<PAGE> 1
UNITED STATES
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 July 31, 1999
[ ] 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: 0-26023
ALLOY ONLINE, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3310676
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
115 West 30th Street, #201, New York, NY 10001
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (212) 244-4307
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of September 2, 1999, the registrant had 14,231,797 shares of common
stock, $.01 par value per share, outstanding. All share numbers referenced in
this quarterly report reflect a 1.128-for-1 stock split of all outstanding
shares of Common Stock effected by Alloy Online, Inc. on May 13, 1999.
<PAGE> 2
ALLOY ONLINE, INC.
CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
--------
<S> <C>
Item 1. Financial Statements
Condensed Balance Sheets, July 31, 1999 (unaudited)
and January 31, 1999................................................ 3
Statements of Operations, Three Months Ended July 31, 1999
(unaudited) and July 31, 1998 (unaudited)........................... 4
Statements of Comprehensive Loss, Three Months Ended
July 31, 1999 (unaudited) and July 31, 1998 (unaudited)............. 5
Statements of Operations, Six Months Ended July 31, 1999
(unaudited) and July 31, 1998 (unaudited)........................... 6
Statements of Comprehensive Loss, Six Months Ended
July 31, 1999 (unaudited) and July 31, 1998 (unaudited)............. 7
Statements of Cash Flows, Six Months Ended July 31, 1999
(unaudited) and July 31, 1998 (unaudited)........................... 8
Statement of Changes in Stockholders' (Deficit) Equity, Six
Months Ended July 31, 1999 (unaudited) ............................. 9
Notes to Financial Statements (unaudited)............................. 10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations........................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk............ 20
PART II - OTHER INFORMATION
Item 1. Legal Proceedings..................................................... 21
Item 2. Changes in Securities and Use of Proceeds............................. 21
Item 3 Defaults Upon Senior Securities....................................... 21
Item 4. Submission of Matters to a Vote of Security Holders................... 21
Item 5 Other Information..................................................... 21
Item 6. Exhibits and Reports on Form 8-K...................................... 22
SIGNATURES.............................................................................. 23
EXHIBIT INDEX........................................................................... 24
EXHIBIT 27 - Financial Data Schedule.................................................... 25
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ALLOY ONLINE, INC.
CONDENSED BALANCE SHEETS
<TABLE>
ASSETS
<CAPTION>
January 31, July 31,
1999 1999
----------- --------
(audited) (unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (includes restricted cash
of $182,000 and $161,000 at January 31, 1999
and July 31, 1999, respectively) $ 2,983,283 $ 23,642,673
Available-for-sale marketable securities (Note 3) -- 22,351,236
Accounts receivable, net 145,476 244,657
Stock subscription receivable 2,500,000 --
Inventories, net 810,354 2,461,914
Prepaid catalog costs 426,012 1,847,000
Other current assets 32,675 1,115,252
----------- ------------
TOTAL CURRENT ASSETS 6,897,800 51,662,732
Property and equipment, net 178,017 423,623
Deferred financing costs, net 125,851 --
Other assets 205,387 381,083
----------- ------------
TOTAL ASSETS $ 7,407,055 $ 52,467,438
=========== ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,558,477 $ 5,756,104
Current portion of capital lease obligation 73,178 82,748
----------- ------------
TOTAL CURRENT LIABILITIES 1,631,655 5,838,852
Promissory notes, net of unamortized discount 3,945,122 --
Capital lease obligation, less current portion 40,218 6,367
Series A Convertible redeemable preferred stock;
$.01 par value; 1,678,286 shares authorized;
1,487,843 shares issued and outstanding at January 31, 1999 4,836,387 --
STOCKHOLDERS' (DEFICIT) EQUITY:
Common Stock; $.01 par value; 50,000,000 shares authorized;
8,479,727 and 14,231,774 shares issued and outstanding, respectively 84,797 142,318
Additional paid-in capital 5,441,012 61,254,064
Accumulated deficit (8,347,241) (13,961,973)
Deferred compensation (224,895) (732,417)
Accumulated other comprehensive loss (Note 4) -- (79,773)
----------- ------------
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY (3,046,327) 46,622,219
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
(DEFICIT) EQUITY $ 7,407,055 $ 52,467,438
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
ALLOY ONLINE, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the three months
ended July 31,
1998 1999
----------- -----------
<S> <C> <C>
NET MERCHANDISE REVENUES $ 2,082,047 $ 3,596,449
SPONSORSHIP AND OTHER REVENUES 5,230 219,421
----------- -----------
TOTAL REVENUES 2,087,277 3,815,870
COST OF GOODS SOLD 1,200,123 1,899,695
----------- -----------
GROSS PROFIT 887,154 1,916,175
----------- -----------
OPERATING EXPENSES:
Selling and marketing 2,482,632 4,319,829
General and administrative 509,279 1,146,386
----------- -----------
TOTAL OPERATING EXPENSES 2,991,911 5,466,215
----------- -----------
LOSS FROM OPERATIONS (2,104,757) (3,550,040)
INTEREST (EXPENSE) INCOME, NET (60,042) 471,876
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (2,164,799) (3,078,164)
EXTRAORDINARY ITEM:
Charge for early retirement of debt (Note 8) 0 (234,788)
----------- -----------
NET LOSS $(2,164,799) $(3,312,952)
=========== ===========
BASIC LOSS PER SHARE OF COMMON STOCK (Note 6)
Before Extraordinary Item $ (.26) $ (.23)
Extraordinary Charge -- (.02)
----------- -----------
Net Loss $ (.26) $ (.25)
=========== ===========
DILUTED LOSS PER SHARE OF COMMON STOCK (Note 6)
Before Extraordinary Item $ (.24) $ (.23)
Extraordinary Charge -- (.02)
----------- -----------
Net Loss $ (.24) $ (.25)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 8,479,727 13,411,623
=========== ===========
Diluted 8,953,880 13,411,623
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
ALLOY ONLINE, INC.
STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
<TABLE>
<CAPTION>
For the three months
ended July 31,
1998 1999
---------- -----------
<S> <C> <C>
Net Loss $(2,164,799) $(3,312,952)
Other comprehensive loss, net of tax:
Unrealized loss on available-for-sale securities -- (79,773)
----------- -----------
Comprehensive Loss $(2,164,799) $(3,392,725)
=========== ===========
</TABLE>
<PAGE> 6
ALLOY ONLINE, INC.
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the six months
ended July 31,
1998 1999
----------- -----------
<S> <C> <C>
NET MERCHANDISE REVENUES $ 3,434,437 $ 5,987,928
SPONSORSHIP AND OTHER REVENUES 6,267 382,212
----------- -----------
TOTAL REVENUES 3,440,704 6,370,140
COST OF GOODS SOLD 2,105,947 3,148,553
----------- -----------
GROSS PROFIT 1,334,757 3,221,587
----------- -----------
OPERATING EXPENSES:
Selling and marketing 4,000,287 6,929,883
General and administrative 774,060 2,065,234
----------- -----------
TOTAL OPERATING EXPENSES 4,774,347 8,995,117
----------- -----------
LOSS FROM OPERATIONS (3,439,590) (5,773,530)
INTEREST (EXPENSE) INCOME, NET (37,975) 393,586
----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (3,477,565) (5,379,944)
EXTRAORDINARY ITEM:
Charge for early retirement of debt (Note 8) 0 (234,788)
----------- -----------
NET LOSS $(3,477,565) $(5,614,732)
=========== ===========
BASIC LOSS PER SHARE OF COMMON STOCK (Note 6)
Before Extraordinary Item $ (.41) $ (.49)
Extraordinary Charge -- (.02)
----------- -----------
Net Loss $ (.41) $ (.51)
=========== ===========
DILUTED LOSS PER SHARE OF COMMON STOCK (Note 6)
Before Extraordinary Item $ (.39) $ (.49)
Extraordinary Charge -- (.02)
----------- -----------
Net Loss $ (.39) $ (.51)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 8,479,727 11,100,952
=========== ===========
Diluted 8,953,880 11,100,952
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
ALLOY ONLINE, INC.
STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
<TABLE>
<CAPTION>
For the six months
ended July 31,
1998 1999
----------- -----------
<S> <C> <C>
Net Loss $(3,477,565) $(5,614,732)
Other comprehensive loss, net of tax:
Unrealized loss on available-for-sale securities -- (79,773)
----------- -----------
Comprehensive Loss $(3,477,565) $(5,694,505)
=========== ===========
</TABLE>
<PAGE> 8
ALLOY ONLINE, INC.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
For the six months
ended July 31,
1998 1999
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,477,656) $ (5,614,732)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 10,470 80,141
Amortization of deferred financing costs 8,514 24,955
Extraordinary charge for early retirement of debt -- 234,788
Compensation charge for issuance of options 147,963 349,815
Accrued interest on promissory notes 80,140 124,015
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (35,795) (99,181)
Inventories, net (268,070) (1,651,560)
Other current assets (651,561) (2,503,564)
Other assets (104,772) 43,775
Increase in:
Accounts payable and accrued expenses 979,146 4,197,629
----------- ------------
Net cash used in operating activities (3,311,621) (4,813,919)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities -- (22,431,009)
Capital expenditures (10,818) (274,286)
Purchase of domain name and mailing list (4,000) (250,000)
----------- ------------
Net cash used in investing activities (14,818) (22,955,295)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from sale of common stock -- 50,149,499
Proceeds from stock subscription receivable -- 2,500,000
Net proceeds from issuance of promissory notes 3,658,738 --
Exercise of warrants to purchase common stock -- 30,000
Payments of promissory notes -- (4,212,084)
Preferred stock issuance expenses -- (3,208)
Payments of capital lease obligation (20,375) (35,603)
----------- ------------
Net cash provided by financing activities 3,638,363 48,428,604
----------- ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 311,924 20,659,390
CASH AND CASH EQUIVALENTS, beginning of period 2,320,548 2,983,283
----------- ------------
CASH AND CASH EQUIVALENTS, end of period $ 2,632,472 $ 23,642,673
=========== ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITY:
Purchase of computer equipment under capital lease $ 122,967 $ 6,033
Exercise of stock options -- 3,625
Deferred compensation -- 857,337
Accumulated other comprehensive loss -- (79,773)
Conversion of preferred stock into common stock -- 4,845,897
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
ALLOY ONLINE, INC.
Statement of Changes in Stockholders' (Deficit) Equity
(unaudited)
For the Six Months Ended July 31, 1999
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other
---------------------- Paid-in Comprehensive Accumulated Deferred
Shares Amount Capital Loss Deficit Compensation Total
---------- -------- ----------- -------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, February 1,
1999 8,479,727 $ 84,797 $ 5,441,012 $ -- $ (8,347,241) $ (224,895) $(3,046,327)
Exercise of employee
and consultant
stock options 362,481 3,625 (3,625) -- -- -- 0
Issuance of options to
employees for
services rendered -- -- 767,371 -- -- (767,371) 0
Issuance of options
to consultants for
services rendered -- -- 89,966 -- -- (89,966) 0
Amortization of
deferred
compensation -- -- -- -- -- 349,815 349,815
Unrealized loss on
available-for-sale
securities -- -- -- (79,773) -- -- (79,773)
Exercise of warrant
into common stock 11,280 113 30,446 -- -- -- 30,559
Accretion of issuance
costs on preferred
stock -- -- (12,719) -- -- -- (12,719)
Conversion of
preferred stock
into common stock 1,678,286 16,783 4,829,114 -- -- -- 4,845,897
Proceeds from issuance
of common stock in
connection with an
initial public
offering, net of
issuance costs 3,700,000 37,000 50,112,499 -- -- -- 50,149,499
Net loss -- -- -- -- (5,614,732) -- (5,614,732)
---------- -------- ----------- -------- ------------ ---------- -----------
Balance, July 31, 1999 14,231,774 $142,318 $61,254,064 $(79,773) $(13,961,973) $ (732,417) $46,622,219
========== ======== =========== ======== ============ ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
ALLOY ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
1. FINANCIAL STATEMENT PRESENTATION
The accompanying financial statements have been prepared by Alloy
Online, Inc. ("Alloy"), without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operations, comprehensive losses and cash flows at July 31, 1999 and
for all periods presented have been made. The results of operations for
the periods ended July 31, 1999 and 1998 are not necessarily indicative
of the operating results for a full year.
