales and marketing expenses 6,745,957 4,697,601 24,491,850 10,208,439
General and administrative expenses 3,009,280 3,756,270 12,677,087 10,191,191
Noncash compensation expense 276,660 629,925 1,103,045 2,460,100
-------------------------------------- --------------------- -------------------
Total operating expenses 14,298,858 10,819,522 53,104,674 27,421,709
-------------------------------------- --------------------- -------------------
Loss from operations (12,108,684) (9,535,504) (46,090,935) (24,567,381)
Interest income 1,460,021 1,475,096 4,591,437 2,596,385
-------------------------------------- --------------------- -------------------
Loss before provision for income taxes
and minority interest (10,648,663) (8,060,408) (41,499,498) (21,970,996)
Provision for income taxes - - - 94,750
Minority interest 1,018,027 238,729 4,162,888 238,729
-------------------------------------- --------------------- -------------------
Net loss $ (9,630,636) $ (7,821,679) $ (37,336,610) $ (21,827,017)
====================================== ===================== ===================
Net loss per share - basic and diluted $ (0.37) $ (0.32) $ (1.46) $ (1.24)
====================================== ===================== ===================
Weighted average basic and diluted
shares outstanding 26,268,851 24,521,730 25,656,735 19,812,052
====================================== ===================== ===================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
THESTREET.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
2000 1999
--------------------- ---------------------
(unaudited)
Cash Flows from Operating Activities:
<S> <C> <C>
Net Loss $ (37,336,610) $ (21,827,018)
Adjustments to reconcile net loss to cash used in
operating activities:
Noncash compensation expense 1,103,045 2,460,100
Noncash advertising expense 1,009,817 1,047,975
Provision for doubtful accounts 548,479 140,000
Minority Interest (4,162,888) (238,729)
Depreciation and amortization 3,117,077 315,188
Increase in accounts receivable (2,246,484) (1,205,156)
Decrease in other receivables 840,133 453,987
Increase in prepaid expenses and other current assets (1,021,500) (1,212,737)
Decrease (increase) in other assets 42,989 (188,485)
Increase in accounts payable and accrued expenses 5,192,604 3,550,111
Increase in deferred revenue 1,482,471 1,823,715
Increase in other current liabilities 959,072 -
Increase (decrease) in deferred rent 149,524 (100,317)
--------------------- ---------------------
Net cash used in operating activities (30,322,271) (14,981,366)
Cash Flows from Investing Activities:
Purchase of short-term investments (51,285,484) -
Sale of short-term investments 33,390,000 -
Capital expenditures (7,274,505) (2,808,557)
Acquisition of BiGFiSH Management, Inc. (250,000) -
--------------------- ---------------------
Net cash used in investing activities (25,419,989) (2,808,557)
--------------------- ---------------------
Cash Flows from Financing Activities:
Increase in minority interest - 16,925,944
Proceeds from sale/leaseback 2,388,239 -
Repayments under sale/leaseback (383,138) -
Proceeds from issuance of common stock 7,313,572 112,787,892
Repayments under line of credit - (3,333)
--------------------- ---------------------
Net cash provided by financing activities 9,318,673 129,710,503
--------------------- ---------------------
Effect of exchange rate on changes in cash (738,687) -
--------------------- ---------------------
Net (decrease) increase in cash (47,162,274) 111,920,580
Cash and cash equivalents, beginning of period 108,239,811 24,611,958
--------------------- ---------------------
Cash and cash equivalents, end of period $ 61,077,537 136,532,538
===================== =====================
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Income taxes $ - $ 94,750
Noncash investing and financing activities:
Equipment acquired under capital leases $ 2,388,239 $ -
Issuance of common stock - BiGFiSH acquisition $ 275,000 $ -
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
TheStreet.com, Inc.
Notes to Condensed Consolidated Financial Statements
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
Business
TheStreet.com, Inc. ("TheStreet.com") is a leading provider of
original, timely, comprehensive and trustworthy financial news and commentary --
through its network of free and subscription-based web sites, and through
conferences, books, and wireless and broadband initiatives. TheStreet.com
combines the most important qualities of traditional print journalism -
accuracy, intelligence, fairness and wit - with the web's advantages as a
financial news medium - timeliness, interactivity and global distribution. Our
content is generated by a staff of over 111 professional reporters and editors,
in addition to approximately 30 outside contributors. We update our sites with
original stories throughout each business day and with many additional features
on the weekends. We offer our readership additional tools and features such as
real-time quotes, portfolio trackers, public company earnings information and
charts and analysis.
Basis of Presentation
The information presented as of September 30, 2000 and 1999, and for
the three and nine month periods then ended, is unaudited, but in the opinion of
management of TheStreet.com, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring adjustments) which
TheStreet.com considers necessary for the fair presentation of its financial
position as of September 30, 2000, the results of its operations for the three
and nine month periods ended September 30, 2000 and 1999, and its cash flows for
the nine month periods ended September 30, 2000 and 1999. The financial
statements included herein have been prepared in accordance with generally
accepted accounting principles and the instructions to Form 10-Q. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with TheStreet.com's audited financial statements and accompanying
notes for the year ended December 31, 1999, included in TheStreet.com's Annual
Report on Form 10-K as filed with the Securities and Exchange Commission.
The consolidated financial statements include the accounts of
TheStreet.com, Inc. and its 63% owned subsidiary, TheStreet.com (UK) Limited.
All intercompany balances and transactions have been eliminated in
consolidation.
Results for the interim period are not necessarily indicative of
results that may be expected for the entire year.
2. NET LOSS PER SHARE OF COMMON STOCK
TheStreet.com computes net loss per share of common stock in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
per Share" ("SFAS No. 128"). Under the provisions of SFAS No. 128, basic net
loss per share ("Basic EPS") is computed by dividing net loss by the weighted
average number of shares of common stock outstanding. The following table
reconciles the numerator and denominator for the calculation:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
-------------------------------------- --------------------------------------
-------------------------------------- --------------------------------------
9/30/2000 9/30/1999 9/30/2000 9/30/1999
------------------ ------------------- ------------------ -------------------
(unaudited) (unaudited)
Numerator:
<S> <C> <C> <C> <C>
Net Loss $ (9,630,636) $ (7,821,679) $ (37,336,610) $ (21,827,017)
Preferred Stock Dividends - - - (1,572,836)
Accretion of Redeemable
Convertible Series B
Preferred Stock - - - (1,252,569)
------------- ------------- ------------- -------------
Net Loss Available to Common
Shareholders $ (9,630,636) $ (7,821,679) $ (37,336,610) $ (24,652,422)
================== =================== ================== ===================
Denominator:
Weighted Average Basic &
Diluted Shares Outstanding 26,268,851 24,521,730 25,656,735 19,812,052
Net Loss Per Share $ (0.37) $ (0.32) $ (1.46) $ (1.24)
</TABLE>
3. INITIAL PUBLIC OFFERING
On May 14, 1999, TheStreet.com completed its initial public offering
(the "IPO") and sold an aggregate of 6,325,000 shares of TheStreet.com's common
stock to the public (including 741,667 shares from TheStreet.com and 83,333
shares from Kevin English, then TheStreet.com's Chairman of the Board, Chief
Executive Officer and President, pursuant to the exercise of the underwriters'
overallotment option). Net proceeds to TheStreet.com were $108,788,000, after
deducting underwriting discounts and commissions and expenses payable by
TheStreet.com in connection with the IPO.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion contains forward-looking statements within
the meaning of Section 27(a) of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21(E) of the Securities Exchange Act of 1934, as
amended, including, without limitation, statements regarding our expectations,
beliefs, intentions or future strategies that are signified by the words
"expects", "anticipates", "intends", "believes", or similar language. All
forward-looking statements included in this quarterly report on Form 10-Q are
based on information available to us on the date hereof, and we assume no
obligation to update any such forward-looking statements. These forward-looking
statements are subject to risks and uncertainties which could cause actual
results to differ.
The following discussion and analysis should be read in conjunction
with the unaudited condensed consolidated financial statements and notes
thereto.
Overview
TheStreet.com, Inc. is a leading provider of original, timely,
comprehensive and trustworthy financial news and commentary -- through its
network of free and subscription-based web sites, and through conferences,
books, and wireless and broadband initiatives. TheStreet.com combines the most
important qualities of traditional print journalism - accuracy, intelligence,
fairness and wit - with the web's advantages as a financial news medium -
timeliness, interactivity and global distribution. Our content is generated by a
staff of over 111 professional reporters and editors, in addition to
approximately 30 outside contributors. We update our sites with original stories
throughout each business day and with many additional features on the weekends.
