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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT ON UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999.
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from..................to....................
Commission file number: 0-27331
FINDWHAT.COM
(Exact name of registrant as specified in its charter)
Nevada 88-0348835
(State of Incorporation) (I.R.S. Employer Identification No.)
121 West 27th Street, Suite 903
New York, New York 10001
(212) 255-1500
(Address and telephone number of registrant's principal executive offices and
principal place of business)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
Indicate by check mark whether the registrant (1) has filed all reports
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. /X/ Yes / / No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. /X/
State the aggregate market value of the voting and non-voting equity
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or
the average bid and asked prices of such common equity, as of a specified
date within 60 days prior to the date of filing. $61,807,359 based on the last
sale price on March 29, 2000.
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date. 13,691,750 shares of common,
$.001 par value as of March 27, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for 2000 Annual Meeting of Stockholders.
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Forward-Looking Statements
This document contains forward-looking statements which reflect the views
of management with respect to future events and financial performance. These
forward-looking statements are subject to certain uncertainties and other
factors that could cause actual results to differ materially from such
statements. These uncertainties and other factors include, but are not limited
to, the words "anticipates", "believes", "estimates", "expects", "plans",
"projects", "targets" and similar expressions which identify forward-looking
statements. You should not place undue reliance on these forward-looking
statements, which speak only as of the date the statements were made.
PART I
Item 1. Description of Business
BUSINESS
Overview
We are a developer and marketer of performance-based advertising services
for the Internet. Currently, we offer two proprietary services: FindWhat.com, a
pay-for-performance search engine and BeFirst.com, a web site optimization
service. Our focus is to:
o drive qualified traffic to Internet web sites, and
o ensure that Internet users find what they are looking for when
"surfing the web."
Our services are designed to connect consumers who are most likely to purchase
specific goods and services to businesses that provide those goods and services.
The FindWhat.com search engine allows Internet users to enter a word or
phrase describing what they want, called a keyword or search word, and click on
"Find." Our search engine then displays a selection of web sites related to that
keyword. Advertisers can determine where on the results page their web site link
will appear for any given keyword search, through an open, automated bidding
process. Advertisers submit bids for the amount they will pay for each consumer
who clicks-through to their web sites. We have entered into relationships with
Go2Net, LinkShare Corporation, Beasley Broadcasting and Inktomi.
Our FindWhat.com search listing advertisement revenue is determined by
multiplying the number of click-throughs on paid search results by the amounts
bid for applicable keywords. Search listing revenue is earned based on
click-through activity to the extent that the advertiser has deposited
sufficient funds with us or collection is probable. Our banner advertising
revenue is earned under the terms of our contractual arrangements with
advertisers or advertising agencies. While we only launched our FindWhat.com
search engine in September 1999, we have made significant progress in growing
the number of advertisers and consumers. As of March 23, 2000, consumers
could find relevant search listings for information, products and services
from approximately 2,300 participating advertisers who had placed over 1.15
million search listings, up from approximately 1,200 advertisers and more
than 750,000 search listings as of December 31, 1999. For the year to date
through March 23, 2000, the FindWhat.com search engine had approximately 1.1
million paid click-throughs with an average price per paid click-through of
$0.06. In all of 1999, the FindWhat.com search engine had approximately
35,000 paid click-throughs.
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Our BeFirst.com service, known as "web site optimization," increases the
volume of relevant traffic to each client's business by improving the placement
in the search results generated by Internet search engines. We achieve improved
placement for our clients through our understanding of search engine algorithms
and constant monitoring of search engine behavior. Our BeFirst.com service
currently derives revenue from two sources: set-up fees charged to new clients
and a per-click-through charge for each consumer the service generates for a
client's web site. As of March 23, 2000, BeFirst.com had over 100 clients,
including eBay, Avenue A, Ebags.com and Dr.Koop.com.
We were organized under the laws of the State of Nevada under the name
Collectibles America, Inc. in October 1995. We discontinued our business
operations and transferred our assets to satisfy liabilities in 1997. In June
1999, we acquired 1,000 shares of common stock of BeFirst Internet Corporation,
which was organized under the laws of the State of Delaware in March 1998,
representing all of its outstanding capital stock. These shares were acquired
from the holders in exchange for our issuance of 8,750,000 shares of our common
stock. As the result of such exchange of stock, the stockholders of BeFirst
Internet Corporation acquired control of us and BeFirst Internet Corporation
became our wholly owned subsidiary. We changed our corporate name to BeFirst.com
at the time of the acquisition. In September 1999, we changed our corporate name
to FindWhat.com. At the time of our acquisition of BeFirst Internet Corporation,
it had been in the business of developing and offering "web site optimization"
services to Internet advertisers.
Industry Overview
Internet advertisers rely on web sites providing web directories or
"search engines" as one of the means of supplying an audience for their web
sites and advertising message. These search engines enable consumers to search
the Internet for a listing of web sites matching a descriptive word or phrase
and offer advertisers exposure to the Internet audience. In order to attract
and keep users, these search engines have evolved into "portals" that deliver
a vast array of content and services.
Internet user's unmet search requirements. Portals attempt to increase
the number and duration of visits to their sites in order to maximize
graphical advertising opportunities. Increasing length of visits creates a
conflict of interest between the consumer's desire to find what they are
looking for in a quick and efficient manner and the portal. Additionally, the
process for assigning results to user queries by traditional search engines
may generate irrelevant results. Search engines that use technology based on
invisible or descriptive tags are prone to post irrelevant and unassociated
results because operators are free to tag their sites with irrelevant search
terms to attract additional customer attention at low cost.
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Ineffectiveness of traditional Internet advertising. Traditional Internet
advertising primarily is in the form of banner or sponsorship advertising, which
is typically priced with advertisers paying for viewers. Advertising with
portals is typically expensive and available only to relatively large accounts,
which limits the number of Internet advertising opportunities. We believe the
pay-per-view model does not efficiently exploit the advertising potential and
accountability of the Internet because advertisers are paying for viewers who
may not be interested in their products or services.
Lack of convergence between effective e-commerce and search engines. We
believe that there is increasing frustration and discontent among consumers
concerning the lack of comprehensive information regarding offers of consumer
products and services by existing Internet search engines. Additionally, we
believe that advertisers are looking for alternatives to traditional Internet
advertising. This presents a market opportunity for the FindWhat.com search
engine, which is designed as an e-commerce aggregator to improve the consumer
search experience and more efficiently link advertisers with their target
consumers.
The FindWhat.com solution
FindWhat.com
FindWhat.com is designed as an e-commerce aggregator to improve the
consumer search experience and link advertisers and consumers. We distinguish
the FindWhat.com search engine from the "portal" search engine model - used
by such sites as AltaVista, Excite, and Yahoo - by presenting an extremely
clean, uncluttered interface. Unlike portals, which seek to keep consumers
within their web site and have multiple graphical advertisements, our search
result pages load quickly and consist of a list of 25 results per page. The
top results for any keyword search are those companies that are most likely
to have what the consumer wants to find. Consequently, we believe our
FindWhat.com search engine offers consumers fast, simple and direct search
results. By eliminating extraneous content and advertising, we eliminate a
portal's inherent conflict between assisting consumers to locate relevant
information and attempting to keep them within the portal's web site. Like
the Yellow Pages, the FindWhat.com search engine is a commercial search tool
for people or businesses that are actively looking for information or for
goods or services to purchase.
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The FindWhat.com search engine
Search results on the FindWhat.com search engine are rank-ordered through
a competitive bidding process in which each advertiser's bid represents the
amount it will pay us for each consumer click-through. The advertiser with the
highest bid is listed first in the search results, with the remaining
advertisers appearing in descending order. Because advertisers must pay for
each click-through to their web site, we believe that they select and bid
only on those search words or phrases they believe are most relevant to their
business offerings. We also employ editors and an automated editing program
to insure that advertisers do not bid on irrelevant keywords.
Benefits for consumers
A better search result. We believe that the pay-for-performance model
delivers a better and more relevant search result to Internet consumers,
because companies actively promoting and selling the desired goods and
services are positioned first in the results listings.
A robust database. As of March 23, 2000, the FindWhat.com search engine
listed paid results from approximately 2,300 advertisers who had placed more
than 1.15 million search listings. Additionally, our search results not only
deliver web sites that bid for position, the search is supplemented by
Inktomi's robust database. Inktomi is an independent supplier that is not
allied with any one search engine or portal.
Ease of use. The FindWhat.com search engine focuses on delivering an
easy-to-use, uncluttered interface that delivers a faster response with less
confusion. The FindWhat.com site is particularly easy to navigate for the novice
web user.
Benefits to Advertisers
Delivery of the target market. The FindWhat.com pay-for-performance search
engine enables marketers to target their message directly at the consumers who
are shopping for products or services in their category. They accomplish this
precise targeting of qualified prospects by paying to reach consumers who have
typed in keywords or phrases that describe their product and service offerings.
Control. The advertiser maintains control over their listing in the
FindWhat.com search results. Our clients can access their account and write or
edit their company or product description at any time. We believe this
capability is particularly useful to advertisers when they are running
promotions or are featuring certain seasonal or holiday items or services.
Ease of use. The FindWhat.com search engine advertiser interface is easy
to access and use. Advertisers can establish an account online, although
customer service is available via e-mail or a toll-free number.
Reasonable start-up costs. Barriers to opening an account with the
FindWhat.com search engine are low. Any company with a web site can utilize the
FindWhat.com search engine. Participation in the system requires a minimum bid
deposit of $25. The account is then charged for each consumer who clicks through
to the bidder's web site. The minimum starting bid for a specific
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keyword search result is $0.01.
Efficiency and accountability. The FindWhat.com search engine brings
efficiency and accountability to the purchase of Internet advertising and
addresses what we believe is the most common objection marketers have when
considering an Internet media buy - knowing what they are getting for their
money. Advertisers can pick all the keywords that are relevant to their
businesses, bidding the most for those that are most relevant and bidding less
for those that are more distantly related to their core products.
Pay for performance only. With the FindWhat.com search engine, advertisers
are confident that they are not wasting their advertising dollars because they
pay only for the prospects who come to their site. We believe the pay-per-click
model delivers exactly the type of accountability advertisers are seeking.
Evaluation. With our open automated bidding system, advertisers can
evaluate the value of paying for a premium position. The search results page
shows advertisers what their competitors are bidding for their positions and
allows them to make competitive bids. The bidding for key words is automated in
real time, so that results are instantaneous.
Popular category key buys
We also offer advertisers the opportunity to buy popular category keywords
on our FindWhat.com search engine. These popular category topics present quick
access choices for consumers who have not refined their search enough to type in
a keyword that defines a narrow topic.
Banner advertising on FindWhat.com
In addition to the pay-for-performance bidding system, we offer
opportunities to advertisers to buy traditional banner ad placements.
Advertisers can choose from highly targeted placements, based on major search
categories like travel or music or run-of-site banners. Keyword-specific and
run of site banners appear at the top of the search result pages and at the
top of information pages. There is no paid advertising on the FindWhat.com
home page.
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BeFirst.com
Another service we offer to meet the needs of Internet e-commerce
businesses we offer our BeFirst.com service, known as "web site
optimization." The purpose of our BeFirst.com service is to increase the
volume of traffic relevant to each client's business by improving the
placement of our clients' web sites in the search results generated by
Internet search engines.
In providing "web site optimization" services, our technical staff
analyzes the client's web site, including its main goals and objectives. We
then focus on enhancing the probability that the web site will appear in a list
of results in response to a consumer's inquiry on other popular search engines.
The goal is a higher ranking on the list. The methods we use for a particular
client might include providing suggestions as to how source codes in a client's
web site should be restructured or modified to increase relevancy rankings.
Additionally, we may create a new web site consisting of the client's desired
promotional information which we submit to search engines. When a user clicks on
a listing based on the web site created by us, the user is automatically
forwarded to the client's main web site.
We believe that our BeFirst.com web site optimization service is unique
because each client's objectives are assessed on an individual basis, generating
customized programs in an industry where standard "one size fits all" models
typically prevail. Moreover, our BeFirst.com service seeks to optimize a
client's site on up to 300 search engines, directories and online yellow pages,
while other search optimization services generally limit their optimization
techniques to a smaller number of search engines. As of March 23, 2000,
BeFirst.com had over 100 clients, including eBay, Avenue A, Ebags.com and
Dr.Koop.com.
Strategy
Increase number of advertisers
We recruit advertisers to utilize our services primarily through direct
sales efforts. Our sales staff targets e-commerce businesses and advertisers
who they locate through on line research. Our sales staff usually contacts
potential advertisers directly, utilizing telemarketing and e-mail. If
warranted, our sales staff makes personal sales calls. Additionally, we
sponsor trade shows in which we believe potential advertisers will be exposed
to our services.
Increase traffic
Online traffic partnerships.
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Our online traffic partnerships enable us to link our advertisers to
consumers who may not otherwise use the FindWhat.com search engine. We have
agreements with Go2Net, Mamma.com, WebInfoSearch and Cyber Networks, Inc. to
provide search results on their meta-search engines. We also target heavily
trafficked sites, browsers, community portals and Internet service providers.
Traditional media strategies. We utilize traditional media strategies to
generate unique users for the FindWhat.com search engine. To build brand
awareness with consumers and drive traffic to the FindWhat.com web site, we use
offline media including: public relations, telemarketing, radio and outdoor
advertising in key markets. We believe offline media has proven to be highly
effective for online media companies. Our online advertising includes targeted
e-mail, banners and our affiliate program. See "Sales and Marketing."
Affiliate program. Central to our Internet-based marketing is an affiliate
program that allows other web sites to place the FindWhat.com search interface
on their pages in the form of small boxes or banners. Our affiliate program
drives traffic to the FindWhat.com site and also functions as an online
branding program by placing the FindWhat.com logo on numerous sites around the
web. Our affiliates earn money for each click-through generated by a search on
their site. We attempt to place FindWhat.com links on high traffic, high profile
web sites and pay other web site owners fees to provide the necessary incentive
to enter into the link arrangement.
Increase revenue
Our objective is to expand advertiser participation and increase business
and consumer transactions through our FindWhat.com search engine. We believe
that if we build a solid foundation of active bidders and users, we will
stimulate growth which should increase the efficiency of our service. A large
and active base of advertisers will enable us to generate more relevant search
results for consumers, which in turn should increase the number of consumers
utilizing our services and clicking through on bidded results.
Sales & Marketing
Our sales and marketing efforts are coordinated out of our New York and
Santa Monica offices. We currently employ seven full-time sales representatives.
All of our representatives are compensated with salaries and performance-based
bonuses. Our representatives report to supervisors and have direct communication
with our Chief Executive Officer, who oversees our sales and marketing efforts.
Consumer and business users
We target online consumers who are actively shopping for goods and
services or looking for information. To build brand awareness with consumers and
drive traffic to the FindWhat.com web site, we use offline media including:
public relations, telemarketing, radio and outdoor advertising in key markets.
We believe offline media has proven to be highly effective for online media
companies. Our online advertising includes targeted e-mail, banners and the
affiliate program.