Certain information and footnote disclosures prepared in accordance
with generally accepted accounting principles and normally included in
the financial statements have been condensed or omitted. It is
suggested that these financial statements and notes be read in
conjunction with the financial statements and notes related to the
Company's fiscal year ended January 31, 1999 included in Alloy's
Registration Statement on Form S-1 (Registration No. 333-74159)
declared effective by the Securities and Exchange Commission on May 13,
1999.
2. BUSINESS
Alloy was incorporated in the State of Delaware on January 22, 1996 and
is a leading Web site serving the unique interests and tastes of the
high growth Generation Y (10 to 24 year olds) marketplace. Through our
Web site, www.alloy.com, Generation Y boys and girls can interact,
share information, explore compelling and relevant content and shop.
Through our Web site and our Alloy direct mail catalog, we offer
Generation Y boys and girls a variety of merchandise, including boys
and girls apparel, accessories, footwear, music, cosmetics and magazine
subscriptions.
3. AVAILABLE-FOR-SALE SECURITIES
Management determines the appropriate classification of its investments
in debt and equity securities at the time of purchase and reevaluates
such determinations at each balance sheet date. As of July 31, 1999,
Alloy classified its entire portfolio of marketable securities as
available-for-sale. Securities available for sale are carried at fair
value, with the unrealized gains and losses, net of income taxes,
reported as a separate component of Shareholders' Equity. The amortized
cost of debt securities is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization and accretion, as
well as interest, are included in Interest Income. Realized gains and
losses are included in Other Income. The cost of securities sold is
based on the specific identification method. Alloy's investments in
debt securities are diversified among investment grade securities in
accordance with our investment policy.
4. COMPREHENSIVE LOSS
Alloy adopted SFAS No. 130, Reporting Comprehensive Income, in the
quarter ended April 30, 1998. This Statement establishes standards for
reporting and display of comprehensive income or loss and its
components in a full set of general-purpose financial statements. This
Statement requires that all items that are required to be recognized
under accounting standards as components of comprehensive income or
loss be reported in a financial statement that is displayed with the
same prominence as other financial statements.
<PAGE> 11
ALLOY ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
5. STOCK OPTIONS
In April 1999, Alloy's stock option plan was amended to reserve up to
4,000,000 shares of Common Stock for issuance under the plan, upon and
subject to the consummation of Alloy's initial public offering of
shares of its common stock (the "Offering"). In the six month period
ended July 31, 1999, options to purchase 1,027,910 shares of common
stock were granted to 32 employees, three consultants and two board
members of Alloy. These options become exercisable over a period
ranging from immediately to four years from the date of grant. The
exercise prices of the options range from $0.60 per share to $26.25 per
share. The total compensatory cost associated with the granting of
these options is $857,000, as calculated pursuant to Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees". Of this amount, $321,000 has been recognized as
compensation expense during the six months ended July 31, 1999, in
accordance with the vesting provisions of these options. The remaining
$536,000 has been included in deferred compensation and will be charged
to expense in accordance with the vesting provisions of these options
as the employee and consultant services are performed.
Additionally, options to purchase 362,481 shares of Alloy's common
stock were exercised during the six months ended July 31, 1999. These
options had a weighted average exercise price of $0.68 per share.
6. NET LOSS PER SHARE
The following table sets forth the computation of basic and diluted net
loss per share:
<TABLE>
<CAPTION>
Three Months Six Months
Ended July 31, Ended July 31,
-------------- --------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
Numerator:
<S> <C> <C> <C> <C>
Loss before extraordinary item $(2,164,799) $(3,078,164) $(3,477,565) $(5,379,944)
Accretion of preferred stock 0 (1,824) 0 (12,719)
----------- ----------- ----------- -----------
Loss before extraordinary item
available to common stockholders (2,164,799) (3,079,988) (3,477,565) (5,392,663)
Extraordinary item -- (234,788) -- (234,788)
----------- ----------- ----------- -----------
Net loss $(2,164,799) $(3,314,776) $(3,477,565) $(5,627,451)
=========== =========== =========== ===========
Denominator:
Basic weighted average shares
outstanding 8,479,727 13,411,623 8,479,727 11,100,952
Nominal issuances of stock options 474,153 0 474,153 0
----------- ----------- ----------- -----------
Diluted weighted average shares
outstanding 8,953,880 13,411,623 8,953,880 11,100,952
=========== =========== =========== ===========
Basic loss per share before
extraordinary item $ (0.26) $ (0.23) $ (0.41) $ (0.49)
Diluted loss per share before
extraordinary item $ (0.24) $ (0.23) $ (0.39) $ (0.49)
Basic net loss per share $ (0.26) $ (0.25) $ (0.41) $ (0.51)
Diluted net loss per share $ (0.24) $ (0.25) $ (0.39) $ (0.51)
</TABLE>
<PAGE> 12
ALLOY ONLINE, INC.