We offer our readership additional tools and features such as real-time quotes,
portfolio trackers, public company earnings information and charts and analysis.
We originally organized in September 1996 as a limited liability
company funded by our co-founders, Mr. James J. Cramer and Dr. Martin Peretz. In
May 1998, we were re-organized from a limited liability company into a C
corporation, and in May 1999, we completed our initial public offering. In
September 1999, we formed a subsidiary, TheStreet.com (Europe) Limited, to begin
our international expansion by creating a London-based counterpart to
TheStreet.com to be known as TheStreet.co.uk. During December of 1999, we
acquired ipoPros.com, Inc., a company with a subscription-based online website
offering research, ratings, data and news about initial and secondary stock
offerings and in May 2000, we acquired BiGFiSH Management, Inc., a conference
and event production firm. We are based in New York City with bureaus in San
Francisco and London and correspondents in Silicon Valley, Tokyo, Hong Kong,
Berlin and Washington, D.C.
We currently derive our revenues from advertising and e-commerce,
retail and professional subscriptions, content syndication fees, conference
attendees and other sources. Of these, our two principal sources of revenue are
advertisers and subscribers.
We have a number of strategic relationships with third parties that
continue to help create brand awareness and increase subscription and
advertising revenues, including the following: a subscription distribution
agreement with DLJdirect; an e-commerce marketing partnership with American
Express Travel Related Services Company; content distribution agreements with
Yahoo!, America Online, Intuit, Motorola, ON24, Lycos, I-Won, About.com,
NBCi.com and CNET; content syndication alliances with Microsoft MSN MoneyCentral
and News Digital Media's FoxSports.com website; and joint ventures with media
companies such as The New York Times Co., and Ha'aretz Group, a leading Israeli
newspaper publisher.
TheStreet.co.uk website was launched on February 15, 2000 as a free
site and publishes financial news and analysis to UK investors. TheStreet.co.uk
derives its revenues primarily from advertising. TheStreet.co.uk content is now
available through Sky News Online, Yahoo!, Netscape, Compuserve, AOL, Lycos,
Egg, Virginmoney.com and Freeserve, and has signed advertising agreements with
TD Waterhouse, Morgan Stanley Dean Witter, eBay and Fidelity Investments.
On June 16, 2000, we relaunched our subscription-based web site,
located at www.thestreet.com, as a free site. In addition, we launched a new
subscription-based site, located at www.RealMoney.com, aimed towards an audience
of active investors and focused on providing commentary and analysis on a
real-time basis. Subscribers to TheStreet.com were automatically converted into
RealMoney.com subscribers at the effective time of the relaunch. On August 1,
2000, we launched www.TheStreetPros.com, a new subscription-based site which is
aimed at an audience of professional investors.
Recent Developments
On August 7, 2000, we entered into a Securities Purchase Agreement
with Go2Net, Inc. ("Go2Net") and Vulcan Ventures Inc. ("Vulcan"), pursuant to
which, among other things, each of Go2Net and Vulcan purchased 670,167 shares of
our common stock, par value $.01 per share, at a purchase price of $5.56 per
share. In addition, we granted each of Go2Net and Vulcan an option to purchase
up to an additional 7.45% (for a total of 14.9%) of our common stock outstanding
immediately after the issuance of such stock, at a purchase price of $13.50 per
share. Each option is exercisable at any time during the six months after its
grant. We also entered into a Co-Branding and Marketing Agreement with Go2Net,
pursuant to which, among other things, we will license Go2Net's proprietary
message board technology platform, giving our RealMoney.com subscriber base the
ability to view and post messages in a co-branded environment, and syndicate
content and index headlines from our free site to Silicon Investor, Go2Net's
personal finance web site.
On September 19, 2000, we announced that we anticipated lower than
expected third quarter revenue due to the slower-than-anticipated implementation
of news distribution deals and the impact of seasonality on advertising sales.
On October 5, 2000, we settled a lawsuit commenced against us by Fox
News Network, L.L.C. concerning TheStreet.com television program that ran on the
Fox News Channel. As part of the settlement, we have agreed that prior to May 1,
2001, we will not produce a television program similar to the program that ran
on the Fox News Channel.
Results Of Operations
Three Months Ended September 30, 2000 And September 30, 1999
Net Revenues
Advertising & E-Commerce Revenues. Advertising and e-commerce revenues
are derived from Internet sponsorship arrangements and from the delivery of
banner and e-mail advertisements, as well as from conference sponsorships.
Advertising and e-commerce revenues increased to $3,722,267 for the three months
ended September 30, 2000, as compared to $2,141,675 for the three months ended
September 30, 1999. This increase is primarily the result of agreements with new
advertisers and e-commerce partners, as well as revenues from TheStreet.co.uk.
For the three months ended September 30, 2000, 58% of our advertising and
e-commerce revenues were derived from sponsorship contracts, as compared to 77%
for the three months ended September 30, 1999, reflecting our decreased
dependence on sponsors as a source of revenue. Our number of advertisers for the
third quarter of 2000 was 174, as compared to 65 for the third quarter of 1999.
For the three months ended September 30, 2000, our top five advertisers
accounted for approximately 27% of our total advertising and e-commerce
revenues, as compared to approximately 43% for the three months ended September
30, 1999, reflecting an increase in our advertiser base. During the three months
ended September 30, 2000, our sites worldwide averaged over 43 million page
views per month, as compared to 17 million page views per month during the three
months ended September 30, 1999. Unique visitors averaged 2.9 million (U.S.) and
0.1 million (U.K.) per month during the three months ended September 30, 2000,
as compared to 1.3 million unique visitors per month during the three months
ended September 30, 1999.
Subscription Revenues. Subscription revenues are derived from annual
and monthly subscriptions. Subscription revenues increased to $2,111,364 for the
three months ended September 30, 2000, as compared to $1,350,937 for the three
months ended September 30, 1999. This increase is primarily the result of the
growth in our subscriber base, as well as an increase in the subscription price.
For the three months ended September 30, 2000, approximately 80% of our net
subscription revenue was derived from annual subscriptions, as compared to 76%
for the three months ended September 30, 1999. We calculate net subscription
revenues by deducting from gross revenues cancellation chargebacks and any
refunds. During the three months ended September 30, 2000, cancellation
chargebacks and refunds accounted for approximately 12% of total subscription
revenues.
Our subscriber base has decreased to approximately 93,000 annual and
monthly subscribers as of September 30, 2000 (not including free trials, but
including subscribers paid for as part of bulk subscription contracts), as
compared to approximately 116,000 as of March 31, 2000. We anticipate this trend
to continue until mid-2001 as a result of our new strategy of a network of both
free and paid sites under TheStreet.com name.
Other Revenues. Other revenues are primarily derived from barter
arrangements, conference attendees, syndication revenues and reprint revenues.
Other revenues decreased to $407,653 for the three months ended September 30,
2000, as compared to $455,430 for the three months ended September 30, 1999.
This decrease is primarily the result of a reduction in barter revenue and the
absence of revenue associated with the Fox television show, partially offset by
BiGFiSH conference related revenue. Barter transactions are recognized at the
fair value as determined by the comparable advertising market rates at the time
of placement. In future periods, management intends to maximize cash advertising
revenue and to avoid barter transactions, although we will continue to enter
into barter relationships when deemed appropriate.
Cost Of Revenues
Cost of revenues includes compensation and benefits for editorial
staff, fees paid to outside contributors and content licensing fees payable to
content providers. Cost of revenues increased to $4,051,110 for three months
ended September 30, 2000, as compared to $2,664,024 for the three months ended
September 30, 1999. This increase is primarily the result of the additional
salaries and related expenses incurred as a result of the growth of our
editorial staff to 111 employees as of September 30, 2000, which includes the
editorial staff for TheStreet.co.uk, as compared to our editorial staff of 91
employees as of September 30, 1999. Additionally, costs have increased due to
higher rates paid to outside contributors, and costs related to TheStreet.co.uk.
