SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): NOVEMBER 1, 1999
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DSL.NET, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
0-27525 06-1510312
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(Commission File Number) (IRS Employer Identification No.)
545 LONG WHARF DRIVE, NEW HAVEN, CONNECTICUT 06511
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(203) 772-1000
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ITEM 5. OTHER EVENTS.
On November 1, 1999, DSL.net, Inc. issued a press release, a copy of
which is being filed as Exhibit 99.1 to this Current Report on Form 8-K, such
press release being incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
99.1 Press Release dated November 1, 1999.
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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 hereunto duly authorized.
DSL.net, Inc.
November 1, 1999 By: /s/ David Struwas
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Name: David Struwas
Title: President and Chief
Executive Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press Release dated November 1, 1999.
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Exhibit 99.1
DSL.net More Than Doubles Third Quarter Revenues
Company Expands to 52 Cities, now Authorized to Provide
Service in 45 States and the District of Columbia....
NEW HAVEN, CT, Nov. 1, 1999 - DSL.net, Inc. (NASDAQ: DSLN), a direct provider
of high-speed data communications and Internet solutions, today announced that
its third quarter revenue had more than doubled over the previous quarter.
DSL.net uses digital subscriber line (DSL) technology to provide these
high-speed Internet services to small and medium sized businesses located in
second and third tier cities.
"We are very pleased with our third quarter results and the significant increase
in revenues over the previous quarter," said David F. Struwas, president and
chief executive officer of DSL.net. "We are aggressively executing our plan to
establish a nationwide network of DSL services available directly to small and
medium sized businesses. In the third quarter alone, we expanded our presence
from 24 to 52 cities. In addition, we now have CLEC approval in 45 states as
well as the District of Columbia. We are well positioned to provide small and
medium sized businesses with the broadband solutions they need in today's
Internet economy."
Total revenue for the quarter, which ended September 30, 1999, was $317,500, up
133 percent over the previous quarter. Recurring service fees accounted for more
than 82 percent of DSL.net's total revenue in the latest quarter. DSL.net posted
a net loss of $5,621,000 for the quarter ended September 30, 1999, compared to a
net loss of $4,811,000 for the prior quarter, while earnings before interest,
taxes, depreciation of capital assets, amortization, and non-cash stock
compensation (EBITDA) were negative $4,951,000 for the period. EBITDA loss for
the previous quarter was $3,029,000.
"We believe that our direct, full service sales approach allows us to capture
more revenue and profit per line than does a wholesale model," said Robert Q.
Berlin, chief financial officer and vice president of strategic planning at
DSL.net. "We are well positioned with our customers to deliver additional value
added services-services developed either internally or from our strategic
partners."
On October 12, 1999, the company completed its initial public offering of 7.2
million shares of common stock at an initial public offering price of $7.50 per
share. In conjunction with the initial public offering, all of the company's
preferred stock converted into 35,759,798 shares of common stock.
DSL.net reported that basic and diluted net loss per common share for the three
months and nine months ended September 30, 1999, was $0.66 and $3.87,
respectively, compared to a net loss per common share for the three months and
six months ended June 30, 1999 of $2.45 and $3.63, respectively. The net loss
per common share for the six months ended June 30, 1999 has been revised from
that which was previously reported to reflect a change in the number of shares
used in computing net loss per common share, as described in the attached
Statements of Operations. This change has no impact either on DSL.net's
previously reported net loss or cash flows for any period.
STRATEGIC ALLIANCES WITH MICROSOFT AND STAPLES
During the quarter, DSL.net entered into key strategic relationships with
Microsoft Corporation and Staples Inc.
In the Microsoft agreement, the software company invested $15 million in DSL.net
and has agreed to participate in joint marketing activities to promote and sell
a combined service package that includes DSL.net services and a co-branded
version of Microsoft's MSN portal. DSL.net will receive a portion of the
advertising revenue generated from the co-branded MSN portal.
