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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 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: 000-26891
HOTJOBS.COM, LTD.
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(Exact name of registrant as specified in its charter)
Delaware 13-3931821
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
24 West 40th Street, 14th Floor
New York, New York 10018
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(Address of principal executive office) (Zip code)
(212) 699-5300
--------------
(Registrant's telephone number, including area code)
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 |_|
As of May 1, 2000, there were 31,861,387 shares of the registrant's common stock
outstanding.
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<PAGE>
HOTJOBS.COM, LTD.
Table of Contents
<TABLE>
<CAPTION>
Part I. Financial Information Page Number
-----------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 (Unaudited)
and December 31, 1999...................................................... 1
Unaudited Consolidated Statements of Operations for the
Three Months Ended March 31, 2000 and 1999................................. 2
Unaudited Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999................................. 3
Notes to Unaudited Consolidated Financial Statements....................... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................. 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk................. 26
Part II. Other Information
Item 1. Legal Proceedings.......................................................... 26
Item 2. Changes in Securities and Use of Proceeds.................................. 26
Item 3. Defaults By the Company on its Senior Securities........................... 27
Item 4. Results of Votes of Security Holders....................................... 27
Item 5. Other Information.......................................................... 27
Item 6. Exhibits and Reports on Form 8-K........................................... 27
Item 7. Signature.................................................................. 28
</TABLE>
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
HOTJOBS.COM, LTD.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................................... $ 76,517,353 $ 88,372,658
Marketable securities ....................................................... 47,731,660 49,897,110
Accounts receivable, net .................................................... 10,169,403 6,456,227
Prepaid expenses and other current assets ................................... 2,505,719 2,744,041
------------- -------------
Total current assets ................................................. 136,924,135 147,470,036
Property and equipment, net ................................................. 8,463,700 4,572,496
Other assets ................................................................ 419,753 498,720
------------- -------------
Total assets.......................................................... $ 145,807,588 $ 152,541,252
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Line of credit .............................................................. $ 333,333 $ 166,293
Accounts payable and accrued expenses ....................................... 10,367,358 9,233,739
Other current liabilities ................................................... 872,003 992,812
Deferred revenue - current portion .......................................... 7,151,332 4,292,808
Notes payable - current portion ............................................. 272,816 297,753
Current installments of obligations under capital leases .................... 202,727 205,840
------------- -------------
Total current liabilities ............................................. 19,199,569 15,189,245
Line of credit, excluding current portion ...................................... 666,667 498,879
Deferred revenue, excluding current portion .................................... 1,633,061 1,080,544
Notes payable, excluding current portion ....................................... -- 27,930
Obligations under capital leases, excluding current installments ............... 166,945 216,479
------------- -------------
Total liabilities .................................................... 21,666,242 17,013,077
Stockholders' equity:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued
and outstanding as of March 31, 2000 and
December 31, 1999 ....................................................... -- --
Common stock, $0.01 par value; 100,000,000 shares authorized;
31,854,587 and 31,344,419 shares issued and outstanding at
March 31, 2000 and December 31, 1999, respectively ...................... 318,546 313,444
Deferred compensation .......................................................... (5,022,395) (5,509,523)
Additional paid-in capital ..................................................... 178,403,817 177,952,759
Accumulated deficit ............................................................ (49,526,464) (37,219,056)
Accumulated other comprehensive loss ........................................... (32,158) (9,449)
------------- -------------
Total stockholders' equity ........................................... 124,141,346 135,528,175
------------- -------------
Commitments and contingencies
Total liabilities and stockholders' equity ........................... $ 145,807,588 $ 152,541,252
============= =============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
1
<PAGE>
HOTJOBS.COM, LTD.
Unaudited Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
2000 1999
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<S> <C> <C>
Revenues:
Service fees ................................................. $ 10,479,882 $ 1,960,374
Software license fees ........................................ 150,536 78,221
Career expo fees ............................................. 1,262,394 215,727
Other ........................................................ 1,986,798 394,787
------------ -----------
Total revenues ............................................ 13,879,610 2,649,109
Cost of revenues ................................................. 2,496,860 425,162
------------ -----------
Gross profit ............................................ 11,382,750 2,223,947
Operating expenses:
Product development .......................................... 942,409 177,616
Sales and marketing .......................................... 19,682,615 3,415,540
General and administrative ................................... 4,520,246 778,400
Non-cash compensation ........................................ 449,591 --
------------ -----------
Total operating expenses ................................. 25,594,861 4,371,556
----------- ------------
Loss from operations ................................. (14,212,111) (2,147,609)
Net interest income (expense) .................................... 1,904,703 (68,087)
------------ -----------
Net loss ............................................. (12,307,408) $(2,215,696)
============ ===========
Basic and diluted net loss per common share ...................... (0.39) (0.11)
============ ===========
Weighted average shares outstanding used in basic
and diluted net loss per common share
calculation ...................................................... 31,569,033 20,820,000
============ ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE>
HOTJOBS.COM, LTD.
Unaudited Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ...................................................... $(12,307,408) $(2,215,696)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization ............................. 625,330 73,378
Provision for doubtful accounts ........................... 671,538 84,000
Non-cash compensation ..................................... 449,591 --
Changes in:
Accounts receivable ....................................... (4,385,703) (734,342)
Prepaid expenses and other current assets ................. 257,135 680,202
Accounts payable and accrued expenses ..................... 1,141,254 1,267,760
Deferred revenue .......................................... 3,412,471 294,345
Other ..................................................... (338,541) 119,079
------------ -----------
Net cash used in operating activities ............. (10,474,333) (431,274)
------------ -----------
Cash flows from investing activities:
Sale of marketable securities .............................. 75,550,000 --
Purchase of marketable securities .......................... (73,100,000) --
Purchase of trademark ...................................... (34,898) --
Capital expenditures ....................................... (4,504,722) (128,482)
------------ -----------
Net cash used in investing activities ............. (2,089,620) (128,482)
------------ -----------
Cash flows from financing activities:
Advance from affiliate .................................... -- 680,000
Proceeds from issuance of stock for the Employee Stock
Purchase Plan ............................................ 399,282 --
Repayment of note payable ................................. (52,867) --
Proceeds from line of credit .............................. 334,828 --
Proceeds from exercise of options ......................... 81,852 --
Principal payments under capital lease obligations ........ (52,647) (29,414)
------------ -----------
Net cash provided by financing activities ........ 710,448 650,586
------------ -----------
Effect of foreign exchange rates on cash ...................... (1,800) --
------------ -----------
Net (decrease) increase in cash and cash
equivalents .................................. (11,855,305) 90,830
Cash and cash equivalents at beginning of period ............... 88,372,658 167,004
------------ -----------
Cash and cash equivalents at end of period ..................... $ 76,517,353 $ 257,834
============ ===========
Supplemental disclosures of cash flow information:
Interest paid ............................................. $ 27,552 $ 8,495
============ ===========
Non-cash transactions:
Equipment acquired under capital leases .................... $ -- $ 378,487
Barter transaction ......................................... $ 25,000 $ 168,334
Stock issued for purchase of trademark ..................... $ 12,562 $ --
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
HOTJOBS.COM, LTD.
Notes to Unaudited Consolidated Financial Statements
1) DESCRIPTION OF BUSINESS
HotJobs.com, Ltd. (the "Company") is a leading Internet-based recruiting
solutions company. The Company's suite of products and services leverages
the Internet to provide a direct exchange of information between job
seekers and employers. The Company's employment exchange, www.hotjobs.com,
allows member employers access to a database of job seekers and a back-end
system which provides recruiters with the tools to post, track and manage
job openings in a real-time environment. The employment exchange also
allows job seekers to identify, research, apply and evaluate job
opportunities while enabling them to restrict access to their resumes.
Headhunters are prohibited from using the employment exchange, ensuring
direct contact between job seekers and member employers. The Company also
offers its Softshoe(R) and Shoelace(TM) proprietary hiring management
software and provides employers with additional recruiting solutions such
as WorkWorld(TM) career expos, online advertising and consulting services.
The majority of the Company's revenues are recurring and are primarily
derived from employer memberships to the Company's online employment
exchange, www.hotjobs.com. The Company operates in a highly competitive
environment and inherent in the Company's business are various risks and
uncertainties, including its limited operating history and unproven
business model. The Company's success may depend in part upon the
emergence of the Internet as a recruiting medium, prospective products and
service development efforts and the acceptance of the Company's products
and services by the marketplace.
HotJobs.com, Ltd. was incorporated in the State of Delaware on February
20, 1997 (inception) as Hot Jobs, Inc. On September 23, 1998, Hot Jobs,
Inc. changed its name to HotJobs.com, Ltd. On June 18, 1999, the Company
established an international presence with the incorporation of
HotJobs.com Pty. Limited in Australia.
2) BASIS OF PRESENTATION
The unaudited interim consolidated financial statements of the Company as
of March 31, 2000 and for the three months ended March 31, 2000 and 1999,
included herein have been prepared in accordance with the instructions for
Form 10-Q under the Securities Exchange Act of 1934, as amended, and
Article 10 of Regulation S-X under the Securities Act of 1933, as amended.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations relating to interim consolidated financial statements.