Product Development Expenses
Product development expenses include compensation and benefits for
software developers and graphic designers, expenses for contract programmers and
developers, communication lines and other technology costs. Product development
expenses increased to $4,266,961 for the three months ended September 30, 2000,
as compared to $1,735,726 for the three months ended September 30, 1999. This
increase is primarily the result of costs related to the expansion of our
capacity to handle the increase in traffic following the conversion of
TheStreet.com from a single, subscription-based site to a network of free and
paid sites. Additionally, salaries and related expenses have increased as a
result of a growth in our technology and product development headcount to 66
employees as of September 30, 2000, which includes technology staff for
TheStreet.co.uk and ipoPros.com, Inc., as compared to 39 employees as of
September 30, 1999, partially offset by a reduction in outside consulting fees.
Sales And Marketing Expenses
Sales and marketing expenses consist primarily of advertising and
promotion on television, radio, online and in print, advertising agency fees,
promotional materials, content distribution fees, and compensation expenses for
our direct sales force and customer service department. Sales and marketing
expenses increased to $6,745,957 for the three months ended September 30, 2000,
as compared to $4,697,601 for the three months ended September 30, 1999. This
increase is primarily the result of additional salaries and related expenses
incurred as a result of an increase in our sales and marketing headcount to 77
employees as of September 30, 2000, which includes staff from TheStreet.co.uk,
as compared to 55 as of September 30, 1999, costs associated with an advertising
campaign designed to drive traffic to our newly free site, as well as increased
costs associated with content distribution deals, partially offset by reduced
advertising commissions. For the three months ended September 30, 2000, our
advertising expenses consisted primarily of media costs. In addition, in
connection with our barter transactions, we recorded barter advertising expenses
during the three months ended September 30, 2000 and 1999, which approximates
the barter advertising revenues we recorded in those periods.
General And Administrative Expenses
General and administrative expenses consist primarily of compensation
for general management, finance and administrative personnel, occupancy costs,
professional fees, equipment rental and other office expenses. General and
administrative costs decreased to $3,009,280 for the three months ended
September 30, 2000, as compared to $3,756,270 for the three months ended
September 30, 1999. This decrease is primarily the result of reduced
professional fees, computer services and equipment rental, partially offset by
administrative costs associated with TheStreet.co.uk operations, and additional
costs to support the growth of our business, such as occupancy costs. General
and administrative expenses for the three months ended September 30, 2000
include goodwill amortization of $204,447 related to the acquisition of
ipoPros.com, Inc. in December 1999 and BiGFiSH Management, Inc. in May 2000.
Noncash Compensation Expense
In 1998, and the first three months of 1999, we granted options to
purchase shares of our common stock at exercise prices that were less than the
fair market value of the underlying shares of common stock on the date of grant.
This resulted in noncash compensation expense incurred over the period that
these specific options vest. The noncash compensation expense was $276,660 for
the three months ended September 30, 2000. The remaining noncash compensation
expense for 2000 is currently estimated to be approximately $267,644, a lower
amount than previously estimated, reflecting the resignations of certain
individuals from the Company, which has the effect of decreasing the noncash
compensation expense incurred in future quarters.
Minority Interest
This amount accounts for the minority interest held by outside
investors in the net losses of TheStreet.com (Europe) Limited, which was formed
in September 1999. For the three months ended September 30, 2000, minority
interest was $1,018,027, based upon net losses of $1,238,527, offset by
preferred dividends of $220,500. For the three months ended September 30, 1999,
minority interest was $238,729.
Interest Income
For the three months ended September 30, 2000, interest income was
$1,460,021, as compared to $1,475,096 for the three months ended September 30,
1999.
Nine Months Ended September 30, 2000 And September 30, 1999
Net Revenues
Advertising & E-Commerce Revenues. Advertising and e-commerce revenues
increased to $11,287,103 for the nine months ended September 30, 2000, as
compared to $5,005,883 for the nine months ended September 30, 1999. This
increase is primarily the result of increased sales of Internet sponsorship,
banner and e-mail advertisements, as well as revenues from TheStreet.co.uk. For
the nine months ended September 30, 2000, 55% of our advertising and e-commerce
revenues were derived from sponsorship contracts, as compared to 80% for the
nine months ended September 30, 1999. Our number of advertisers for the nine
months ended September 30, 2000 was 307, as compared to 118 for the nine months
ended September 30, 1999. For the nine months ended September 30, 2000, our top
five advertisers accounted for approximately 25% of our total advertising and
e-commerce revenues, as compared to approximately 46% for the nine months ended
September 30, 1999.
Subscription Revenues. Subscription revenues increased to $6,276,261
for the nine months ended September 30, 2000, as compared to $2,997,917 for the
nine months ended September 30, 1999. This increase is primarily the result of
the growth in our subscriber base, as well as an increase in the subscription
price. For the nine months ended September 30, 2000, approximately 80% of our
net subscription revenue was derived from annual subscriptions, as compared to
74% for the nine months ended September 30, 1999. We calculate net subscription
revenues by deducting from gross revenues cancellation chargebacks and any
refunds. During the nine months ended September 30, 2000, cancellation
chargebacks and refunds accounted for approximately 9% of total subscription
revenues.
Other Revenues. Other revenues increased to $1,437,433 for the nine
months ended September 30, 2000, as compared to $1,195,475 for the nine months
ended September 30, 1999. This increase is primarily the result of barter
arrangements with online and print media companies, BiGFiSH conference related
revenue, as well as higher revenues from TheStreet.com television show, offset
by the absence of a one-time consulting services arrangement in April 1999
related to content syndication.
Cost Of Revenues
Cost of revenues increased to $11,987,058 for the nine months ended
September 30, 2000, as compared to $6,344,947 for the nine months ended
September 30, 1999. This increase is primarily the result of additional salaries
and related expenses incurred as a result of the growth of our editorial staff
to 111 employees as of September 30, 2000, which includes the editorial staff
for TheStreet.co.uk, as compared to our editorial staff of 91 employees as of
September 30, 1999. Additionally, costs have increased due to the growth in the
number of research tools made available to our subscribers, higher rates paid to
outside contributors, and costs related to TheStreet.co.uk.
Product Development Expenses
Product development expenses increased to $14,832,692 for the nine
months ended September 30, 2000, as compared to $4,561,979 for the nine months
ended September 30, 1999. This increase is primarily the result of costs related
to the expansion of our capacity to handle the increase in traffic following the
conversion of TheStreet.com from a single, subscription-based site to a network
of free and paid sites. Additionally, salaries and related expenses have
increased as a result of a growth in our technology and product development
headcount to 66 employees as of September 30, 2000, which includes technology
staff for ipoPros.com, Inc., as compared to 39 employees as of September 30,
1999.
Sales And Marketing Expenses
Sales and marketing expenses increased to $24,491,850 for the nine
months ended September 30, 2000, as compared to $10,208,439 for the nine months
ended September 30, 1999. This increase is primarily the result of costs
associated with additional salaries and related expenses incurred as a result of
an increase in our sales and marketing headcount to 77 employees as of September
30, 2000, which includes staff from TheStreet.co.uk, as compared to 55 as of
September 30, 1999, costs of an ad campaign designed to drive traffic to our
newly free site, as well as increased costs associated with content distribution
deals.
General And Administrative Expenses
General and administrative costs increased to $12,677,087 for the nine
months ended September 30, 2000, as compared to $10,191,191 for the nine months
ended September 30, 1999. This increase is primarily the result of
administrative costs associated with TheStreet.co.uk operations, and additional
costs to support the growth of our business, such as occupancy costs and
administrative salaries and related expenses, partially offset by reduced
recruiting fees, computer services and equipment rental. General and
administrative expenses for the nine months ended September 30, 2000 include
goodwill amortization of $555,006 related to the acquisition of ipoPros.com,
Inc. in December 1999 and BiGFiSH Management, Inc. in May 2000.
Noncash Compensation Expense
In 1998, and the first three months of 1999, we granted options to
purchase shares of our common stock at exercise prices that were less than the
fair market value of the underlying shares of common stock on the date of grant.
This resulted in noncash compensation expense incurred over the period that
these specific options vest. The noncash compensation expense was $1,103,045 for
the nine months ended September 30, 2000. We estimate that this expense will
total approximately $1.4 million for the year ended December 31, 2000. The
remaining noncash compensation expense beyond the year 2000 is currently
estimated to be $2.2 million.
Minority Interest
For the nine months ended September 30, 2000, minority interest was
$4,162,888, based upon net losses of $4,824,388, offset by preferred dividends
of $661,500. For the nine months ended September 30, 1999, minority interest was
$238,729.
