<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
---------------------
[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 0-25575
---------------------
@plan.inc
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1643381
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3 LANDMARK SQUARE, SUITE 400 06901
STAMFORD, CT (Zip Code)
(Address of principal executive offices)
(203) 961-0340
(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, and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock of the latest practical date.
CLASS OF COMMON STOCK OUTSTANDING AT NOVEMBER 1, 2000
--------------------- -------------------------------
Voting common stock, no par value 11,332,770 shares
<PAGE> 2
@PLAN.INC
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Balance Sheets as of September 30, 2000 (unaudited) and
December 31,1999 3
Statements of Operations for the three and nine months ended
September 30, 2000 and September 30, 1999 (unaudited) 4
Statements of Cash Flows for the nine months ended
September 30, 2000 and September 30,1999 (unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
Part II Other Information
Item 2. Changes in Securities and Use of Proceeds 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
2
<PAGE> 3
@PLAN.INC
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
---- ----
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 31,371,373 $ 34,817,991
Accounts receivable, net of allowance
of $387,200 and $164,000, respectively:
Billed 3,116,770 2,214,834
Unbilled 421,146 181,432
Prepaid expenses and other 721,196 635,356
------------ ------------
Total current assets 35,630,485 37,849,613
Property and equipment, net 293,029 260,372
Software development costs, net 460,501 551,545
Other assets 336,275 460,823
------------ ------------
Total assets $ 36,720,290 $ 39,122,353
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,288,357 $ 881,041
Accrued liabilities 1,034,244 956,447
Deferred revenue 2,640,391 2,452,214
------------ ------------
Total current liabilities 4,962,992 4,289,702
------------ ------------
Shareholders' equity (deficit):
Common stock, no par value,
50,000,000 shares authorized;
11,332,770 and 11,205,700 shares
issued and outstanding, respectively 42,040,092 41,730,405
Additional paid-in capital 1,855,511 1,855,511
Accumulated deficit (12,138,305) (8,753,265)
------------ ------------
Total shareholders' equity 31,757,298 34,832,651
------------ ------------
Total liabilities and shareholders' equity $ 36,720,290 $ 39,122,353
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
@PLAN.INC
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------- ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues $ 3,612,604 $ 2,009,841 $ 9,758,614 $ 4,970,959
Costs and expenses:
Product costs 2,882,402 1,264,809 7,602,961 2,810,575
Selling and marketing 1,441,242 898,849 4,517,158 2,137,425
General and administrative 925,503 558,312 2,460,614 1,379,091
Non-cash compensation expense -- -- -- 505,098
------------ ------------ ------------ -----------
Total costs and expenses 5,249,147 2,721,970 14,580,733 6,832,189
------------ ------------ ------------ -----------
Loss from operations (1,636,543) (712,129) (4,822,119) (1,861,230)
Interest income 510,438 435,340 1,489,543 658,048
------------ ------------ ------------ -----------
Net loss before income taxes (1,126,105) (276,789) (3,332,576) (1,203,182)
Income tax provision 6,027 10,000 52,464 54,300
------------ ------------ ------------ -----------
Net loss $ (1,132,132) $ (286,789) $ (3,385,040) $(1,257,482)
============ ============ ============ ===========
Basic and diluted
loss per share $ (0.10) $ (0.03) $ (0.30) $ (0.44)
============ ============ ============ ===========
Weighted average shares
outstanding 11,303,710 10,976,540 11,257,770 5,808,580
============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
@PLAN.INC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------------
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,385,040) $ (1,257,482)
Adjustments to reconcile
net loss to net cash used in
operating activities:
Depreciation and amortization 581,709 420,509
Provision for doubtful accounts 230,000 120,000
Non-cash charges -- 505,098
Changes in operating assets and liabilities:
Increase in accounts receivable (1,371,650) (777,275)
Increase in prepaid expenses
and other (85,840) (523,373)
Decrease (increase) in other assets 124,548 (434,150)
Increase in accounts payable 407,316 456,095
Increase in accrued liabilities 77,797 276,570
Increase in deferred revenue 188,177 1,066,939
------------ ------------
Net cash used in operating activities (3,232,983) (147,069)
------------ ------------
Cash flows from investing activities:
Purchases of equipment (146,524) (107,262)
Software development costs (376,798) (513,987)
------------ ------------
Net cash used in investing activities (523,322) (621,249)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance
of common stock, net 309,687 31,767,759
------------ ------------
Net cash provided by financing activities 309,687 31,767,759