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o Radio: Radio is our primary consumer advertising launch vehicle. By
focusing on delivering the media message by region, we are attempting to
create the perception that FindWhat.com is a major online presence in the
selected market. We believe that radio is a highly effective medium for
reaching Internet users.
o Outdoor Advertising: In December 1999, we launched outdoor (billboard)
campaigns in Los Angeles in selected high traffic locations. This
billboard advertising has been obtained through our agreement with Van
Wagner Outdoor.
o Online Advertising: We operate an online banner campaign to promote
FindWhat.com and our million dollar sweepstakes, featuring a "click and
win" promotion.
o Million Dollar Giveaway: Starting December 1999, we implemented a daily
million dollar lottery. Registered consumers have the chance to win $1
million in a daily online lottery. We believe the million-dollar lottery
provides an incentive to visit FindWhat.com repeatedly. A personalized
e-mail greeting welcomes consumers back each time. The lottery has been
arranged through a third party provider that guarantees payment of the
sweepstakes in return for flat fees from us.
o Public Relations: We have a public relations firm to exploit our contests
and other media activities.
Advertisers
We believe businesses that become FindWhat.com search engine clients are
those who are particularly interested in taking advantage of the growth of
e-commerce by driving motivated consumers to their web sites efficiently. Our
program to attract advertising clients includes:
o Direct sales: Our sales staff targets companies with highly visible
web-based promotional programs and advertisers who are using competitive
services.
o Business-oriented advertising: Because the barriers to opening an account
with the FindWhat.com search engine service are low, virtually any company
with a web site can try the service. To reach this larger market, we have
supplemented our direct-sales program with an advertising campaign on
business-oriented media.
o Online promotion: Our online promotional program includes banner
advertisements and preferred placement on search engines.
o Trade Shows: We participate and sponsor industry trade shows, such as the
Internet Search Engine Expo held in San Francisco in November 1999 and in
New York in March 2000. We intend to participate in additional trade shows
that attract advertisers and affiliates throughout
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the year.
o Customer service: To eliminate any perceived barriers to doing business
with us, we attempt to deliver excellent customer service. We believe that
superior customer service adds an extra level of value.
BeFirst.com
To obtain advertising clients for our BeFirst.com service, our sales force
uses direct phone and Internet selling to a target client list culled from the
large number of advertisers placing banner advertising on the top search service
web sites as well as smaller advertisers placing advertisements on more targeted
web sites. We anticipate that we will hire additional sales staff in order to
increase the direct queries made to potential clients. We also intend to retain
additional personnel or hire third party contractors to assist in data entry and
technical aspects of our service so that we may service an increased client
base.
Revenue Model
We generate revenue from:
o search listing paid click-throughs on the FindWhat.com search
engine,
o banner advertising on the FindWhat.com search results pages,
o set-up fees on our BeFirst.com service, and
o click-through fees for BeFirst.com service.
FindWhat.com search listing paid click-throughs.
Our FindWhat.com search listing paid click-through revenue is determined
by multiplying the number of click-throughs on paid search results by the
amounts bid for applicable keywords. Paid click-through revenue is earned based
on click-through activity to the extent that the advertiser has deposited
sufficient funds with us or collection is probable.
FindWhat.com banner advertising.
Our banner advertising revenue is earned under the terms of our
contractual arrangements with the advertiser or advertising agency, which
generally provide for a fee for each click-thru on the banner advertisement.
BeFirst.com set-up fees.
We charge each new client a one-time fee for the web site optimization
services to be performed by us for that client.
BeFirst.com click-through fees.
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Click-through rates are negotiated and generally vary based on the
client's industry and the frequency with which words or phrases related to that
industry are searched. The negotiated click-through rate is applied to the
actual number of consumers clicking on the various search engine placements
established by the BeFirst.com service on behalf of a client.
Customers
With an open bidding system that is automated, advertisers can evaluate
the value to their company of paying for a premium position. They can see listed
on the search results page exactly what their competitors are bidding for their
positions and can outbid them, if they like. The auction is automated in real
time, so results are instantaneous. The power of the model is demonstrated
by the quality of the advertisers that have enlisted since September 1999 as
shown in the following table:
FindWhat.com
Participating Companies
Category Company
Advertising Agency Avenue A
Auctions Ebay
Music Sonicnet/MTV
Flowers PC Flowers & Gifts, Flower.com
Pets Petstore.com
Health DrKoop.com, allherb.com
Travel Uniglobe.com
Rewards mypoints.com
Key Relationships
Inktomi. We have an agreement with Inktomi Corporation, a data
information provider, to provide supplemental data for the FindWhat.com search
engine so that consumers will receive comprehensive search results in response
to their search queries. Utilizing Inktomi's database of web sites, we can
display search results in addition to the listings paid for by our advertisers.
Go2Net, Inc. We have entered into an agreement with Go2Net, Inc. to post
our search results on their Dogpile and MetaCrawler meta-search services. Go2Net
is one of the Internet's leading networks, providing consumer services, business
services and enabling services. Go2Net offers through the world wide web a
network of branded properties and aggregated content in the categories of search
and directory, personal finance, multi-player games, small business services and
e-commerce solutions. Pursuant to our agreement, we issued Go2Net a warrant to
purchase 725,000 shares of our common stock.
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LinkShare. We launched an affiliate marketing program with LinkShare
Corporation (http://www.linkshare.com) in early December 1999. This program
offers web sites that are members of the LinkShare Network an opportunity to
offer a link on their sites to our FindWhat.com search engine. LinkShare manages
a network where merchants and affiliates may create an online marketplace, refer
customers to each other, and place a value on that traffic.
Beasley Broadcasting. We have entered into an agreement with Beasley
Broadcasting to provide us with $3 million worth of radio and internet
advertising. Beasley Broadcasting is the 16th largest radio broadcasting company
in the United States based on 1998 gross revenues. After giving effect to
pending acquisitions in Boston, Miami-Ft. Lauderdale, West Palm Beach and
Augusta, Beasley Broadcasting will own and operate 36 stations, located in nine
large and mid-sized markets in the eastern United States. Twelve of these
stations are located in four of the nation's top 12 radio markets: Atlanta,
Philadelphia, Boston and Miami-Ft. Lauderdale.
Competition
FindWhat.com
We compete with portals, pure search engines, and pay-for-performance
search engines.
o Portals
|*| Yahoo! |*| AOL |*| GO |*| iWon
|*| Excite |*| MSN |*| AltaVistal |*| About
|*| Netscape |*| Lycos |*| Snap
o Pure search engines
|*| Google |*| NorthernLight |*| LookSmart
|*| DirectHits |*| HotBot |*| WebCrawler
o Pay-for-performance search engines
|*| GoTo |*| RocketLinks
|*| HitsGalore |*| Kanoodle
In addition, other companies may offer directly competing services in the
future. Most providers of web directories, search and information services offer
additional features and content that we have elected not to offer. We also
compete with traditional off-line media such as television, radio and print for
a share of advertising budgets.
BeFirst.com
We compete on the basis of our ability to anticipate changes in search
engine technologies. We also seek to optimize our client's website for up to 300
search engines, directories and on-line "yellow pages," while we believe that
our competitors typically focus on only the top
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10 search engines.
Since the advent of web site optimization services on the Internet, the
number of companies offering such services has proliferated due to, among other
reasons, the absence of substantial barriers to entry. This competition may
continue to intensify. Such increased competition may lead to reductions in
market prices for search engine optimization marketing and sales.
While we do not believe that any one competitor or group of competitors is
dominant in the web site optimization business, our principal competitors are:
o Did-it.com
o WebsiteResult.com
Most of our current and potential competitors for our FindWhat.com search
engine and our BeFirst.com service have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing and other resources than we have. These competitors may be able to
respond more quickly to new or emerging technologies and changes in search
engine requirements and to devote greater resources to the development,
promotion and sale of their services than we can. Accordingly, we may not be
able to compete successfully against our current or future competitors.
Technology and Operations
We believe high traffic Internet search engines / portals require a fast,
reliable and secure infrastructure that can be easily expanded to maintain
acceptable response times under the stress of growth. However, most new
companies operate under considerable resource constraints that usually hinder
the construction of networks that are fast, reliable and secure. We believe that
while we have operated under the constraints of a new company, we have managed
to create an infrastructure that provides us with an excellent base from which
to grow our business.
We believe our current infrastructure is suitably sized to give web
surfers a positive feeling about their interaction with the FindWhat.com site.
The physical components of our infrastructure are comprised of equipment made by
some of the most recognized manufacturers in the business including Cisco and
Intel. The software being used to power the FindWhat.com site is a
combination of industry standard commercial software and our internally
developed proprietary software. We believe that given the solid mix of
industry standard equipment and software we are positioned to sustain the
effects of considerable growth.
We have provided for site backup services through mica.net (Michigan
Internet Communication Association). We have hardware co-located at mica.net to
replicate the FindWhat.com web site should a catastrophic event occur. This
equipment includes three servers that could be used to replicate web servers,
DNS servers and Database servers.
In February 2000 we introduced a new technology called F.A.S.T. (FindWhat
Advanced Search Technology.) F.A.S.T. is designed to read most simple plain
English queries and, utilizing programmed intelligence, deliver relevant search
results from the FindWhat.com proprietary database. F.A.S.T. was implemented to
deliver more refined search results to FindWhat.com users and to give
FindWhat.com advertisers more site traffic. F.A.S.T. processes
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what the Findwhat.com user queries, then interprets the query based on
intelligence programmed into the FindWhat.com system. F.A.S.T. interprets the
query by comparing it to keywords purchased by advertisers and delivers what we
believe will be an accurate outcome for the user.
Early in our development, we placed a firewall between the outside world
and our service. As currently configured, our firewall provides the ability
to block out any traffic that is not required to operate the FindWhat.com web
service.
Intellectual Property
We have pending United States federal applications with the Patent and
Trademark Office for the marks "FindWhat.com," "BeFirst," "Be1st," "Find what
you're looking for," "pay for placement" and "a better search result." In
addition, we use and have common law rights in the marks "F.A.S.T.,""FindWhat
Advanced Search Technology" and "Search and Win." In February 2000, we filed a
patent application for our FindWhat.com search engine with the U.S. Patent and
Trademark Office. This application is currently pending.
While we rely on trade secrets and confidentiality provisions to protect
our intellectual property, we also use a license from Inktomi as well as
standard licenses contained in software we use, such as software supplied by
Microsoft, in offering our web site search engine.
We are not dependent on any third-party technology or service mark
licenses in connection with our web site optimization business. However, we do
rely upon common law trade secret, proprietary technology and confidentiality
principles to protect our intellectual property rights.
We have adopted a policy of requiring our employees and consultants to
execute confidentiality agreements when they commence employment or are employed
by us. These agreements generally provide that all confidential information
developed or made known to employees and consultants during the course of their
relationship with us is not to be disclosed to third parties, except under
specific circumstances described in these agreements. In the case of employees,
the agreements provide that inventions conceived by employees in the course of
employment will be our exclusive property.
The material risks associated with our intellectual property rights are
discussed above under "Risk Factors."
Regulations
Governmental Regulations
We are not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to, or commence
on, the Internet. However, due to the increasing popularity and use of the
Internet, it is possible that various laws and regulations may be adopted with
respect to the Internet, covering issues such as taxation, user privacy and
characteristics and
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quality of products and services. In 1998, the United States Congress
established the Advisory Committee on Electronic Commerce which is charged with
investigating and making recommendations to Congress regarding the taxation
of sales by means of the Internet. The adoption of any such laws or regulations
upon the recommendation of this Advisory Committee or otherwise may decrease the
growth of the Internet, which could in turn decrease the demand for our products
or services, our cost of doing business or otherwise have an adverse effect on
our business, prospectus, financial condition, or results of operations.
Moreover, the applicability to the Internet of existing laws governing issues,
such as property ownership, libel and personal privacy is uncertain. Future
federal or state legislation or regulations could have a material adverse effect
on our business, prospects, financial conditions and results of operations.
Facilities
We have an executive, administrative and sales office in New York City,
an executive and marketing office in Santa Monica, California, and an
executive, administrative and techical facility in Fort Myers, Florida.
Employees
We currently have 35 employees, including our executive officers. We
have approximately seven employees in sales and marketing, eighteen in
technical and customer service, seven in administration and three executive
officers. In addition, WPI Advertising, Inc., an affiliate of one of our
executive officers, currently supplies us with certain services, including
office space and additional staff support.
Item 2. Properties.
We lease approximately 3,200 square feet of office space in Fort Myers,
Florida for current annual rent of $28,000. The lease commenced August 1,
1999 and has a three-year term. We share office space in New York with WPI
Advertising, Inc., an affiliate of Robert D. Brahms, our Chief Executive
Officer and director. We share office space in Santa Monica, California with
V-Lite Corporation, an affiliate of Courtney P. Jones, our Chairman of the
Board of Directors.
Item 3. Legal Proceedings.
We are not a party to any pending legal proceedings and are not aware of
any threatened legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
Price Range Of Common Stock
From June 17, 1999 until October 7, 1999, our common stock traded on the
OTC Bulletin Board under the symbol "FWHT." From October 7, 1999 to December 21,
1999, our common stock appeared in the National Quotation Bureau Inc.'s
over-the-counter "pink sheets." Prior to June 17, 1999, our common stock was
listed under the symbol "CAMJ" and traded infrequently.
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The following table sets forth the high and low sales prices of our common stock
for the periods indicated as reported by the NASD's OTC Bulletin Board or the
National Quotation Bureau Inc.'s over-the-counter "pink-sheets":
Quarter Ended High Low
March 31, 2000 (through March 30,
2000)............................. $18.25 $5.375
December 31, 1999................. $ 9.25 $3.875
September 30, 1999................ $ 8.50 $3.00
June 30, 1999 (beginning June
17, 1999).......................... $ 7.25 $5.00
Such prices reflect inter-dealer quotations, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
On March 29, 2000, the last reported sale price of our common stock on
the OTC Bulletin Board was $11.50 per share. The number of record holders of our
common stock was 128 as of March 28, 2000.
Dividend Policy.
We currently do not anticipate paying cash dividends on our common stock
at any time in the near future. We may never pay cash dividends or distributions
on our common stock. Any credit agreements which we may enter into with
institutional lenders may restrict our ability to pay dividends. Whether we pay
cash dividends in the future will be at the discretion of our board of directors
and will be dependent upon our financial condition, results of operations,
capital requirements and any other factors that the board of directors decides
is relevant.
Recent Sales of Unregistered Securities.
Set forth below in chronological order is information regarding the
numbers of shares of common stock sold by FindWhat.com, the number of options
and warrants issued by FindWhat.com, the consideration received by FindWhat.com
for such shares, options and warrants and information relating to the section of
the Securities Act or rules of the Securities and Exchange Commission under
which exemption from registration was claimed in the past three years. None of
these securities was registered under the Securities Act.
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In October 1997, we sold 12,000,000 shares of common stock to a former
officer for a purchase price of $15,000 pursuant to Section 4(2) of the
Securities Act of 1933.
In June 1999, we cancelled 8,600,000 shares of common stock contributed to
us by Mr. Mick Jardine, and then effected a 1-for-2 reverse stock split of the
remaining outstanding shares of common stock.
Following the reverse split, in June 1999, we completed a private offering
of 1,250,000 shares of common stock to 39 individual and corporate accredited
investors purchasers for gross proceeds of $2,500,000. The certificates
representing the shares of common stock were appropriately legended. In the
opinion of Findwhat.com the issuance of these shares was exempt pursuant to Rule
506 of Regulation D under the Securities Act.
In June 1999, we acquired all of the outstanding capital stock of BeFirst
Internet Corporation in exchange for the issuance of 8,750,000 shares of common
stock to Messrs. Courtney P. Jones, Craig A. Pisaris-Henderson, Robert D.