Interest Income
For the nine months ended September 30, 2000, interest income was
$4,591,437, as compared to $2,596,385 for the nine months ended September 30,
1999. This increase is primarily the result of interest earned on the net
proceeds from the IPO for the entire first nine months of 2000 as compared to a
partial period in 1999.
Liquidity and Capital Resources
We currently invest in money market funds and other short-term,
investment grade instruments that are highly liquid, of high-quality, and have
maturities of less than one year, with the intent that such funds easily be made
available for operating purposes. As of September 30, 2000, our cash, cash
equivalents, and short-term investments amounted to $90,148,343, representing
75% of our total assets.
We believe that our market risk exposures are immaterial as we do not
have instruments for trading purposes, and reasonable possible near-term changes
in market rates or prices will not result in material near-term losses in
earnings, material changes in fair values or cash flows for all instruments.
Cash used in operating activities of $30,322,271 for the nine months
ended September 30, 2000 was primarily due to a net loss of $37,336,610, offset
by noncash charges and increases in accounts payable and accrued expenses,
deferred revenue, other current liabilities, and decreases in other receivables
and other assets, partially offset by the minority interest in the net losses of
The Street.co.uk and increases in accounts receivable and prepaid expenses and
other current assets.
Cash used in investing activities of $25,419,989 for the nine months
ended September 30, 2000 consisted of net purchases of short-term investments,
capital expenditures, and the acquisition of BiGFiSH Management, Inc. Capital
expenditures have generally consisted of purchases of computer hardware related
to increasing our capacity and enhancing our web sites.
Cash provided by financing activities of $9,318,673 for the nine
months ended September 30, 2000 consisted primarily of proceeds from the
issuance of common stock, and net proceeds from a sale/leaseback transaction
related to computer equipment purchased by TheStreet.co.uk.
TheStreet.co.uk will require additional funding in order to finance
its ongoing operations (assuming continuation of its current rate of
expenditure) beyond December 31, 2000. We are seeking to obtain such additional
funding or sell TheStreet.co.uk's equity or operations. We may be unable to
obtain such additional funding or consummate such sale on terms attractive to us
or at all, in which case we may discontinue the operations of TheStreet.co.uk.
TheStreet.co.uk is not a wholly-owned subsidiary of the Company, and in the
event we discontinue the operations of TheStreet.co.uk, we may need to purchase
the equity interests of the minority investors in TheStreet.co.uk. The
occurrence of the foregoing would have a material adverse effect on the
Company's liquidity and capital resources.
We believe that our current cash and cash equivalents and short-term
investments will be sufficient to meet our anticipated cash needs for at least
the next 12 months. Thereafter, if cash generated from operations is
insufficient to satisfy our liquidity requirements, we may need to raise
additional funds through public or private financings, strategic relationships
or other arrangements. There can be no assurance that additional funding, if
needed, will be available on terms attractive to us, or at all. Strategic
relationships, if necessary to raise additional funds, may require us to provide
rights to certain of our content. The failure to raise capital when needed could
materially adversely affect our business, results of operations and financial
condition. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our then-current stockholders would be
reduced. Furthermore, these equity securities might have rights, preferences or
privileges senior to those of our common stock.
Year 2000 Compliance
To date our systems and software have not experienced any material
disruption due to the onset of the Year 2000. However, we cannot assure that we
will not experience disruptions in the future as a consequence of Year 2000
issues. We cannot quantify the amount of our potential exposure, but do not
believe it to be material.
Risk Factors That May Affect Future Operating Results
You should carefully consider the following risks before making an
investment decision. The risks described below are all the material risks facing
TheStreet.com. We may also face some non-material risks which we have not
discussed in the following description of our risk factors. If any of the
following risks occur, our business, results of operations or financial
condition could be materially adversely affected.
We Have a History of Losses and We Anticipate Losses Will Continue
As of September 30, 2000, we had an accumulated deficit of $85.0
million. We have not achieved profitability and expect to continue to incur net
losses in 2000 and subsequent fiscal periods. We expect to continue to incur
significant operating expenses and, as a result, will need to generate
significant revenues to achieve profitability, which may not occur. Even if we
do achieve profitability, we may be unable to sustain or increase profitability
on a quarterly or annual basis in the future.
We recently announced that we expect our U.S. operations to become
EBITDA-positive beginning in the second half of 2001, but we cannot guarantee
that this will happen. EBITDA is a measure of earnings before interest, taxes,
depreciation or amortization are taken into account. If we are unable to achieve
EBITDA-positive results beginning in the second half of 2001, the price of our
common stock may decrease.
Risks Associated With Our New Strategy
Our New Strategy May Not Be Successful
We recently converted our main web site, TheStreet.com, to a free
site, accompanied by a network of free and subscription sites. We believe that
the continued successful implementation of this new strategy will increase our
number of unique visitors and page views, and that we will be able to increase
our advertising revenues as a result. In September 2000, we dramatically scaled
back our mass market advertising campaign, and are relying more heavily on news
distribution arrangements to increase our number of unique visitors and page
views. We believe such arrangements are a more cost effective way of driving
traffic to our free main site. However, our news distribution agreements may not
continue to provide such cost efficiencies, and even if they attract visitors to
our web sites, there is no guarantee that our offerings will capture their
attention. Additionally, since the conversion of our main site to a free site,
our overall advertising rates have declined, although we believe they still
remain among the highest of financial web sites. Accordingly, we cannot assure
you that our new strategy, even if executed properly, will help us attract
significantly increased traffic, or that we will be able to increase our
advertising revenues as a result.
Anticipated Traffic Increases May Not Occur
We have entered into headline indexing and content distribution
agreements with a variety of Internet portals and content providers to
distribute our news and headlines to their users, thus driving potential readers
to our web sites. We believe that these arrangements will continue to provide a
cost-effective way to increase our unique visitors and page view inventory.
However, as we experienced in the third quarter of 2000, actual traffic is
subject to a variety of factors, including seasonal fluctuations in financial
news consumption and overall online usage, technical difficulties associated
with the implementation and ongoing delivery of the news distribution
arrangements and editorial policy changes by our partners.
We May Have Difficulty Selling Our Advertising Inventory
The market for online advertising sales has softened. Both traditional
and new media advertisers are scaling back their online media budgets. As a
result, many advertising supported web sites are experiencing difficulty selling
their available inventories and maintaining their rate structures. Although we
believe that our network of sites and corresponding demographic profiles will
continue to enable us to maintain our high sell-through, we expect that our
overall advertising rates will decrease as a result of increased inventory.
Additionally, if we are unable to retain current advertising sales staff due to
the softening of the online advertising market, we may not be able to increase
or sustain our advertising revenues. If we are unable to attract significantly
increased traffic and advertising revenues under this strategy, our business,
results of operations and financial condition could be materially adversely
affected.
We Depend On Our Top Advertisers For A Significant Portion Of Our
Advertising Revenues, And The Loss Of Several Of Our Top Advertisers
Would Harm Our Business
In the third quarter of 2000, our top five advertisers accounted for
approximately 27% of our total advertising revenues. Our business, results of
operations and financial condition could be materially adversely affected by the
loss of a number of our top advertisers, and such a loss could be concentrated
in a single quarter. Further, if we do not continue to increase our revenue from
financial-services advertisers or attract advertisers from non-financial
industries, our business, results of operations and financial condition could be
materially adversely affected. As is typical in the advertising industry, our
advertising contracts have cancellation provisions.
We May Have Difficulty Retaining Current Subscribers After We Go Free
We will seek to retain our current subscribers under our new strategy
and to attract new subscribers by marketing our subscription-based services to
readers of our free content. We may not be able to retain our current
subscribers and attract additional subscribers in a cost-effective manner. If
our subscription base declines or our cost of subscriber acquisition increases,
our business, results of operations and financial condition could be materially
adversely affected.
We Face A Possible Decline In Our User Demographic As We Attract A
Larger Mainstream Audience
Currently, our financially oriented readers provide an upscale
demographic that is desirable to advertisers, enabling us to charge advertising
rates that we believe to be among the highest of financial web sites. Our
desirable reader demographic has enabled us to build a growing advertising
business. To reach this attractive audience, our advertisers pay rates that we
believe are among the highest of financial web sites. However, as our mainstream
traffic increases, particularly in connection with the implementation of our new
strategy to offer our content for free, we expect to experience dilution of our
reader demographic, which would likely result in a decrease in our ability to
command premium advertising rates, particularly on our free site.