------------ ------------
Net change in cash and cash equivalents (3,446,618) 30,999,441
Cash and cash equivalents
at beginning of period 34,817,991 3,682,576
------------ ------------
Cash and cash equivalents
at end of period $ 31,371,373 $ 34,682,017
============ ============
Supplemental information:
Cash paid for income taxes $ 56,638 $ 54,300
Warrants issued to preferred
shareholders -- $ 1,322,995
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
@PLAN.INC
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The financial information as of September 30, 2000 and for the three
and nine months ended September 30, 2000 and 1999 is unaudited, but includes all
adjustments, consisting only of normal recurring adjustments, that we consider
necessary for a fair presentation of our financial position at September 30,
2000, and our operations and cash flows for the three and nine months ended
September 30, 2000 and 1999. Operating results for the three and nine months
ended September 30, 2000 are not necessarily indicative of results that may be
expected for the entire year. The financial statements included herein have been
prepared in accordance with generally accepted accounting principles and the
instructions of Form 10-Q and Rule 10-01 of Regulation S-X. 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 our audited financial statements for the year ended December 31, 1999,
which were included as part of our Annual Report on Form 10-K.
2. GENERAL:
@plan.inc was incorporated in the State of Tennessee in May 1996. We
provide target market research planning systems for Internet advertisers,
advertising agencies, Web publishers, online retailers and consumer brand
marketers. Our internally developed systems, which our clients access through
our Web site, combine databases of consumer lifestyle, product preference and
demographic data with technology that enables our clients to perform queries and
searches to plan campaigns and strategies.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION
We provide target market research planning systems to our clients on a
renewable subscription basis. We recognize revenue ratably over the contract
period, which is generally twelve months. We bill our clients for our services
based on terms of the contracts, which may not coincide with criteria required
for revenue recognition.
On the accompanying balance sheets, deferred revenue represents amounts
invoiced prior to rendering our services while unbilled receivables represents
the value of services rendered prior to being invoiced. Substantially all of the
deferred and unbilled revenue will be earned and billed, respectively, within
twelve months of the respective ending periods.
Upon signing a contract, our sales representatives become eligible for
a commission. These commissions are paid at the time of the contract signing.
For financial reporting purposes, we capitalize these commissions as a component
of prepaid expenses and amortize these amounts over the lives of the related
contracts.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and all investments in
highly liquid instruments purchased with original maturities of three months or
less. Funds in excess of operating cash needs are maintained in a money market
fund, which may exceed the amount insured by the Federal Deposit Insurance
Corporation.
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<PAGE> 7
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated depreciation
and amortization. Property and equipment consists of computer equipment,
software, furniture and fixtures and leasehold improvements. Computer equipment,
software, furniture and fixtures are depreciated using the straight-line method
over their useful lives that range from 3 to 5 years. Leasehold improvements are
amortized over the term of the lease.
SOFTWARE DEVELOPMENT COSTS
We capitalize direct costs relating to our computer software
development upon the establishment of technological feasibility. Until our
products reach technological feasibility, all costs related to development
efforts are expensed as a component of product costs. Software development
costs, subsequent to technological feasibility and prior to general release,
have been capitalized and are reported at the lower of unamortized cost or net
realizable value. We amortize capitalized software development costs on a
straight-line basis for periods ranging from one to three years. As of September
30, 2000 and December 31, 1999, software development costs are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Software development costs $1,568,500 $1,191,702
Less: Accumulated depreciation (1,107,999) (640,157)
---------- ----------
$ 460,501 $ 551,545
========== ==========
</TABLE>
We periodically review our software development costs and property and
equipment for any potential impairments. We consider undiscounted cash flows,
future operating results, trends or other relevant information in assessing
whether the carrying value of our assets is recoverable. At September 30, 2000,
we do not believe that any of our assets are impaired.
