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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
Form 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999, or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 19 34
For the Transition period from to .
Commission file number: 0-27253
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NETCENTIVES INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 93-1213291
(State or Other Jurisdiction (I.R.S Employer
of Incorporation or Organization) Identification No.)
475 Brannan Street
San Francisco, CA 94107
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (415) 538-1888
___________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of Class)
___________
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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant based upon the closing sale price of the Registrant's Common
Stock on the Nasdaq National Market on March 17, 2000 was approximately
$926,913,112. Shares of Common Stock held by each executive officer and
director and by each person who owns 10% or more of the outstanding Common Stock
have been excluded in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive determination
for other purposes.
There were 34,581,469 shares of Registrant's Common Stock issued and
outstanding as of March 17, 2000.
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DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the definitive Proxy
Statement for the Registrant's 2000 Annual Meeting of Stockholders scheduled to
be held on Wednesday, May 24, 2000 (the "2000 Proxy Statement").
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This amendment to the Report on Form 10-K for the year ended December 31, 1999
of Netcentives Inc. is being filed to correct an error in the placement of
certain text, which was included as paragraph (d) of Item 14 rather than
paragraph (e) of Item 5. No substantive changes have been made from the
original report.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
INFORMATION
(a) Market Information
The Company's Common Stock is traded on the NASDAQ Stock Market under the ticker
symbol NCNT.
The following table shows the high and low bid prices of the Company's Common
Stock for the period from October 13, 1999 (effective date of the initial public
offering) through December 31, 1999 as reported by NASDAQ Stock Market:
High $96.00
Low $10.25
The closing price of the Company's Common Stock on the NASDAQ Stock Market on
March 17, 2000 was $45.56.
Future stock prices may be subject to volatility, particularly on a quarterly
basis. Any shortfall in revenues or net income from amounts expected by
securities analysts could have an immediate and significant adverse effect on
the trading price of the Company's stock.
(b) Holders
As of March 17, 2000, the Company had approximately 207 shareholders of record.
This number excludes shareholders whose stock is held in nominee or street name
by brokers.
(c) Dividends
We have never paid cash dividends on our common stock. We currently
intend to retain any future earnings to fund the development and growth of our
business. Therefore, we do not currently anticipate paying any cash dividends in
the foreseeable future.
(d) Report of offering securities and use of proceeds therefrom
On October 13, 1999, in connection with the Company's initial public
offering, a Registration Statement on Form S-1 (No. 333-83443) was declared
effective by the Securities and Exchange Commission (and closed on October 19,
1999), pursuant to which 6,000,000 shares of the Company's Common Stock were
offered and sold for the account of the Company at a price of $12.00 per share.
In addition, on November 9, 1999 the Company sold an additional 335,937 shares
under the underwriters' overallotment option. The managing underwriters were
Credit Suisse First Boston Corporation, Hambrecht & Quist LLC and Thomas Weisel
Partners LLC. After deducting approximately $5.3 million in underwriting
discounts and $1.9 million in other related expenses, the net proceeds of the
offering were approximately $68.8 million. Of such amount, approximately $10.8
million has been used for working capital, approximately $200,000 has been used
for debt repayment, and the remainder has been invested in investment grade,
interest bearing securities. The Company intends to use the remaining proceeds
for capital expenditures and for general corporate purposes, including working
capital to fund anticipated operating losses.
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(e) Sales of Unregistered Securities
During 1999, we granted stock options to purchase 3,040,335 shares of
Common Stock, with exercise prices ranging from $3.15 to $62.313 per share, to
employees and officers pursuant to our 1996 Stock Option Plan and stock options
to purchase 120,000 shares of Common Stock at an exercise price of $12.00
pursuant to our 1999 Directors Stock Option Plan. During 1999, options to
purchase 442,745 shares of Common Stock were exercised, with exercise prices
ranging from $.10 to $6.82. The sales and issuances of these securities were
exempt from registration under either Rule 701 under the Securities Act of 1933
or under Section 4(2) of the Securities Act of 1933.
From our inception in June 1996 through December 31, 1999, we have issued
and sold (without payment of any selling commission to any person) the following
unregistered securities:
(1) An aggregate of 2,000,000 shares of common stock at $0.001 per
share in June 1996 to Eric W. Tilenius and Elliot S. Ng.
(2) An aggregate of 50,000 shares of common stock at $0.02 per share
in September 1996 to Venture Law Group Investments 1996, Craig Johnson and
Elias Blawie.