Unforeseen Development Difficulties May Hinder Or Prevent The
Continued Implementation Of Our New Strategy
Although the launch of our network of free and subscription sites
occurred on schedule in the second quarter of 2000, we are continuing to enhance
our design and our technological infrastructure to further improve our sites,
and to accommodate the expected increase in traffic. Nevertheless, unforeseen
development difficulties could prevent us from implementing such improvements or
cause the costs to implement such improvements, including design, technology and
related costs, to be higher than anticipated. Additionally, the enhanced
technological infrastructure may not support the anticipated increase in
traffic.
We Depend On Third Parties For Assistance In Technological
Implementation
We are dependent on third parties, including software companies,
application service providers and technology consulting firms, to help us
implement many of the products that materially contribute to the success of our
new strategy. If these third parties are not able to fulfill their
responsibilities to us on schedule or if the technology developed by them for
our use does not function as anticipated, the implementation of such products
may be delayed and the cost of implementation may be higher than anticipated.
If We Are Unable To Attract Or Retain Qualified Editorial Staff And
Outside Contributors, Our Business Could Be Harmed
Our future success depends substantially upon the continued efforts of
our editorial staff and outside contributors to produce original, timely,
comprehensive and trustworthy content. Only a few of our editors and writers are
bound by employment agreements. Competition for financial journalists is
intense, and we may not be able to retain existing or attract additional highly
qualified editors and writers in the future. If we lose the services of a
significant number of our editorial staff and outside contributors, or are
unable to continue to attract additional editors and writers with appropriate
qualifications, our business, results of operations and financial condition
could be materially adversely affected.
In addition, we believe that some of our writers, including Mr. James
J. Cramer, Mr. Herb Greenberg, Mr. Adam Lashinsky and Mr. Dave Kansas, have a
large and loyal following among our readers. Mr. Cramer has an employment
agreement with us that terminates in February 2003. Mr. Greenberg has an
employment agreement with us that terminates in March 2001. Mr. Lashinsky has an
employment agreement with us that terminates in February 2003. Mr. Kansas has an
employment agreement with us that terminates in April 2002. If we lose the
services of prominent members of our editorial staff, including Mr. Greenberg,
Mr. Lashinsky or Mr. Kansas, or popular outside contributors, including Mr.
Cramer, a significant number of our subscribers may not renew their
subscriptions or the number of our readers may decrease. A significant reduction
in the number of our subscribers or readers could materially adversely affect
our business, results of operations and financial condition.
Potential Fluctuations In Our Quarterly Financial Results Make
Financial Forecasting Difficult
Our quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside our
control.
We believe that advertising sales in traditional media, such as
television and radio, generally are lower in the first and third calendar
quarters of each year. Similar seasonal patterns are developing in our industry.
We believe that quarter-to-quarter comparisons of our operating
results may not be a good indication of our future performance, nor would our
operating results for any particular quarter be indicative of future operating
results. In some future quarters our operating results may be below the
expectations of public market analysts and investors. In such an event, the
price of our common stock is likely to decrease.
Our Future Success Depends On Our Ability To Attract And Retain
Personnel In Key Business Positions
Our future success depends upon our ability to attract and retain
personnel in key business positions. The loss of one or more of our key
personnel, or our inability to attract replacements, could materially adversely
affect our business, results of operations and financial condition. A few of our
employees have entered into non-competition agreements with us. However,
competition in the Internet industry is intense, and other employees may leave
us and work for our competitors or start their own competing businesses.
Our ability to develop and maintain both our site and our corporate
computer network is dependent on our ability to recruit and retain technology
personnel. Certain technology employees have left the company to pursue new
opportunities and we will need to replace these employees. Competition for
skilled technologists is intense, and we may not be able to retain existing or
attract additional technology personnel with appropriate expertise.
Our Limited Operating History Makes Evaluating Our Business Difficult
We commenced operations in June 1996 and launched our web site in
November 1996. Accordingly, we have only a limited operating history upon which
you can evaluate our business and prospects. An investor in our common stock
must consider the risks, expenses and difficulties frequently encountered by
early stage companies in new and rapidly evolving markets, including web-based
financial news and information companies.
TheStreet.co.uk Requires Additional Funding After December 31, 2000 To
Finance Ongoing Operations, Which May Not Be Available
TheStreet.co.uk will require additional funding in order to finance
its ongoing operations (assuming continuation of its current rate of
expenditure) beyond December 31, 2000. We are seeking to obtain such additional
funding or sell TheStreet.co.uk's equity or operations. We may be unable to
obtain such additional funding or consummate such sale on terms attractive to us
or at all, in which case we may discontinue the operations of TheStreet.co.uk.
TheStreet.co.uk is not a wholly-owned subsidiary of the Company, and in the
event we discontinue the operations of TheStreet.co.uk, we may need to purchase
the equity interests of the minority investors in TheStreet.co.uk. The
occurrence of the foregoing would have a material adverse effect on the
Company's liquidity and capital resources.
Our International Expansion Plans Face Many Risks, Which We May Not Be
Able To Overcome
We continue to explore opportunities to expand internationally and, in
doing so, we expect to encounter many of the risks associated with international
business expansion. These risks include, but are not limited to, language
barriers, cultural differences, changes in currency exchange rates, political
and economic instability, difficulties with regulatory compliance and
difficulties with enforcing contracts and other legal obligations. We cannot
assure you that we will be able to take advantage of any opportunities to expand
internationally in light of the foregoing risks.
Intense Competition Could Reduce Our Market Share And Harm Our
Financial Performance
An increasing number of financial news and information sources compete
for consumers' and advertisers' attention and spending. We expect this
competition to continue to increase. We compete for advertisers, readers, staff
and outside contributors with many types of companies, including:
- online services or web sites focused on business, finance and
investing, such as CBS.MarketWatch.com, CNBC.com, CNNfn.com, The
Wall Street Journal Interactive Edition, DowJones.com,
SmartMoney.com; Microsoft MSN MoneyCentral and The Motley Fool;
- publishers and distributors of traditional media, including
print, radio and television, such as The Wall Street Journal,
Fortune, Bloomberg Business Radio and CNBC;
- providers of terminal-based financial news and data, such as
Bloomberg Business News, Reuters News Service, Dow Jones Markets
and Bridge News Service;
- web "portal" companies, such as Yahoo! and America Online; and
- online brokerage firms, many of which provide financial and
investment news and information, such as Charles Schwab, E*TRADE
and Merrill Lynch.
Our ability to compete depends on many factors, including the
originality, timeliness, comprehensiveness and trustworthiness of our content
and that of our competitors, the ease of use of services developed either by us
or our competitors and the effectiveness of our sales and marketing efforts.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to devote greater resources than we
can to the development and promotion of their services. These competitors may
also engage in more extensive research and development, undertake more
far-reaching marketing campaigns, adopt more aggressive pricing policies
(including offering more of their financial news and commentary for free) and
make more attractive offers to existing and potential employees, outside
contributors, strategic partners and advertisers. Our competitors may develop
content that is equal or superior to ours or that achieves greater market
acceptance than ours. It is also possible that new competitors may emerge and
rapidly acquire significant market share. We may not be able to compete
successfully for advertisers, readers, staff or outside contributors, which
could materially adversely affect our business, results of operations and
financial condition. Increased competition could result in price reductions,
reduced margins or loss of market share, any of which could materially adversely
affect our business, results of operations and financial condition.
We also compete with other web sites, television, radio and print
media for a share of advertisers' total advertising budgets. If advertisers
perceive the Internet or our web sites to be a limited or an ineffective
advertising medium, they may be reluctant to devote a portion of their
advertising budget to Internet advertising or to advertising on our web sites.
A Failure To Establish And Maintain Strategic Relationships With Other
Companies Could Decrease Our Subscriber And Reader Base, Which May
Harm Our Business
We depend on establishing and maintaining content syndication and
headline indexing relationships with high-traffic web sites for a significant
portion of our current subscriber and reader base. There is intense competition
for relationships with these firms and placement on these sites, and we may have
to pay significant fees to establish additional content syndication and headline
indexing relationships or maintain existing relationships in the future. In
addition, the success of our newly-launched professional product,
TheStreetPros.com, will depend in part on our ability build a subscriber base
through the establishment and maintenance of subscription distribution
relationships with financial services firms. We may be unable to enter into or
successfully renew relationships with these firms or sites on commercially
reasonable terms or at all. These relationships may not attract significant
numbers of subscribers or readers.