INCOME TAXES
We recognize deferred tax assets and liabilities for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized.
STOCK-BASED COMPENSATION
We account for our stock-based compensation to our employees by
recognizing compensation expense for the difference between the estimated fair
value of our stock at the date of grant and the exercise price of the granted
stock. Stock-based grants issued to non-employees are recorded at either the
fair value of the services provided or the fair value of the stock issued, as
determined using the Black-Scholes model.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires us to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements. These assumptions also affect the reported amounts of
revenue and expenses during the reporting periods. Actual results could differ
from those estimates and assumptions.
7
<PAGE> 8
STOCK-SPLIT
The accompanying financial statements give retroactive effect to a 1.8
for 1 stock-split that was approved by our Board of Directors on March 10, 1999.
4. PROPOSED MERGER BETWEEN @PLAN.INC AND DOUBLECLICK INC.
On September 25, 2000 the Company announced that the Company had
entered into an Agreement and Plan of Merger, dated as of September 24, 2000
(the "Merger Agreement") among DoubleClick Inc., a Delaware corporation
("DoubleClick"), Atlas Merger Sub, Inc., a Tennessee corporation and a direct
wholly-owned subsidiary of DoubleClick ("Merger Sub"), and us. Pursuant to the
Merger Agreement, Merger Sub would merge with and into us (the "Merger"), with
us continuing as the surviving corporation. As a result of the Merger, we would
become a wholly-owned subsidiary of DoubleClick.
Consummation of the proposed Merger is subject to certain conditions,
including termination or expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approval by
our shareholders and other customary closing conditions. For information
regarding the terms and conditions of the proposed Merger, including the
consideration to be paid to our shareholders refer to our Form 8-K filed with
the Securities and Exchange Commission on September 27, 2000.
5. BASIC AND DILUTED NET LOSS PER SHARE
Basic loss per share amounts are computed by dividing the net loss by
the weighted average number of shares of common stock outstanding during the
period. Diluted loss per share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during the period
plus the effects of any potentially dilutive securities. In the accompanying
statements of operations, diluted loss per share does not include the effects of
potentially dilutive securities for all periods presented, as they would have
been anti-dilutive in years in which a loss is reported.
The following summarizes the securities outstanding, which are excluded
from the loss per share calculation, as amounts would have an anti-dilutive
effect.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
STOCK OPTIONS 2,245,164 1,891,040 2,245,164 1,891,040
WARRANTS 200,000 200,000 200,000 200,000
--------- --------- --------- ---------
TOTAL 2,445,164 2,091,040 2,445,164 2,091,040
========= ========= ========= =========
</TABLE>
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this Quarterly Report contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, but are
not limited to, statements about our plans, objectives, expectations and
intentions and other statements contained in this Form 10-Q that are not
historical facts. When used, the words "expect," "anticipate," "intent," "plan,"
"believe," "estimate" and similar expressions are generally intended to identify
forward-looking statements. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by these forward-looking statements, including:
- failure to complete the merger with DoubleClick could negatively
impact our stock price and future business operations;
- market acceptance of the Internet as an advertising medium;
- the continued development of the electronic commerce market;
- our ability to develop and introduce new products;
- market acceptance of our products and services;
- our limited operating history;
- our history of losses and expectation of continued losses;
- our dependence on our relationship with The Gallup Organization for
the collection of data;
- our ability to manage our rapid growth;
- intense competition in our market;
- our ability to attract, retain and train qualified sales, client
service and other personnel;
- our ability to timely collect, process, store and deliver accurate
data;
- the unpredictability of our financial results and expected
fluctuations in our quarterly results;
- variations in product or client mix;
- possible technical difficulties or service interruptions;
- the magnitude and timing of strategic pricing changes, marketing
decisions, product development costs and possible acquisitions; and
- other risk factors described in the "Risk Factors" section of the
Company's Registration Statement on Form S-1 (File no. 333-74507),
which was filed with the Securities and Exchange Commission on
May 17, 1999, and our form 10-K for the year ended December
31, 1999.