NOTES TO FINANCIAL STATEMENTS
Alloy has applied the provisions of SFAS No. 128, "Earnings Per Share"
in the above calculations. Basic and diluted loss per share in the
periods prior to the Offering are also computed pursuant to the
Securities and Exchange Commission Staff Accounting Bulletin No. 98
("SAB 98"). SAB 98 requires that all equity instruments issued at
nominal prices prior to the effective date of an initial public
offering be included in the calculation of basic and diluted loss per
share as if they were outstanding for all periods presented whether or
not the impact is dilutive. In accordance with SFAS No. 128 and SAB 98,
after the Offering, the nominal issuances are included in the total
option pool and assessed for dilution as is normally done under SFAS
No. 128.
The 517,261 warrants to purchase Alloy's common stock (of which 11,280
were exercised upon consummation of the Offering) and the Series A
Convertible Redeemable Preferred Stock prior to its conversion into
1,678,286 shares of Alloy's common stock upon the consummation of the
Offering have been excluded from the above calculations as the impact
of their inclusion would be anti-dilutive.
7. INITIAL PUBLIC OFFERING
In April 1999, Alloy restated its Certificate of Incorporation such
that, subject to the consummation of the Offering, it will have the
authority to issue an aggregate of 55,000,000 shares of capital stock,
consisting of 50,000,000 shares of common stock, par value $.01 per
share, and 5,000,000 shares of preferred stock, par value $.01 per
share. In May 1999, Alloy effected a 1.128-for-1 common stock split.
All references to common shares and per common share, except for
references to authorized common shares, in the financial statements
have been restated to give effect to the common stock split discussed
herein.
In May 1999, Alloy issued 3,700,000 shares of its common stock and
received approximately $50.1 million in proceeds, net of underwriting
discounts and expenses, upon the successful completion of the Offering.
Upon the consummation of the Offering, the Series A Convertible
Redeemable Preferred Stock was converted into 1,678,286 shares of
common stock.
8. EXTRAORDINARY ITEM
In conjunction with the Offering, Alloy redeemed its outstanding
promissory notes including accrued interest thereon for $4,212,000. The
extraordinary charge of $234,788 in 1999 resulted from the full
recognition of the remaining unamortized deferred financing costs and
unamortized discount on these notes, which had an original maturity of
May 2001.
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion of the financial condition and results of
operation of Alloy should be read in conjunction with the Financial Statements
and the related Notes included elsewhere in this Report. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results may differ materially from those anticipated in these
forward-looking statements as a result of various factors.
OVERVIEW
Alloy Online is a leading Web site serving the unique interests and
tastes of Generation Y. Through our Web site, www.alloy.com, Generation Y boys
and girls can interact, share information, explore compelling and relevant
content and shop. Through our Web site and our Alloy direct mail catalog, we
offer Generation Y boys and girls a variety of merchandise, including boys and
girls apparel, accessories, footwear, music, cosmetics and magazine
subscriptions.
Our revenues consist of merchandise revenues and sponsorship and other
revenues. We generate merchandise revenues through both our catalog and our Web
site. We generate sponsorship and other revenues primarily through the sale of
sponsorships, banner advertisements, co-marketing programs and other revenue
sharing arrangements on our Web site and in our catalog. Revenues from sales of
merchandise are recognized at the time products are shipped to customers.
Revenues from sponsorships, advertising and other arrangements are recognized
during the period in which the sponsorship or advertisement is displayed,
provided that no significant performance obligations remain and the collection
of the related receivable is probable. Revenues from sales of Internet
advertisements are recognized net of commissions paid to advertising sales firms
and to technology and content providers.
We were incorporated in January 1996, launched our Web site in August
1996 and began recognizing meaningful revenues in August 1997 following the
distribution of our first Alloy catalog. To date, the majority of our revenues
have been generated through merchandise sales. Sponsorship and other revenues
have not been material, but we expect these revenues to increase in future
periods as a result of our plan to increase visitors to our Web site and further
develop our marketing and sales team to capitalize on our sponsorship,
advertising and other revenue opportunities. In May 1999, we issued 3,700,000
shares of common stock in our initial public offering (the "Offering") and
received approximately $50.1 million in net proceeds, after deduction of
underwriter's commissions and discounts and expenses related to the Offering.
We incurred net losses of approximately $118,000 for the fiscal year
ended January 31, 1997, $1.9 million for the fiscal year ended January 31, 1998,
$6.4 million for the fiscal year ended January 31, 1999, and $5.6 million for
the six months ended July 31, 1999. These net losses resulted primarily from the
costs associated with developing our Web site and database of Generation Y boys
and girls, attracting users to our Web site and establishing the Alloy brand.
Because of our plans to invest heavily in marketing and promotion, to hire
additional employees and to develop our Web site and operating infrastructure,
we expect to incur significant net losses for the foreseeable future. Although
we have experienced revenue growth in recent periods, this growth may not be
sustainable and, therefore, these recent periods should not be considered
indicative of future performance. We may never achieve significant revenues or
profitability, or if we achieve significant revenues they may not be sustained
in future periods.
<PAGE> 14
RESULTS OF OPERATIONS
The following table sets forth the statement of operations data for the
periods indicated as a percentage of revenues. Any trends reflected by the
following table may not be indicative of future results.