(3) An aggregate of 1,452,613 shares of Series A Preferred Stock at
$0.65 per share in September 1996 to Mari Baker, Broderbund Software, Inc.,
James R. Carrekar, Trustee, The Carrekar Family Trust U/D/T 3/29/90, as
amended, CNA Trust TTEE FBO Venture Law Group 401(k) Plan Elias Blawie,
David A. Duffield Trust Dated July 14, 1998, Draper Associates, L.P.,
George Garrick, Craig W. Johnson, Margaret Taylor, VLG Investments 1996 and
Wasatch Venture Fund.
(4) An aggregate of 485,000 shares of Series B Preferred Stock at
$1.00 per share in November 1996 to David A. Duffield Trust Dated July 14,
1988, Draper Associates, L.P., Information Technology Ventures, L.P., ITV
Affiliates Fund, L.P., Steve Kaufman, P. William Parish, Margaret C. Taylor
and Wasatch Venture Fund.
(5) A warrant to purchase 10,000 shares of Series B Preferred Stock
at $1.00 per share in November 1996 to Silicon Valley Bank.
(6) Warrants to purchase 22,500 shares of Series B Preferred Stock at
$2.00 per share in January 1997 to Daryl Mobley, Masters-McNeil and Steve
Gunderson.
(7) A warrant to purchase 21,000 shares of Series B Preferred Stock
at $1.30 per share in May 1997 to Phoenix Lending and Leasing.
(8) Warrants to purchase 75,000 shares of Series B Preferred Stock at
$1.00 per share in June 1997 to affiliates of Information Technology
Ventures.
(9) Warrants to purchase 46,891 shares of Series B Preferred Stock at
$1.00 per share in August 1997 to P. William Parish, Margaret C. Taylor,
David A. Duffield Trust, Wasatch Venture Corporation and Draper Associates,
L.P.
(10) An aggregate of 500,000 shares of common stock at $0.12 per share
in August 1997 to West Shell, III.
(11) Promissory notes with an aggregate principal amount of
$1,312,601.60 which were subsequently converted into 1,009,693 shares of
Series C Preferred Stock in September 1997 during January, June, August,
and September 1997 to Information Technology Ventures, L.P., ITV Affiliates
Fund, L.P., David A. Duffield Trust Dated July 14, 1988, P. William Parish,
Margaret Taylor and Wasatch Venture Corporation.
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(12) Warrants to purchase 400,000 shares of Series N Preferred Stock
at $1.00 per share in July, August and September 1997 to rewards suppliers.
(13) An aggregate of 7,754,847 shares of Series C Preferred Stock at
$1.30 per share in September 1997 to David A. Duffield Trust Dated July 14,
1998, Robin and Chris Donohoe, Draper Associates, L.P., Draper Fisher
Associates Fund IV, L.P., Draper Fisher Partners IV, L.P., Draper Richards
Management Company, Huret Family Partners, L.P., Information Technology
Ventures, L.P., ITV Affiliates Fund, L.P., Mayfield Associates Fund III,
Mayfield VIII, Merco Ventures, NEA President's Fund, L.P., NEA Ventures
1997, New Enterprise Associates VII, L.P., P. William Parish, Margaret C.
Taylor, Wasatch Venture Fund and The William H. Draper Revocable Trust.
(14) Warrants to purchase 130,000 shares of Series N Preferred Stock
at $1.30 per share in October 1997 to American Airlines and Yahoo!.
(15) An aggregate of 30,000 shares of common stock in connection with
the purchase of the United States patent application having SC/Serial
Number 08/572,017 in September 1997 and November 1998.
(16) An aggregate of 1,048,600 shares of common stock at $0.15 per
share in December 1997 to West Shell, III.
(17) Warrants to purchase an aggregate of 31,948 shares of Series C
Preferred Stock in May 1998 with an aggregate value of $31,000 to Phoenix
Lending and Leasing in consideration for entering into an equipment
financing relationship pursuant to which we financed $1.2 million of
equipment.