Brahms, Peter Miller, Tony Garcia and Christopher Knight Whitaker, the former
stockholders of BeFirst Internet Corporation. The certificates representing the
shares of common stock were appropriately legended. In the opinion of
FindWhat.com the issuance of these shares was exempt by pursuant to Section 4(2)
of the Securities Act and the rules promulgated thereunder.
In June 1999, we issued options under our 1999 Stock Incentive Plan to
purchase up to an aggregate of 663,713 shares of our common stock to certain
employees and non-employees of the Company at average weighted exercise prices
of $2.17 and $2.00 per share, respectively.
In September 1999, we issued options under our 1999 Stock Incentive Plan
to purchase up to an aggregate of 62,000 shares of our common stock to certain
employees and non-employees of the Company at average weighted exercise prices
of $4.00 and $4.50 per share, respectively.
In November 1999, we issued options under our 1999 Stock Incentive Plan to
purchase up to an aggregate of 3,000 shares of our common stock to certain
employees of the Company at an exercise price of $3.91 per share.
In November 1999, we entered into an agreement with Global Financial
Resources, Inc. for public investor relations services whereby we issued
non-plan stock options to purchase up to 150,000 shares of our common stock at
$3.75 per share. In March 2000, our agreement with Global Financial was
terminated and 68,750 of the option shares vested.
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In November 1999, we entered into an agreement to issue 41,750 shares of
our common stock to Van Wagner Communications, LLC in consideration of $161,770
worth of advertising space. The certificates representing the shares of common
stock were appropriately legended. In the opinion of FindWhat.com the issuance
of these shares was exempt by pursuant to Section 4(2) of the Securities Act and
the rules promulgated thereunder.
In November 1999, we entered into an agreement to issue 50,000 shares of
our common stock to David M. Medinis as consideration for consulting services.
In December 1999, Mr. Medinis became a member of our board of directors. The
certificates representing the shares of common stock were appropriately
legended. In the opinion of FindWhat.com the issuance of these shares was exempt
by pursuant to Section 4(2) of the Securities Act and the rules promulgated
thereunder.
In December 2000, we issued options under our 1999 Stock Incentive Plan
to purchase up to 500 shares of our common stock to an employee at an
exercise price of $4.12 per share.
In January 2000, we entered into an agreement to issue 600,000 shares of
our common stock to Beasley Broadcast Group in consideration of $3,000,000 worth
of radio and on-line advertising. The certificates representing the shares of
common stock were appropriately legended. In the opinion of FindWhat.com the
issuance of these shares was exempt by pursuant to Section 4(2) of the
Securities Act and the rules promulgated thereunder.
In January 2000, we issued Cyber Networks, Inc., a strategic partner, a
warrant to purchase 5,000 shares of our common stock at a purchase price of
$5.50 per share. The warrant was appropriately legended. In the opinion of
FindWhat.com the issuance of the warrant was exempt by pursuant to Section 4(2)
of the Securities Act and the rules promulgated thereunder.
In January 2000, we issued options under our 1999 Stock Incentive Plan to
purchase up to an aggregate of 231,000 shares of our common stock to certain
employees and non-employees at a weighted average exercise price $5.50 per
share.
In February 2000, we entered into an agreement to issue 500,000 shares of
our common stock to Andrew Lessman and issued Mr. Lessman a warrant to purchase
up to 125,000 shares of our common stock at a purchase price of $5.50 per share
in consideration of a $2,000,000 cash investment. The certificates representing
the shares of common stock and the warrant were appropriately legended. In the
opinion of FindWhat.com the issuance of these shares and the warrant was exempt
by pursuant to Section 4(2) of the Securities Act and the rules promulgated
thereunder.
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In February 2000, we issued options under our 1999 Stock Incentive Plan to
purchase up to an aggregate of 20,000 shares of our common stock to certain
non-employee directors at an exercise price of 5.75 per share.
In March 2000, we issued a warrant to Go2Net, Inc. to purchase up to
725,000 shares of our common stock at a purchase price of $5.50 per share in
connection with a strategic alliance. The warrant was appropriately legended. In
the opinion of FindWhat.com the issuance of the warrant was exempt by pursuant
to Section 4(2) of the Securities Act and the rules promulgated thereunder.
Item 6. Selected Consolidated Financial Data.
The following selected statements of operations date for the period
from our inception on March 27, 1998 through December 31, 1998 and the year
ended December 31, 1999 and the selected balance sheet data as of December
31, 1999 and 1998 are derived from our consolidated financial statements and
related notes included elsewhere in this prospectus audited by Grant Thornton
LLP, our independent certified public accountants.
The pro forma balance sheet data is adjusted to reflect the issuance
of 1,100,000 shares of common stock subsequent to December 31, 1999.
Period from
March 27,
1998 (date of
Year ended inception) to
December 31, December 31,
1999 1998
----------- -----------
STATEMENT OF OPERATIONS DATA:
Revenues $ 451,509 $ 58,818
Cost of revenues 394,402 36,837
----------- -----------
Gross profit 57,107 21,981
Operating expenses
Sales and marketing 369,086
General and administrative 1,472,287 44,146
Product development 54,058 45,000
----------- -----------
Total operating expenses 1,895,431 89,146
----------- -----------
Loss from operations (1,838,324) (67,165)
Interest income, net 48,657
----------- -----------
NET LOSS $(1,789,667) $ (67,165)
=========== ===========
Loss per share - basic and diluted $ (0.17) $ (0.01)
=========== ===========
Unaudited pro forma information (1):
Increase in officer salaries $ 180,000 $ 270,000
=========== ===========
Pro forma net loss after increase in officer
salaries $(1,969,667) $ (337,165)
=========== ===========
Pro forma loss per share after increase
in officer salaries $ (0.18) $ (0.04)
=========== ===========
Weighted-average number of common
shares outstanding 10,781,765 8,750,000
=========== ===========
<PAGE>
December 31, 1999 December 31, 1999 December 31, 1998
Actual Pro Forma Actual
------ --------- ------
BALANCE SHEET DATA:
Current assets $ 1,021,856 $ 3,021,856 $ 15,165
Total assets 1,266,880 3,266,880 16,525
Working capital 788,875 2,788,875 (23,525)
Stockholders' equity
(deficit) 1,027,536 3,027,536 (22,165)
(1) The supplemental pro forma information is provided to show the
impact of the addition of salaries with three officers of the
Company effective July 1, 1999. The pro forma adjustments
reflect salary increase effective July 1, 1999 as if the
salaries hade been effective March 27, 1998.
Item 7. Management's Discussion and Analysis or Plan of Operation.
This management's discussion and analysis of financial condition contains
forward-looking statements, the accuracy of which involve risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify
forward-looking statements. This management's discussion and analysis also
contains forward-looking statements attributed to certain third parties relating
to their estimates regarding the growth of the Internet, Internet advertising
and online commerce markets and spending. Prospective investors should not place
undue reliance on these forward-looking statements, which apply only as of the
date of this report. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons.
Overview
We are a developer and marketer of performance-based advertising services
for the Internet. Currently, we offer two proprietary services: FindWhat.com., a
pay-for-performance search engine and BeFirst.com, a web site optimization
service. Our focus is:
o to drive qualified traffic to Internet web sites and
o to ensure that Internet users find what they are looking for when
"surfing the web."
Our services are designed to connect consumers who are most likely to purchase
specific goods and services to businesses that provide those specific goods and
services.
The FindWhat.com search engine, which launched in September 1999, allows
Internet users to enter a word or phrase describing what they want, called a
keyword. Our search engine then displays a selection of web sites related to
that keyword. Advertisers can determine where on the results page their web site
link will appear on any given keyword search through an open, automated
bidding process. Advertisers submit bids for the amount they will pay for each
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consumer who clicks-through to their web sites. Advertisers can change their
bids at any time. The highest bidder receives the first listing with all other
bidders listed in descending order. Each advertiser pays us the amount of its
bid whenever a consumer clicks on the advertiser's listing in the FindWhat.com
search results. Advertisers must pay for each click-through, so they bid only on
keywords relevant to their offerings. We believe that the FindWhat.com search
engine is an efficient system for advertisers - they pay only for
prospects that come to their site. They can insure that those prospects are
qualified by picking only those keywords that are most relevant to their
business. Advertisers can choose exactly how much they are willing to pay per
prospect, thereby maintaining precise control over the placement of their
listings in the FindWhat.com search results and their cost of customer
acquisition.
While we only launched our FindWhat.com search engine in September
1999, we have made significant progress in growing the number of advertisers
and consumers. As of March 23, 2000, consumers could find relevent search
listings for informtion products and services from approximately 2,300
participating advetisers who had placed over 1.15 million search listings up
from approximately 1,200 advetisers and more than 750,000 search lisitngs as
of December 31, 1999. For the year to date through March 23, 2000, the
FindWhat.com search engine had approximately 1.1 million paid click-throughs
with an average price per paid click-throughs with an average price per paid
click-through of $006. In all of 1999, the FindWhat.com search engine had
approximately 34,000 paid click-throughs.
The FindWhat.com search engine generates revenue consisting of search
listing click-through fees and banner advertising. For the year ended December
31, 1999, revenue from the FindWhat.com search engine was immaterial. In order
to generate significant revenues, we must increase substantially the number of
advertisers we service and the volume of click-throughs to our clients' web
sites. FindWhat.com search listing paid click-through revenue is determined by
multiplying the number of click-throughs on paid search results by the amounts
bid for applicable keywords. Search listing paid click-through revenue is
recognized when earned based on click-through activity to the extent that the
advertiser has deposited sufficient funds with us or collection is probable.
FindWhat.com banner advertisement revenue is recognized when earned under the
terms of the contractual arrangement with the advertiser or advertising
agency, provided that collection is probable.
We believe that our FindWhat.com search engine will be more attractive to
advertisers as more consumers use it for their search needs and more attractive
to consumers as more advertisers bid for placement in our search results. A
significant component of our expenses consists of costs incurred to attract
consumers to our service. To date, we have primarily attracted consumers through
online and offline marketing, including radio and outdoor advertising as well as
advertising on the Internet, and through our affiliates. We expect to continue
to rely upon these sources for a significant proportion of consumer searches
conducted on our service. Our future success is dependent upon reducing our
consumer acquisition costs and increasing the revenue we derive from this
traffic. In order to significantly increase revenues we will be required to
incur a significant expansion of our operations, including hiring additional
management and staff. These actual and proposed increases in marketing and
personnel will significantly increase our operating expenses.
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Our BeFirst.com web optimization service generates revenue from initial
set-up fees charged to new clients and from click-through fees our clients pay
for consumers who get to their web sites as a result of our efforts.
BeFirst.com set-up fee charges are recognized at the time a new client signs
up for the service and pays such fee. For the year ended December 31, 1999,
set-up fee charges represented less than 10% of BeFirst.com revenues.
BeFirst.com click-through fees are determined by multiplying the number of
click-throughs to a client's web sites as a result of our efforts by the
amount we charge per click-through. As of March 23, 2000, BeFirst.com had
approximately 100 clients, including eBay, Avenue A, Ebags.com, and
Dr.Koop.com.
We were organized under the laws of the State of Nevada under the name
Collectibles America, Inc. in October 1995. We discontinued our business
operations and transferred our assets to satisfy liabilities in 1997. In June
1999, we acquired 1,000 shares of common stock of BeFirst Internet Corporation,
which was organized under the laws of the State of Delaware in March 1998,
representing all of its outstanding capital stock. These shares were acquired
from the holders of such stock in exchange for our issuance to such stockholders
of 8,750,000 shares of our common stock. As the result of such exchange of
stock, the stockholders of BeFirst Internet Corporation acquired control of us
and BeFirst Internet Corporation became our wholly owned subsidiary. We changed
our corporate name to BeFirst.com at the time of the acquisition. Therefore, the
following discussion is a discussion of the business of BeFirst Internet
Corporation through the time of the acquisition. In September 1999, we changed
our corporate name to FindWhat.com.
We have a limited operating history. We began offering our BeFirst.com
service in March 1998. Our FindWhat.com search engine was commercially launched
in September 1999, but generated immaterial revenues in the fiscal year ended
December 31, 1999. Our services have achieved only limited market acceptance to
date. Our losses for the years ended December 31, 1999 and 1998 were $1,789,667
and $67,165, respectively.
Our limited operating history and the uncertain nature of the markets we
address or intend to address make prediction of our future results of operations
difficult. Our operations may never generate significant revenues and we may
never achieve profitable operations.
Results Of Operations
Year ended December 31, 1999 and period from inception (March 27, 1998) to
December 31, 1998
Our fiscal year runs from January 1 through December 31. We began offering
our Internet web site optimization service in March 1998 and we commercially
launched our FindWhat.com(SM) search engine in September 1999. As a result of
these factors, comparisons between the fiscal years ended December 31, 1998 and
1999 have limited meaning.
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Revenue
Revenue for the year ended December 31, 1999 increased to $451,509
compared to $58,818 for the period from inception (March 27, 1998) to
December 31, 1998 as a result of growth in demand for our BeFirst.com
service. Revenue from the FindWhat.com search engine was immaterial in 1999.
We expect that FindWhat.com search listing paid click-through revenue and
banner advertisement revenue will represent an increasing percentage of total
revenue in future periods.
Cost of Revenues
Cost of revenues consists primarily of costs associated with designing and
maintaining our web sites, providing the BeFirst.com service, fees paid to
outside service providers like Inktomi that provide our unpaid listings, and
fees paid to telecommunications carriers for Internet connectivity. Costs
associated with providing the BeFirst.com service include salaries of related
personnel and web site domain registration expenses for clients. Costs
associated with maintaining our web sites include salaries of related personnel,
depreciation of web site equipment, co-location charges for our web site
equipment and software license fees. Cost of revenues increased to $394,402 for
the year ended December 31, 1999 from $36,837 for the period from inception
(March 27, 1998) to December 31, 1998. The increase was primarily due to the
launch of the FindWhat.com search engine in September 1999 and the growth of our
BeFirst.com service, including an increase in personnel associated with
providing the BeFirst.com service, and the number of web site domain names
registered. We anticipate cost of revenues will continue to increase as our
traffic and number of advertisers increase.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of :
o advertising expenditures for the FindWhat.com search engine, such as
radio, outdoor and banner advertising campaigns and sponsorships,
o promotional expenditures, including proprietary contests to attract
consumers to the FindWhat.com web site and sponsorships of industry
seminars,
o revenue-sharing or other arrangements with our FindWhat.com
affiliates,
o fees to marketing and public relations firms, and
o payroll and related expenses for personnel engaged in marketing,
customer service and sales functions.
With the exception of sales personnel salaries, most of our sales and marketing
expenses relate to the FindWhat.com search engine.
Advertising expenditures include campaigns for the FindWhat.com search
engine in New York City and Los Angeles on local radio stations and billboards
paid for with cash, as well as transactions in which we have exchanged shares of
our restricted common stock for advertising. In November 1999, we issued 41,750
shares of common stock in exchange for outdoor advertising.
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The term of the contract was four months, and we recorded $40,445 in non-cash
advertising charges for the year ended December 31, 1999. The remainder of
$121,335 was deferred and will be expensed over the term of the contract. In
January 2000, we announced an equity investment and multi-year marketing
agreement with Beasley Broadcast Group, the nation's 16th largest radio
broadcasting company based on gross revenue. We will receive $3 million worth of
radio advertising and online links and promotions across Beasley's media
properties and Beasley will receive 600,000 shares of restricted FindWhat.com
common stock. We will record a non-cash advertising charge of $4,425,000 over
the two-year term of the contract.
Promotional expenditures include the Search & Win $1 million Internet
lottery game on our search engine web site, which began on December 16, 1999.