THREE MONTHS ENDED JULY 31,
1998 1999
------ ------
Net merchandise revenues ........................... 99.8% 94.2%
Sponsorship and other revenues ..................... 0.2 5.8
----- -----
Total revenues .................................. 100.0 100.0
Cost of goods sold ................................. 57.5 49.8
----- -----
Gross profit ....................................... 42.5 50.2
Operating expenses:
Selling and marketing ........................... 118.9 113.2
General and administrative ...................... 24.4 30.0
----- -----
Total operating expenses ........................ 143.3 143.2
----- -----
Loss from operations ............................... (100.8) (93.0)
Interest (expense) income, net ..................... (2.9) 12.4
----- -----
Loss before extraordinary item ..................... (103.7) (80.6)
Extraordinary item ................................. 0.0 (6.2)
----- -----
Net loss ........................................... (103.7)% (86.8)%
===== =====
COMPARISON OF THREE MONTHS ENDED JULY 31, 1998 AND 1999
Revenues
Merchandise Revenues. Net merchandise revenues increased 72.7% from
$2.1 million in the three months ended July 31, 1998 to $3.6 million in the
three months ended July 31, 1999. The increase in merchandise sales in the three
months ended July 31, 1999 was due primarily to the significant increase in
orders driven by our expanded database of Generation Y buyers and prospects to
which we marketed in the quarter.
Sponsorship and Other Revenues. Sponsorship and other revenues amounted
to $219,000 in the three months ended July 31, 1999 as compared to immaterial
revenues in the three months ended July 31, 1998. Programs to take advantage of
the increased number of visitors to our Web site and our introduction of new
online services did not begin generating material revenue until the third
quarter of fiscal 1998.
Cost of Goods Sold
Cost of goods sold consists of the cost of the merchandise sold by
Alloy plus the freight cost to deliver the merchandise to the warehouse. Our
cost of goods sold increased 58.3% from $1.2 million in the three months ended
July 31, 1998 to $1.9 million in the three months ended July 31, 1999. The
increase in cost of goods sold was due primarily to the increase in product
sales volume. Alloy's gross profit as a percentage of total revenues increased
from 42.5% in the three months ended July 31, 1998 to 50.2% in the three months
ended July 31, 1999 due to our improved merchandise mix and growing high margin
sponsorship and other revenues.
Operating Expenses
Selling and Marketing. Selling and marketing expenses consist primarily
of Alloy catalog production and mailing costs; our call center and fulfillment
operations expenses; salaries of our sales and marketing personnel; marketing
costs; and expenses related to the development, maintenance and marketing of our
Web site. These expenses increased 74.0% from $2.5 million in the three months
ended July 31, 1998 to $4.3 million in the three months ended July 31, 1999 due
to the increased costs incurred in marketing to our expanded database, increased
<PAGE> 15
Web site promotion and development, and the hiring of selling and marketing
staff. As a percentage of total revenues, our selling and marketing expenses
declined from 118.9% in the three months ended July 31, 1998 to 113.2% in the
three months ended July 31, 1999. Improved efficiencies in our fulfillment
operations due to our renegotiated fulfillment services contract and the
increased percentage of orders and catalog requests coming through our Web site
offset increased expenditures on Internet advertising programs and sales and
marketing personnel.
We expect selling and marketing expenses to increase significantly in
future periods. These increases will be principally related to hiring additional
sales and marketing personnel and increased spending on advertising in a variety
of media to increase brand awareness, attract additional visitors to our Web
site and grow online merchandise sales. There can be no assurance that these
increased expenditures will result in increased visitors to our Web site or
additional sales.
General and Administrative. General and administrative expenses consist
primarily of salaries and related costs for our executive, administrative,
finance and management personnel, as well as support services and professional
service fees. These expenses increased 125.0% from $509,000 in the three months
ended July 31, 1998 to $1.1 million in the three months ended July 31, 1999. As
a percentage of total revenues, our general and administrative expenses
increased from 24.4% in the three months ended July 31, 1998 to 30.0% in the
three months ended July 31, 1999. The increase in general and administrative
expenses was driven by an increase in compensation expense for additional
personnel to handle our growing business, together with expenses incurred as a
result of becoming a public company, such as professional fees, insurance
premiums and public relations costs. We expect general and administrative
expenses to grow as we hire additional personnel and incur additional expenses
related to the growth of our business and our operations as a public company.
Loss from Operations
As described above, we have invested heavily to build the Alloy brand,
grow our customer database, enhance and attract visitors to our Web site and
increase the number of our employees to support a growing operation. For the
foregoing reasons, our loss from operations increased from $2.1 million in the
three months ended July 31, 1998 to $3.6 million in the three months ended July
31, 1999.
Interest (Expense) Income, Net
Interest income net of expense includes income from our cash and cash
equivalents and from investments and expenses related to our financing
obligations. We generated net interest expense of $60,000 in the three months
ended July 31, 1998 due to the interest expense resulting from our issuance of
promissory notes in May 1998, which exceeded our interest earned on cash
balances held. In the three months ended July 31, 1999, we generated net
interest income of $472,000 due to the investment of the proceeds raised in our
initial public offering in May 1999.
Extraordinary Item
As a result of the early retirement of our outstanding promissory notes
upon the closing of the Offering, we incurred a one-time extraordinary charge of
$235,000 in the three months ended July 31, 1999.
<PAGE> 16
SIX MONTHS ENDED JULY 31,
1998 1999
------ ------
Net merchandise revenues ........................... 99.8% 94.0%
Sponsorship and other revenues ..................... 0.2 6.0
----- -----
Total revenues .................................. 100.0 100.0
Cost of goods sold ................................. 61.2 49.4
----- -----
Gross profit ....................................... 38.8 50.6
Operating expenses:
Selling and marketing ........................... 116.3 108.8
General and administrative ...................... 22.5 32.4
----- -----
Total operating expenses ........................ 138.8 141.2
----- -----
Loss from operations ............................... (100.0) (90.6)
Interest (expense) income, net ..................... (1.1) 6.2
----- -----
Loss before extraordinary item ..................... (101.1) (84.4)
Extraordinary item ................................. 0.0 (3.7)
----- -----
Net loss ........................................... (101.1)% (88.1)%
===== =====
COMPARISON OF SIX MONTHS ENDED JULY 31, 1998 AND 1999
Revenues
Merchandise Revenues. Net merchandise revenues increased 74.3% from
$3.4 million in the six months ended July 31, 1998 to $6.0 million in the six
months ended July 31, 1999. The increase in merchandise sales in the six months
ended July 31, 1999 was due primarily to the significant increase in orders
driven by our expanded database of Generation Y buyers and prospects to which we
marketed in the quarter.