(18) An aggregate of 5,476,192 shares of Series D Preferred Stock at
$3.15 per share in August 1998 to Affinity Trust, K.B. Chandrasekhar and
Sukanya Chandrasekhar, Citicorp, David A. Duffield Trust Dated July 14,
1988, Huret Family Partners, L.P., Information Technology Ventures, L.P.,
Integral Capital Partners IV MS Side Fund, L.P., Integral Capital Partners
IV, L.P., ITV Affiliates Fund, L.P., Mayfield Associates Fund III, Mayfield
VIII, Mindful Partners, New Enterprise Associates VII, Limited Partnership,
RRE Investors Fund, L.P., RRE Investors, L.P., Stuart L. Rudick, Margaret
L. Taylor and Wendell G. Van Auken & Ethel S. Van Auken Trust.
(19) An aggregate of 808,780 shares of common stock with a value of
$2,548,000 in connection with the acquisition of 100 percent of the shares
of Panttaja Consulting Group Inc. in December 1998.
(20) An aggregate of 200,000 shares of common stock at $0.65 per share
in December 1998 to West Shell, III.
(21) An aggregate of 5,278,283 shares of Series E Preferred Stock at
$6.82 per share in March, April and June 1999 to 5S Ventures, LLC, Affinity
Trust, American Express, Mari Baker, Black Marlin Investments, LLC,
Chancellor Private Capital Offshore Partners I, C.V., Chancellor Private
Capital Offshore Partners II, L.P., Chancellor Private Capital Partners
III, L.P., Citicorp Strategic Technology Corp., David A. Duffield Trust
Dated July 14, 1988, Robin and Chris Donohoe, Drake & Co for the account of
Citiventure 96, Drake & Co for the account of Citiventure III, Draper
Fisher Associates Fund IV, L.P., Draper Fisher Partners IV, L.P., Draper
Richards Management Company, Draper Richards, L.P., Tracy Flynn, Glynn
Ventures IV, L.P., Huret Family Partners, L.P., Information Technology
Ventures, L.P., Integral Capital Partners IV MS Side Fund, L.P., Integral
Capital Partners IV, L.P., ITV Affiliates Fund, L.P., Mayfield Associates
Fund III, Mayfield VIII, Mindful Partners, MSD Portfolio L.P. Investments,
NEA President's Fund, L.P., New Enterprise Associates VII, Limited
Partnership, P. William Parish, RRE Investors Fund, L.P., RRE Investors,
LP, Stuart L. Rudick, Rhonda Sinbaldi, Spinnaker Clipper Fund, LP,
Spinnaker Founders Fund, LP, Spinnaker Offshore Founders Fund, Cayman
Limited, Spinnaker Technology Fund, L.P., Spinnaker Technology Offshore
Fund, Ltd., Starwood Hotels & Resorts
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Worldwide, Inc., Margaret L. Taylor, TWP Netcentives Investors, Wendell G.
Van Auken & Ethel S. Van Auken Trust, Vermeer Investments, LLC, Wasatch
Venture Fund and The William H. Draper Revocable Trust.
(22) Warrants to purchase 150,000 shares of common stock at $8.00 per
share on July 1999 to Infoseek Corporation.
(23) An aggregate of 100,000 shares of common stock with a value of
$1,000,000 in connection with the hiring of an employee in August 1999.
(24) Warrants to purchase 85,000 shares of common stock at $11.00 per
share in September 1999 to United Airlines.
(25) Warrants to purchase 100,000 shares of common stock at $11.00 per
share in October 1999 to US Airways.
(26) An aggregate of 6,202,606 options to purchase shares of common
stock at an average exercise price of $4.372 per share to our employees and
consultants. In general, 1/8 of the shares of common stock subject to these
options vest after six months and the remainder vests in equal monthly
installments for 42 months thereafter. The term of each option is ten
years.
There were no underwritten offerings employed in connection with any of the
transactions set forth above.
Issuances numbered one through twenty and twenty-two through twenty-five,
described above, were deemed to be exempt from registration under the Securities
Act in reliance upon Section 4(2) thereof as transactions by an issuer not
involving any public offering. Issuance number twenty-one was deemed exempt in
reliance upon Regulation D of the Securities Act. Issuances numbered one, ten,
sixteen, twenty, twenty-three and twenty-six, to our founders, executives,
employees and consultants, are also exempt from registration pursuant to Rule
701 promulgated under the Securities Act. The recipients of securities in each
such transaction represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends where affixed to the securities
issued in such transactions. All recipients had adequate access, through their
relationships with us, to information about us.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are included in this report.
Exhibit No. Description
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2.1* Agreement and Plan of Merger among the Registrant, Brown Dog
Acquisition Corporation and UVN Holdings, Inc.
3.1** Amended and Restated Certificate of Incorporation of the
Registrant.
3.2** Bylaws of the Registrant.