OVERVIEW
We were founded in May 1996. During the period from May 1996 to
December 31, 1996, our inception period, we had no revenues and were primarily
engaged in the development and planning of our software and survey research
infrastructures. In June 1997, we introduced our first product system, the @plan
Gutenberg Advertising System. Since 1997, subscribers to this system have
included Internet advertisers,
9
<PAGE> 10
advertising agencies and Web publishers and, to a lesser extent, online
retailers and consumer brand marketers. During 1997, we continued to build our
sales and operations staff and during 1998, our first full year of sales, we
continued to grow our client subscriber base, develop new products, and opened a
satellite office in San Francisco, California to service our existing West Coast
clients and to expand our client base in this market. In December 1998, we
introduced the @plan Kepler E-Business System specifically designed for online
retailers and consumer brand marketers. In March 2000, we launched our first
highly targeted vertical market research system, the Darwin E-Retail system,
which focuses on the automotive, travel and merchandising e-commerce sector.
We derive all of our revenues from the sale of subscriptions to our
systems. The subscription contracts are generally non-cancelable for a period of
one year and most automatically renew unless we receive notice of termination
from the client prior to the anniversary date. Clients typically pay contract
fees on an annual, quarterly or monthly basis, which are recorded as deferred
revenue until the revenue is recognized. Revenue is recognized on a
straight-line basis over the non-cancelable contract period, generally 12
months. Upon renewal, many of the subscription rates increase automatically in
accordance with contract provisions. These automatic increases are generally
higher in the first two renewal years than in subsequent renewal years where the
rate adjustment is based on increases in the Consumer Price Index, or CPI. We
have experienced a contract renewal rate in excess of 90% from inception through
September 30, 2000. The renewal rate is not necessarily indicative of the rate
of future retention of our revenue base.
One measure of the volume of our business is "contract value" which
represents the annualized value of all contracts in effect at a given point in
time, without regard to the duration of contracts then outstanding and without
deducting revenue already recognized under these contracts. Our contract value
was $15.4 million at September 30, 2000 and $8.8 million at September 30, 1999.
As of September 30, 2000, we have recognized $7.1 million of revenues of the
$15.4 million in contract value.
Our revenues and operating margins will fluctuate due, in part, to
product and customer mix. Annual subscriptions to the @plan Kepler E-Business
System and the Darwin E-Retail System are typically priced higher than annual
subscriptions to the @plan Gutenberg Advertising System. Moreover, annual
subscription pricing and renewal pricing are often negotiated and may vary based
on the volume of subscriptions being sold to the client. Variations in product
or client mix could cause our revenue and operating results to fluctuate on a
quarterly or annual basis.
Product costs consist primarily of amounts paid to The Gallup
Organization for quarterly collection of data used in our market research
systems. From time to time we will engage Gallup on a case-by-case basis to
collect additional data. In the past, these additional engagements have caused
our data collection costs to fluctuate from quarter to quarter, and we expect
quarterly data collection costs to continue to fluctuate as we plan to continue
to use Gallup for additional data collection. Product costs will also increase
during the remainder of 2000 and in future periods as we continue to develop
additional highly targeted vertical market research systems. Our second vertical
system, the Emerson System for ad-supported websites, is scheduled for release
at the beginning of the fourth quarter 2000.
Also included in product costs are software development costs, which
consist primarily of the amortization of capitalized software development costs
and, to a lesser extent, other non-capitalized technology expenses such as Web
site maintenance. Software development costs represent direct expenses incurred
to improve or enhance our systems, including increasing access speeds, designing
new user interfaces and developing new system modules. As of September 30, 2000,
we had approximately $461,000 in capitalized software development costs which
will be amortized and expensed as product costs over the next one to three
years. See note 3 of the notes to our financial statements for an explanation of
the accounting for our software development costs.
We have incurred significant losses since inception and as of September
30, 2000, we had an accumulated deficit of $12.1 million. Our net losses and
accumulated deficit resulted from our lack of substantial revenues and the
significant costs incurred in the development of our systems and in the
establishment of our operations
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<PAGE> 11
infrastructure. Additionally, our accumulated deficit was affected by a $1.3
million dividend in connection with warrants issued to the holders of our
preferred stock upon the consummation of our initial public offering. We intend
to continue to make significant investments in the development of new products,
the enhancement of our current systems and in the expansion of our sales force.