Many companies that we may approach for a strategic relationship or
who already have strategic relationships with us also provide financial news and
information from other sources. As a result, these companies may be reluctant to
enter into or maintain strategic relationships with us. Our business, results of
operations and financial condition could be materially adversely affected if we
do not establish additional, and maintain existing, strategic relationships on
commercially reasonable terms or if any of our strategic relationships do not
result in an increase in the number of subscribers or readers of our web sites.
Failure To Retain And Integrate Our Advertising Sales Force Could
Result In Lower Advertising Revenues
We depend on our internal advertising sales department to maintain and
increase our advertising sales, and as our main site becomes free and our
dependency on advertising revenue increases, we expect to expand our advertising
sales staff significantly. As of September 30, 2000, our U.S. advertising sales
department consisted of 23 employees and our U.K. advertising sales department
consisted of six employees. The success of our advertising sales department is
subject to a number of risks, including the competition we face from other
companies in hiring and retaining sales personnel and the length of time it
takes new sales personnel to become productive. Our business, results of
operations and financial condition could be materially adversely affected if we
do not effectively expand and maintain an effective advertising sales
department.
We May Be Unable To Manage Our Growth, Which May Harm Our Business
We have experienced rapid growth in our operations. Our rapid growth
has placed a significant strain on our managerial, operational and financial
resources. To manage our growth, we must continue to implement and improve our
managerial controls and procedures and operational and financial systems. In
addition, our future success will depend on our ability to manage our workforce,
in particular our editorial, advertising sales and business development staff.
As of September 30, 2000, we had a total of 219 U.S. employees, as compared to
202 employees as of September 30, 1999. As of September 30, 2000,
TheStreet.co.uk had 63 employees. We cannot assure you that our systems,
procedures or controls will be adequate to support our operations, or that our
management will be able to successfully offer and expand our services. If we are
unable to manage our growth effectively, our business, results of operations and
financial condition could be materially adversely affected.
We May Be Unable To Grow Through Acquisitions And Integrate Future
Acquisitions Into Our Business
We intend to pursue a growth strategy that may involve acquisitions of
other companies. However, we may be unable to successfully pursue and complete
acquisitions in a timely and cost-effective manner. Further, the pursuit and
integration of acquisitions will require substantial attention from our senior
management, which will limit the amount of time these individuals will have
available to devote to our existing operations. There can be no assurance that
we can successfully integrate these acquisitions into our business or implement
our plans without delay or substantial cost. In addition, future acquisitions by
us could result in the incurrence of debt and contingent liabilities, which
could have a material adverse effect upon our financial condition and results of
operations. Any failure or any inability to effectively manage and integrate
growth may have a material adverse effect on our financial condition and results
of operations.
Increases In Traffic May Strain Our Systems
In the past, we have experienced significant spikes in traffic on our
web site when there have been important financial news events. In addition, the
number of our readers has continued to increase over time and we expect our
reader base to increase significantly now that our main site has been converted
to a totally free site. Accordingly, our web sites must accommodate a high
volume of traffic, often at unexpected times. Although we have upgraded and
continue to upgrade our systems in connection with the launch of our network of
sites, our web site has in the past, and may in the future, experience
publishing problems, slower response times than usual or other problems for a
variety of reasons. These occurrences could cause our readers to perceive our
web sites as not functioning properly and, therefore, cause them to use other
methods to obtain their financial news and information. In such a case, our
business, results of operations and financial condition could be materially
adversely affected.
We Face A Risk Of System Failure That May Result In Reduced Traffic,
Reduced Revenue And Harm To Our Reputation
Our ability to provide timely information and continuous news updates
depends on the efficient and uninterrupted operation of our computer and
communications hardware and software systems. Similarly, our ability to track,
measure and report the delivery of advertisements on our site depends on the
efficient and uninterrupted operation of a third-party system. In February 2000,
our Internet-hosting agreement with Exodus Communications, Inc. was renewed, and
we currently continue to maintain all of our production servers at Exodus's New
Jersey data center. Our operations depend on Exodus's ability to protect its own
systems and our systems in its data center against damage from fire, power loss,
water damage, telecommunications failure, vandalism and similar unexpected
adverse events. Although Exodus provides comprehensive facilities management
services, including human and technical monitoring of all production servers 24
hours per day, seven days per week, Exodus does not guarantee that our Internet
access will be uninterrupted, error-free or secure. Any disruption in the
Internet access to our web sites provided by Exodus could materially adversely
affect our business, results of operations and financial condition. In addition,
in September 1999, we entered into an agreement with USinternetworking, Inc.
under which USi provides us with a mirror site for partial disaster recovery in
the event of the failure of our primary systems. In December 1999, we did
experience system failures that required us to use USi's mirror site for a short
period of time. Our own internal systems and operations, as well as those of
Exodus and USi, may be subject to damage or interruption from human error,
natural disasters, fire, water damage, power loss, telecommunication failures,
break-ins, sabotage, computer viruses, intentional acts of vandalism and similar
events. Any system failure, including network, software or hardware failure,
that causes an interruption in our service or a decrease in responsiveness of
our web sites could result in reduced traffic, reduced revenue and harm to our
reputation, brand and our relations with our advertisers and e-commerce
partners. In February 2000, many prominent web sites were subjected to
"distributed denial-of-service" attacks, during which their servers were
inundated with requests for data, causing them to overload and preventing
legitimate traffic from getting through, which rendered the sites unresponsive
to users for a period of time. Like most other web sites, we may be vulnerable
to such attacks and other deliberate attempts to disrupt our technological
operations. Our insurance policies may not adequately compensate us for any
losses that we may incur because of any failures in our system or interruptions
in our delivery of content. Our business, results of operations and financial
condition could be materially adversely affected by any event, damage or failure
that interrupts or delays our operations.
Any Failure Of Our Internal Security Measures Or Breach Of Our Privacy
Protections Could Cause Us To Lose Users And Subject Us To Liability
Users who subscribe to one of our subscription-based web sites are
required to furnish certain personal information (including name, email address
and credit card information), which we use to administer our services. Although
we no longer need credit-card information to process subscription payments for
our main site, now that it has converted to a free site, we continue to gather
credit card information for the subscription-based sites in our network. In
addition, in the near future, we plan to implement a registration system that
will collect certain information (although not payment information) from users
of our free main site who wish to gain access to certain features of our site.
In addition, we rely on a third party hosting service to host our newly-launched
professional web site. If the security measures that we or such third party use
to protect personal information are ineffective, we may lose users and our
business may be harmed. Additionally, both we and such third party rely on
security and authentication technology licensed from third parties to perform
real-time credit card authorization and verification. We cannot predict whether
technological developments could allow these security measures to be
circumvented. We may need to use significant resources to prevent security
breaches or to alleviate problems caused by any security breaches. If we or our
third party hosting partner are not able to prevent all security breaches, our
business, results of operations and financial condition could be materially
adversely affected.
Our users depend on us to keep their personal information private and
to disclose it to third parties. We therefore maintain a strict privacy policy,
under which we will not furnish, rent or sell to third parties any personal
information about our subscribers or other users. We have retained the ability
to modify the privacy policy at any time. Like most web sites that require some
form of registration, we use "cookies" (small data files placed by a web server
on a user's hard drive to enable the server to track the user's movement on the
site) in order to help our subscribers navigate throughout the site, and we use
individual tracking information obtained from the cookies for internal purposes,
such as to administer subscriber accounts and process purchases in our online
store. In addition, companies that serve banners and other advertisements on our
site use their own cookies, enabling them to limit the frequency with which a
user is shown a particular ad. Some Internet users and industry observers have
expressed privacy concerns about cookies. If our users perceive that we are not
protecting their privacy, our business, results of operations and financial
condition could be materially adversely affected.