Sponsorship and Other Revenues. Sponsorship and other revenues amounted
to $382,000 in the six months ended July 31, 1999 as compared to immaterial
revenues in the six months ended July 31, 1998. Programs to take advantage of
the increased number of visitors to our Web site and our introduction of new
online services did not begin generating material revenue until the third
quarter of fiscal 1998.
Cost of Goods Sold
Cost of goods sold consists of the cost of the merchandise sold by
Alloy plus the freight cost to deliver the merchandise to the warehouse. Our
cost of goods sold increased 49.5% from $2.1 million in the six months ended
July 31, 1998 to $3.1 million in the six months ended July 31, 1999. The
increase in cost of goods sold was due primarily to the increase in product
sales volume. Alloy's gross profit as a percentage of total revenues increased
from 38.8% in the six months ended July 31, 1998 to 50.6% in the six months
ended July 31, 1999 due to our improved merchandise mix and growing high margin
sponsorship and other revenues.
Operating Expenses
Selling and Marketing. Selling and marketing expenses consist primarily
of Alloy catalog production and mailing costs; our call center and fulfillment
operations expenses; salaries of our sales and marketing personnel; marketing
costs; and expenses related to the development, maintenance and marketing of our
Web site. These expenses increased 73.2% from $4.0 million in the six months
ended July 31, 1998 to $6.9 million in the six months ended July 31, 1999 due to
the increased costs incurred in marketing to our expanded database, increased
Web site promotion and development, and the hiring of selling and marketing
staff, which included a $142,000 non-cash charge in the six months ended July
31, 1999 related to stock options granted during the period. As a percentage of
total revenues, our selling and marketing expenses declined from 116.3% in the
six months ended July 31, 1998 to 108.8% in the six months ended July 31, 1999.
Improved efficiencies in our fulfillment operations due to our
<PAGE> 17
renegotiated fulfillment services contract and the increased percentage of
orders and catalog requests coming through our Web site offset increased
expenditures on Internet advertising programs and sales and marketing personnel.
We expect selling and marketing expenses to increase significantly in
future periods. These increases will be principally related to hiring additional
sales and marketing personnel and increased spending on advertising in a variety
of media to increase brand awareness, attract additional visitors to our Web
site and grow online merchandise sales. There can be no assurance that these
increased expenditures will result in increased visitors to our Web site or
additional sales.
General and Administrative. General and administrative expenses consist
primarily of salaries and related costs for our executive, administrative,
finance and management personnel, as well as support services and professional
service fees. These expenses increased 166.8% from $774,000 in the six months
ended July 31, 1998 to $2.1 million in the six months ended July 31, 1999. As a
percentage of total revenues, our general and administrative expenses increased
from 22.5% in the six months ended July 31, 1998 to 32.4% in the six months
ended July 31, 1999. The increase in general and administrative expenses was
driven by an increase in compensation expense for additional personnel to handle
our growing business, together with expenses incurred as a result of becoming a
public company, such as professional fees, insurance premiums and public
relations costs. Compensation expense for the six months ended July 31, 1999
included a $189,000 non-cash charge related to stock options granted during the
period. We expect general and administrative expenses to grow as we hire
additional personnel and incur additional expenses related to the growth of our
business and our operations as a public company.
Loss from Operations
As described above, we have invested heavily to build the Alloy brand,
grow our customer database, enhance and attract visitors to our Web site and
increase the number of our employees to support a growing operation. For the
foregoing reasons, our loss from operations increased from $3.4 million in the
six months ended July 31, 1998 to $5.8 million in the six months ended July 31,
1999.
Interest (Expense) Income, Net
Interest income net of expense includes income from our cash and cash
equivalents and from investments and expenses related to our financing
obligations. We generated net interest expense of $38,000 in the six months
ended July 31, 1998 due to the interest expense resulting from our issuance of
promissory notes in May 1998, which exceeded our interest earned on cash
balances held. In the six months ended July 31, 1999, we generated net interest
income of $394,000 due to the investment of the proceeds raised in our initial
public offering in May 1999.
Extraordinary Item
As a result of the early retirement of our outstanding promissory notes
upon the closing of the Offering, we incurred a one-time extraordinary charge of
$235,000 in the six months ended July 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations primarily through the sale of equity
and debt securities as we have generated negative cash flow from operations
since our inception. In May 1999, we raised approximately $50.1 million in net
proceeds upon the closing of the Offering. At July 31, 1999, we had
approximately $24 million of cash and cash equivalents and a further $22 million
of marketable securities. Our principal commitments at July 31, 1999 consisted
of accounts payable and obligations under our capital and operating leases.
<PAGE> 18
Net cash used in operating activities was $3.3 million in the six
months ended July 31, 1998 and $4.8 million in the six months ended July 31,
1999. The principal use of cash in both periods was to fund our losses from
operations.
Cash used in investing activities has consisted of the purchase of
marketable securities with a portion of the proceeds from the Offering; capital
expenditures for computers, office furniture and equipment; and the acquisition
of certain intangible assets. Following the Offering, we purchased approximately
$22.4 million in marketable securities in the six months ended July 31, 1999.
Reflecting the increased pace of business growth and Web site traffic, our
capital expenditures rose from $11,000 in the six months ended July 31, 1998 to
$274,000 in the six months ended July 31, 1999. In the six months ended July 31,
1999 we also acquired a Web site domain name and a customer mailing list in
separate transactions for a total of $250,000.