As a result, we expect to incur additional losses at least through December 31,
2000.
On September 25, 2000 the Company announced that the Company had
entered into an Agreement and Plan of Merger, dated as of September 24, 2000
(the "Merger Agreement") among DoubleClick Inc., a Delaware corporation
("DoubleClick"), Atlas Merger Sub, Inc., a Tennessee corporation and a direct
wholly-owned subsidiary of DoubleClick ("Merger Sub"), and us. Pursuant to the
Merger Agreement, Merger Sub would merge with and into us (the "Merger"), with
us continuing as the surviving corporation. As a result of the Merger, we would
become a wholly-owned subsidiary of DoubleClick. See note 4 of notes to the
financial statements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Revenues. Total revenues increased 80% to $3.6 million for the three
months ended September 30, 2000 from $2.0 million for the three months ended
September 30, 1999. The increase in revenues resulted principally from an
increase of $1.3 million in recurring revenues from the retention of existing
clients. These renewals reflect higher subscription rates than those in place
during the initial term of these contracts, in accordance with contract
provisions. Additionally, we experienced increased revenues of approximately
$257,000 from subscription sales to new clients, including revenues from our
@plan Kepler E-Business System launched in December 1998. During the quarter, we
had minimal revenues from our Darwin E-Retail system as it was not launched
until March 2000.
Product Costs. Product costs consist primarily of amounts paid to
Gallup for quarterly collection of data used in our market research systems and
software development costs. Product costs increased 128% to $2.9 million for the
three months ended September 30, 2000 from $1.3 million for the three months
ended September 30, 1999. This increase was due primarily to an increase of
approximately $770,000 in additional data collection costs and software
development costs associated with the introduction of our Darwin E-Retail
system. In addition, we incurred costs of approximately $652,000 in connection
with the development of the Emerson System, our second vertical target market
planning system.
Consistent with our strategy, we are currently developing additional
highly targeted vertical market research systems. As a result, we anticipate
continuing to incur increased data collection and software costs during the
remainder of 2000 and in future periods.
Selling and Marketing. Selling and marketing costs consist primarily of
the personnel expenses associated with the sale and service of our systems,
including commissions, public relations costs and marketing expenses. Selling
and marketing costs increased 60% to $1.4 million for the three months ended
September 30, 2000 from approximately $899,000 for the three months ended
September 30, 1999. This increase was due largely to the expansion of our sales
force and client service team, commissions associated with increased sales, and
to a lesser extent, Company branding initiatives. Selling and marketing costs
will increase as we continue to expand our sales force and introduce new
products.
General and Administrative. General and administrative expenses consist
primarily of salaries and related costs for our administrative, financial and
information technology personnel, professional fees, occupancy costs and general
office expenses. General and administrative expenses increased 66% to
approximately $926,000 for the three months ended September 30, 2000 as compared
to approximately $558,000 for the three months ended September 30, 1999. This
increase was primarily due to the increase in personnel needed to support our
expanding operations and related costs as well as costs related to being a
public company. We anticipate hiring additional personnel and expect that
general and administrative expenses will increase in future periods.
Interest income. Interest income consists of interest on our cash and
cash equivalents. Interest income was approximately $510,000 for the three
months ended September 30, 2000 as compared to approximately $435,000 for the
three months ended September 30, 1999. The increase in interest income was
primarily attributable to the higher interest rates during the three months
ended September 30, 2000.
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<PAGE> 12
Net loss. Our net loss increased 295% to $1.1 million for the three
months ended September 30, 2000 from approximately $287,000 for the three months
ended September 30, 1999. This increase was primarily attributable to an
increase of $1.4 million in products costs incurred during the three months
ended September 30, 2000 in connection with the development of our vertical
systems.