Difficulties Associated With Our Brand Development May Harm Our
Ability To Attract Subscribers And Readers
We believe that maintaining and growing awareness about the
TheStreet.com brand is an important aspect of our efforts to continue to attract
users. The importance of brand recognition will increase in the future because
of the growing number of web sites providing financial news and information. The
new sites that we have introduced, RealMoney.com and TheStreetPros.com, do not
have widely recognized brands, and we will need to increase awareness of these
brands among potential users. In order to raise recognition of TheStreet.com
brand and to drive traffic to our newly free flagship site, in July 2000 we
embarked on a multimedia advertising campaign centered on the New York
metropolitan area. However, this and other efforts to build brand awareness may
not be cost effective or successful in reaching potential users, and some
potential users may not be receptive to our advertising campaign or other
efforts. Accordingly, we cannot assure you that such efforts will be successful
in raising awareness of TheStreet.com brand or in persuading potential users to
visit our sites.
Failure To Maintain Our Reputation For Trustworthiness May Reduce The
Number Of Our Readers, Which May Harm Our Business
It is very important that we maintain our reputation as a trustworthy
news organization. The occurrence of events, including our misreporting a news
story or the non-disclosure of a stock ownership position by one or more of our
writers in breach of our compliance policy, could harm our reputation for
trustworthiness. These events could result in a significant reduction in the
number of our readers, which could materially adversely affect our business,
results of operations and financial condition.
Potential Liability For Information Displayed On Our Web Sites May
Require Us To Defend Against Legal Claims, Which May Cause Significant
Operational Expenditures
We may be subject to claims for defamation, libel, copyright or
trademark infringement or based on other theories relating to the information we
publish on our web sites. These types of claims have been brought, sometimes
successfully, against online services as well as other print publications in the
past. We could also be subject to claims based upon the content that is
accessible from our web sites through links to other web sites. We recently
introduced stock ticker-based message boards that allow users to post comments
about individual stocks. We undertake no obligation to moderate these message
boards, and potential liability for providers of message board services has not
yet been well established. We may choose to allow our editorial staffers or
outside contributors to post on our boards, thus increasing our potential
liability. Our insurance may not adequately protect us against these claims.
Year 2000 Complications May Disrupt Our Operations And Harm Our
Business
Many currently installed computer systems and software products were
coded during their production to accept only two-digit entries to identify a
year in the date code field. To date our systems and software have not
experienced any material disruption due to the onset of the Year 2000, and our
vendors and strategic partners have not reported experiencing any Year 2000
problems. However, because we and our subscribers and readers are dependent, to
a very substantial degree, upon the proper functioning of our and their computer
systems, any future occurrence of Year 2000 problems or the failure of our Year
2000 contingency plans could materially disrupt our operations or the ability of
our subscribers and readers to access our web sites, which could materially
adversely affect our business, results of operations and financial condition.
Failure To Protect Our Intellectual Property Rights Could Harm Our
Brand-Building Efforts And Ability To Compete Effectively
To protect our rights to our intellectual property, we rely on a
combination of trademark and copyright law, trade secret protection,
confidentiality agreements and other contractual arrangements with our
employees, affiliates, clients, strategic partners and others. The protective
steps we have taken may be inadequate to deter misappropriation of our
proprietary information. We may be unable to detect the unauthorized use of, or
take appropriate steps to enforce, our intellectual property rights. We have
registered our trademarks in the United States and we have pending U.S. and
foreign applications for other trademarks. Effective trademark, copyright and
trade secret protection may not be available in every country in which we offer
or intend to offer our services. Failure to adequately protect our intellectual
property could harm our brand, devalue our proprietary content and affect our
ability to compete effectively. Further, defending our intellectual property
rights could result in the expenditure of significant financial and managerial
resources, which could materially adversely affect our business, results of
operations and financial condition.
We May Have To Defend Against Intellectual Property Infringement
Claims, Which May Cause Significant Operational Expenditures
Although we believe that our proprietary rights do not infringe on the
intellectual property rights of others, other parties may assert infringement
claims against us or claims that we have violated a patent or infringed a
copyright, trademark or other proprietary right belonging to them. We
incorporate licensed third-party technology in some of our services. In these
license agreements, the licensors have generally agreed to defend, indemnify and
hold us harmless with respect to any claim by a third party that the licensed
software infringes any patent or other proprietary right. We cannot assure you
that these provisions will be adequate to protect us from infringement claims.
Any infringement claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources on our part, which
could materially adversely affect our business, results of operations and
financial condition.
Difficulties In Developing New And Enhanced Services And Features For
Our Web Sites Could Harm Our Business
We intend to introduce additional and enhanced services in order to
retain our current readers and attract new readers. If we introduce a service
that is not favorably received, our current readers may choose a competitive
service over ours or fail to renew their subscriptions. We may also experience
difficulties that could delay or prevent us from introducing new services. These
difficulties may include the loss of, or inability to obtain or maintain,
third-party technology license agreements. Furthermore, the new services we may
introduce could contain errors that are discovered after these services are
introduced. In these cases, we may need to significantly modify the design or
implementation of such services on our web sites to correct these errors. Our
business, results of operations and financial condition could be materially
adversely affected if we experience difficulties in introducing new services or
if these new services are not accepted by our readers.
Our Ability To Maintain And Increase Our Readership Depends On The
Continued Growth In Use And Efficient Operation Of The Web
The web-based information market is new and rapidly evolving. Our
business would be materially adversely affected if web usage does not continue
to grow or grows slowly. Web usage may be inhibited for a number of reasons,
such as:
o inadequate network infrastructure;
o security and privacy concerns;
o inconsistent quality of service; and
o unavailability of cost-effective, high-speed access to the
Internet.
Our readers depend on Internet service providers, online service
providers and other web site operators for access to our web sites. Many of
these services have experienced significant service outages in the past and
could experience service outages, delays and other difficulties due to system
failures unrelated to our systems. These occurrences could cause our readers to
perceive the web in general or our web sites in particular as an unreliable
medium and, therefore, cause them to use other media to obtain their financial
news and information. We also depend on a number of information providers to
deliver information and data feeds to us on a timely basis. Our web sites could
experience disruptions or interruptions in service due to the failure or delay
in the transmission or receipt of this information, which could materially
adversely affect our business, results of operations and financial condition.
A General Decline In Online Advertising Or Our Inability To Adapt To
Trends In Online Advertising Could Harm Our Advertising Revenues
No standards have been widely accepted to measure the effectiveness of
web advertising. If standards do not develop, existing advertisers may not
continue or increase their levels of web advertising. If standards develop and
we are unable to meet these standards, advertisers may not continue advertising
on our site. Furthermore, advertisers that have traditionally relied upon other
advertising media may be reluctant to advertise on the web. Our business,
results of operations and financial condition could be materially adversely
affected if the market for web advertising declines or develops more slowly than
expected. Different pricing models are used to sell advertising on the web. It
is difficult to predict which, if any, will emerge as the industry standard.
This uncertainty makes it difficult to project our future advertising rates and
revenues. We cannot assure you that we will be successful under alternative
pricing models that may emerge. Moreover, "filter" software programs that limit
or prevent advertising from being delivered to a web user's computer are
available. Widespread adoption of this software could materially adversely
affect the commercial viability of web advertising, which could materially
adversely affect our advertising revenues. In addition, some Internet
commentators, privacy advocates and federal and state officials have recently
suggested that legislation may be needed to better safeguard online privacy, by
the limitation or elimination of the use of cookies or by other methods. If such
legislation is passed, it is likely to restrict the ability of online
advertisers to target their ads, which may result in a decrease in online
advertising rates or online advertising spending generally. Such a decrease
could materially adversely affect our advertising revenues.
We compete with other web sites, television, radio and print media for
a share of advertisers' total advertising budgets. If advertisers perceive the
web in general or our web sites in particular to be a limited or an ineffective
advertising medium, they may be reluctant to devote a portion of their
advertising budget to online advertising or to advertising on our web sites.
Government Regulation And Legal Uncertainties Relating To The Web
Could Increase Our Costs Of Transmitting Data And Increase Our Legal
And Regulatory Expenditures And Could Decrease Our Readership
Existing domestic and international laws or regulations and private
industry guidelines specifically regulate communications or commerce on the web.
Further, laws and regulations that address issues such as user privacy, pricing,
online content regulation, taxation of e-commerce transactions and the
characteristics and quality of online products and services are under
consideration by federal, state, local and foreign governments and agencies and
by private industry groups. Several telecommunications companies have petitioned
the Federal Communications Commission to regulate Internet service providers and
online services providers in a manner similar to the regulation of long distance
telephone carriers and to impose access fees on such companies. This regulation,
if imposed, could increase the cost of transmitting data over the web. Moreover,
it may take years to determine the extent to which existing laws relating to
issues such as intellectual property ownership and infringement, libel,
obscenity and personal privacy are applicable to the web. The Federal Trade
Commission and government agencies in certain states have been investigating
certain Internet companies regarding their use of personal information. We could
incur additional expenses if any new regulations regarding the use of personal
information are introduced or if these agencies chose to investigate our privacy
practices. Any new laws or regulations relating to the web, or certain
application or interpretation of existing laws, could decrease the growth in the
use of the web, decrease the demand for our web sites or otherwise materially
adversely affect our business.