Our agreements with affiliate web sites take different formats. Some
agreements with web sites provide that we pay these web sites to direct traffic
to our FindWhat.com search engine through online links placed on their sites or
banner advertisements promoting our search engine on their sites. In addition,
we have revenue-sharing agreements with affiliate web sites which integrate our
search results into their web sites. The results are displayed without requiring
a web surfer to leave the affiliate's web site. We also have revenue-sharing
contracts with web sites called meta-search engines that aggregate the search
offerings of several providers of search engines. These contracts provide that
our search results are included in the aggregated search offerings on these
sites. These contracts with other web sites are typically short term, generally
expiring within a year or less. Our costs for traffic under these contracts vary
widely and are generally incurred on a click-through basis where we pay for each
consumer who clicks through to our service, or where we share the per-click
revenue we derive from a consumer who clicks through directly to one of our
advertiser's web sites.
Our sales and marketing expense was $369,086 for the year ended December
31, 1999. We did not incur any sales and marketing expense prior to 1999. Our
1999 sales and marketing expense was related primarily to the launch of the
FindWhat.com search engine in September 1999 and increased sales efforts related
to our BeFirst.com service. Until June 30, 1999, an affiliate employed our sales
force and we reimbursed the affiliate by paying a commission. As of July 1,
1999, the members of our sales force became our direct employees. We believe
that continued investment in sales and marketing, including attracting consumers
and advertisers to utilize the FindWhat.com search engine, is critical to
attaining our strategic objectives and as a result, expect these costs to
continue increasing in the future.
General and Administrative. General and administrative expenses consist
primarily of payroll and related expenses for executive and administrative
personnel; facilities; insurance; professional services, including consulting,
legal, and accounting fees; expenses and fees associated with the reporting and
other obligations of a public company; travel and other general corporate
expenses, as well as fees to affiliates which provide office space and other
general and administrative services. Until July 1, 1999, our Chairman, Chief
Executive Officer, and President/Chief Technology Officer did not receive
salaries. General and administrative expenses increased to $1,472,287 for the
year ended December 31, 1999 from $44,146 for the period from inception (March
27, 1998) to December 31, 1998. These increases were primarily due to increases
in administrative
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headcount and related expenses associated with the hiring of personnel,
increased professional services, increased services provided by our affiliates,
executive officer salaries, which were not incurred prior to July 1, 1999,
and costs associated with being a public company beginning in June 1999,
including the cost of directors' and officers' liability insurance expense. In
December 1999, we issued options for the purchase of 68,750 shares of common
stock to an investor public relations firm. The term of the contract was five
and a half months, and we recorded $36,094 in non-cash general and
administrative charges for the year ended December 31, 1999. The remainder of
$108,281 was deferred and will be expensed over the term of the contract. We
expect general and administrative expenses to continue to increase as we
expand our staff and incur additional costs related to the growth of our
business and compliance with the reporting obligations of a public company.
Product Development. Product development expenses consist primarily of
payroll and related expenses for personnel responsible for development of
features and functionality for our BeFirst.com and FindWhat.com services,
license fees for software used in product development and depreciation for
related equipment, and consulting fees to a technical consultant. Product
development increased to $54,058 for the year ended December 31, 1999 from
$45,000 for the period from inception (March 27, 1998) to December 31, 1998, as
a result of increased technical consulting services and increases in
compensation expense, in part related to the development of the FindWhat.com
search engine. In November 1999, we issued 50,000 shares of common stock to a
technical consultant, who became a member of our Board of Directors in December
1999. The term of the contract is for one year, and we recorded $15,625 in
non-cash technical consulting charges for the year ended December 31, 1999. The
remainder of $171,875 was deferred and will be expensed over the term of the
contract. We believe that continued investment in product development is
critical to attaining our strategic objectives and as a result, expect product
development expenses to continue increasing in the future.
Interest Income, Net
Interest income, net, consists primarily of earnings on our cash and
cash equivalents, net of interest expense attributable to equipment leases
and any taxes. Net interest income was $48,657 for the year ended December
31, 1999. We did not earn any interest income or incur any interest expense
prior to 1999. Our 1999 interest income was primarily due to an increase in
our average cash and cash equivalent balances following the receipt of funds
from our June 1999 private placement of common stock.
Net Loss
As a result of the factors described above, our net loss increased to
$1,789,667 for the year ended December 31, 1999 from $67,165 for the period from
inception (March 27, 1998) to December 31, 1998.
Liquidity and Capital Resources
We have historically satisfied our cash requirements primarily through
private placements of equity securities and the reliance on affiliated
businesses owned by our executive officers. Through March 2000, we have raised
approximately $4.5 million through equity financings. To date, space
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and support services in New York City have been provided to us by WPI
Advertising, Inc., an affiliate of our Chief Executive Officer, Robert D.
Brahms. Through August 31, 1999, space and support services were provided to us
in Florida by Internet Services International, Inc., an affiliate of our
President, Craig Pisaris-Henderson. We have been billed for these services at
competitive rates.
Net cash used in operating activities totaled approximately $1,283,889
for the year ended December 31, 1999 and net cash provided by operating
activities was $8,402 for the period from inception (March 27, 1998) through
December 31, 1998. The increase in net cash used in the year ended December
31, 1999 was primarily attributable to cash used in marketing and sales
efforts as well as general and administrative and product development
expenses, partially offset by increases in revenue, stock option compensation
and increases in other current assets.
Net cash used in investing activities totaled approximately $260,056 for
the year ended December 31, 1999 and $1,700 for the period from inception (March
27, 1998) through December 31, 1998. This increase resulted primarily from
capital expenditures for equipment.
Net cash provided by financing activities totaled approximately $2,444,174
for the year ended December 31, 1999. We did not have any financing activities
in 1998. The activity in 1999 consisted of the net proceeds from a private
placement of our common stock in June 1999 in which the Company issued 1,250,000
shares of common stock for $2.00 per share and received gross proceeds of $2.5
million.
In February 2000, the Company completed a private placement of our common
stock with an accredited investor. The Company issued 500,000 shares of common
stock for $4.00 per share and received gross proceeds of $2.0 million. We also
issued the investor 125,000 warrants to purchase our common stock at an exercise
price of $5.50 per share.
Our principal sources of liquidity consisted of $906,931 of cash and cash
equivalents as of December 31, 1999. Although we have no material long-term
commitments for capital expenditures, we anticipate an increase in capital
expenditures consistent with anticipated growth of operations, infrastructure
and personnel.
We currently anticipate that the net proceeds from our private
placements, together with cash flows from operations and anticipated
financings, will be sufficient to meet the anticipated liquidity needs for
working capital and capital expenditures over the next 12 months. In the
future, we may seek additional capital through the issuance of debt or equity
depending upon results of operations, market conditions or unforeseen
opportunities. Our future liquidity and capital requirements will depend upon
numerous factors. The pace of expansion of our operations will affect our
capital requirements. We may also have increased capital requirements in
order to respond to competitive pressures. In addition, we may need
additional capital to fund acquisitions of complementary products,
technologies or businesses. Our forecast of the period of time through which
our financial resources will be adequate to support our operations is a
forward-looking statement that involves risks and uncertainties and actual
results could vary materially as a result of the factors described
24
<PAGE>
above. As we require additional capital resources, we will seek to sell
additional equity or debt securities or obtain a bank line of credit. The sale
of additional equity or convertible debt securities could result in additional
dilution to existing stockholders. There can be no assurance that any financing
arrangements will be available in amounts or on terms acceptable to us, if at
all.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.
Not appplicable.
Item 8. Financial Statements and Supplementary Data.
The Company's balance sheet as of December 31, 1999, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
year ended December 31, 1999 and for the period from March 27, 1998 (date of
inception) to December 31, 1998, together with the independent certified public
accountants' report thereon appear on pages F-1 through F-17 hereof, and are
incorporated herein by reference.
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.
In August 1999, our board of directors retained Grant Thornton LLP as our
independent accountants and dismissed Pritchett, Siler & Hardy, P.C., the
accountants for Collectibles America, Inc., and Levine, Levine & Meyrowitz,
CPAs, P.C., the accountants for BeFirst Internet Corporation.
During the periods Pritchett, Siler & Hardy, P.C. and Levine, Levine &
Meyrowitz, CPAs, P.C. were retained, there were no disagreements with the former
accountants on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which would have caused them
to make reference to the subject matter in connection with their reports. No
accountants report prepared by the former auditors on our financial statements
for either of the past two years contained an adverse opinion or disclaimer of
opinion or was modified as to uncertainty, audit scope or accounting principles.
Prior to engaging Grant Thornton LLP, neither we nor anyone acting on our
behalf consulted with Grant Thornton LLP regarding the application of accounting
principles to any specific transaction or the type of audit opinion that might
be rendered on our financial statements.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information required under this item is incorporated herein by reference to
the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders
pursuant to Regulation 14A.
Item 11. Executive Compensation.
25
<PAGE>
Information required under this item is incorporated herein by reference
to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders
pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information required under this item is incorporated herein by reference
to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders
pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions.
Information required under this item is incorporated herein by reference
to the Company's Proxy Statement for the 2000 Annual Meeting of Stockholders
pursuant to Regulation 14A.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this Report.
(1) The following Financial Statements are included in this Annual
Report on Form 10-K on the pages indicated below:
<TABLE>
<S> <C>
Independent Certified Public Accountants Report. F-2
Balance Sheets as of December 31, 1999 and 1998. F-3
Statement of Operations for the year ended December 31, 1999 and for the
period from March 27, 1998 (date of inception) to December 31, 1998. F-4
Statement of Stockholders' Equity (Deficit) for the year ended December
31, 1999 and for the period from March 27, 1998 (date of inception)
to December 31, 1998. F-5
Statement of Cash Flows for the year ended December 31, 1999 and for
the period from March 27, 1998 (date of inception) to December 31, 1998. F-6
</TABLE>
(b) Exhibits:
Number Exhibit
- - ------ -------
2.1* Agreement and Plan of Reorganization dated June 17, 1999 by and
among BeFirst Internet Corporation, Collectibles America, Inc. and
Mick Jardine.
3.1* Articles of Incorporation of FindWhat.com (f/k/a Collectibles
America, Inc.)
3.2* By-laws of FindWhat.com
3.3 Audit Committee Charter
10.1* Portal Services Agreement dated June 18, 1999 between Inktomi
Corporation and BeFirst Internet Corporation.
10.2* Lease Agreement by and between Cambridge Management Associates and
BeFirst.com Inc.
10.3* Agreement dated August 18, 1999 between Michigan Internet
Communication Association and BeFirst.com Inc.
10.4* BeFirst 1999 Stock Incentive Plan
10.5* Form of Incentive Stock Option Agreement
10.6* Form of Non-Qualified Stock Option Agreement
10.7(R) Search Result Agreement, dated December 22, 1999, between the
Registrant and Mamma.com.
10.8(R) Search Services Agreement, dated March 15, 2000, between the
Registrant and Go2Net, Inc.
26
<PAGE>
10.9 Advertising Agreement, dated January 14, 2000, between the
Registrant and Beasley Internet Ventures, LLC.
10.10 Merchant Agreement, dated July 13, 1999, between the Registrant and
LinkShare Corporation.
16.1** Letter from Pritchett, Siler & Hardy, P.C.
16.2** Letter from Levine, Levine & Meyrowitz, CPA's, P.C.
21 Subsidiaries of the Registrant
24 Power of Attorney
27 Financial Data Schedule
* Incorporated by reference to the exhibit previously filed on September 14,
1999 with prior Form 10 of FindWhat.com (file no. 0-27331).
** Incorporated by reference to the exhibit previously filed on November 1, 1999
with Amendment No. 1 to FindWhat.com's prior Form 10 (file no 0-27331).
(R) Please note that certain confidential commercial information has been
redacted from some of the exhibits attached to this Form 10-K in order to
preserve the confidentiality of such information. All of the confidential
information which has been redacted is on file with the Securities and Exchange
Commission. Exhibits to this Form 10-K which have had confidential information
redacted are indicated as follows on the exhibit list above: (R). Within
the exhibits to this Form 10-K, redacted material is indicated by the following
sign where such redacted text would have appeared in the relevant exhibit:
< < (**REDACTED**)
(c) Reports on Form 8-K
None
27
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FINDWHAT.COM
Date: March 30, 2000 By: /s/ Robert D. Brahms
---------------------------------
Robert D. Brahms, Chief Executive
Officer
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title
- - --------- -----
*
- - ------------------------------------------ Chairman of the Board and Director
Courtney P. Jones
*
- - ------------------------------------------ Chief Executive Officer and Director
Robert D. Brahms (principal executive officer)
*
- - ------------------------------------------ President, Chief Technology Officer
Craig A. Pisaris-Henderson and Director
/s/ Michael S. Schulman
- - ------------------------------------------ Chief Financial Officer
Michael S. Schulman (principal financial and
accounting officer)
*
- - ------------------------------------------ Director
David Medinis
*
- - ------------------------------------------ Director
Lee S. Simonson
*
- - ------------------------------------------ Director
Kenneth E. Christensen
*By /s/ Robert D. Brahms
--------------------------------------
Robert D. Brahms
Attorney-in-Fact
28
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Certified Public Accountants F-2
Balance Sheets F-3
Statements of Operations F-4
Statement of Stockholders' Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-17
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
FindWhat.com
We have audited the accompanying balance sheets of FindWhat.com as of December
31, 1999 and 1998, and the related statements of operations, stockholders'
equity (deficit) and cash flows for the year ended December 31, 1999 and for
the period from March 27, 1998 (date of inception) to December 31, 1998.
These financial statements are the responsibility of FindWhat.com's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FindWhat.com as of December 31,
1999 and 1998, and the results of its operations and its cash flows for the year
ended December 31, 1999 and for the period from March 27, 1998 (date of
inception) to December 31, 1998 in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
New York, New York
February 17, 2000 (except for Note P, as
to which the date is March 15, 2000)
F-2
<PAGE>
FindWhat.com
BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 906,931 $ 6,702
Accounts receivable 97,675 8,463
Prepaid expenses and other current assets 17,250
----------- -----------
Total current assets 1,021,856 15,165
EQUIPMENT, FURNITURE AND FIXTURES - NET 242,429 1,360
OTHER ASSETS 2,595
----------- -----------
Total assets $ 1,266,880 $ 16,525
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 134,773 $ 11,348
Current portion of capital lease obligation 7,025
Deferred income 31,402 19,353
Due to affiliate 59,781 7,989
----------- -----------
Total current liabilities 232,981 38,690
CAPITAL LEASE OBLIGATION, less current portion 6,363
----------- -----------
Total liabilities 239,344 38,690
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value; authorized,
500,000 shares; none issued and outstanding
Common stock, no par value, authorized issued
and outstanding, 1,000 shares at
December 31, 1998 1,000
Common stock, $.001 par value; authorized,
50,000,000 shares; issued and outstanding,
12,591,750 shares at December 31, 1999 12,592
Additional paid-in capital 3,273,267 54,000
Deferred service costs (401,491)
Accumulated deficit (1,856,832) (67,165)
----------- -----------
1,027,536 (12,165)
Less stock subscription receivable (10,000)
----------- -----------
Total stockholders' equity 1,027,536 (22,165)
----------- -----------
Total liabilities and stockholders' equity $ 1,266,880 $ 16,525
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
FindWhat.com
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
March 27,
1998 (date of
Year ended inception) to
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Revenues $ 451,509 $ 58,818
Cost of revenues 394,402 36,837
------------ ------------
Gross profit 57,107 21,981
Operating expenses
Sales and marketing 369,086
General and administrative 1,472,287 44,146
Product development 54,058 45,000
------------ ------------
Total operating expenses 1,895,431 89,146
------------ ------------
Loss from operations (1,838,324) (67,165)
Interest income, net 48,657
------------ ------------
NET LOSS $ (1,789,667) $ (67,165)
============ ============
Loss per share - basic and diluted $ (0.17) $ (0.01)
============ ============
Unaudited pro forma information (i):
Increase in officer salaries $ 180,000 $ 270,000
============ ============
Pro forma net loss after increase in officer salaries $ (1,969,667) $ (337,165)
============ ============
Pro forma loss per share after increase
in officer salaries $ (0.18) $ (0.04)
============ ============
Weighted-average number of common
shares outstanding 10,781,765 8,750,000
============ ============
</TABLE>
(i) The supplemental pro forma information is provided to show the impact of
the addition of salaries with three officers of the Company effective July
1, 1999. The pro forma adjustments reflect salary increases effective July
1, 1999 as if the salaries had been effective March 27, 1998.