Loss per share. The loss per share amount for the three months ended
September 30, 2000 was $.10 compared to $.03 for the three months ended
September 30, 1999.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Revenues. Total revenues increased 96% to $9.8 million for the nine
months ended September 30, 2000 from $5.0 million for the nine months ended
September 30, 1999. The increase in revenues resulted principally from an
increase of $3.3 million in recurring revenues from the retention of existing
clients. These renewals reflect higher subscription rates than those in place
during the initial term of these contracts, in accordance with contract
provisions. Additionally, we experienced increased revenues of $1.5 million from
subscription sales to new clients, including revenues from our @plan Kepler
E-Business System launched in December 1998. During the nine months, we had
minimal revenues from our Darwin E-Retail system as it was not launched until
March 2000.
Product Costs. Product costs consist primarily of amounts paid to
Gallup for quarterly collection of data used in our market research systems and
software development costs. Product costs increased 171% to $7.6 million for the
nine months ended September 30, 2000 from $2.8 million for the nine months ended
September 30, 1999. This increase was due primarily to an increase of $2.9
million in additional data collection costs and software development costs
associated with the introduction of our Darwin E-Retail system. In addition, we
incurred costs of $1.3 million in connection with the Emerson System, our second
vertical target market planning system. Consistent with our strategy, we are
currently developing additional highly targeted vertical market research
systems. As a result, we anticipate continuing to incur increased data
collection and software costs during the remainder of 2000 and in future
periods.
Selling and Marketing. Selling and marketing costs consist primarily of
the personnel expenses associated with the sale and service of our systems,
including commissions, public relations costs and marketing expenses. Selling
and marketing costs increased 111% to $4.5 million for the nine months ended
September 30, 2000 from $2.1 million for the nine months ended September 30,
1999. This increase was due largely to the expansion of our sales force and
client service team, commissions associated with increased sales, and to a
lesser extent, company branding initiatives. Selling and marketing costs will
increase as we continue to expand our sales force and introduce new products.
General and Administrative. General and administrative expenses consist
primarily of salaries and related costs for our administrative, financial and
information technology personnel, professional fees, occupancy costs and general
office expenses. General and administrative expenses increased 78% to $2.5
million for the nine months ended September 30, 2000 from $1.4 million for the
nine months ended September 30, 1999. This increase was primarily due to the
increase in personnel needed to support our expanding operations and related
costs as well as costs related to being a public company including directors'
and officers' liability insurance. We anticipate hiring additional personnel and
expect that general and administrative expenses will increase in future periods.
Interest income. Interest income consists of interest on our cash and
cash equivalents. Interest income was $1.5 million for the nine months ended
September 30, 2000 as compared to approximately $658,000 for the nine months
ended September 30, 1999. The increase in interest income was primarily
attributable to the higher cash balances during the nine months ended September
30, 2000 as a result of net proceeds from our sale of common stock in May 1999.
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Net loss. Our net loss increased 169% to $3.4 million for the nine
months ended September 30, 2000 from $1.3 million for the nine months ended
September 30, 1999. This increase was primarily attributable to an increase of
$4.2 million in products costs incurred during the nine months ended September
30, 2000 in connection with the development of our vertical systems.
Loss per share. The loss per share amount for the nine months ended
September 30, 2000 was $.30. Included in the loss per share amount for the nine
months ended September 30, 1999 of $.44, is a $1.3 million dividend associated
with initial public offering warrants issued to preferred shareholders.
Excluding the effect of this charge, the loss per share for the nine months
ended September 30, 1999 was $.22.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, we had $31.4 million in cash and cash
equivalents as compared to $34.7 million as of September 30, 1999. In May 1999,
we consummated our initial public offering by selling 2,500,000 shares of Common
Stock at a price of $14.00 per share. Net proceeds from the IPO, net of
underwriting discounts and offering costs, were $31.7 million. Prior to May
1999, we financed our operations primarily through the private placement of
preferred stock. Net proceeds from the sale of convertible preferred stock from
inception through September 30, 2000 have totaled $9.6 million.
Net cash used in operating activities was $3.2 million for the nine
months ended September 30, 2000. Cash used in operating activities was primarily
attributable to net losses and increases in accounts receivable offset by
increases in accounts payable and deferred revenue. For the nine months ended
September 30, 1999, net cash used in operating activities was approximately
$147,000 which was primarily attributable to net operating losses and increases
in accounts receivable offset partially by increases in deferred revenue and
accounts payable.