In the opinion of management, the accompanying unaudited interim
consolidated financial statements reflect all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the financial
position of the Company at March 31, 2000, and the results of their
operations and their cash flows for the three months ended March 31, 2000
and 1999.
The results of operations for such periods are not necessarily indicative
of results expected for the full year or for any future period. These
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements as of December 31, 1999, and for
the two years then ended and for the period from February 20, 1997
(inception) to December 31, 1999 and related notes included in the
Company's 10-K filed with the Securities and Exchange Commission. Certain
reclassifications have been made to the 1999 financial statements to
conform to the 2000 presentation.
3) BUSINESS SEGMENT REPORTING
The Company has determined that it does not have any separately reportable
business segments.
4
<PAGE>
4) RECENT ACCOUNTING PRONOUNCEMENTS
The Company is required to adopt SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" effective July 1, 2000, and has not
yet determined the effect SFAS No. 133 will have on its results of
operations and financial position. This statement is not required to be
applied retroactively to financial statements of prior periods.
FASB Interpretation No. 44, "Accounting for Certain Transactions Involving
Stock Compensation" ("FIN No. 44") provides guidance for applying APB
Opinion No. 25, "Accounting for Stock Issued to Employees." With certain
exceptions, FIN No. 44 applies prospectively to new awards, exchanges of
awards in a business combination, modifications to outstanding awards and
changes in grantee status on or after July 1, 2000. The Company does not
believe that the implementation of FIN No. 44 will have a significant
effect on its results of operations.
In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements" ("SAB No. 101") which
summarizes certain of the SEC staff's views in applying generally accepted
accounting principles to revenue recognition in financial statements. The
Company will be required to adopt the accounting provisions of SAB No. 101
no later than the second quarter of 2000. The Company does not believe
that the implementation of SAB No. 101 will have a significant effect on
its results of operations.
5) LOAN AND SECURITY AGREEMENT
On September 16, 1999, the Company entered into a Loan and Security
Agreement with Silicon Valley Bank, which was subsequently modified on
November 22, 1999. The agreement consists of a $4,000,000 revolving line
of credit and a $1,000,000 equipment line of credit. The revolving line of
credit has a term of one year and bears interest at an annual rate of the
bank's prime rate plus 75 basis points. Interest on the revolving line of
credit is payable monthly and any principal outstanding is payable at the
end of the term. The equipment line of credit has a term of 42 months and
bears interest at an annual rate of the bank's prime rate plus 100 basis
points. The Company may borrow under this equipment line of credit during
the first six months of the term. Interest on the equipment line of credit
is payable monthly and the principal is payable over 36 months commencing
on April 1, 2000. As of March 31, 2000, the Company has fully utilized the
entire $1,000,000 equipment line and has available $2,200,000 of the
$4,000,000 revolving line of credit as $1,800,000 of the revolving line of
credit has been utilized to support a letter of credit issued in 1999 in
connection with entering into a lease for new premises in New York.
6) NON-CASH COMPENSATION
In connection with the granting of options in 1999, the Company recorded
net deferred compensation of approximately $7.5 million. For financial
reporting purposes, the deferred compensation is being amortized as
non-cash compensation over the vesting period of the related options.
Accordingly, the Company amortized $449,591 of deferred compensation as
non-cash compensation in the three months ended March 31, 2000. The
deferred compensation remaining at March 31, 2000 of approximately $5.0
million will be amortized as non-cash compensation over the remaining
vesting period of the related options through August 2003.
7) EMPLOYEE STOCK PURCHASE PLAN
On August 10, 1999, the Employee Stock Purchase Plan became effective. The
plan is designed to comply with the requirements of Section 423 of the
Internal Revenue Code. The plan allows eligible employees to purchase
shares of common stock at 85% of the lower of the fair market value of the
Company's common stock on the employee's entry date into the offering
period or the fair market value on the semi-annual purchase date through
periodic payroll deductions. Currently, a total of 191,282 shares of
common stock are available for issuance under the plan.
The plan has a series of successive offering periods, each with a maximum
duration of 24 months. The initial offering period began on August 10,
1999 and will end on the last business day in July 2001. The next offering
period will begin on the first business day in August 2001 and subsequent
offering periods will be set by the Compensation Committee of the
Company's Board of Directors.
5
<PAGE>
On January 31, 2000, the first purchase date under the plan, employees
purchased 58,718 shares of the Company's common stock for $399,282 or
$6.80 per share.
8) COMMITMENTS AND CONTINGENCIES
a) In January 2000, the Company entered into a five-year lease
agreement for office space in Santa Monica, California, for total
minimum lease payments of approximately $631,000.
b) In February 2000, the Company entered into a four-year lease
agreement for office space in Austin, Texas, for total minimum lease
payments of approximately $434,000.
c) As of March 31, 2000, the Company has commitments of approximately
$22.6 million for various advertising campaigns through December
2002. These commitments include broadcasting, print, online and
outdoor advertising.
9) BASIC AND DILUTED NET LOSS PER COMMON SHARE
The Company computes net loss per share in accordance with SFAS No. 128,
"Computation of Earnings Per Share," and the SEC Staff Accounting Bulletin
No. 98 ("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic
net loss per share is computed by dividing the net loss to common
stockholders for the period by the weighted average number of common
shares outstanding during the period. Diluted net loss per share is
computed by dividing the net loss for the period by the weighted average
number of common and common equivalent shares outstanding during the
period. As the Company had a net loss in each of the periods presented,
basic and diluted net loss per share is the same. Diluted net loss per
share for the three months ended March 31, 2000 and 1999 does not include
the effects of options to purchase shares of common stock, as the effect
of their inclusion is anti-dilutive during each period.
10) SUBSEQUENT EVENTS
On April 25, 2000, the Company signed a definitive agreement to acquire
Resumix, Inc., a leading developer of staffing management software. The
acquisition closed on May 11, 2000. The Company issued 3,560,019 shares of
its common stock, of which 359,282 will be held in escrow for one year
pending satisfaction of certain conditions, to Resumix's current
stockholders who are accredited investors. Stockholders of Resumix who are
not accredited investors received cash for their shares of Resumix that in
the aggregate amounted to approximately $400,000. In addition, HotJobs.com
assumed Resumix's existing stock option plans, resulting in the potential
additional issuances of approximately 1.1 million shares of the Company's
common stock upon the exercise of Resumix employee stock options. In
addition, upon the consummation of the acquisition, all outstanding
options to purchase common stock of Resumix converted into options to
purchase common stock of the Company.
This acquisition will be accounted for under the purchase method of
accounting for a business combination.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
THE INFORMATION IN THIS REPORT 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. SUCH
STATEMENTS ARE BASED UPON CURRENT EXPECTATIONS, ASSUMPTIONS, ESTIMATES AND
PROJECTIONS ABOUT HOTJOBS.COM AND OUR INDUSTRY. THESE FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. ANY STATEMENTS CONTAINED
HEREIN THAT ARE NOT STATEMENTS OF HISTORICAL FACTS MAY BE DEEMED TO BE
FORWARD-LOOKING STATEMENTS. FOR EXAMPLE, WORDS SUCH AS "MAY," "WILL,"
"SHOULD," "ESTIMATES," "PREDICTS," "POTENTIAL," "CONTINUE," "STRATEGY,"
"BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS," "INTENDS," AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
HOTJOBS.COM'S ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD DIFFER
SIGNIFICANTLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING STATEMENTS.
FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO SUCH A DISCREPANCY INCLUDE, BUT
ARE NOT LIMITED TO, THOSE DISCUSSED ELSEWHERE IN THIS REPORT IN THE
SECTION ENTITLED "RISK FACTORS" AND THE RISKS DISCUSSED IN OUR OTHER
SECURITIES AND EXCHANGE COMMISSION ("SEC") FILINGS INCLUDING OUR
REGISTRATION STATEMENT ON FORM S-1 DECLARED EFFECTIVE ON NOVEMBER 10, 1999
BY THE SEC (FILE NO. 333-89813) AND IN OUR FORM 10-K FILED MARCH 24, 2000.
HOTJOBS.COM UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY
FORWARD-LOOKING STATEMENTS FOR ANY REASON, EVEN IF NEW INFORMATION BECOMES
AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.
We are a leading provider of comprehensive recruiting solutions that
leverage the Internet to exchange information more efficiently between job
seekers and employers. The majority of our revenues are recurring and are
derived primarily from employer memberships to our www.hotjobs.com
employment exchange. We also offer our Softshoe and Shoelace proprietary
hiring management software and provide additional recruiting solutions to
employers such as our WorkWorld career expos, online advertising and
consulting services.