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
FindWhat.com
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Note B)
Year ended December 31, 1999 and
period from March 27, 1998 (date of inception)
to December 31, 1998
<TABLE>
<CAPTION>
Common stock, Common stock,
no par value $.001 par value Additional Deferred
---------------------- ----------------------- paid-in service
Shares Amount Shares Amount capital cost
--------- -------- ---------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock 1,000 $ 1,000 $ 9,000
Executive compensation 45,000
--------- -------- -----------
Net loss
Balance at December 31, 1998 1,000 1,000 54,000
Reclassification of no par value
common stock into $.001 common stock (1,000) (1,000) 2,500,000 $ 2,500 (250)
Issuance of common stock in connection
with private placement 1,250,000 1,250 2,432,704
Issuance of common stock, in connection
with acquisition of BeFirst Internet
Corporation 8,750,000 8,750 (8,750)
Issuance of common stock for consulting
and advertising services 91,750 92 349,188 $(293,210)
Fair value of options issued for services 144,375 (108,281)
Fair value of stock options granted to
consultants and nonemployees 266,000
Executive compensation 36,000
Receipt of stock subscription
Net loss
--------- -------- ---------- -------- ----------- ---------
Balance at December 31, 1999 $ 12,591,750 $ 12,592 $ 3,273,267 $(401,491)
========= ======== ========== ======== =========== =========
<CAPTION>
Stock
Accumulated subscription
deficit receivable Total
----------- ------------ ------------
<S> <C> <C> <C>
Issuance of common stock $(10,000)
Executive compensation $ 45,000
Net loss $ (67,165) (67,165)
------------ -------- -----------
Balance at December 31, 1998 (67,165) (10,000) (22,165)
Reclassification of no par value
common stock into $.001 common stock 1,250
Issuance of common stock in connection
with private placement 2,433,954
Issuance of common stock, in connection
with acquisition of BeFirst Internet
Corporation
Issuance of common stock for consulting
and advertising services 56,070
Fair value of options issued for services 36,094
Fair value of stock options granted to
consultants and nonemployees 266,000
Executive compensation 36,000
Receipt of stock subscription 10,000 10,000
Net loss (1,789,667) (1,789,667)
----------- --------- -----------
Balance at December 31, 1999 $(1,856,832) $ $ 1,027,536
=========== ========= ===========
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE>
FindWhat.com
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
March 27,
1998 (date of
Year ended inception) to
December 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net loss $(1,789,667) $ (67,165)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities
Depreciation 33,405 340
Stock options granted to consultants and nonemployees 266,000
Executive compensation 36,000 45,000
Common shares issued for consulting and advertising
services, net 56,070
Options issued for services, net 36,094
Changes in operating assets and liabilities
Accounts receivable (89,212) (8,463)
Other current assets (17,250)
Other assets (2,595)
Accounts payable and accrued expenses 123,425 11,348
Deferred income 12,049 19,353
Due to affiliate 51,792 7,989
----------- -----------
Net cash (used in) provided by operating activities (1,283,889) 8,402
----------- -----------
Cash flows from investing activities
Purchase of equipment (260,056) (1,700)
----------- -----------
Cash flows from financing activities
Gross proceeds from private placement 2,500,000
Payment of financing costs (64,796)
Payments made on capital leases (1,030)
Receipt of stock subscription 10,000
----------- -----------
Net cash provided by financing activities 2,444,174
----------- -----------
INCREASE IN CASH AND CASH
EQUIVALENTS 900,229 6,702
Cash and cash equivalents at beginning of period 6,702
----------- -----------
Cash and cash equivalents at end of period $ 906,931 $ 6,702
=========== ===========
Supplemental noncash investing and financing activities
Capital lease obligations for purchase of equipment $ 14,418
Capital contributions for stock subscription $ 10,000
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - NATURE OF BUSINESS
BeFirst.com was organized under the laws of the State of Nevada and,
beginning June 17, 1999, conducts its operations through its wholly-owned
subsidiary, BeFirst Internet Corporation. In September 1999, the Company
changed its name from BeFirst.com to FindWhat.com ("FindWhat" or the
"Company").
FindWhat.com is a developer and marketer of performance-based advertising
services for the Internet. FindWhat offers two services: FindWhat.com, a
pay-for-position search engine which launched in September 1999 and
BeFirst.com, a web site optimization service. The Company charges an
initial set-up fee to enhance a client's web page using key words and
utilizes software that tracks click-through rates. The Company operates in
one reportable business segment.
NOTE B - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of FindWhat.com
and its wholly-owned subsidiary, BeFirst Internet Corporation.
On June 17, 1999, Collectibles America, Inc. ("Collectibles"), a
nonoperating public company with immaterial net assets, acquired 100% of
the outstanding common stock of BeFirst Internet Corporation, whose date
of inception was March 27, 1998 (the "Acquisition"). The Acquisition
resulted in the owners and management of BeFirst Internet Corporation
having effective control of the combined entity. Concurrent with the
Acquisition, Collectibles changed its name to BeFirst.com. In September
1999, BeFirst.com changed its name to FindWhat.com.
Under generally accepted accounting principles, the Acquisition is
considered to be a capital transaction in substance, rather than a
business combination. That is, the Acquisition is equivalent to the
issuance of stock by BeFirst Internet Corporation for the net monetary
assets of Collectibles (now FindWhat), accompanied by a recapitalization,
and is accounted for as a change in capital structure. Accordingly, the
accounting for the Acquisition is identical to that resulting from a
reverse acquisition, except that no goodwill is recorded. Under reverse
takeover accounting, the post-reverse-acquisition comparative historical
financial statements of the "legal acquirer," Collectibles (now FindWhat),
are those of the "accounting acquirer" (BeFirst Internet Corporation).
Accordingly, the financial statements of FindWhat.com for the period from
March 27, 1998 through December 31, 1998, are the historical financial
statements of BeFirst Internet Corporation for the same period. The basic
structure and terms of the Acquisition and related
F-7
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE B (continued)
events, all of which are deemed to have occurred simultaneously on June
17, 1999, together with the applicable accounting effects, were as
follows:
o FindWhat.com cancelled 8,600,000 unissued shares of common stock and
effected a 2-to-1 reverse stock split of its outstanding shares of
common stock, resulting in a decrease in the number of outstanding
shares to 2,500,000.
o FindWhat.com issued 1,250,000 post-split shares of common stock in a
private placement for $2.00 per share in cash (see Note K).
o FindWhat.com acquired all of the outstanding shares of common stock
of BeFirst Internet Corporation in exchange for 8,750,000 post-split
shares of FindWhat.com. The common stock exchanged, in addition to
the existing FindWhat.com shares outstanding, collectively resulted
in the recapitalization of the Company. Earnings per share ("EPS")
calculations include the Company's change in capital structure for
all periods presented.
o The sole officer and director of FindWhat.com was replaced by a
board of directors from BeFirst Internet Corporation.
o The Company adopted a 1999 Stock Incentive Plan (see Note M) for
employees.
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
2. Equipment, Furniture and Fixtures
Equipment, furniture and fixtures are stated at cost. Depreciation
is computed using the straight-line method over the estimated useful
lives of the assets, which range from three to five years.
Depreciation expense consists of the depreciation of computer
equipment and furniture.
F-8
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE C (continued)
3. Revenues
The Company derives revenues from the following sources: through
set-up fees charged to new BeFirst clients, through click-through
rates charged for the traffic the BeFirst service generates to its
clients' Web sites and through search listing click-throughs and
banner advertisements on the FindWhat.com search engine.
Revenue is recognized when the set-up services are completed and as
click-throughs are generated.
4. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions in determining the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
5. Basic and Diluted Loss Per Share
Basic and diluted loss per share is calculated by dividing the net
loss by the weighted average number of shares of common stock
outstanding during each period. All stock options have been excluded
from the calculation of diluted loss per share as their effect would
have been antidilutive (see Note M).
The issuance of 8,750,000 shares as described in Note B has been
reflected as of March 27, 1998.
6. Deferred Service Costs
Deferred service costs, which is shown as a reduction to
stockholders' equity, consists of the value of common stock and
stock options issued for services that will be provided to the
Company in future periods.
7. Reclassifications
Certain amounts in the 1998 financial statements were reclassified
to conform to the 1999 presentation.
F-9
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE C (continued)
8. Significant New Accounting Pronouncements
In September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS No.
133"), "Accounting for Derivative Instruments and Hedging
Activities," which requires entities to recognize all derivatives in
their financial statements as either assets or liabilities measured
at fair value. SFAS No. 133 also specifies new methods of accounting
for hedging transactions, prescribes the items and transactions that
may be hedged and specifies detailed criteria to be met to qualify
for hedge accounting. SFAS No. 133, as amended by SFAS No. 137, is
effective for fiscal years beginning after June 15, 2000. The
Company currently does not use derivative instruments as defined by
SFAS No. 133. If it continues to not use these derivative
instruments by the effective date, the adoption of this statement
will have no effect on the results of operations or the financial
position of the Company.
In January 2000, the Emerging Issues Task Force reached a
consensus on Issue No. 99-17, "Accounting for Advertising Barter
Transaction," to be effective for transactions entered into after
January 20, 2000. The consensus states that advertising barter
transactions should be accounted for at fair value and the fair
value recognized be disclosed in the financial statements, if
there is verifiable objective evidence provided by sufficient
cash transactions received by the seller of the advertising or
similar advertising. Accordingly, the Company will record barter
transactions, if any, at their estimated fair value,
prospectively, beginning January 2000.
NOTE D - EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures at December 31, 1999 and 1998 consist
of the following:
1999 1998
-------- --------
Computer equipment $193,921
Furniture and fixtures 67,835 $ 1,700
Leased equipment 14,418
-------- --------
276,174 1,700
Less accumulated depreciation (33,745) (340)
-------- --------
$242,429 $ 1,360
======== ========
F-10
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE E - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses at December 31, 1999 and 1998
consist of the following:
1999 1998
-------- --------
Accounts payable and other $ 64,818 $ 9,332
Professional fees 24,955 871
Salaries and bonuses 1,145
Database license 45,000
-------- --------
$134,773 $ 11,348
======== ========
NOTE F - RELATED PARTY TRANSACTIONS
The Company shares space in New York and California with WPI Advertising
Inc. ("WPI") and V-Lite Corporation ("V-Lite"), respectively, whose owners
are also the shareholders and officers of the Company. The total amount
paid to V-Lite for the year ended December 31, 1999 was approximately
$7,000.
Through June 30, 1999, the Company paid a 30% commission to WPI for sales
generated by WPI. The commission covered sales costs as well as rent
allocation and other administrative costs provided by WPI. These expenses
for the period ended December 31, 1999 and December 31, 1998 were
approximately $100,000 and $18,000, respectively, of which approximately
$50,000 and $9,000, respectively, are included in general and
administrative expenses and $50,000 and $9,000, respectively, are included
in marketing and sales expenses. Beginning July 1, 1999, the Company hired
its own sales staff and entered into a revised arrangement with WPI
whereby an allocation of the above-mentioned rent and administrative
expenses is apportioned to the Company. The total amount allocated to WPI
for the year ended December 31, 1999 is approximately $54,000, which is
included in general and administrative expenses. Total amounts due to WPI
at December 31, 1999 and 1998 were approximately $60,000 and $8,000,
respectively.
Through July 31, 1999, the Company shared space in Florida with Internet
Solutions International ("ISI"), whose owner is also the shareholder and
officer of the Company. The total amount paid to ISI during the year ended
December 31, 1999 was approximately $24,000. Beginning August 1, 1999, the
Company signed a lease (with an unrelated lessor) and moved its technical
operations out of ISI's offices.
F-11
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE F (continued)
In November 1999, the Company also hired WPI to purchase airtime to
several radio stations on behalf of the Company. Total amount charged to
the Company for the period ended December 31, 1999 was approximately
$35,000, which represents the regular rates charged by these stations
during their normal course of business.
NOTE G - DEFERRED INCOME
Deferred income at December 31, 1999 represents advance deposits made
by the Company's clients against future click-throughs for search
listing advertisements on the FindWhat.com search engine. Revenue will
be recognized as click-throughs are made to a client's website. Total
deferred revenue recorded for the year ended December 31, 1999 was
approximately $35,000, of which approximately $3,000 was recognized in
1999. Deferred income at December 31, 1998 represents advance deposits
made by the Company's clients for future BeFirst click-through sales.
NOTE H - COMMITMENTS AND CONTINGENCIES
Beginning August 1, 1999, the Company leased office space under the terms
of an operating lease that expires in 2002.
Future minimum payments under noncancellable operating leases consisted of
the following at December 31, 1999:
2000 $28,400
2001 30,000
2002 23,400
------
$81,800
=======
In addition, the Company has entered into service agreements with various
Internet providers, all with terms of one year or less. These agreements
allow the Company to connect to the Internet with sufficient capacity so
that the FindWhat.com Web site can handle current and anticipated traffic.
NOTE I - CONCENTRATION OF FINANCIAL INSTRUMENTS
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents. The Company
places its cash and cash equivalents with European American Bank. In
general, through the year, such instruments exceeded the FDIC insurance
limit of $100,000.
F-12
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE J - MAJOR CUSTOMERS
During the year ended December 31, 1999, one customer provided
approximately 30% of the Company's revenues. The loss of this customer,
without an appropriate replacement, may have a material effect on the
Company's business. Management does not believe any such loss will occur
as long as the Company continues to provide competitive service.
NOTE K - PRIVATE PLACEMENT
In June 1999, a private placement to offer 1,250,000 shares of $.001 par
value common stock at a price of $2.00 per share was completed by the
Company. The proceeds from the offering were used as follows: (a) upgrades
to transactions processing systems; (b) the hiring of additional sales and
technical personnel; (c) development of the FindWhat.com search engine,
which was launched in September 1999; and (d) purchase of additional
computer hardware and software.
As a result of the private placement, approximately $65,000 of legal costs
were incurred, which are being reflected as a reduction to additional
paid-in-capital.
NOTE L - COMMON STOCK AND STOCK OPTIONS ISSUED FOR SERVICES
In November 1999, the Company issued 41,750 shares of common stock for
outdoor advertising at a closing market price of $3.875 per share. The
term of the contract is for four months. Total noncash advertising charges
for the year ended December 31, 1999 recorded by the Company were $40,445,
which is included in marketing and sales expense. The remainder of
$121,335 was deferred and will be expensed over the term of the contract.