DSL.net also reached an exclusive marketing agreement with Staples which
designates DSL.net as Staples' exclusive supplier of business class DSL services
in each of the markets served by DSL.net. Staples has agreed to market DSL.net
services to small and medium sized businesses through its retail stores, direct
marketing sales force, catalog, and Web site. DSL.net and Staples are working
together to install interactive informational kiosks in Staples' retail stores
to promote DSL.net's service. Staples made an initial investment of $3.5 million
in DSL.net during the quarter and then made a subsequent investment of $2.6
million at the time of DSL.net's IPO.
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"Our partnerships with Microsoft and Staples underscore our commitment to
providing solutions to small and medium sized businesses in smaller markets
throughout the United States," Struwas said.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are subject to a
variety of risks and uncertainties, many of which are beyond DSL.net's control,
which could cause actual results to differ materially from those contemplated in
these forward-looking statements. In particular, the risks and uncertainties
include those described under "Risk Factors" in DSL.net's October 6, 1999 IPO
Prospectus, which include, among other things, (i) DSL.net's extremely limited
operating history, which makes it difficult to evaluate its business and
prospects; (ii) the difficulty of predicting the new and rapidly evolving
high-speed data communications industry; (iii) DSL.net's history of, and
expectation of additional, losses and negative operating cash flow and need to
obtain significant additional funds on acceptable terms by 2001; (iv) DSL.net's
unproven business model, which may not be successful; (v) DSL.net's failure to
achieve or sustain market acceptance for its services at desired pricing levels,
which could impair its ability to achieve profitability or positive cash flow;
(vi) DSL.net's ability to negotiate, enter into and renew interconnection and
collocation agreements with traditional telephone companies; (vii) the intense
competition in the high-speed data communications industry, which may
negatively affect the number of DSL.net's customers and the pricing of its
services; (viii) regulatory, legislative, and judicial developments, which could
adversely affect the way DSL.net operates its business; and (ix) DSL.net's
ability to recruit and retain qualified personnel and to manage the growth of
its operations. Existing and prospective investors are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. DSL.net undertakes no obligation to update or revise the
information contained in this press release, whether as a result of new
information, future events or circumstances or otherwise.
ABOUT DSL.NET
Based in New Haven, CT, DSL.net, Inc. is a high-speed data communications and
Internet access provider that uses digital subscriber line technology to provide
high-speed Internet access solutions to small and medium sized businesses.
DSL.net intends to establish services in second and third tier cities throughout
the United States. As of September 30, 1999, DSL.net had provided service or had
installed equipment in 52 cities. For more information on DSL.net visit its web
site at www.dsl.net.
CONTACT
ANALYST CONTACT: MEDIA CONTACT:
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Robert Q. Berlin Blanc and Otus
CFO & VP, Strategic Planning Greg Peverill-Conti
203.782.7627 Boston, MA
[email protected] 617.262.6454
[email protected]
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DSL.net, Inc.
Statements of Operations
(unaudited)
Three Months Ended
March 31, June 30, September 30,
1999 1999 1999
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Revenue $ 48,188 $ 135,985 $ 317,492
Operating expenses:
Network and operations 264,457 1,218,171 2,274,605
Sales and marketing 129,375 1,106,214 2,092,383
General and administrative 525,184 1,028,829 1,391,064
Stock compensation 822,260 1,794,545 796,109
Total operating expenses 1,741,276 5,147,759 6,554,161
Operating loss (1,693,088) (5,011,774) (6,236,669)
Interest expense (income), net (6,474) (201,141) (620,341)
Other expense, net - - 5,156
Net loss $(1,686,614) $(4,810,633) $(5,621,484)
Exchange of preferred stock - 11,998,000 -
Loss applicable
to common stock $(1,686,614) $(16,808,633) $(5,621,484)
Net loss per common
share-basic and diluted $ (0.51)(a) $ (2.45) $ (0.66)
Shares used in computing
net loss per common share 3,282,640 (a) 6,874,276 8,478,493
Pro forma net loss
per common share (b) $ (0.14)(a) $ (0.15) $ (0.13)
Shares used in computing
pro forma net loss
per common share (b) 12,330,748 (a) 33,037,828 44,023,515
Other data:
EBITDA (c) $ (822,663) $(3,029,067) $(4,950,605)
(a) The share and per share amounts have been revised from that previously
reported as a result of the exclusion of certain outstanding common shares which
DSL.net had the right to repurchase under certain circumstances from certain
shareholders during the period from January to April 1999. These shares had
previously been included in the calculation of the share amounts. This change
has no impact on DSL.net's previously reported net loss or cash flows for any
period.