Founded in February 1997, we began operations with seven employees and we
had grown to 275 employees as of March 31, 2000. Our early operating
activities related primarily to the development of the necessary
technological infrastructure for the operation of www.hotjobs.com. In
February 1997, we commercially launched our www.hotjobs.com employment
exchange. In September 1997, we began to license our Softshoe hiring
management software. During 1998 and 1999, we experienced significant
increases in our revenue from sales of memberships to our employment
exchange and license and hosting fees for our Softshoe software. In early
1999, we introduced our WorkWorld career expos and expanded our marketing
programs to increase awareness of the HotJobs.com brand. In 2000, we
launched our Shoelace turn-key hiring management software. Hosted by
HotJobs.com, Shoelace delivers the same technology that powers the
www.hotjobs.com employment exchange on a private label version that can be
used on any corporate Website. In May 1999, we raised net proceeds of
approximately $16.1 million in a private placement of our Series A
Preferred Stock. In the third quarter of 1999, we raised net proceeds of
approximately $23.2 million in our IPO and in the fourth quarter of 1999,
we raised net proceeds of approximately $114.9 million in our follow-on
public offering.
We classify our revenues as follows:
o Service fees, consisting of subscription fees paid by
employers for membership to our www.hotjobs.com employment
exchange and software hosting fees paid by customers of our
hiring management software. We sell memberships to each
employer on a per recruiter basis and bill the employer
monthly, quarterly, semi-annually, annually or bi-annually.
Membership entitles each recruiter to post a specific number
of jobs on www.hotjobs.com simultaneously. Software hosting
fees consist of recurring monthly fees to maintain an
employer's Softshoe or Shoelace database as well as the
hosting of a miscellaneous proprietary software product.
7
<PAGE>
o Software license fees, consisting of license fees paid by our
Softshoe and Shoelace customers as well as license fees
relating to a miscellaneous proprietary software product.
o Career expo fees, consisting of fees from employers that rent
booths at our WorkWorld career expos.
o Other, consisting of fees derived from single-ad job postings
on www.hotjobs.com, banner advertising, which we sell on a
monthly and extended-term basis, co-operative advertising
revenue, barter revenue, and consulting and other
Softshoe-related services, including system customization and
resume scanning services, which we bill on a monthly and
extended-term basis.
We recognize revenue as follows:
o Service fees. We provide subscriptions for membership to our
employment exchange for a minimum term of three months. We
recognize subscription revenue over the subscription term. We
provide hosting services to Softshoe and Shoelace customers on
a monthly basis, and we recognize hosting revenue in the month
we provide the service.
o Software license fees. We recognize software license fees
ratably over the four-year estimated useful life of the
software, in accordance with Statements of Position 97-2 and
98-9 issued by the American Institute of Certified Public
Accountants.
o Career expo fees. We recognize career expo fees in the month
in which the career expo takes place.
o Other. We recognize revenues related to these services over
the period of delivery of service. Other revenues also include
barter revenue, which consists of fees generated from
exchanges of services with other vendors. We recognize barter
revenue over the period that we receive the benefit.
We classify our cost of revenues and operating expenses as follows:
o Cost of revenues. Cost of revenues primarily consists of
compensation and other costs associated with the operation of
our www.hotjobs.com employment exchange, resume scanning
services, depreciation expense and career expo expenses.
o Product development expense. Product development expense
consists primarily of costs associated with the compensation
of product development personnel. Our product development
expenses constitute all of our research and development
expenditures.
o Sales and marketing expense. Sales and marketing expense
consists primarily of advertising and promotional expenses,
public relations expenses, conference expenses, printing fees,
sales and marketing compensation, including base salary and
sales commissions, and telemarketing communications expenses.
Sales commissions have remained relatively constant as a
percentage of revenues, and we expect this to continue.
However, the timing and magnitude of marketing initiatives
have caused, and will continue to cause, fluctuations in sales
and marketing expense as a percentage of revenues.
o General and administrative expense. General and administrative
expense consists primarily of compensation for administrative
and executive staff, fees for professional services, bad debt
expense and general office expense.
8
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, our results of
operations expressed as a percentage of revenues:
Three Months Ended March 31,
-----------------------------
2000 1999
------ ------
Revenues:
Service fees.............................. 76% 74%
Software license fees..................... 1 3
Career expo fees.......................... 9 8
Other..................................... 14 15
---- ----
Total revenues......................... 100 100
Cost of revenues.............. 18 16
---- ----
Gross profit........................... 82 84
Operating Expenses:
Product development....................... 7 7
Sales and marketing....................... 142 129
General and administrative................ 32 29
Non-cash compensation..................... 3 ---
---- ----
Total operating expenses............... 184 165
---- ----
Loss from operations................ (102) (81)
Net interest income (expense).... 13 (3)
---- ----
Net loss............................ (89)% (84)%
==== ====
We have incurred substantial losses in every fiscal period since our inception.
For the three months ended March 31, 2000, we incurred a net loss of
approximately $12.3 million. As of March 31, 2000, we had an accumulated deficit
of approximately $49.5 million. Our net loss and resulting accumulated deficit
are primarily due to the costs we incurred to develop our online employment
exchange and software products and to expand our sales and marketing programs.
We intend to devote significant resources to advertising and brand-marketing
programs designed to attract new employers to subscribe to www.hotjobs.com and
new job seekers to use the site. We anticipate increasing advertising spending
in specific periods in the future. This may result in sales and marketing
expenses increasing as a percentage of total revenues in these periods. As of
March 31, 2000, we had commitments of approximately $22.6 million for various
advertising campaigns through December 2002. These commitments include
broadcasting, print, online and outdoor advertising.
We expect growth in the number of member employers of www.hotjobs.com to result
in substantial growth in subscription fees. Our strategy contemplates that
revenue from employer memberships will likely be the single largest source of
revenue for us in the immediate future.
9
<PAGE>
Deferred Compensation
We recorded deferred compensation net of options forfeited of approximately $7.5
million in the year ended December 31, 1999, and amortized approximately $2.0
million as non-cash compensation expense in 1999 and approximately $450,000 for
the three months ended March 31, 2000. Deferred compensation represents the
difference between the exercise price of stock options granted and the fair
value for accounting purposes of the underlying common stock at the date of the
grant. The remaining deferred compensation at March 31, 2000 of approximately
$5.0 million will be amortized over the remaining vesting period of the options.
We currently expect to amortize the remaining deferred compensation as follows:
For the period:
---------------
April through December 2000......................... $1.3 million
Full Year 2001...................................... $1.8 million
Full Year 2002...................................... $1.4 million
Full Year 2003...................................... $0.5 million
For the Three Months Ended March 31, 2000 and 1999
Revenues
Our total revenues increased to approximately $13.9 million for the three months
ended March 31, 2000 from approximately $2.6 million for the three months ended
March 31, 1999. The increase in our total revenues was due to increased revenue
in all of our revenue categories.
Service Fees. Service fees increased to approximately $10.5 million for the
three months ended March 31, 2000, from approximately $2.0 million for the three
months ended March 31, 1999. This increase resulted primarily from an increase
in the number of employers subscribing to www.hotjobs.com and, to a lesser
extent, an increase in hosting fees generated by a larger number of licensees of
our Softshoe software.
Software License Fees. Software license fees increased to approximately $151,000
for the three months ended March 31, 2000 from approximately $78,000 for the
three months ended March 31, 1999. The increase resulted primarily from an
increase in the number of companies that license our proprietary Softshoe
software and the launch of our Shoelace software in 2000.
Career Expo Fees. Career expo fees increased to approximately $1.3 million for
the three months ended March 31, 2000 from approximately $216,000 for the three
months ended March 31, 1999. The increase resulted from an increase in the
number of career expos held in 2000 versus 1999.
Other. Other revenues increased to approximately $2.0 million for the three
months ended March 31, 2000, from approximately $395,000 for the three months
ended March 31, 1999. Other revenues increased mainly as a result of increased
single ad job postings, banner advertising and co-operative advertising.
Cost of Revenues
Cost of revenues increased to approximately $2.5 million for the three months
ended March 31, 2000, from approximately $425,000 for the three months ended
March 31, 1999. Cost of revenues as a percentage of revenues for the three
months ended March 31, 2000 and 1999 were 18% and 16%, respectively. The
increase in cost of revenues as a percentage of revenues in the three months
ended March 31, 2000 compared to the same period in 1999 principally reflects
the increased costs associated with the increased number of career expos. We
incur higher marginal costs associated with career expo revenues than with our
other revenue categories.
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Operating Expenses
Product Development Expense. Product development expense increased to
approximately $942,000 for the three months ended March 31, 2000 from
approximately $178,000 in the three months ended March 31, 1999. The increase
reflects our continuing efforts to enhance the content and features in our
products and services and resulted primarily from increased salaries and related
expenses associated with hiring additional technology personnel.
Sales and Marketing Expense. Sales and marketing expense increased to
approximately $19.7 million for the three months ended March 31, 2000, from
approximately $3.4 million for the three months ended March 31, 1999. As a
percentage of revenues, sales and marketing increased to 142% for the three
months ended March 31, 2000, from 129% for the three months ended March 31,
1999. The increase in sales and marketing expense was primarily due to our
extensive "Hottest Hand on the Web" advertising campaign in the quarter ended
March 31, 2000, which included two commercials in connection with the Super
Bowl, print advertisements, online sponsorship and outdoor signage. In addition,
sales and marketing expense increased due to the hiring of additional sales and
marketing personnel.
General and Administrative Expense. General and administrative expense increased
to approximately $4.5 million for the three months ended March 31, 2000, from
approximately $778,000 for the three months ended March 31, 1999. General and
administrative expense increased primarily due to increased salaries and related
expenses associated with hiring additional administrative personnel.