On November 28, 1999, the Company issued 50,000 shares of common stock to
a consultant of the Company for services at a closing market price of
$3.75 per share. The term of the contract is for one year. Total noncash
consulting charges for the year ended December 31, 1999 recorded by the
Company were $15,625, which is included in product development expenses.
The remainder of $171,875 was deferred and will be expensed over the term
of the contract.
F-13
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE L (continued)
In November 1999, the Company issued options for the purchase of 150,000
shares of common stock to an investor public relations firm at a price of
$3.75 per share. The contract was subsequently terminated in March 2000
and 68,750 option shares vested. The term was amended to five and a
half months. Total noncash charges for the year ended December 31, 1999
recorded by the Company were $36,094, which is included in general and
administrative expenses. The remainder of $108,281 was deferred and
will be expensed over the term of the contract.
NOTE M - STOCK INCENTIVE PLAN
In June 1999, the Board of Directors of the Company adopted the 1999 Stock
Incentive Plan ("the Plan"). The total number of shares reserved and
available for distribution to the Company's key employees, officers,
directors, consultants and other agents and advisors under this Plan as of
December 31, 1999 were 1,000,000 shares. Awards under the Plan consist of
stock options (both qualified and non-qualified options), restricted stock
awards, deferred stock awards and stock appreciation rights.
During the year ended December 31, 1999, the Company granted 495,501
options under the terms of the Plan to its employees and 233,712 options
to nonemployees. Total expense recognized for stock options given to
nonemployees amounted to approximately $266,000, which is included as a
noncash charge in the statement of operations for the year ended December
31, 1999.
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock Based
Compensation," that relate only to pro forma disclosures required by SFAS
No. 123 for employee plans. It applies APB Opinion 25, "Accounting for
Stock Issued to Employees," and does not recognize compensation expense
for its stock-based compensation plans for employees. If the Company had
elected to recognize compensation expense based upon the fair value at the
grant date for awards under these plans, consistent with the methodology
prescribed by SFAS No. 123, then the Company's net loss and loss per share
would be increased to the pro forma amounts indicated below:
Year ended December 31, 1999 Actual Pro forma
----------------------------- ----------- -----------
Net loss $(1,789,667) $(2,129,541)
=========== ===========
Loss per share - basic and diluted $(0.17) $(0.20)
====== ======
F-14
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE M (continued)
The fair value of these options for the year ended December 31, 1999 was
estimated at the date of grant using the Black-Scholes option pricing
model with the following weighted-average assumptions:
Volatility 50%
Risk-free rate 6%
Expected life 5 years
Vesting requirements 1 year
Forfeiture rate 0%
Expected dividends 0
The weighted-average fair value of all Plan options granted during the
year ended December 31, 1999 was $1.22, and the weighted-average exercise
price was $2.29. The maximum life of the option is five years.
Stock option activity under the Plan during the year ended December 31,
1999 is summarized below:
Weighted-
average
exercise
Options price
------- -----
Balance, December 31, 1998 0 $ --
Granted 729,213 $2.30
Canceled (6,000) $3.33
---------
723,213
=========
The following table summarizes information concerning currently
outstanding and exercisable stock options under the Plan:
Weighted-
average Weighted- Weighted-
Range remaining average average
of exercise Number contractual exercise Number exercise
price outstanding life (years) price exercisable price
----------- ----------- ------------ --------- ----------- ---------
$2.00 - $2.20 661,713 4.47 $2.11 555,713 $2.14
$3.87 - $4.50 61,500 4.72 $4.20 25,000 4.50
-------- -------
723,213 4.49 $2.29 580,713 $2.24
======= ===== =======
F-15
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE N - DATABASE LICENSE
In August 1999, the Company acquired a database license from Inktomi,
Inc., which requires minimum aggregate payments of $600,000 over the
three-year life of the contract. The Company accounts for this license as
an executory contract and records expense as the service is provided. As
of December 31, 1999, the minimum payments of $90,000 under the license
have been expensed.
NOTE O - INCOME TAXES
At December 31, 1999, the Company has operating loss carryforwards of
approximately $1,300,000, which expire through 2019. The future
availability of such carryforwards may be limited based on certain
changes in stock ownership. For financial statements purposes, a
valuation allowance equal to the amount of the net deferred tax asset
at December 31, 1999 has been recognized, as the realization of such
deferred tax asset is uncertain.
Components of the Company's deferred tax asset at December 31, 1999 and
1998 are as follows:
1999 1998
--------- ---------
Stock option compensation $ 120,838
Net operation loss carryforwards 520,550 $ 9,000
Capital expenditures 77,145
--------- ---------
718,533 9,000
Valuation allowance (718,533) (9,000)
--------- ---------
Net deferred tax asset $ -- $ --
========= =========
NOTE P - SUBSEQUENT EVENTS
On January 12, 2000, the Company entered into an advertising agreement
with Beasley Internet Ventures LLC ("Beasley") whereby the Company will
issue 600,000 shares of common stock to Beasley. Under the terms of the
contract, Beasley will provide $3,000,000 of advertising to the Company
over a two-year period. The Company will record the noncash advertising
charge of $4,425,000 over the term of the contract.
On January 28, 2000, the Board of Directors of the Company amended its
1999 Stock Incentive Plan (see Note M) to increase the total number of
shares reserved and available for distribution to the Company's key
employees, officers, directors, consultants and other agents to 1,900,000
shares, subject to shareholder approval in June 2000.
F-16
<PAGE>
FindWhat.com
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1999 and 1998
NOTE P - SUBSEQUENT EVENTS (continued)
On February 11, 2000, the Company completed a private placement of 500,000
shares of common stock for $2 million and a warrant to purchase an
additional 125,000 shares of common stock at a price of $5.50 per share.
These warrants expire on February 11, 2005 and have a fair value of
$628,750.
On March 15, 2000, the Company entered into an agreement with Go2Net, Inc.
("Go2Net") whereby Go2Net will provide metasearch services to the Company
through its network of web sites. The term of the agreement is for one
year. Pursuant to the agreement, Go2Net will receive warrants to purchase
725,000 shares of the Company's common stock at a price of $5.50 per
share. These warrants have a fair value of $10,200,000 and will be
expensed over a one-year period.
F-17
<PAGE>
EXHIBIT 3.3
FINDWHAT.COM
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities. The Audit
Committee shall provide assistance to the directors in fulfilling their
responsibility to the stockholders, relating to corporate accounting,
reporting practices of the Corporation, and the quality and integrity of
the financial reports of the Corporation. In doing so, it is the
responsibility of the Audit Committee to maintain free and open
communication between the directors, the independent auditors, the
internal auditors, if any, or the entity performing the internal audit
function, and the financial management of the Corporation.
Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster adherence to, the
Corporation's policies, procedures and practices. The Audit Committee's
primary duties and responsibilities are to:
o Serve as an independent and objective party to review
periodically the Corporation's financial reporting process
and internal control system.
o Review and recommend to the directors, after consultation
with the financial management of the Corporation, the
independent accountants to be selected to audit the
financial statements of the Corporation.
o If applicable, review and concur with management's
appointment, termination or replacement of the director of
internal audit or the company performing the internal audit
function.
o Provide an open avenue of communication for the independent
accountants, financial and senior management, the internal
auditing department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
As long as the Corporation meets the requirements to qualify as a small
business filer under the rules of the Securities and Exchange Commission,
the Audit Committee shall be comprised of two or more directors as
determined by the
<PAGE>
Board of Directors, each of whom shall be independent directors and free
from any relationship that, in the opinion of the Board of Directors,
would interfere with the exercise of his or her independent judgment as a
member of the Audit Committee. After the Corporation ceases to qualify as
a small business filer under the rules of the Securities and Exchange
Commission, the Audit Committee shall be comprised of three or more
directors as determined by the Board of Directors, each of whom shall be
independent directors and free from any relationship that, in the opinion
of the Board of Directors, would interfere with the exercise of his or
her independent judgment as a member of the Audit Committee. The
definition of an "independent director" is outlined in the attached
Appendix A. All members of the Audit Committee shall have a working
familiarity with basic finance and accounting practices, and, after the
Corporation no longer qualifies as a small business filer under the rules
of the Securities and Exchange Commission, at least one member of the
Audit Committee shall have accounting or related management expertise.
The Board of Directors shall elect members of the Audit Committee at the
annual meeting of the Board of Directors or until their successors shall
be duly elected and qualified. Unless the full Board of Directors elects
a Chair, the members of the Audit Committee may designate a Chair by
majority vote of the full Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet at least annually, or more frequently as
circumstances dictate. As part of its job to foster open communication,
the Audit Committee should meet at least annually with management, the
director of the internal auditing department, if any, and the independent
accountants in separate executive sessions to discuss any matters that
the Audit Committee or each of these groups believe should be discussed
privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically as conditions
dictate.
2. Review the Corporation's annual financial statements with
management and the independent accountants to determine
that the independent accountants are satisfied with the
disclosure and content of the financial statements to be
presented to stockholders. Any changes in accounting
principles should be reviewed.
3. Review with the independent accountants, the Corporation's
internal auditor or the company performing the internal
audit function, if any, and financial and accounting
personnel, the adequacy and effectiveness of the accounting
and financial controls of the
2
<PAGE>
Corporation, and elicit any recommendations for the
improvement of such internal controls or particular areas
where new or more detailed controls or procedures are
desirable. This inquiry should place particular emphasis on
the adequacy of internal controls to expose any payment,
transactions, or procedures that might be deemed illegal or
otherwise improper.
4. Review with financial management and the independent
accountants the quarterly reports on Form 10-Q. The Chair
of the Audit Committee may represent the entire Audit
Committee for the purposes of this review.
INDEPENDENT ACCOUNTANTS
5. After consultation with the financial management of the
Corporation, recommend to the Board of Directors the
selection of the independent accountants, considering the
independence and effectiveness, and with management's
recommendations approve the fees and other compensation to
be paid to the independent accountants. On an annual basis,
the Audit Committee should review and discuss with the
accountants all significant relationships the accountants
have with the Corporation to determine the accountants'
independence.
6. Review the performance of the independent accountants and
approve any proposed discharge of the independent
accountants when circumstances warrant.
7. Periodically consult with the independent accountants out
of the presence of management about internal controls and
the fullness and accuracy of the Corporation's financial
statements.
FINANCIAL REPORTING PROCESSES
8. In consultation with the independent accountants and the
internal auditors, if any, review the Corporation's
financial reporting processes, both internal and external.
9. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and
practices as suggested by the independent accountants,
management or the internal auditing department.
3
<PAGE>
PROCESS IMPROVEMENT
10. Review with financial management of the Corporation and
independent accountants the results of their analysis of
significant financial reporting issues and practices,
including changes in, or adoptions of, accounting
principles and disclosure practices. Also review with
financial management and the independent accountants their
qualitative judgments about the appropriateness of
accounting principles and financial disclosure practices
used or proposed to be used.
11. Review any significant disagreements among management and
the independent accountants or the internal auditing
department or the company engaged to perform the internal
audit function, if any, in connection with the preparation
of the financial statements.
ETHICAL AND LEGAL COMPLIANCE
12. Review periodically Corporation policy statements to
determine the appropriateness of the Corporation's code of
ethics.
13. Inquire whether management has established a system to
review, monitor and enforce its code of ethics.
14. Inquire whether management has a review system in place to
ensure that the Corporation's financial statements and
other reports filed with governmental organizations satisfy
legal requirements.
15. Report together with the financial management of the
Corporation the results of the annual audit to the Board of
Directors. If requested by the Board of Directors, invite
the independent accountants to attend the full Board of
Directors meeting to assist in reporting the results of the
annual audit or to answer other directors' questions.
16. Review, with the Corporation's counsel, legal compliance
matters including corporate securities trading policies.
17. Review, with the Corporation's counsel, any legal matter
that could have a significant impact on the Corporation's
financial statements.
18. Investigate any matter brought to its attention within the
scope of its duties, with the power to retain outside
counsel for this purpose, if in its judgment, that is
appropriate.
4
<PAGE>
APPENDIX A: DEFINITION OF INDEPENDENCE FOR PURPOSES OF AUDIT COMMITTEE SERVICE
DEFINITION:
Members of the Audit Committee shall be considered independent if they have no
relationship to the Corporation that may interfere with the exercise of their
independence from management and the Corporation.
o been employed by the Corporation or its affiliates in the current
or past three years;
o accepted any compensation from the Corporation or its affiliates
in excess of $60,000 during the previous fiscal year (except for
board service, retirement plan benefits, or non-discretionary
compensation);
o an immediate family member who is, or has been in the past three
year, employed by the Corporation or its affiliates as an
executive officer;
o been a partner, controlling shareholder or an executive officer of
any for-profit business to which the Corporation made, or from
which it received, payments (other than those which arise solely
from investments in the Corporation's securities) that exceed five
percent of the Corporation's consolidated gross revenues for that
year, or $200,000, whichever is more, in any of the past three
years; or
o been employed as an executive of another entity where any of the
Corporation's executives serve on that entity's compensation
committee.
<PAGE>
EXHIBIT 10.7
SEARCH RESULT AGREEMENT
This is to acknowledge a content integration agreement between FindWhat.com
("PARTNER") and Mamma.com ("Mamma.com"). PARTNER and Mamma.com agree to the
following:
1. Mamma.com will include PARTNER search results in the "meta search"
returns that result from queries at the http://www.mamma.com service.
Mamma.com will list Partner's search results ahead of all other search
engines and directories. At least one of PARTNER's search results will
appear among the top five of all results displayed for at least 50% of
all search queries and, in all events, at least one Partner's search
results will appear on the first page of results. Mamma.com will
include at least two additional such results in the first four result
pages. Mamma.com will clearly label the results provided by PARTNER as
those of FindWhat.com. PARTNER must provide Mamma.com with the
PARTNER's top ranked search results for every, and all, queries to be
displayed on www.Mamma.com.
2. Payments: PARTNER will pay Mamma.com [**Redacted**] revenue generated
by visits ("click-through revenue") sent to PARTNER site as a result
of the search returns described in paragraph 1 above.
3. Payment terms: PARTNER will pay Mamma.com within 30 days of receipt of
documentation of the number of visits sent from links described in
paragraph 1 above. Partner may review Mamma.com's records on reasonable
notice to verify the accuracy of such documentation.
4. Confidentiality: The terms of the agreement between Mamma.com and
PARTNER are strictly confidential and not to be disclosed without prior
approval by the other party.
5. Announcements: Both parties will mutually approve any announcement of
this agreement prior to its release. Approval will cover the content of
the announcement and the timing of its release.
6. TERM: ONE YEAR FROM DATE OF EXECUTION UNLESS TERMINATED IN ACCORDANCE
WITH PARAGRAPH 7 BELOW.
7. Termination: After an initial minimum term of 6 months, either party
may terminate this agreement with 30 days written notice. If terminated
in the middle of a month, payments will be pro-rated for the final
month. MAMMA.COM RESERVES THE RIGHT TO TERMINATE THIS AGREEMENT AT ANY
TIME AT ITS SOLE DISCRETION IF IT REASONABLY DEEMS THAT THE SEARCH
RESULTS PROVIDED BY THE PARTNER ARE UNACCEPTABLE WITH REGARDS TO THEIR
RELEVANCE AND QUALITY. PARTNER RESERVES THE RIGHT TO TERMINATE THIS
AGREEMENT AT ANY TIME IN ITS SOLE DISCRETION IF IT REASONABLY DEEMS
THAT THE CONTENT AND/OR QUALITY OF THE MAMMA.COM HAS CHANGED IN AN
UNFAVORABLE MANNER.