Concerns About Web Security Could Reduce Our Advertising Revenues,
Decrease Our Reader Base And Increase Our Web Security Expenditures
Concern about the transmission of confidential information over the
Internet has been a significant barrier to electronic commerce and
communications over the web. Any well-publicized compromise of security could
deter more people from using the web or from using it to conduct transactions
that involve the transmission of confidential information, such as signing up
for a paid subscription, executing stock trades or purchasing goods or services.
Because many of our advertisers seek to advertise on our web sites to encourage
people to use the web to purchase goods or services, our business, results of
operations and financial condition could be materially adversely affected if
Internet users significantly reduce their use of the web because of security
concerns. We may also incur significant costs to protect ourselves against the
threat of security breaches or to alleviate problems caused by these breaches.
Shares Eligible For Public Sale After Our Initial Public Offering or
After Our Recent Investment Could Adversely Affect Our Stock Price
As of November 8, 2000, there were outstanding 26,812,534 shares of
our common stock. Of these shares, the shares sold in our initial public
offering are freely tradeable except for any shares purchased by our
"affiliates" as defined in Rule 144 under the Securities Act. The remaining
shares are "restricted securities," subject to the volume limitations and other
conditions of Rule 144 under the Securities Act.
Many of these restricted shares, because they were obtained in 1998
private placements by holders who are not affiliates of the Company, are now
eligible for sale under Rule 144. In addition, after the first anniversary of
our initial public offering, some holders of common stock have the right to
request the registration of their shares under the Securities Act of 1933, as
amended. Upon the effectiveness of that registration statement, all shares
covered by that registration statement will be freely transferable.
Additionally, in connection with the investments by Go2Net and Vulcan, we
granted them the right to request the registration of the shares they purchased.
Upon the effectiveness of that registration statement, the shares each purchased
and, if one or both exercises its option, the shares each purchases upon
exercise of its option, will be freely transferable. We cannot predict if future
sales of our common stock by these holders, or the availability of our common
stock for sale, will materially adversely affect the market price for our common
stock or our ability to raise capital by offering equity securities.
Control By Principal Stockholders, Officers And Directors Could
Adversely Affect Our Stockholders
Our officers, directors and greater-than-five-percent stockholders
(and their affiliates), acting together, have the ability to control
substantially all matters submitted to our stockholders for approval (including
the election and removal of directors and any merger, consolidation or sale of
all or substantially all of our assets) and to control our management and
affairs. Accordingly, this concentration of ownership may have the effect of
delaying, deferring or preventing a change in control of us, impeding a merger,
consolidation, takeover or other business combination involving us or
discouraging a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, which in turn could materially adversely
affect the market price of the common stock.
Volatility Of Our Stock Price Could Adversely Affect Our Stockholders
The stock market has experienced significant price and volume
fluctuations and the market prices of securities of technology companies,
particularly Internet-related companies, have been highly volatile. Investors
may not be able to resell their shares at or above the price at which they
bought them.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against that company. The institution of similar litigation against
us could result in substantial costs and a diversion of our management's
attention and resources, which could materially adversely affect our business,
results of operations and financial condition.
Anti-Takeover Provisions Could Prevent Or Delay A Change Of Control
Provisions of our amended and restated certificate of incorporation
and amended and restated bylaws and Delaware law could make it more difficult
for a third party to acquire us, even if doing so would be beneficial to our
stockholders.
We Do Not Intend To Pay Dividends
We have never declared or paid any cash dividends on our common stock.
We currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On October 5, 2000, we entered into a settlement with Fox News
Network, L.L.C. ("Fox News") under which the action commenced against us by Fox
News on May 22, 2000 was discontinued with prejudice and without costs.
From time to time, we become involved in various routine legal
proceedings in the ordinary course of our business. We believe that the outcome
of all pending legal proceedings and unasserted claims, in the aggregate, will
not have a material adverse effect on our results of operations, financial
position or liquidity.
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 Vote of Security Holders.
Information concerning the matters submitted to a vote at the annual
meeting of stockholders of the Company, held on July 12, 2000, is contained in
the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2000,
filed with the Securities and Exchange Commission on August 14, 2000.
Item 5. Other Information.
On October 5, 2000, we settled a lawsuit commenced against us by Fox
News Network, L.L.C. concerning TheStreet.com television program that ran on the
Fox News Channel. As part of the settlement, we have agreed that prior to May 1,
2001, we will not produce a television program similar to the program that ran
on the Fox News Channel.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
*3.1 Amended and Restated Certificate of Incorporation
**3.2 Amended and Restated Bylaws
*4.1 The Street.com Rights Plan
**4.2 Amended and Restated 1998 Stock Incentive Plan
27.1 Financial Data Schedule
* Incorporated by reference to Exhibits to the Registrant's Registration
Statement on Form S-1 dated February 23, 1999 (File No. 333-72799).
** Incorporated by reference to Exhibits to the Registrant's Annual Report on
Form 10-K dated March 30, 2000 (File No. 0-25779).
(b) Reports on Form 8-K
During the quarter ended September 30, 2000, the Company filed a
Current Report on Form 8-K, dated August 7, 2000, reporting under Item 5 thereof
the execution of a Securities Purchase Agreement with Go2Net, Inc. ("Go2Net")
and Vulcan Ventures Inc. ("Vulcan") pursuant to which, among other things, the
Company sold to each of Go2Net and Vulcan 670,167 shares of its common stock,
par value $.01 per share, at a purchase price of $5.56 per share. In addition,
the Company granted each of Go2Net and Vulcan an option to purchase up to an
additional 7.45% (for a total of 14.9%) of the Company's shares of common stock
outstanding immediately after the issuance of such stock, at a purchase price of
$13.50 per share. Each option is exercisable for six months from the issuance
date.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: November 14, 2000 TheStreet.com, Inc.
(Registrant)
By: /s/ Thomas J. Clarke, Jr.
-----------------------------------
Name: Thomas J. Clarke, Jr.
Title: Chief Executive Officer
By: /s/ Lisa A. Mogensen
-----------------------------------
Name: Lisa A. Mogensen
Title: Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
*3.1 Amended and Restated Certificate of Incorporation
**3.2 Amended and Restated Bylaws
*4.1 The Street.com Rights Plan
**4.2 Amended and Restated 1998 Stock Incentive Plan
27.1 Financial Data Schedule
* Incorporated by reference to Exhibits to the Registrant's Registration
Statement on Form S-1 dated February 23, 1999 (File No. 333-72799).
** Incorporated by reference to Exhibits to the Registrant's Annual Report on
Form 10-K dated March 30, 2000 (File No. 0-25779).
<PAGE>
Exhibit 27.1
Financial Data Schedule
Fiscal year end...................................... Dec. 31, 2000
Period end........................................... September 30, 2000
Cash................................................. 61,077,537
Securities........................................... 29,070,806
Receivables.......................................... 4,609,681
Allowances........................................... 444,512
Inventory............................................ 0
Current assets....................................... 101,224,098
PP&E................................................. 17,981,305
Depreciation......................................... 3,401,768
Total assets......................................... 120,633,348
Current liabilities.................................. 22,454,895
Bonds................................................ 0
Common............................................... 268,107
Preferred Mandatory.................................. 0
Preferred............................................ 0
Other SE............................................. 82,771,944
Total liability and equity........................... 120,633,348
Sales................................................ 0
Total revenues....................................... 19,000,797
CGS.................................................. 11,987,058
Total costs.......................................... 53,104,674
Other expenses....................................... (4,591,437)
Loss provision....................................... 144,512
Interest expense..................................... 0
Income - Pretax...................................... (41,499,498)
Income tax........................................... 0
Income - continuing.................................. (37,336,610)
Discontinued......................................... 0
Extraordinary........................................ 0
Changes.............................................. 0
Net income........................................... (37,336,610)
EPS - Basic.......................................... (1.46)
EPS - Diluted........................................ (1.46)