Non-Cash Compensation Expense. We recorded approximately $450,000 of non-cash
compensation expense for the three months ended March 31, 2000, which represents
the amortization of a portion of the deferred compensation, net of options
forfeited, recorded in 1999 in connection with stock options granted below the
fair value for accounting purposes of the underlying common stock at the date of
grant. Deferred compensation is amortized over the period during which the
related options vest. The deferred compensation of approximately $5.0 million
remaining at March 31, 2000 will be amortized over the remaining vesting period
of the related options through August 2003.
Net Interest Income (Expense)
For the three months ended March 31, 2000, we recorded net interest income of
approximately $1.9 million compared to approximately $68,000 of net interest
expense for the three months ended March 31, 1999. Net interest income in the
three months ended March 31, 2000 reflects the investment of our excess cash,
which resulted from our initial public offering and our follow-on offering in
the second half of 1999. Prior to the sale of the Series A Preferred Stock in
May 1999, we were a net borrower of funds and had recorded net interest expense
for the three months ended March 31, 1999.
Net Loss
We recorded a net loss of approximately $12.3 million for the three months ended
March 31, 2000, compared to a net loss of approximately $2.2 million for the
comparable period of 1999. For the three months ended March 31, 2000 and 1999,
the basic and diluted net loss per common share was $0.39 and $0.11,
respectively. The increase in the net loss for 2000 compared to 1999 was
primarily attributable to the increased sales and marketing costs associated
with building brand awareness and increased hiring in connection with the growth
of HotJobs.com.
Liquidity and Capital Resources
Since inception, we have financed our activities primarily through funding from
OTEC, Inc., an affiliate, lines of credit, cash from operations, the private
placement of equity securities, our initial public offering and our follow-on
public offering. Through May 1999, OTEC provided us with approximately $3.8
million to fund our operations. Effective May 10, 1999, we raised net proceeds,
after deducting costs of the offering, of approximately $16.1 million from the
sale of our Series A Preferred Stock in a private placement. On August 13, 1999
we completed the initial public offering of 3,000,000 shares of our common stock
for gross proceeds of $24.0 million and net proceeds, after deducting costs of
the offering, of approximately $20.6 million. On September 2, 1999, the
underwriters exercised
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their over-allotment option to the extent of 350,000 shares, resulting in gross
proceeds to us of $2.8 million, and net proceeds after deducting costs of the
offering of approximately $2.6 million. On November 16, 1999, we completed a
follow-on offering of 3,600,000 shares of our common stock for gross proceeds of
$108.0 million, and net proceeds, after deducting costs of the offering, of
approximately $102.1 million. On December 8, 1999, the underwriters exercised
their over-allotment option of an additional 450,000 shares, resulting in gross
proceeds to us of $13.5 million, and net proceeds, after deducting costs of the
offering, of approximately $12.8 million.
Net cash used in operating activities was approximately $10.5 million for the
three months ended March 31, 2000, and approximately $431,000 for the three
months ended March 31, 1999. Net cash used in operating activities for both the
three months ended March 31, 2000 and 1999 resulted primarily from our net loss,
which mainly resulted from costs incurred to support our sales and marketing
efforts and the increased personnel required to manage our growing operations,
combined with a higher level of accounts receivable resulting from increased
billings which was partially offset by increases in accounts payable and accrued
expenses and deferred revenue.
Net cash used in investing activities was approximately $2.1 million for the
three months ended March 31, 2000, compared to approximately $128,000 for the
three months ended March 31, 1999. Net cash used in investing activities in the
three months ended March 31, 2000 was primarily for the purchase of marketable
securities of $73.1 million and for capital expenditures of approximately $4.5
million which were partially offset by proceeds of approximately $75.6 million
from the sale of marketable securities. For the three months ended March 31,
1999 the net cash used in investing activities was solely for capital
expenditures.
Net cash provided by financing activities was approximately $710,000 for the
three months ended March 31, 2000, and approximately $651,000 for the three
months ended March 31, 1999. Net cash provided by financing activities for the
three months ended March 31, 2000 consisted primarily of proceeds of
approximately $335,000 relating to the utilization of the remaining equipment
line of credit, approximately $399,000 from the issuance of stock under the
Employee Stock Purchase Plan and approximately $82,000 from the exercise of
options which were partially offset by approximately $53,000 of repayment of a
note and approximately $53,000 of capital lease payments. For the three months
ended March 31, 1999, net cash provided by financing activities consisted
primarily of an advance from OTEC.
As of March 31, 2000, we had approximately $76.5 million of cash and cash
equivalents and approximately $47.7 million of marketable securities. As of
March 31, 2000, we had approximately $2.2 million of availability under our
existing line of credit, and our principal commitments consisted of
approximately $22.6 million for various advertising campaigns through December
2002 and approximately $15.4 million of office lease commitments through
December 2009. We believe that our existing cash and cash equivalents,
marketable securities and available line of credit will be sufficient to meet
our anticipated cash requirements for working capital and capital expenditures
for at least the next 12 months. Our capital requirements will depend on a
number of factors, including market acceptance of our products and services, the
amount of our resources that we devote to our products and services and
expansion of our operations and the amount of our resources we devote to
promoting awareness of the HotJobs.com brand. Consistent with our growth, we
have experienced a substantial increase in our sales and marketing expenses,
capital expenditure and operating lease arrangements since inception, and we
anticipate that these increases will continue for the foreseeable future. In
addition, we will continue to evaluate possible investments in businesses,
products and technologies, the consummation of any of which would increase our
capital expenditures.
Although we currently believe that we have sufficient capital resources to meet
our anticipated working capital and capital expenditure requirements beyond the
next 12 months, unanticipated events and opportunities may require us to sell
additional equity or debt securities, increase our current line of credit or
establish new credit facilities to raise capital in order to meet our capital
requirements. If we sell additional equity or convertible debt securities, the
sale could dilute the ownership of our existing stockholders. If we issue debt
securities, increase our credit facility or establish a new credit facility, our
fixed obligations could increase and result in operating covenants that would
restrict our operations. We cannot be sure that any such financing will be
available in amounts or on terms acceptable to us.
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Year 2000 Compliance
Our business and operations experienced no material adverse effects from the
calendar change to the year 2000 or from the leap year that occurred in 2000,
and we have not been notified of any disruptions to or failures in the systems
of any of our suppliers.
We will continue to monitor our information technology and non-information
technology systems and those of third parties with whom we conduct business
throughout the year 2000 to ensure that any latent year 2000 issues that may
arise are addressed promptly. Although we do not anticipate any additional
expenditures relating to year 2000 compliance, we cannot provide any assurance
as to the magnitude of any future costs until significant time has passed.
Risk Factors
Risks Related to Our Financial Condition and Business Model
We have a limited operating history so it will be difficult for you to evaluate
an investment in HotJobs.com.
We were incorporated and began generating revenues in February 1997.
Accordingly, we have only a limited operating history for you to evaluate our
business and prospects. As a new company, we face risks and uncertainties
relating to our ability to successfully implement our strategy. You must
consider the risks, expenses and uncertainties that an early stage company in
new and rapidly evolving markets like ours faces. Some of these risks include:
o ability to sustain historical revenue growth rates;
o ability to increase awareness of our brand;
o managing our expanding operations;
o competition;
o attracting, retaining and motivating qualified personnel;
o maintaining our current, and developing new, strategic relationships;
o ability to anticipate and adapt to the changing Internet market and any
changes in government regulation; and
o attracting and retaining a large number of member companies for our
employment exchange and licenses for our hiring management software.
We also depend on the growing use of the Internet for recruiting purposes and on
general economic conditions. If we cannot address these risks and uncertainties
or are unable to execute our strategy, we may not be successful.
We have not been profitable, and we expect our losses to continue.
We have never been profitable. For the quarter ended March 31, 2000, we incurred
a net loss of approximately $12.3 million. At March 31, 2000, we had an
accumulated deficit of approximately $49.5 million. We expect to continue to
lose money in the foreseeable future because we anticipate incurring significant
expenses in connection with building awareness of the HotJobs.com brand, rapidly
expanding our sales, technology and other personnel, developing strategic
relationships and improving our products and services. We forecast our future
expense levels based on our operating plans and our estimates of future
revenues. We may find it necessary to accelerate expenditures relating to our
sales and marketing, products and technology and expansion efforts or to
otherwise increase our financial commitment to creating and maintaining brand
awareness or developing our products. Although our revenues have grown in recent
quarters, we cannot assure you that we will achieve sufficient revenues for
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If our revenues
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grow at a slower rate than we anticipate, or if our spending levels exceed our
expectations or cannot be adjusted to reflect slower revenue growth, we may not
generate sufficient revenues to achieve or sustain profitability.
You should not rely on our quarterly operating results as an indication of our
future results because they are subject to significant fluctuations.
Fluctuations in our operating results or the failure of our operating results to
meet the expectations of public market analysts and investors may negatively
impact our stock price.