Net cash provided by financing activities was approximately $3.6
million in the six months ended July 31, 1998 from the sale of promissory notes
in May 1998. In the six months ended July 31, 1999, we received $50.1 million in
net proceeds from the Offering, as well as the second $2.5 million cash
installment from the sale of our Series A Convertible Preferred Stock to Brand
Equity Ventures. After the closing of the Offering on May 19, 1999, we repaid
$4.2 million of principal and accrued interest on our promissory notes. In
addition, upon the consummation of the Offering in May 1999, all outstanding
Series A Convertible Redeemable Preferred Stock was converted into 1,678,286
shares of common stock.
We currently anticipate that we will continue to experience significant
growth in our operating expenses for the foreseeable future as we build our
brand and customer database and that our operating expenses will be a material
use of our cash resources. We believe that in light of the Offering which raised
net proceeds of $50.1 million in May 1999, our existing working capital and cash
flows from operations will be sufficient to meet our anticipated cash needs for
working capital and capital expenditures for at least the next 24 months,
although we will consider attractive opportunities to raise additional capital
should these opportunities arise. If cash generated from operations is
insufficient to satisfy our cash needs, we may be required to raise additional
funds. If we raise additional funds through the issuance of equity securities,
our existing shareholders may experience significant dilution. Furthermore,
additional financing may not be available when needed or, if available,
financing may not be on terms favorable to us or our stockholders. If financing
is not available when required or is not available on acceptable terms, we may
be unable to develop or enhance our products or services. In addition, we may be
unable to take advantage of business opportunities or respond to competitive
pressures. Any of these events could have a material and adverse effect on our
business, results of operations and financial condition.
IMPACT OF THE YEAR 2000
Many currently installed computer systems and software products are
coded to accept or recognize only two digit entries in the date code field.
These systems may recognize a date using "00" as the year 1900 rather than the
year 2000. As a result, computer systems and/or software used by many companies
and governmental agencies may need to be upgraded to comply with Year 2000
requirements or risk system failure or miscalculations causing disruptions of
normal business activities.
State of Readiness. The four third-party vendors upon whom we
materially rely are Harrison Fulfillment Services, our fulfillment services and
call center provider; OneSoft Corporation, which maintains our Web site and
provides our connection to the Internet; Quad/Graphics, Inc., our commercial
printer; and the United States Postal Service, our mail carrier. We have sought
confirmation from these four vendors that their systems are Year 2000 compliant.
In June 1999, Harrison Fulfillment Services successfully converted our
fulfillment operations to a system that they represent to be Year
2000-compliant. OneSoft has informed us that its systems are Year 2000
compliant. We have reviewed Year 2000 readiness disclosure statements prepared
by Quad/Graphics and the U.S. Postal Service. According to the Year 2000
readiness disclosure statement provided by the U.S. Postal Service on its Web
site, as of August 9. 1999, its Business Applications which includes financial,
marketing, mail operation systems, and enabler systems were 99.3% remediated. In
addition, the U.S. Postal Service reported that as of August 9, 1999, its Mail
Processing equipment was 93% remediated. As of the second quarter of 1999,
Quad/Graphics reports in its Year 2000 readiness statement that it has completed
testing of its imaging and
<PAGE> 19
distribution systems. Quad/Graphics also reports that ongoing live Year 2000
tests of the press systems have not yet produced any failures, and it is in the
process of upgrading its perfect binder software in the finishing unit. We
believe, from information provided in the Year 2000 disclosures, that both the
U.S. Postal Service and Quad/Graphics will be Year 2000 compliant by October
1999.
We do not expect to experience any material adverse effects on our
business, financial condition or results of operations from any other vendor,
distributor or supplier who may experience Year 2000 problems.
We have been conducting an internal assessment of all material
information technology and non-information technology systems at our
headquarters, including our accounting software, our network server and related
software, our personal computers and related software and our telephone system.
We believe that all of these systems either are or will be made Year 2000
compliant by October 1999. The majority of our material information technology
and non-information technology systems are PC-based, and therefore, are
currently Year 2000 compliant. We are not currently aware of any Year 2000
problems relating to these systems which would have a material adverse effect on
our business, financial condition or results of operations. Any systems
discovered to be non-compliant will be made Year 2000 compliant through normal
upgrades of our software or hardware, or, when necessary, replacement of our
software or hardware.
Costs. To date, we have not incurred any material costs in identifying
or evaluating Year 2000 compliance issues. Most of our expenses have related to,
and are expected to continue to relate to, the upgrades or replacements, when
necessary, of software or hardware, as well as costs associated with time spent
by employees in the evaluation process and Year 2000 compliance matters
generally. These expenses are included in our capital expenditures budget and
are not expected to be material to our financial position or results of
operations. These expenses, however, if higher than anticipated, could have a
material and adverse effect on our business, results of operations and financial
condition.
Risks. There can be no assurance that we will not discover Year 2000
compliance problems in our systems that will require substantial revisions or
replacements. In the event that the fulfillment and operational facilities that
support our business, or our Web-hosting facilities, are not Year 2000
compliant, we may be unable to deliver goods or services to our customers and
portions of our Web site may become unavailable. In addition, there can be no
assurance that third-party software, hardware or services incorporated into our
material systems will not need to be revised or replaced, which could be
time-consuming and expensive. Our inability to fix or replace third-party
software, hardware or services on a timely basis could result in lost revenues,
increased operating costs and other business interruptions, any of which could
have a material and adverse effect on our business, results of operations and
financial condition. Moreover, the failure to adequately address Year 2000
compliance issues in our software, hardware or systems could result in claims of
mismanagement, misrepresentation or breach of contract and related litigation,
which could be costly and time-consuming to defend.