<PAGE>
8. Logos/Trademark: PARTNER hereby grants Mamma.com a license to use
PARTNER's trademark "FINDWHAT.COM" and associated logo (to be supplied
by PARTNER) on the Mamma.com service solely as described herein.
9. Indemnification: Mamma.com agrees to indemnify, defend and hold
PARTNER, its successors, officers, directors and employees harmless
from any and all actions, causes of action, claims, demands, costs,
liabilities, expenses (including reasonable attorneys' fees) and
damages arising out of or in connection with any claim relating to the
Mamma.com Service. PARTNER agrees to indemnify, defend and hold
Mamma.com, its successors, officers, directors and employees harmless
from any and all actions, causes of action, claims, demands, costs,
liabilities, expenses (including reasonable attorneys' fees) and
damages arising out of or in connection with any claim relating to the
FINDWHAT.COM.
10. Exclusivity: This agreement is non-exclusive.
11. Content ownership and license: Each party will retain all right, title
and interest in all content and intellectual property in its service.
12. Notices, etc.: Any notice required or permitted by this Agreement shall
be deemed given if delivered by registered mail, postage prepaid,
addressed to the other party at the address shown at the beginning of
this Agreement or at such other address for which such party gives
notice hereunder. Delivery shall be deemed effective three (3) days
after deposit with postal authorities.
13. Severability: If any provision of this Agreement shall be held by a
court of competent jurisdiction to be contrary to law, such provision
shall be changed and interpreted so as to best accomplish the
objectives of the original provision to the fullest extent allowed by
law and the remaining provisions of this Agreement shall remain in full
force and effect.
14. Complete Understanding: This Agreement, including all Exhibits attached
hereto and hereby incorporated by reference, constitutes the final,
complete and exclusive agreement between the parties with respect to
the subject matter hereof, and supersedes any prior or contemporaneous
agreement, either written or oral.
15. Force Majeure: Except with respect to obligations to make payments
hereunder, neither party shall be deemed in default hereunder, nor
shall it hold the other party responsible for, any cessation,
interruption or delay in the performance of its obligations hereunder
due to causes beyond its reasonable control including, but not limited
to, earthquake, flood, fire, storm or other natural disaster, act of
God, labor controversy or threat thereof, civil disturbance or
commotion, disruption of the public markets, war or armed conflict or
the inability to obtain sufficient materials, supplies, labor,
transportation, power or other essential commodity or service required
in the conduct of its business, including internet access, or any
change in or the adoption of any law, ordinance, rule, regulation,
order, judgment or decree.
<PAGE>
16. Independent Contractors: The parties are independent contractors. This
Agreement shall not be construed to create a joint venture or
partnership between the parties. Neither party shall be deemed to be an
employee, agent, partner or legal representative of the other for any
purpose and neither shall have any right, power or authority to create
any obligation or responsibility on behalf of the other.
17. Mamma.com may not alter the display of FindWhat.com search results in
any manner. Mamma.com shall not save or cache any search results
provided by FindWhat.com but shall merely display to its Website
visitors the search results provided by the link of FindWhat.com.
Mamma.com shall not in any manner solicit or, directly or indirectly,
enter into any listing or advertisement agreement with an advertiser
constituting a search result supplied by PARTNER.
Agreed and Accepted:
Mamma.com /s/ Andrew Morgan FindWhat.com /s/ Stacey Roarty
--------------------------- ---------------------------
Name: Andrew Morgan Name: Stacey Roarty
-------------------------------- -----------------------------------
Its: V.P. Sales Its: Director
--------------------------------- ------------------------------------
Date: December 22, 1999 Date:
-------------------------------- -----------------------------------
<PAGE>
EXHIBIT 10.8
SEARCH SERVICES AGREEMENT
THIS SEARCH SERVICES AGREEMENT (this "Agreement") is entered into as of
March 7, 2000, by and between Go2Net, Inc., a Delaware corporation having its
principal place of business at 999 Third Avenue, Suite 4700, Seattle, WA 98109
("Go2Net"), and FindWhat.com, a Nevada corporation having its principal place of
business at 520 Broadway, Suite 230, Santa Monica, CA 90401 ("Partner").
RECITALS
WHEREAS, Go2Net offers and provides metasearch services through its
network of Web sites, currently available through, but not limited to, the
Uniform Resource Locators ("URL(S)") www.go2net.com, www.metacrawler.com, and
www.dogpile.com (collectively, the "GO2NET METASEARCH SERVICE") which enable
users to simultaneously search the World Wide Web using multiple third-party
search engines by entering a query or request for information in a search box
posted on a World Wide Web site, which submits those queries or requests to the
Go2Net Metasearch Service;
WHEREAS Partner has developed a full-text World Wide Web search engine
and/or a directory service currently accessible through the URL
www.findwhat.com, which provides users with results based upon search queries.
WHEREAS, Partner wishes to have its Search Results (defined below) used
and incorporated in the Go2Net Metasearch Services (as defined below) on the
terms and conditions set forth herein;
NOW THEREFORE, in exchange for the mutual promises herein, and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS.
"AGENCY COMMISSIONS" shall mean the portion of fees, payable to Partner
as the result of Paid Click Throughs and Fee-Based Referrals, which are payable
by Partner to unaffiliated third parties in reasonable consideration for sales,
marketing, and distribution efforts. Partner shall document all Agency
Commissions that impact the Payments as part of the monthly Report (as set forth
in paragraphs 3.2 and 3.3 respectively). FindWhat shall not deduct Agency
Commissions in excess of 15% per Paid Click Through or Fee-Based Referral when
calculating the Payment. Additionally, FindWhat shall not apply deductions of
Agency Commissions to greater than 17.5% of the aggregate number of Paid Click
Throughs and Fee-Based Referrals when calculating the Payment.
"CLICK THROUGH(S)" shall mean each instance in which a user of the
Go2Net Metasearch Service is directed/referred to a Web site as the result of
that user directing an Internet browser to access that Web site via a hypertext
link posted within a Search Result.
"DOGPILE" shall mean the Go2Net metasearch engine that processes user
search queries directed to the Internet domain dogpile.com.
"EFFECTIVE DATE" shall mean the earlier of to occur of (i) May 1, 2000
or (ii) the first date on which Go2Net incorporates Search Results on the
Results Pages PROVIDED, HOWEVER, that Go2Net shall not be obligated to include
Search Results in the Results Pages until such time as Go2Net shall have
received the duly executed and delivered Warrant.
"FEE-BASED REFERRAL(S)" shall mean each instance in which a user of the
Partner Search Engine is directed/referred to a Web site as the result of that
user directing an Internet browser to access that Web site via a hypertext link
posted by the Partner Search Engine, and a third party has agreed to pay a
Referral Fee to Partner in exchange for each such referral.
<PAGE>
"INTELLECTUAL PROPERTY" means any intellectual property or proprietary
rights, including but not limited to, copyright rights (including rights in
audiovisual works), moral rights, trademark (including logos, slogans, trade
names, service marks), patent rights (including patent applications and
disclosures), know-how, inventions, rights of priority, and trade secret rights,
recognized in any country or jurisdiction in the world.
"METACRAWLER" shall mean to the Go2Net metasearch engine that processes
user search queries directed to the Internet domain metacrawler.com.
"NET REFERRAL FEES" shall mean Referral Fees less Agency Commissions
applied thereto.
"PAID CLICK THROUGH(S)" shall mean only those Click Throughs for which
third parties have agreed to pay a Referral Fee to Partner.
"PARTNER SEARCH ENGINE" means the full-text World Wide Web search
engine(s) and/or directory service(s) under the name of, and/or which is/are
operated, licensed, controlled, owned, leased, by, Partner, which can currently
be accessed through the URL www.findwhat.com, as Partner may update the same
from time to time.
"PARTNER SITE" means Partner's site on the World Wide Web with the
following URL: www.findwhat.com.
"REFERRAL FEE(S)" means the dollar amount payable to Partner by third
parties in exchange for each Paid Click Through and each Fee-Based Referral.
Referral Fees shall not result in such cases that Paid Click Throughs and
Fee-Based Referrals result directly from (i) a user repeatedly accessing the
Search Results without the intent to perform a search and for the sole purpose
of generating revenues for Go2Net under this Agreement, or by a bot, macro
program, Internet agent, or any other automatic means, or (ii) malicious Paid
Click Throughs (which, for purpose of this Agreement, means any user who
repeatedly accesses the Search Results for the purpose of increasing the
payments an advertiser must make to FindWhat).
"RESULTS PAGE(S)" shall mean each page in the Go2Net Metasearch Service
that contains Search Results and/or search results from other third party World
Wide Web search engines and/or directory services.
"SEARCH RESULT(S)" shall mean the information provided to the Go2Net
Metasearch Service by the Partner Search Engine, which shall include descriptive
text and a hypertext link to a Web page, in response to a user query submitted
to the Partner Search Engine by any of the Go2Net Metasearch Service. Partner
may limit the Search Results to those results that may earn a Referral Fee.
"WARRANT" shall mean the warrant to purchase 725,000 shares of the
Common Stock of Partner at an exercise price of $5.50 per share, executed and
delivered by Partner to and in the name of Go2Net, in the form attached hereto
as Exhibit A.
2. THE LICENSE.
2.1 GRANT. Subject to the terms and conditions of this Agreement, Partner
hereby grants to Go2Net during the Term the non-exclusive, royalty
free, worldwide license to use the Partner Search Engine as part of the
Go2Net Metasearch Service and to display the Search Results. To the
extent the use of the Partner Search Engine and display of the Search
Results is deemed to be reproduction, transmission, or distribution,
Go2Net is further granted a non-exclusive, royalty-free, worldwide
license to use, transmit, distribute, and publicly display the Partner
Search Engine and Search Results so as to enable users of the Go2Net
Metasearch Service to search the Web using the Partner Search Engine
and access the Search Results.
-2-
<PAGE>
2.2 RIGHT TO INCLUDE IN SEARCH RESULTS. The foregoing license includes the
right of Go2Net to query the Partner Search Engine in real-time for
each search conducted on the Go2Net Metasearch Service, and to format
the Search Results in a Results Page(s), and to include advertising,
sponsorships, links, and other messaging and promotions on the Results
Page(s).
3. OPERATIONS.
3.1 INCLUSION IN SEARCH RESULTS. Subject to user customization and any
applicable performance standards, in response to the users' submission
of search queries, Go2Net shall include the display of Search Results
(i) on the second Results Page of Dogpile and (ii) on one or more
Results Pages of MetaCrawler in a manner consistent with the then
current text-based implementation on the Results Pages of MetaCrawler.
3.1.1 CHANGES TO PARTNER SEARCH ENGINE. Partner shall provide Go2Net timely
notice of changes to Partner Search Engine results formatting, and
Partner shall actively work with Go2Net to provide the Go2Net
Metasearch Service with continuous access to the Search Results.
3.2 PAYMENTS. Within 30 calendar days, following the end of each
calendar month during the term of this Agreement, Partner shall pay
to Go2Net [**Redacted**]
3.2.1 EXAMPLE: [**Redacted**]
3.3 REPORTS AND RECORDS. With each payment made under this Agreement,
Partner shall provide to Go2Net a written report with the information
and data, reasonably requested by Go2Net, related to the Search
Results, Paid Click Throughs, Fee-Based Referrals, the average monthly
Referral Fee, Agency Commissions, and revenues derived by Partner.
Go2Net reserves the right to contest the contents of such report and
the respective payment amount within thirty (30) days of receipt of
such report. In the event of such a contest, the parties agree to use
good faith efforts to resolve any dispute within thirty (30) days of
the notice of such contest from Go2Net. Upon the expiration of such
thirty (30) day period, the parties agree to refer any unresolved
disputes to arbitration, in accordance with the commercial arbitration
rules of the American Arbitration Association then in effect. Each
party shall maintain true and complete records relating to its
respective performance under this Agreement, all of which shall
accurately reflect to actual underlying data.
3.4 AUDITS. Partner agrees that, given written notice of three (3) business
days, at the expense of Go2Net, Go2Net, and/or parties duly authorized
by Go2Net, shall have the right to audit the records of Partner to
confirm compliance with the terms of this Agreement. Any such audit
shall be conducted during normal business hours and shall not unduly
interfere with Partner's ability to conduct business. Partner agrees
that, in the event that Go2Net demonstrates that discrepancies equal
to, or greater than, five percent (5%) exist, Partner shall pay to
Go2Net all costs associated with such audits.
3.5 AUTHORIZE.NET. Go2Net and Partner will work together in good faith to
evaluate a mutually agreeable plan for allowing Authorize.Net merchants
to enter into Referral Fee arrangements. The terms and conditions of
such a plan, including any compensation to Go2Net, are to be mutually
agreed upon by the parties.
4. TERM.
4.1 TERM. The term of this Agreement shall commence on the Effective Date
and continue for a period of one (1) year after the Effective Date,
unless earlier terminated as set forth herein (the "TERM").
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5. MINIMUM PERFORMANCE STANDARDS.
5.1 On a search by search basis, Go2Net shall not be obligated to include
Search Results, if Partner fails to deliver such Search Results in
compliance with Go2Net's proprietary algorithm for the respective
Go2Net Metasearch Service, including with respect to response time and
relevancy, as consistently applied to all third party search engines by
Go2Net within the respective Go2Net Metasearch Service.
5.2 Go2Net shall not otherwise be obligated to include the Search Results,
if the following events occur and Go2Net delivers written notice
thereof to Partner: (a) Partner fails to deliver Search Results that
are reasonably relevant to the respective user searches, as reasonably
determined by Go2Net;or (b) Partner delivers Search Results which, in
the determination of Go2Net, (i) include content that may violate
applicable law or infringe upon third party rights; or (ii) include
content that may be defamatory, obscene or otherwise objectionable;
PROVIDED, HOWEVER, that Partner shall have the right to deliver the
Search Results, if within fifteen (15) days of such written notice,
Partner complies with the foregoing standards in the reasonable
judgment of Go2Net.
5.3 Notwithstanding the foregoing minimum performance requirements, each of
the parties reserves its respective rights to remove, in its sole
discretion, any material or content from pages hosted by it, which it
reasonably believes may violate applicable law, third party rights or
is otherwise objectionable; and Go2Net reserves the right to adjust the
volume of searches submitted to Partner and the proportional mix of
results included on the Results Page(s) in order to maintain the
quality of the Go2Net Metasearch Service.
6. PROPRIETARY RIGHTS.
6.1 OWNERSHIP. Partner understands and agrees that Go2Net is the exclusive
holder of and shall retain, all right, title and interest in and to the
Go2Net Metasearch Service, including without limitation all
Intellectual Property therein. Go2Net understands and agrees that
Partner is the exclusive owner of and holds and shall retain, all
right, title, and interest in and to the Partner Search Engine,
including without limitation all Intellectual Property therein.
6.2 INTELLECTUAL PROPERTY. If a party desires to use any of the other
party's Intellectual Property the requesting party will obtain the
appropriate approvals and guidelines for use of the other party's
Intellectual Property from the other party. Nothing herein shall grant
a party any right, title or interest in the other party's Intellectual
Property. At no time during or after the term of this Agreement shall a
party challenge or assist others to challenge the other party's
Intellectual Property or the registration thereof or attempt to
register any trademarks, marks, or trade names confusingly similar to
those or the other party.