Our quarterly operating results may fluctuate significantly in the future due to
a variety of factors that could affect our revenues or our expenses in any
particular quarter. Fluctuations in our quarterly operating results could cause
our stock price to decline.
You should not rely on quarter-to-quarter comparisons of our results of
operations as an indication of future performance. Factors that may affect our
quarterly results include:
o mismatches between resource allocation and consumer demand due to
difficulties in predicting consumer demand in a new market;
o the demand for and acceptance of our Website, products, product
enhancements and services;
o the timing, amount and mix of subscription, license and service payments;
o changes in general economic conditions, such as recessions, that could
affect recruiting efforts generally and online recruiting efforts in
particular;
o the magnitude and timing of marketing initiatives;
o the maintenance and development of our strategic relationships;
o the timing and integration of acquisitions;
o the introduction, development, timing, competitive pricing and market
acceptance of our products and services and those of our competitors;
o the attraction and retention of key personnel;
o our ability to manage our anticipated growth and expansion;
o our ability to attract qualified job seekers; and
o technical difficulties or system downtime affecting the Internet generally
or the operation of our products and services specifically.
As a result of the factors listed above and because the online recruiting market
is new and it is difficult to predict consumer demand, it is possible that in
some future periods our results of operations may be below the expectations of
public market analysts and investors. This could cause our stock price to
decline. In addition, we plan to significantly increase our operating expenses
to expand our sales and marketing, administration, consulting and training,
maintenance and technical support and research and development groups. If
revenues fall below our expectations in any quarter and we are unable to quickly
reduce our spending in response, our operating results would be lower than
expected and our stock price may fall.
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Our business model is unproven and may not be adaptable to a changing market.
If we are not able to anticipate changes in the online recruiting market or if
our business model is not successful, we may not be able to expand our business
or to successfully compete with other companies, which could have a material
adverse effect on our business, results of operations and financial condition.
Our current business model depends on recurring revenue from employers using our
Website and hosting fees associated with our hiring management software. Our
revenue model and profit potential are unproven. If current employers decide to
discontinue our service and we are unable to replace them with new employers,
our revenues could decrease or grow at a slower rate than expected. It is
possible that we will be required to further adapt our business model in
response to additional changes in the online recruiting market or if our current
business model is not successful.
We may not be able to obtain sufficient funds to grow our business and any
additional financing may be on terms adverse to the interests of our
stockholders.
Because we expect to generate losses for the foreseeable future, we do not
expect that income from our operations will be sufficient to meet our needs. We
may have to raise additional funds in the future in order to fund our
anticipated growth, more aggressive marketing programs or the acquisition of
complementary businesses, technologies and services. Obtaining additional
financing will be subject to a number of factors including:
o market and economic conditions;
o our financial condition and operating performance; and
o investor sentiment.
These factors may make the timing, amount, terms and conditions of additional
financing unattractive for us. If we are able to raise additional funds and we
do so by issuing equity securities, holders of our common stock may experience
significant dilution of their ownership interest and holders of these securities
may have rights senior to those of the holders of our common stock. If we obtain
additional financing by issuing debt securities, the terms of these securities
could restrict or prevent us from paying dividends and could limit our
flexibility in making business decisions.
If additional financing is not available when required or is not available on
acceptable terms, we may be unable to fund our expansion, successfully promote
our brand name, develop or enhance our products and services, take advantage of
business opportunities or respond to competitive pressures, any of which could
have a material adverse effect on our business.
Economic fluctuations may have a material adverse effect on our business,
results of operations and financial condition.
Demand for our services may be significantly and adversely affected by the level
of economic activity and employment in the United States and abroad. When
economic activity slows, many companies hire fewer permanent employees. A
recession could cause employers to reduce or postpone their recruiting efforts
generally, and their online recruiting efforts in particular. Therefore, a
significant economic downturn or recession, especially in regions or industries
where our operations are heavily concentrated, could have a material adverse
effect on our business, financial condition and operating results. Further, we
may face increased pricing pressures during such periods. There can be no
assurance that during these periods our results of operations will not be
adversely affected.
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Risks Related to Our Markets and Strategy
The Internet is not a proven recruiting medium.
If we are unable to compete with traditional recruiting and job seeking methods,
our revenues could be reduced. The future of our business is dependent on the
acceptance by job seekers and employers of the Internet as an effective job
seeking and recruiting tool. The online recruiting market is new and rapidly
evolving, and we do not yet know how effective online recruiting is compared to
traditional recruiting methods. The adoption of online recruiting and job
seeking, particularly among those companies that have historically relied upon
traditional recruiting methods, requires the acceptance of a new way of
conducting business, exchanging information, advertising and applying for jobs.
Many of our potential employer customers have little or no experience using the
Internet as a recruiting tool, and only select segments of the job-seeking
population have experience using the Internet to look for jobs. There can be no
assurance that companies will allocate or continue to allocate portions of their
budgets to Internet-based recruiting. As a result, we cannot be sure that we
will be able to effectively compete with traditional recruiting and job seeking
methods. If Internet-based recruiting is not widely accepted, our business,
results of operations and financial condition could be materially adversely
affected.
We will only be able to execute our business model if use of the Internet grows
and its infrastructure is adapted to that growth.
If Internet usage does not continue to grow, we may not be able to meet our
business objectives. Increased Internet usage will depend, in large part, upon
the maintenance of the Web infrastructure, such as a reliable network backbone
with necessary speed, data capacity and security, and timely development of
enabling products, such as high speed modems, for providing reliable Web access
and services and improved content. Internet usage may be inhibited by any of the
following factors:
o the Internet infrastructure may not be able to support the demands placed
on it, or its performance and reliability may decline as usage grows;
o Websites may not be able to provide adequate security and authentication
of confidential information contained in transmissions over the Internet;
o The Internet industry may not be able to adequately respond to privacy
concerns of potential users; and
o Government regulation may decrease the utility of the Internet for some
purposes.
We cannot assure you that the Web infrastructure or Internet industry will be
able to effectively respond to the demands placed on the Web by increased
numbers of users, frequency of use or increased bandwidth requirements of users.
We may not be able to develop awareness of our brand name.
We believe that continuing to build and maintain awareness of our brand name is
critical to achieving widespread acceptance of our business and to sustain or
increase the number of employers and job seekers who use our Website. Brand
recognition is a key differentiating factor among providers of online recruiting
services, and we believe it could become more important as competition in the
online recruiting market increases. In order to maintain and build brand
awareness, we must succeed in our marketing efforts, provide high quality
services and increase the number of high quality job seekers using
www.hotjobs.com. If we fail to successfully protect, promote, position and
maintain our HotJobs.com brand name, incur significant expenses in promoting our
brand and fail to generate a corresponding increase in revenue as a result of
our branding efforts, or encounter legal obstacles which prevent our continued
use of our brand name, our business, results of operations and financial
condition could be materially adversely affected.
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We may not be able to successfully introduce new or enhanced products and
services.
The failure of any new or enhanced products and services to achieve market
acceptance and generate revenue could result in a material adverse effect on our
revenues. We expect to introduce enhanced products and services in order to
generate additional revenues, attract and retain more employers, attract more
job seekers to our Website and respond to competition. Any new or enhanced
product or service we introduce that is not favorably received could damage our
reputation and the perception of our brand name.
We may lose business if we fail to keep pace with rapidly changing
technologies and customer needs. To remain competitive, we must continually
improve the responsiveness, functionality and features of our products and
services and develop other products and services that are attractive to job
seekers and employers. If we are unable to timely and successfully develop and
introduce new services, products and enhancements to existing products in
response to our industry's changing technological requirements, our revenues
could be materially adversely affected. New Internet-based services, products or
enhancements which we have offered or may offer in the future may contain design
flaws or other defects that could require extensive modifications or result in a
loss of client confidence. In addition, our current technology may not meet the
future technical requirements of employers. Trends that could have a critical
impact on our success include:
o rapidly changing technology in online recruiting;
o evolving industry standards, including both formal and de facto standards
relating to online recruiting;
o developments and changes relating to the Internet;
o evolving government regulations;
o competing products and services that offer increased functionality; and
o changes in employer and job seeker requirements.
We may lose job seekers because our Website content is not attractive to
them. Our future growth depends in part on our ability to attract job seekers
who are qualified for the jobs posted by our customers. This in turn depends in
part on our ability to deliver original and compelling content to these job
seekers. We cannot assure you that our content will be attractive to Internet
users. We also cannot assure you that we will be able to anticipate, monitor and
successfully respond to rapidly changing consumer tastes and preferences to
continue to attract a sufficient number of Internet users to our Website.
Internet users can freely navigate and instantly switch among a large number of
Websites. In addition, many other Websites offer very specific, highly targeted
content. These sites could have greater appeal than our Website to particular
groups within our target audience.
Our business and growth will suffer if we are unable to hire and retain highly
skilled personnel.
If we are unable to hire and retain highly skilled personnel, our growth may be
restricted, the quality of our products and services reduced and our revenues
may be reduced or grow at a slower rate than expected. Our future success
depends on our ability to attract, train, motivate and retain highly skilled
employees. Competition for highly skilled employees is intense, particularly in
the Internet industry. We may be unable to retain our skilled employees or
attract, assimilate and retain other highly skilled employees in the future. We
have from time to time in the past experienced, and we may experience in the
future, difficulty in hiring and retaining highly skilled employees with
appropriate qualifications.