In addition, there can be no assurance that governmental agencies,
utility companies, Internet access companies and others outside our control will
be Year 2000 compliant. The failure by these entities to be Year 2000 compliant
could result in a systemic failure beyond our control, including, for example, a
prolonged Internet, telecommunications or electrical failure, which could also
prevent us from delivering our services to our users, decrease the use of the
Internet or prevent users from accessing our services, any of which would have a
material and adverse effect on our business, results of operations and financial
condition.
Contingency Plan. As discussed above, we are engaged in an ongoing Year
2000 assessment and do not currently have a contingency plan to deal with the
worst case scenario that might occur if technologies on which we depend are not
Year 2000 compliant and fail to operate effectively after the Year 2000. The
results of our Year 2000 compliance evaluation and the responses received from
distributors, suppliers and other third parties with which we conduct business
will be taken into account in determining the need for and nature and extent of
any contingency plans.
If our present efforts to address the Year 2000 compliance issues
discussed above are not successful, or if distributors, suppliers and other
third parties with which we conduct business do not successfully address such
<PAGE> 20
issues, our users could seek alternate suppliers of our products and services.
Any material Year 2000 problem could require us to incur significant
unanticipated expenses to remedy and could divert our management's time and
attention, either of which could have a material and adverse effect on our
business, operating results and financial condition.
FORWARD LOOKING STATEMENTS
This report may contain forward-looking statements that involve risks
and uncertainties, including statements regarding our ability to increase
revenues and generate multiple revenue streams and increase visitors to our Web
Site, our ability to capitalize on our sales and marketing efforts, our ability
to build the Alloy brand name and develop our on-line community, our web site's
appeal to marketers, our ability to meet anticipated cash needs for working
capital and capital expenditures for the next 24 months, and the Year 2000
compliance of our internal systems and third-party systems. Our actual results
could differ materially from those projected in the forward-looking statements
and reported results should not be considered an indication of our future
performance. Factors that might cause or contribute to such differences include,
among others, our expected future losses, our planned sales and marketing
campaigns may not attract sufficient additional visitors to our web site, our
planned sales and marketing campaigns may not increase our revenues or generate
additional revenue streams, we lack experienced management and personnel, we may
fail to establish an effective internal sales organization to attract
sponsorship and advertising revenues, we may not be able to adapt as internet
technologies and customer demands continue to evolve, and we would lose revenues
and incur significant costs if our systems or material third-party systems are
not Year 2000 compliant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Alloy was not exposed to material market risks associated with activities in
derivative financial instruments, other financial instruments or commodity
instruments as of the end of its most recent fiscal quarter.
<PAGE> 21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) On May 13, 1999, Alloy effected a 1.128-for-1 stock split of all
outstanding shares of Common Stock.
(b) Not applicable.
(c)-(d) On May 13, 1999, in connection with Alloy's initial public
offering, a Registration Statement on Form S-1 (No. 333-74159) was declared
effective by the Securities and Exchange Commission, pursuant to which 3,700,000
shares of Common Stock were offered and sold for the account of Alloy at a price
of $15.00 per share, generating gross offering proceeds of $55.5 million. The
managing underwriters of the offering were BancBoston Robertson Stephens, Volpe
Brown Whelan & Company, Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated, and Ladenburg Thalmann & Co. Inc. After deducting approximately
$3.9 million in underwriting discounts and commissions and an estimated $1.5
million in other related expenses, the net proceeds to Alloy were approximately
$50.1 million. The proceeds have been invested, pending their use as described
below, in a portfolio of investment grade fixed income securities.
The following table sets forth Alloy's cumulative use of the net offering
proceeds as of July 31, 1999:
Construction of plant, building and facilities:.....................$ --
Purchase and installation of machinery and equipment: ............... 100,000
Purchase of real estate: ............................................ --
Acquisition of other business(es): .................................. --
Repayment of indebtedness: .......................................... 4,200,000
Working capital ..................................................... 2,000,000
Temporary investments:
investment grade fixed income securities: ..................... 42,000,000
General corporate purposes .......................................... 1,800,000
The foregoing use of net proceeds does not represent a material change
in the use of net proceeds described in the Registration Statement.
During the quarter ended July 31, 1999, Alloy issued an aggregate of
11,280 shares of Common Stock to an equipment lessor upon the exercise of an
outstanding warrant for an aggregate offering price of $30,000. These shares
were offered and sold pursuant to the exemption from registration afforded by
Rule 701 under the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
<PAGE> 22
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
Exhibit No. 3.1 Restated Certificate of Incorporation (filed as Exhibit 3.1 to
Registration Statement on Form S-1, No. 333-74159, and
incorporated herein by reference).
Exhibit No. 3.2 Restated Bylaws (filed as Exhibit 3.2 to Registration
Statement on Form S-1, No. 333-74159, and incorporated herein
by reference).
Exhibit No. 4.1 Form of Common Stock Certificate (filed as Exhibit 4.1 to
Registration Statement on Form S-1, No. 333-74159, and
incorporated herein by reference).
Exhibit No. 27 Financial Data Schedule
(B) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the quarter ended July 31,
1999.
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALLOY ONLINE, INC.
Date: September 14, 1999 By: /s/ Samuel A. Gradess
--------------------------------
Samuel A. Gradess,
Chief Financial Officer
(Principal Accounting and
Financial Officer)
<PAGE> 24
ALLOY ONLINE, INC.
EXHIBIT INDEX
Exhibit No. 3.1 Restated Certificate of Incorporation (filed as Exhibit 3.1 to
Registration Statement on Form S-1, No. 333-74159, and
incorporated herein by reference).
Exhibit No. 3.2 Restated Bylaws (filed as Exhibit 3.2 to Registration
Statement on Form S-1, No. 333-74159, and incorporated herein
by reference).
Exhibit No. 4.1 Form of Common Stock Certificate (filed as Exhibit 4.1 to
Registration Statement on Form S-1, No. 333-74159, and
incorporated herein by reference).
Exhibit No. 27 Financial Data Schedule
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