(b) Pro forma net loss per common share has been calculated assuming the
conversion of all outstanding preferred shares into common shares, as if the
shares had converted immediately upon their issuance. All outstanding preferred
shares were converted into common shares at the closing of the company's initial
public offering in October 1999.
(c) EBITDA is defined as earnings before interest, taxes, depreciation of
capital assets, amortization, and non-cash stock compensation.
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DSL.net, Inc.
Statements of Operations
(unaudited)
Six Months Nine Months
Ended Ended
June 30, September 30,
1999 1999
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Revenue $ 184,173 $ 501,665
Operating expenses:
Network and operations 1,482,628 3,757,233
Sales and marketing 1,235,589 3,327,972
General and administrative 1,554,013 2,945,077
Stock compensation 2,616,805 3,412,914
Total operating expenses 6,889,035 13,443,196
Operating loss (6,704,862) (12,941,531)
Interest expense (income), net (207,615) (827,956)
Other expense, net - 5,156
Net loss $ (6,497,247) $(12,118,731)
Exchange of preferred stock 11,998,000 11,998,000
Loss applicable to common stock $(18,495,247) $(24,116,731)
Net loss per common
share-basic and diluted $ (3.63)(a) $ (3.87)
Shares used in computing
net loss per common share 5,088,380 (a) 6,230,836
Pro forma net loss
per common share (b) $ (0.29)(a) $ (0.41)
Shares used in computing
pro forma net loss
per common share (b) 22,741,490 (a) 29,913,454
Other data:
EBITDA (c) $ (3,851,730) $ (8,802,335)
(a)The share and per share amounts have been revised from that previously
reported as a result of the exclusion of certain outstanding common shares which
DSL.net had the right to repurchase under certain circumstances from certain
shareholders during the period from January to April 1999. These shares had
previously been included in the calculation of the share amounts. This change
has no impact on DSL.net's previously reported net loss or cash flows for any
period.
(b)Pro forma net loss per common share has been calculated assuming the
conversion of all outstanding preferred shares into common shares, as if the
shares had converted immediately upon their issuance. All outstanding preferred
shares were converted into common shares at the closing of the company's initial
public offering in October 1999.
(c)EBITDA is defined as earnings before interest, taxes, depreciation of capital
assets, amortization, and non-cash stock compensation.
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Selected Balance Sheet Data
(Unaudited)
($ in 000's)
As of September 30,
December 31, 1999 1999
1998 Actual Pro Forma (1)
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Cash, cash equivalents
and marketable securities $ 39 $ 43,066 $ 91,806
Net property and equipment 284 16,146 16,146
Total assets 370 62,138 110,878
Current liabilities 336 5,978 5,978
Long-term obligations 350 2,048 2,048
Redeemable preferred stock - 75,016 -
Stockholders' equity (316) (20,904) 102,852
(1) The pro forma balance sheet information reflects the net proceeds and
preferred stock conversions associated with the Company's IPO, which closed on
October 12, 1999.
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CONTACT
ANALYST CONTACT:
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Robert Q. Berlin
CFO & VP, Strategic Planning
203.782.7627
[email protected]
MEDIA CONTACT:
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Blanc and Otus
Greg Peverill-Conti
Boston, MA
617.262.6454
[email protected]
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