We may not be able to effectively manage our expanding operations.
In order to execute our business plan, we must continue to grow significantly.
If we are not able to expand our operations in an efficient manner, our expenses
could grow disproportionately to revenues or our revenues could decline or grow
at a slower rate than expected, either of which could have a material adverse
effect on our business, results of operations and
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financial condition. We have recently experienced a period of rapid growth
that has placed considerable demands on our managerial, operational, financial
and information system resources. We continue to increase the scope of our
operations, and we have grown our workforce substantially. We had 76 employees
as of March 31, 1999. At March 31, 2000, the number of employees had increased
to 275. We expect that the number of our employees will continue to increase for
the foreseeable future. Our growth is expected to result in increased
responsibility for both existing and new management personnel. Our growth has
placed, and our anticipated future growth combined with the requirements we face
as a public company will continue to place, a significant strain on our
management, operations, systems and resources. We expect that we will need to
continue to improve our financial and managerial controls and reporting systems
and procedures, and will need to continue to expand, train and manage our
workforce. Our success depends to a significant extent on the ability of our
executive officers and other members of senior management to operate effectively
both independently and as a group. We will also need to continue to expand and
maintain close coordination among our products and technology, finance and
administration and sales and marketing organizations. We cannot assure you that
if we continue to grow, management will be effective in attracting and retaining
additional qualified personnel, expanding our physical facilities, integrating
acquired businesses or otherwise managing growth. We cannot assure you that our
information systems, procedures or controls will be adequate to support our
operations or that our management will be able to successfully offer our
products and services and implement our business plan. Our future performance
may also depend on our effective integration of acquired businesses. Any such
integration, even if successful, may take a significant period of time and
expense, and may place a significant strain on our resources. If we are not able
to manage existing or anticipated growth, our business, results of operations
and financial condition could be materially adversely affected.
Intense competition may render our services and products uncompetitive or
obsolete.
The market for online recruiting solutions is intensely competitive and highly
fragmented. We expect competition to continue to increase because the market
poses no substantial barriers to entry. We believe that our ability to compete
depends upon many factors both within and beyond our control, including the
following:
o the timing and market acceptance of new solutions and enhancements to
existing solutions developed either by us or our competitors;
o our customer service and support efforts;
o our sales and marketing efforts; and
o the ease of use, performance, price and reliability of solutions developed
either by us or our competitors.
We compete with companies, including recruiting search firms that offer a single
database job board solution, such as Monster.com, as well as newspapers,
magazines and other traditional media companies that provide online job search
services, such as CareerPath.com. We also compete with large Internet
information hubs, or portals, such as Excite@Home, recruiting software companies
such as Webhire, Inc. and job fair companies such as TechExpo Corporation. We
may experience competition from potential customers to the extent that they
develop their own online recruiting offerings internally. In addition, we
compete with traditional recruiting services, such as headhunters, for a share
of employers' total recruiting budgets. We expect to face additional competition
as other established and emerging companies, including print media companies and
headhunters with established brands, enter the online recruiting market.
Many of our current and potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources and
larger customer bases than we do. These factors may allow them to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements. It may also allow them to devote greater resources than we can to
the development, promotion and sale of their products and services. These
competitors may also engage in more extensive research and development,
undertake more far-reaching marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to existing and potential employees and
strategic partners. We cannot assure you that our competitors will not develop
products or services that are equal or superior to our solutions or that achieve
greater market acceptance than our solutions. In addition, current and potential
competitors are making and are expected to continue to make strategic
acquisitions or establish cooperative, and, in some
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cases, exclusive relationships with significant companies or competitors to
expand their businesses or to offer more comprehensive solutions.
We believe that there will be rapid business consolidation in the online
recruiting industry. Accordingly, new competitors may emerge and rapidly acquire
significant market share. In addition, new technologies will likely increase the
competitive pressures that we face. The development of competing technologies by
market participants or the emergence of new industry standards may adversely
affect our revenues and ultimately our competitive position.
Due to competition, we may experience reduced margins on our products and
services, loss of market share or less use of www.hotjobs.com by job seekers and
employers. If we are not able to compete effectively with current or future
competitors as a result of these and other factors, our revenues could be
materially adversely affected.
A failure to establish and maintain partnerships and alliances with other Web
properties could limit the growth of our business.
We have entered into, and expect to continue to enter into, arrangements with
third parties to increase our member base, bring traffic to our Website and
enhance the HotJobs.com brand. If any of our current agreements are terminated,
we cannot assure you that we will be able to replace the terminated agreement
with an equally beneficial arrangement. We also cannot assure you that we will
be able to renew any of our current agreements when they expire or, if we are,
that we will be able to do so on acceptable terms. We also do not know whether
we will be successful in entering into additional partnerships and alliances or
that any relationships, if entered into, will be on terms favorable to us.
In late 1999, we brought an action for enforcement of an agreement between us
and Digital City, Inc., the outcome of which is uncertain. The outcome of such
litigation may have an impact on our business, which impact is uncertain. Any
resulting impact on our stock price is also uncertain.
Loss of any of our key management personnel could negatively impact our
business.
The loss or departure of any of our officers or key employees could materially
adversely affect our ability to implement our business plan and could lower our
revenues or cause our revenues to grow at a slower rate than expected. Our
future success depends to a significant extent on the continued service and
coordination of our management team, particularly Richard S. Johnson, our
President and Chief Executive Officer. We do not maintain key person insurance
for any member of our management team. In addition, certain members of our
management team have joined us within the last year. These individuals have not
previously worked together and are becoming integrated into our management team.
If our key management personnel are not able to work together effectively or
successfully, our business could be materially adversely affected. In addition,
if one or more key employees join a competitor or form a competing company,
though we have non-competition agreements with each of our key employees, we may
lose existing or potential clients which could have a material adverse effect on
our business, results of operations and financial condition. Though we have
confidentiality agreements with each of our employees, if we were to lose a key
employee, we cannot assure you that we would be able to prevent the unauthorized
disclosure or use of our procedures, practices, new product development or
client lists.
We may not be successful in our plan for international expansion.
We may not be able to successfully execute our business plan in foreign markets.
If revenue from international ventures is not adequate to cover our investment
in those ventures, our total revenues could be materially adversely affected. We
believe that expansion into international markets through a combination of
internal business expansion, strategic alliances, joint ventures and potential
acquisitions will be important to continue to grow our business. Our future
international operations might not succeed for a number of reasons including:
o difficulties in staffing and managing foreign operations;
o competition from local recruiting services;
19
<PAGE>
o operational issues such as longer customer payment cycles and greater
difficulties in collecting accounts receivable;
o seasonal reductions in business activity;
o language and cultural differences;
o legal uncertainties inherent in transnational operations such as export
and import regulations, tariffs and other trade barriers;
o taxation issues;
o unexpected changes in trading policies, regulatory requirements and
exchange rates;
o issues relating to uncertainties of laws and enforcement relating to the
regulation and protection of intellectual property; and
o general political and economic trends.
We may not be able to successfully make acquisitions of or investments in other
companies.
We expect our growth to continue, in part, by acquiring complementary
businesses, products, services or technologies. From time to time, we have had
discussions with companies regarding our acquiring, or investing in, their
businesses, products, services or technologies. We cannot assure you that we
will be able to identify suitable acquisition or investment candidates. Even if
we do identify suitable candidates, we cannot assure you that we will be able to
make acquisitions or investments on commercially acceptable terms. Acquiring
other businesses and technologies involves several risks, including:
o availability of financing on terms we find acceptable;
o diversion of our management's attention from other business concerns;
o retention of key personnel of the acquired company;
o entry into markets in which we have little or no direct prior experience;
o inability to identify and acquire businesses on a cost-effective basis;
o inability to manage and integrate acquired personnel, operations,
services, products and technologies into our organization effectively; and
o inability to retain and motivate key personnel and to retain the clients
or goodwill of acquired entities.
In pursuing acquisitions, we may compete with competitors that may be larger and
have greater financial and other resources than we have. Competition for these
acquisition targets could result in increased prices. In addition, in executing
our acquisition strategy, we may incur expenses without being able to identify
suitable acquisition candidates, which could reduce our profitability.
Furthermore, we may incur debt or issue equity securities to pay for any future
acquisitions, which could have the effects described in "We may not be able to
obtain sufficient funds to grow our business and any additional financing may be
on terms adverse to the interests of our stockholders."
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Risks Related to the Internet and Our Technology Infrastructure
We may experience reduced visitor traffic, reduced revenue and harm to our
reputation in the event of unexpected network interruptions caused by system
failures.