3.3** Form of Amended and Restated Certificate of Incorporation.
3.4** Form of Amended and Restated Bylaws.
4.1** Form of Netcentives common stock certificate.
10.1** Form of Indemnification Agreement for directors and officers of
Netcentives.
10.2** 1996 Stock Option Plan, as amended, and form of stock option
agreement and restricted stock purchase agreement.
10.3** 1999 Employee Stock Purchase Plan and form of subscription
agreement.
10.4** 1999 Directors' Stock Option Plan and form of stock option
agreement.
10.5** Lease between Panttaja Consulting Group and Britphil & Co. Ltd.
dated November 13, 1995.
10.6** Lease between Netcentives and Townsend Associates, L.L.C. dated
August 14, 1997.
10.7** Lease between Netcentives and Townsend Associates, L.L.C. dated
August 11, 1998.
10.8** Confidential Advantage Participation Agreement between American
Airlines, Inc. and Netcentives Inc. dated August 19, 1997.
10.9** Supply Agreement between Northwest Airlines, Inc. and Netcentives
Inc. dated September 5, 1997.
10.10** Supply Agreement between Continental Airlines, Inc. and
Netcentives Inc. dated September 5, 1997.
10.11** Supply Agreement between US Airways, Inc. and Netcentives Inc,
dated September 20, 1997.
10.12** Amended and Restated Supply Agreement between Mileage Plus, Inc.
and Netcentives Inc. dated September 9, 1999.
10.13** Marketing Services Agreement between British Airways PLC and
Netcentives Inc. Agreement Number MKTG 002 dated April 4, 1997.
10.14** Supply Agreement between Trans World Airlines, Inc. and
Netcentives Inc. dated February 25, 1999.
10.15** Delta Sky Miles Program Participation Agreement between Delta Air
Lines, Inc. and Netcentives Inc. dated August 15, 1999.
10.16** Office Lease between Netcentives and SKS Brannan Associates, LLC
dated May 5, 1999.
10.17** Employment Agreement between Netcentives and West Shell, III dated
June 26, 1997 and Amendment to Employment Agreement dated October
29, 1998.
10.18** Change of Control Agreement between Netcentives and John F.
Longinotti dated January 15, 1998.
10.19** Amended and Restated Rights Agreement between Netcentives and
certain stockholders dated March 19, 1999.
10.20** America West FlightFund Incentive Miles Agreement between America
West Airlines and Netcentives Inc. dated July 1, 1999.
10.21** Internet Services and Products Agreement between Exodus
Communications, Inc. and Netcentives Inc. dated August 1, 1997.
21.1** Subsidiaries of the Registrant.
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23.1*** Independent Auditors' Consent.
27.1*** Financial Data Schedule.
________________________________________________________________________________
* Incorporated by reference to the exhibit with the same numerical designation
filed as part of the Report on Form 8-K of the Registrant dated March 3, 2000,
filed with the SEC on March 20, 2000.
**Incorporated by reference to the exhibit with the same numerical designation
filed as part of the Registrant's Registration Statement 333-83443, as amended,
declared effective on October 13, 1999.
***Incorporated by reference to the exhibit with the same numerical designation
filed as part of the Report on Form 10-K of the Registrant for the year ended
December 31, 1999, filed with the SEC on March 30, 2000.
(b) The following financial statements and schedules are filed as part of this
report:
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1998 and 1999
Consolidated Statements of Operations for the years ended December 31,
1997, 1998 and 1999
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1998 and 1999
Consolidated Statements of Cash Flows for the years ended December 31,
1997, 1998 and 1999
Notes to Consolidated Financial Statements
Schedule II-Valuation and Qualifying Accounts
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SCHEDULE II
NETCENTIVES INC.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1997, 1998 and 1999
(In thousands)
<TABLE>
<CAPTION> Additions
Balance at and Write-offs
Beginning of Charges to and Balance at
Year Expenses Deductions End of Year
------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
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Description
-----------
Year Ended December 31, 1997
Accounts receivable allowance $ - $ - $ - $ -
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Year Ended December 31, 1998
Accounts receivable allowance $ - $ - $ - $ -
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Year Ended December 31, 1999
Accounts receivable allowance $ - $ 50 $ - $ 50
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</TABLE>
____________________________________________________________________
(c) Reports on Form 8-K:
No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NETCENTIVES INC.
Date: April 6, 2000 By: /s/ John F. Longinotti
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John F. Longinotti, EVP Operations and CFO
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