Deferred revenue was $2.6 million at September 30, 2000 as compared to
$2.2 million at September 30, 1999. Deferred revenue represents amounts invoiced
under contract prior to our rendering of services to the client. Unbilled
accounts receivable was approximately $421,000 at September 30, 2000 and
approximately $94,000 at September 30, 1999. Unbilled accounts receivable
represents the value of services provided prior to invoicing.
Net cash used in investing activities was approximately $523,000 for
the nine months ended September 30, 2000 and approximately $621,000 for the nine
months ended September 30, 1999. Cash used in investing activities in each
period was attributed to software development costs and purchases of property
and equipment.
Net cash provided by financing activities was approximately $310,000
for the nine months ended September 30, 2000. Cash provided by financing
activities was due to the exercise of stock options. For the nine months ended
September 30, 1999, net cash provided by financing activities was $31.8 million,
which was primarily attributable to the proceeds from the sale of common stock,
net of issuance costs.
We believe that our existing cash and cash equivalents will be
sufficient to meet our working capital and capital expenditure requirements
through at least 2001. Thereafter, we may be required to raise additional funds.
If additional funds are raised through the issuance of equity securities, our
shareholders may experience significant dilution. There can be no assurance that
additional funding, if needed, will be available on attractive terms, or at all.
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. The
failure to raise capital when needed could harm our business, operating results
and financial condition.
COMMITMENTS AND CONTINGENCIES
We have no material commitments other than our lease for our corporate
headquarters and obligations under our agreement with Gallup. Our agreement with
Gallup provides us with initial baseline data and quarterly tracking data
collection.
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The agreement has a one-year term with nine successive one-year renewals and is
cancelable by us upon 90-days written notice prior to an anniversary date. The
annual renewal provides for CPI increases to the associated fees. During the
third quarter of 1999 and the first quarter of 2000, we entered into additional
agreements with Gallup to provide us with initial baseline data and quarterly
tracking data collection for our targeted vertical market research systems.
These agreements extend through August 2009 and September 2006, respectively and
are cancelable by us upon 90-days' written notice prior to each anniversary
date. Consistent with our growth strategy, we anticipate incurring increased
data collection and software costs during the remainder of 2000 and in future
periods as we continue to develop additional products.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The carrying values of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and notes payable,
approximate fair value because of the short maturity of these instruments.
Our results of operations, financial position, and cash flows are not
materially affected by changes in the relative values of non-U.S. currencies to
the U.S. dollar. We do not use derivative financial instruments to limit our
foreign currency risk exposure.
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Part II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On May 20, 1999, our Registration Statement on Form S-1 (File
No.333-74507) was declared effective by the SEC. Pursuant to the Registration
Statement we registered and sold 2,500,000 shares of Common Stock at a price of
$14.00 per share. The managing underwriters were Hambrecht and Quist. The
aggregate price of the amount offered and sold was $35.0 million.
The following sets forth the Company's reasonable estimates of the
total expenses incurred by the Company, from the effective date of the
Registration Statement through September 30, 2000, in connection with the
issuance and distribution of the securities registered.
(i) underwriting discounts and commissions $2,450,000
(ii) other expenses 880,000
----------
Total $3,330,000
The net offering proceeds to the Company after deducting the total
expenses set forth above were $31.7 million.
From the effective date of the Registration Statement through September
30, 2000, we used approximately $300,000 of the net offering proceeds to fund
general operating expenses.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is attached hereto.
27.1 Financial Data Schedule (Third Quarter 2000).
(b) The Company filed a current report on Form 8-K on September 27, 2000.
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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.
@plan.inc.
Date: November 14, 2000 BY: /s/ Mark K. Wright
-------------------------
Mark K. Wright,
Chairman and Chief Executive
Officer (principal executive
officer)
DATE: November 14, 2000 BY: /s/ Nancy A. Lazaros
-------------------------
Nancy A. Lazaros,
Senior Vice President
and Chief Financial Officer
(principal financial and
accounting officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Item Description
---- -----------
<S> <C>
27.1 Financial Data Schedule (Third Quarter 2000)
</TABLE>
17