Any system failure, including network, software or hardware failure, that causes
an interruption in the delivery of our products and services or a decrease in
responsiveness of our services could result in reduced visitor traffic, reduced
revenue and could materially adversely affect our reputation and brand. Our
servers and software must be able to accommodate a high volume of traffic. We
have experienced system interruptions in the past, and we believe that these
interruptions will continue to occur from time to time in the future. We believe
that visitor traffic is also dependent on the timing and magnitude of our
advertising. We have experienced monthly fluctuations in visitor traffic,
including short-term reductions. Any substantial increase in demands on our
servers will require us to expand and adapt our network infrastructure. If we
are unable to add additional software and hardware to accommodate increased
demand, we could experience unanticipated system disruptions and slower response
times. Any catastrophic failure at one of our co-location facilities could
prevent us from serving our Web traffic for up to several days, and any failure
of one or more of our Internet service providers may adversely affect our
network's performance. Our clients may become dissatisfied by any system failure
that interrupts our ability to provide our products and services to them or
results in slower response times. We do not maintain business interruption
insurance and our other insurance may not adequately compensate us for any
losses that may occur due to any failures in our system or interruptions in our
service.
Breaches of our network security could be costly.
Because we host HotJobs.com-related data for many of our customers, we may be
liable to any of those customers that experience losses due to our security
failures. As a result, we may be required to expend capital and resources to
protect against or to alleviate security breaches, which could reduce our
profitability. A significant barrier to confidential communications over the
Internet has been the need for security. We may incur significant costs to
protect against the threat of security breaches or to alleviate problems caused
by these breaches. If unauthorized persons penetrate our network security, they
could misappropriate proprietary information or cause interruptions in our
services. Misappropriation of our and our customers' proprietary information or
interruptions of our services could result in reduced visitor traffic and a loss
of member employers. Reduced visitor traffic may result in fewer job seekers
posting their resumes to our www.hotjobs.com employment exchange which, in turn,
may discourage employers from subscribing to the employment exchange. We
generate a substantial portion of our revenue from these subscription fees. Due
to the possibility of liability related to data we host for our customers and
the possibility of a resulting decrease in the number of job seekers and member
employers, a breach of our network security could have a material adverse effect
on our financial condition and results of operations.
Computer viruses may cause our systems to incur delays or interruptions, which
could reduce demand for our service and damage our reputation.
Computer viruses may cause our systems to incur delays or other service
interruptions and could damage our reputation and have a material adverse effect
on our business, financial condition and results of operations. In June 1999, we
detected a virus on a file server which supports our office equipment. The
inadvertent transmission of computer viruses could expose us to a material risk
of loss or litigation and possible liability. Moreover, if a computer virus
affecting our system is highly publicized, our reputation could be materially
damaged and our visitor traffic may decrease. Any of these events could have a
material adverse effect on our revenues.
We may not be able to access third party technology upon which we depend.
If we lose the ability to access third party technology which we use, are unable
to gain access to additional products or are unable to integrate new technology
with our existing systems, we could experience delays in our development and
introduction of new services and related products or enhancements until
equivalent or replacement technology can be accessed, if available, or developed
internally, if feasible. If we experience these delays, our revenues could be
reduced or grow slower than expected and our business could be materially
adversely affected. We license technology that is incorporated into our services
and related products from third parties including Oracle Corporation for
database
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technology and Thunderstone Software-EPI, Inc. for full-text indexing. In light
of the rapidly evolving nature of Internet technology, we may increasingly need
to rely on technology from these or other vendors. Technology from our current
or other vendors may not continue to be available to us on commercially
reasonable terms, or at all.
Potential year 2000 problems with our systems or software could cause delay or
loss of revenue, diversion of resources or increased costs.
Many companies' computer systems, software products and control devices needed
to be upgraded or replaced in order to operate properly in the year 2000 and
beyond because of an inability to distinguish 21st century dates from 20th
century dates.
Our systems and software did not experience any material date-related problems
on January 1, 2000 or in connection with the leap year in 2000. However, our
systems and software may contain undetected errors or defects associated with
year 2000 date functions that have not yet surfaced. If any such errors or
defects do exist, we may incur material costs to resolve them. The internal
systems used to run our business utilize third party hardware and software.
Although to date we have not experienced any date-related problems with third
party hardware or software, we cannot assure you that such problems will not
surface in the next several months. Our business is dependent on the ability of
employers and job seekers to utilize hardware and software in the employment
process. We are not aware of any significant date-related hardware or software
problems experienced by our member employers or job seekers. However, we cannot
assure you that such problems will not arise in the future. If any of these
systems do experience date-related problems, we could experience delay or loss
of revenue, diversion of resources or increased costs, and our financial
condition could be harmed.
In addition, although we believe that the costs of ensuring that our systems and
software and those of third parties with which we do business do not experience
any date-related problems will not be material, we cannot assure you of this.
Risks Related to Legal Uncertainty
We may become subject to burdensome government regulations and legal
uncertainties affecting the Internet which could adversely affect our business.
Legal uncertainties and new regulations could increase our costs of doing
business, require us to revise our products or services, prevent us from
delivering our products and services over the Internet or slow the growth of the
Internet, any of which could increase our expenses, reduce our revenues or cause
our revenues to grow at a slower rate than expected and materially adversely
affect our business, financial condition and results of operations. Laws and
regulations directly applicable to Internet communications, commerce, recruiting
and advertising are becoming more prevalent, and new laws and regulations are
under consideration by the United States Congress and state legislatures. Any
legislation enacted or restrictions arising from current or future government
investigations or policy could dampen the growth in use of the Internet
generally and decrease the acceptance of the Internet as a communications,
commercial, recruiting and advertising medium. The laws governing the Internet,
however, remain largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing laws
such as those governing intellectual property, privacy, libel and taxation apply
to the Internet. In addition to new laws and regulations being adopted, existing
laws may be applied to the Internet. Moreover, the laws and the interpretation
of laws concerning the recruiting industry are constantly changing. New and
existing laws may cover issues which include:
o user privacy;
o civil rights, affirmative action and other employment claims;
o consumer protection;
o libel and defamation;
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<PAGE>
o copyright, trademark and patent infringement;
o trade secret protection;
o rights of publicity and moral rights;
o database protection;
o domain name registration;
o pricing controls;
o characteristics and quality of products and services;
o sales and other taxes; and
o other claims based on the nature and content of Internet materials.
In addition, any imposition of state sales and use taxes on the products and
services sold over the Internet may decrease demand for products and services
that we sell over the Internet. The U.S. Congress passed legislation in 1998
which limits for three years the ability of states to impose any new taxes on
Internet-based transactions. Failure by Congress to renew this legislation and
the subsequent imposition of state taxes on Internet-based transactions could
adversely affect our future operating results which could result in a decline in
our stock price.
We may be unable to obtain a U.S. trademark registration for our brand or to
protect our other proprietary intellectual property rights.
Failure to obtain federal trademark registration for www.hotjobs.com could
disrupt our promotion of the HotJobs.com brand. If we are unable to secure the
rights to use the www.hotjobs.com mark and related derivative marks, a key
element of our strategy of promoting "HotJobs.com" as a global brand could be
disrupted. Our success depends to a significant degree upon the protection of
our brands and their value, particularly the "HotJobs.com" brand name. We are
also susceptible to others imitating our brands, particularly HotJobs.com. Our
application to obtain a federal registration for "www.hotjobs.com." was approved
by the U.S. Trademark Office and published for possible opposition by third
parties on April 18, 2000. We cannot assure you that no opposition will be
raised to our application. In addition, in May 1998, another pending trademark
applicant, who has since abandoned its application, made claims regarding prior
use and ownership of "hotjobs" as a trademark. Adverse outcomes to these or
similar claims or any related litigation, should it occur, could result in us
being limited or prohibited from further using the "www.hotjobs.com" mark and
related derivative marks in the future.
Failure to protect our intellectual property rights could permit others to
appropriate our proprietary technology. The unauthorized reproduction or other
misappropriation of our proprietary technology, including our Softshoe and
Shoelace hiring management software, could enable third parties to benefit from
our technology and brand name without paying us for them. If this were to occur,
our revenues could be materially adversely affected and the value of our brand
could be diminished. The steps we have taken to protect our proprietary rights
may not be adequate to deter misappropriation of proprietary information. We may
not be able to detect unauthorized use of our proprietary information or take
appropriate steps to enforce our intellectual property rights. In addition, the
validity, enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of other
countries in which we market or may market our services in the future are
uncertain and may afford little or no effective protection of our intellectual
property. If we resort to legal proceedings to enforce our intellectual property
rights, the proceedings could be burdensome and expensive. The proceedings also
could involve a high degree of risk.
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<PAGE>
Defending against intellectual property infringement claims could be time
consuming and expensive, and we may be liable for infringing on the intellectual
property rights of others. If we are not successful in defending against these
claims, we could be subject to significant damages and the disruption of our
business.
Successful intellectual property infringement claims against us could result in
monetary liability or a material disruption in the conduct of our business. We
cannot be certain that our products, content and brand names do not or will not
infringe valid patents, copyrights or other intellectual property rights held by
third parties. We expect that infringement claims in our markets will increase
in number as more participants enter the markets. We may be subject to legal
proceedings and claims from time to time relating to the intellectual property
of others in the ordinary course of our business. We may incur substantial
expenses in defending against these third party infringement claims, regardless
of their merit.
We may be liable as a result of information retrieved from or transmitted over
the Internet.
We may be sued for defamation, civil rights infringement, negligence, copyright
or trademark infringement, personal injury, product liability or other legal
claims relating to information that is published or made available on
www.hotjobs.com and the other sites linked to it. These types of claims have
been brought, sometimes successfully, against online services in the past. We
could also be sued for the content that is accessible from www.hotjobs.com and
through links to other Internet sites or through content and materials that may
be posted by members in chat rooms or on bulletin boards. We also offer email
services, which may subject us to potential risks, such as liabilities or claims
resulting from unsolicited email or spamming, lost or misdirected messages,
security breaches, illegal or fraudulent use of email or interruptions or delays
in email service. Our insurance does not specifically provide for coverage of
these types of claims and therefore may not adequately protect us against these
types of claims. In addition, we could incur significant costs in investigating
and defending such claims, even if we ultimately are not liable. If any of these
events occur, our revenues could be materially adversely affected.
Other Risks
Our stock price may experience extreme price and volume fluctuations.
The stock market in general and the market prices of shares in technology
companies, particularly those such as ours that offer Internet-based products
and services, have been extremely volatile and have experienced fluctuations
that have often been unrelated or disproportionate to the operating performance
of such companies. The market price of our common stock has fluctuated
significantly in the past and could continue to be highly volatile and subject
to wide fluctuations in response to many factors, some of which are largely
beyond our control. These factors include:
o quarterly variations in our results of operations;
o adverse business developments;
o changes in financial estimates by securities analysts;
o investor perception of us and online recruiting services in general;
o announcements by our competitors of new products and services; and
o general economic conditions both in the U.S. and in foreign countries.
Our stock price may also experience fluctuations due to approximately $5.0
million in non-cash deferred compensation which we expect to amortize over the
next four years.
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Since our stock price is volatile, we may become subject to securities
litigation which is expensive and could result in a diversion of resources.
Litigation brought against us could result in substantial costs to us in
defending against the lawsuit and a diversion of management's attention.
Securities class action litigation has often been brought against companies that
experience volatility in the market price of their securities. Since our stock
price is volatile, we could be subject to securities litigation and incur higher
expenses than expected, which could have a material adverse effect on our
business and results of operations.
Future sales of our common stock may negatively affect our stock price.
The market price of our common stock could decline as a result of sales of a
large number of shares of our common stock in the market or as a result of sales
by our existing stockholders, or the perception that these sales could occur. We
have and will continue to have a large number of shares of common stock
outstanding and available for resale. These sales might make it more difficult
for us to sell equity securities in the future at a time and at a price that we
deem appropriate. Unregistered shares of our common stock currently outstanding
are or will become eligible for sale without registration pursuant to Rule 144
under the Securities Act, subject to certain conditions of Rule 144. Certain
holders of our common stock also have certain demand and piggyback registration
rights enabling them to register their shares under the Securities Act for sale.
It may be difficult for a third party to acquire HotJobs.com which could depress
our stock price.
Delaware corporate law, our amended and restated certificate of incorporation
and bylaws, and our Stock Award Plan and 1999 Stock Option/Stock Issuance Plan
contain provisions that could have the effect of delaying, deferring or
preventing a change in control of HotJobs.com or our management that
stockholders may consider favorable or beneficial. These provisions could
discourage proxy contests and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. These
provisions could also limit the price that investors might be willing to pay in
the future for shares of our common stock. These provisions include:
o authorization to issue "blank check" preferred stock, which is preferred
stock that can be created and issued by the board of directors without
prior stockholder approval, with rights senior to those of common stock;
o a staggered board of directors, so that it would take three successive
annual meetings to replace all directors;
o prohibition of stockholder action by written consent;
o advance notice requirements for the submission by stockholders of
nominations for election to the board of directors and for proposing
matters that can be acted upon by stockholders at a meeting;
o immediate vesting of options issued under the Stock Award Plan and the
1999 Stock Option/Stock Issuance Plan in connection with a change of
control; and
o the payment of a cash distribution for surrendered options with limited
stock appreciation rights upon the successful completion of a hostile
tender offer for more than 50% of our outstanding voting stock.
Our executive officers, directors and existing stockholders, whose interests may
differ from other stockholders, will have the ability to exercise significant
control over us.
Our executive officers and directors and entities affiliated with them, in the
aggregate, beneficially own a majority of our common stock. These stockholders
are able to exercise significant influence over all matters requiring approval
by our stockholders, including the election of directors and the approval of
significant corporate transactions, including a change of control of
HotJobs.com. The interests of these stockholders may differ from the interests
of our other stockholders.
25
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk. We are exposed to changes in interest rates primarily due to
our investment in short-term marketable securities, which are comprised of US
Treasury Bills and Dutch Auction Rate Securities with longer term maturities
that generally reset at par every 35 days and may include municipal obligations,
money market preferred stock and taxable debt. These investments are classified
as available for sale securities and, therefore, any changes in the market's
interest rates affect the value of the investment and such change in value is
recorded as unrealized gains and losses. Our interest rate risk based on a
hypothetical increase in interest rates of 100 basis points, for the financial
instruments included in our portfolio, would be a decrease of approximately
$95,000 in the value of our portfolio.
Market Risks. Our accounts receivable are subject, in the normal course of
business, to collection risks. We regularly assess these risks and have
established policies and business practices to protect against the adverse
effects of collection risks. As a result, we do not anticipate any material
losses in this area.
Part II. Other Information
Item 1. Legal Proceedings
From time to time, HotJobs.com is subject to legal proceedings and claims in the
ordinary course of business, including claims of alleged infringement of
trademarks, copyrights and other intellectual property rights. HotJobs.com is
not currently aware of any legal proceedings or claims that the Company believes
will have, individually or in the aggregate, a material adverse effect on its
financial position or results of operations.
Item 2. Changes in Securities and Use of Proceeds
(a) Not applicable.
(b) Not applicable.
(c) Recent Sales of Unregistered Securities:
On February 29, 2000, we issued 500 unregistered shares of our common
stock in connection with the purchase of Trademark registration number
2,053,800 for WorkWorld. This issuance was exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof. The Company relied on the following criteria to make
such exemption available: the number of offerees, the size and manner of
the offering, the sophistication of the offerees and the availability of
material information.
(d) Use of Proceeds:
On August 10, 1999, the Securities and Exchange Commission declared
effective our Registration Statement on Form S-1 (File No. 333-80367) in
connection with our IPO. A total of 3,350,000 shares of our common stock
(including 350,000 shares issued pursuant to the exercise by the
underwriters of a portion of their over-allotment option) were sold at a
price of $8.00 per share to an underwriting syndicate led by Deutsche Bank
Securities Inc., BancBoston Robertson Stephens Inc., SG Cowen Securities
Corporation and E*OFFERING Corp. On August 13, 1999 and September 2, 1999,
3,000,000 and 350,000 shares of our common stock, respectively, were sold
and thereafter, the IPO was completed. The aggregated gross proceeds
raised in connection with the IPO were $26.8 million. The total costs
incurred in connection with the IPO, including underwriting discounts and
commissions, and fees for registration, legal, accounting, transfer agent,
printing, and other miscellaneous fees, were approximately $3.6 million,
resulting in net proceeds to us of approximately $23.2 million.
As of March 31, 2000, we had used approximately $13.9 million of the net
proceeds of the IPO. The remaining net proceeds will be used for general
corporate purposes, including increasing our sales and marketing efforts;
26
<PAGE>
developing our infrastructure, products and services; obtaining
additional office space; hiring additional personnel; and possible
acquisitions.
Item 3. Defaults By the Company on its Senior Securities
Not applicable.
Item 4. Results of Votes of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Number Description
- -------------- -----------------------------------------------------------
3.1* Amended and Restated Certificate of Incorporation.
3.2* Amended and Restated Bylaws.
4.1* Specimen Common Stock certificate.
4.2 Please see Exhibits 3.1 and 3.2 for provisions of the
certificate of incorporation and bylaws.
21.1 Subsidiaries.
27.1 Financial Data Schedule for the Period Ended March 31,
2000.
* Incorporated by reference to the Company's Registration Statement on Form S-1
(File No. 333-80367), as amended.
(b) Reports on Form 8-K:
Form 8-K dated and filed February 7, 2000, for the purpose of filing
under Item 5--Other Events and Item 7--Financial Statements and
Exhibits, a press release setting forth certain financial results of
HotJobs.com for the three months and year ended December 31, 1999.
Form 8-K dated March 9, 2000 and filed March 10, 2000, for the purpose
of filing under Item 5--Other Events and Item 7--Financial Statements
and Exhibits, a press release setting forth results of HotJobs.com's
action against Digital City, Inc. and a letter from the Nineteenth
Judicial Circuit of Virginia and Order dated March 8, 2000.
27
<PAGE>
Signature
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.
HOTJOBS.COM, LTD.
(Registrant)
Dated: May 12, 2000 By: \s\ John S. Rusak
--------------------------
John S. Rusak
Vice President and Controller
(Duly Authorized Officer and Principal
Accounting Officer)
28
Exhibit 21.1
HotJobs.com, Ltd.
Subsidiaries
- --------------------
HotJobs.com Pty. Limited
HotJobs Holding Company
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