7. CONFIDENTIALITY.
7.1 CONFIDENTIAL INFORMATION. Each party (the "RECEIVING PARTY")
acknowledges that by reason of its relationship to the other party (the
"DISCLOSING PARTY") hereunder, the Receiving Party will have access to
certain information and materials, including the terms of this
Agreement, concerning the Disclosing Party's business, plans,
technology, products, and services that are confidential and of
substantial value to the Disclosing Party, the value of which would be
impaired if such information were disclosed to third parties
("CONFIDENTIAL INFORMATION"). The Receiving Party agrees that it shall
not use in any way for its own account or the account of any third
party, nor disclose to any third party, any such Confidential
Information revealed to it by the Disclosing Party. The Receiving Party
shall take every reasonable precaution to protect the confidentiality
of Confidential Information. Upon request by the Receiving Party, the
Disclosing Party shall advise
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whether or not it considers any particular information to be
Confidential Information. The Receiving Party shall not publish any
technical description of the Disclosing Party's Confidential
Information beyond any descriptions published by the Disclosing
Party. In the event of expiration or termination of this Agreement,
there shall be no use or disclosure by the Receiving Party of any
Confidential Information of the Disclosing Party, and the Receiving
Party shall not develop any software, devices, components, or
assemblies utilizing the Disclosing Party's Intellectual Property.
7.2 EXCLUSIONS. Confidential Information does not include any information
that the Receiving Party can demonstrate by written records: (a) was
known to the Receiving Party prior to its disclosure hereunder by the
disclosing party; (b) is independently developed by the Receiving
Party; (c) is or becomes publicly known through no wrongful act of the
Receiving Party; (d) has been rightfully received from a third party
whom the Receiving Party has reasonable grounds to believe is
authorized to make such disclosure without restriction; (e) has been
approved for public release by the Disclosing Party's prior written
authorization; or (f) must be produced or disclosed pursuant to
applicable law, regulation or court order, provided that the receiving
party provides prompt advance notice thereof to enable the disclosing
party to seek a protective order or otherwise prevent such disclosure.
In addition, Go2Net and Partner may disclose the existence and terms of
this Agreement in connection with a potential acquisition of
substantially the entire business of the other party, or a private or
public offering of securities of either party.
8. REPRESENTATIONS AND WARRANTIES.
8.1 Partner represents and warrants to Go2Net: that it has the right to
grant the rights hereunder; that it holds the necessary rights to
permit the use of the Search Results for the purposes of this
Agreement; that its entry into this Agreement does not violate any
agreement with any other party; that its performance under this
Agreement will conform to applicable U.S. laws and government rules and
regulations; that the use, reproduction, distribution, transmission, or
display of the Search Results, as contemplated by this Agreement will
not (i) violate applicable local, state or Federal law or infringe upon
any Intellectual Property rights or other rights of third parties; or
(ii) contain any material that is defamatory or otherwise any material
that promotes wrongful conduct that would constitute a criminal offense
or give rise to civil liability.
9. LIMITATION OF LIABILITY AND DISCLAIMER.
9.1 LIMITATION OF LIABILITY. NEITHER GO2NET NOR PARTNER MAKES ANY WARRANTY
WHATSOEVER WITH REGARDS TO THE FEATURES, FUNCTIONS, PERFORMANCE,
QUALITY, OR OTHER CHARACTERISTICS OF THE SERVICE EACH COMPANY PROVIDES.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO EACH OTHER OR ANY OTHER
ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES,
HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, AND NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. GO2NET SHALL NOT BE
LIABLE TO PARTNER OR ANY OTHER PARTY FOR ANY DAMAGES ARISING FROM THIRD
PARTY UNAUTHORIZED ACCESS OR USE OF THE GO2NET METASEARCH SERVICE.
PARTNER SHALL NOT BE LIABLE TO GO2NET OR ANY OTHER PARTY FOR ANY
DAMAGES ARISING FROM THIRD PARTY UNAUTHORIZED ACCESS OR USE OF THE
PARTNER SEARCH ENGINE.
9.2 DISCLAIMER. GO2NET MAKES NO OTHER WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE GO2NET
METASEARCH SERVICE, AND GO2NET SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE. GO2NET DOES NOT WARRANT THAT THE OPERATION OF THE
GO2NET METASEARCH SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE.
FURTHERMORE, GO2NET DOES NOT MAKE ANY REPRESENTATIONS REGARDING
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THE USE OR THE RESULTS OF THE USE OF THE GO2NET METASEARCH SERVICE
IN TERMS OF THEIR CORRECTNESS, ACCURACY, RELIABILITY OR OTHERWISE.
9.3 DISCLAIMER. PARTNER MAKES NO OTHER WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE PARTNER
SEARCH ENGINE, AND PARTNER SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE. PARTNER DOES NOT WARRANT THAT THE OPERATION OF THE
PARTNER SEARCH ENGINE WILL BE UNINTERRUPTED OR ERROR-FREE. FURTHERMORE,
PARTNER DOES NOT MAKE ANY REPRESENTATIONS REGARDING THE USE OF THE
SEARCH RESULTS OR THE USE OF THE PARTNER SITE IN TERMS OF THEIR
CORRECTNESS, ACCURACY, RELIABILITY OR OTHERWISE.
10. TERMINATION.
10.1 TERMINATION FOR BREACH OR INSOLVENCY. Either party shall have the right
to terminate this Agreement on written notice if (a) the other party
ceases to do business in the ordinary course or is insolvent, i.e.,
unable to pay its debts in the ordinary course as they come due, or is
declared bankrupt, or is the subject of any liquidation or insolvency
proceeding which is not dismissed within ninety (90) days, or makes any
assignment for the benefit of creditors, (b) the other party breaches
any material term of this Agreement and fails to cure such breach
within thirty (30) days after written notice thereof, or (c) the other
party fails to timely make any payment hereunder.
10.2 EFFECT OF TERMINATION. Upon the expiration or termination of this
Agreement:
10.2.1 Each party shall, within thirty (30) days of such expiration or
termination return to other party or destroy all Confidential
Information and all other material received from such other party.
10.2.2 All rights granted by Go2Net hereunder to Partner shall terminate.
10.2.3 All rights granted by Partner hereunder to Go2Net shall terminate.
10.3 SURVIVAL. Sections 3.2, 3.3, 3.4, 7, 8, 9, and 11 shall survive any
expirations or terminations of this Agreement.
11. MISCELLANEOUS.
11.1 INDEMNIFICATION BY PARTNER. With respect to claims or actions against
one or both parties by third parties insofar as such claim, demand or
action is attributable to the acts or omissions of Partner, including
without limitation claims based upon the violation of applicable law or
infringement of Intellectual Property rights or other third party
rights, or a breach by Partner of a representation and/or warranty made
in this Agreement, Partner shall (i) indemnify Go2Net against any
liability, cost, loss, or expense of any kind; and (ii) hold harmless
Go2Net and save it from any liability, cost, loss, or expense of any
kind. Go2Net shall have the right to select and control legal counsel
for the defense of any such claim, demand or action and for any
negotiations relating to any such claim, demand or action; however, to
the extent any such claim is covered in full by this indemnity, Partner
shall have the right, to such extent, to control the defense of such
claim; and Partner must approve any settlement of any such claim,
demand or action to the extent that such settlement imposes any
restrictions on or requires Partner to contribute financially to such
settlement.
INDEMNIFICATION BY GO2NET. With respect to claims or actions against
one or both parties by third parties insofar as such claim, demand or
action is attributable to the acts or omissions of Go2Net, including
without limitation claims based upon the violation of applicable law or
infringement of
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Intellectual Property rights or other third party rights, or a
breach by Go2Net of a representation and/or warranty made in this
Agreement, Go2Net shall (i) indemnify Partner against any liability,
cost, loss, or expense of any kind; and (ii) hold harmless Partner
and save it from any liability, cost, loss, or expense of any kind.
Partner shall have the right to select and control legal counsel for
the defense of any such claim, demand or action and for any
negotiations relating to any such claim, demand or action; however,
to the extent any such claim is covered in full by this indemnity,
Go2Net shall have the right, to such extent, to control the defense
of such claim; and Go2Net must approve any settlement of any such
claim, demand or action to the extent that such settlement imposes
any restrictions on or requires Go2Net to contribute financially to
such settlement.
11.2 INJUNCTIVE RELIEF. The parties acknowledge that the breach or
threatened breach of Section 7 would cause irreparable harm to the
non-breaching party, the extent of which would be difficult to
ascertain. Accordingly, each party agrees that, in addition to any
other remedies to which a party may be legally entitled, a party may
seek immediate injunctive relief in the event of a breach or threatened
breach of such sections by the other party or any of the other party's
employees or subcontractors.
11.3 ASSIGNMENT. Except as set forth herein, neither party may assign this
Agreement, without the prior written consent of the other party.
Notwithstanding the foregoing, either party may assign this Agreement
to (a) to any affiliate, division, or subsidiary able to timely deliver
the services contemplated by this Agreement, or (b) to any purchaser of
all or substantially all of such party's assets or to any successor by
way of merger, consolidation, or similar transaction. Subject to the
foregoing, this Agreement will be binding upon, enforceable by, and
inure to the benefit of the parties and their respective successors and
assigns.
11.4 WAIVER AND AMENDMENT. No modification, amendment or waiver of any
provision of this Agreement shall be effective unless in writing and
signed by the party to be charged. No failure or delay by either party
in exercising any right, power, or remedy under this Agreement shall
operate as a waiver of any such right, power or remedy.
11.5 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Washington without giving effect to the conflict of law
principles thereof.
11.6 NOTICES, ETC. Any notice required or permitted by this Agreement shall
be deemed given if delivered by registered mail, postage prepaid,
addressed to the other party at the respective address shown at the
beginning of this Agreement or at such other address for which such
party gives notice hereunder. Delivery shall be deemed effective three
(3) days after deposit with postal authorities.
11.7 INDEPENDENT CONTRACTORS. The parties are independent contractors with
respect to each other. Each party is not and shall not be deemed to be
an employee, agent, partner, joint venturer or legal representative of
the other for any purpose and shall not have any right, power, or
authority to create any obligation or responsibility on behalf of the
other.
11.8 SEVERABILITY. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be contrary to law, such provision
shall be changed and interpreted so as to best accomplish the
objectives of the original provision to the fullest extent allowed by
law and the remaining provisions of this Agreement shall remain in full
force and effect.
11.9 COMPLETE UNDERSTANDING. This Agreement, including all Exhibits attached
hereto and hereby incorporated by reference, constitutes the final,
complete and exclusive agreement between the parties with respect to
the subject matter hereof, and supersedes any prior or contemporaneous
agreement, either written or oral.
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11.10 FORCE MAJEURE. Except with respect to obligations to make payments
hereunder, neither party shall be deemed in default hereunder, nor
shall it hold the other party responsible for, any cessation,
interruption or delay in the performance of its obligations hereunder
due to causes beyond its reasonable control including, but not limited
to: earthquake, flood, fire, storm or other natural disaster, act of
God, labor controversy or threat thereof, civil disturbance or
commotion, disruption of the public markets, war or armed conflict or
the inability to obtain sufficient material, supplies, labor,
transportation, power or other essential commodity or service required
in the conduct of its business, including internet access, or any
change in or the adoption of any law, ordinance, rule, regulation,
order, judgment or decree.
11.11 PUBLICITY. The parties shall cooperate to issue one or more joint press
releases announcing this Agreement; such joint press release shall
require the approval of both parties prior to issuance. As long as one
party or the other has not provided the other party with notice of
withdrawal of permission, the parties shall be permitted to use
previously approved text with no further approvals subject to the text
being substantially the same with allowance only of context and time.
Except in the course of performing pursuant to this Agreement, the
parties shall not publicize their relationship or the work done in
connection with this Agreement without the prior written approval of
the other party.
The remainder of this page left blank intentionally.
IN WITNESS WHEREOF, the parties have caused this Agreement to executed
effective as of the day and year first set forth above.
FINDWHAT, INC. GO2NET, INC.
By: /s/ Craig A. Pisaris-Henderson By: /s/ Thomas M. Camp
-------------------------------------- ---------------------------
Craig A. Pisaris-Henderson Thomas M. Camp
President and Chief Vice President, Business
Technology Officer Development
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EXHIBIT 10.9
ADVERTISING AGREEMENT
AGREEMENT made as of the 14th day of January, 2000 (the
"EFFECTIVE DATE"), by and among BEASLEY INTERNET VENTURES, LLC, a Delaware
limited liability company ("BEASLEY") and FINDWHAT.COM, a Nevada corporation
(herein called "FINDWHAT").
ARTICLE I.
GENERAL DEFINITIONS
1.1 "Affiliate" of the Person concerned shall mean a Person that
directly or indirectly (through one or more intermediaries) controls, is
controlled by, or is under common control with such Person concerned.
1.2 "Beasley Competitor" shall mean any Person, other than Beasley,
who/which is engaged either directly, or indirectly through an Affiliate, in
radio programming or radio program distribution whether free over-the-air,
cable, telephone, local, microwave, direct broadcast satellite, via Internet or
otherwise in North America.
1.3 "Beasley Radio Network" shall mean those radio stations listed on
Exhibit C, attached hereto, as amended from time to time to reflect future
acquisitions and dispositions of radio stations by Beasley and its Affiliates.
1.4 "Content" shall mean text, graphics, photographs, video, audio
and/or other data or information relating to any subject and/or advertisements.
1.5 "Examination Commencement Date" shall have the meaning provided in
Section 2.2(a).
1.6 "Findwhat Site" shall mean the Internet Web Site owned by Findwhat
with a web address of www.findwhat.com, as may be changed from time to time.
1.7 "Internet" shall mean a global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol and/or
such other standard network interconnection protocols as may be adopted from
time to time, which is used to transmit Content that is directly of indirectly
delivered to a computer or other digital electronic device for display to an
end-user, whether such Content is delivered through on-line browsers, off-line
browsers, or through "push" technology, electronic mail, broadband distribution,
satellite, wireless or otherwise.
1.8 "Internet Web Site" or "Web Site" shall mean any site or service
delivering Content on or through the Internet, including, without limitation,
any on-line service such as America Online and Compuserve.
1.9 "Person" shall mean individual, partnership, corporation or
organized group of persons, including agencies and other instrumentalities of
governments and states.
1.10 "Term" shall mean the term specified in Article 3.
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1.11 "Purchase Agreement" shall mean that Common Stock Purchase
Agreement dated as of the Effective Date by and between Findwhat and Beasley.
ARTICLE II.
BEASLEY ADVERTISING
2.1 PLACEMENT AND PAYMENT OF ADVERTISING.
(a) In exchange for the cash payments set forth and in
accordance with Section 2.1(d), Beasley shall arrange for the placement of radio
broadcast advertising on the Beasley Radio Network of the Findwhat Site and
Findwhat's other products and services of the placement types set forth in the
Advertising placement roster set forth in Exhibit A attached hereto, with an
aggregate value of Three Million One Hundred Eighty Thousand Dollars
($3,180,000) (the "CONTRACTED ADVERTISING AMOUNT"). In the event that Beasley
reduces the principal amount of the Note (as defined in Section 2.1(d) below)
pursuant to Section 12.7 of the Purchase Agreement, the Contracted Advertising
Amount shall automatically be reduced by an amount equal to such reduction in
the principal amount of the Note. Beasley shall arrange for the placement of
advertising among the stations in the Beasley Radio Network in accordance with
the advertising plan in Exhibit B attached hereto. All advertising materials
shall be subject to any applicable Beasley advertising guidelines and the
standard Beasley preemption policies.
(b) The value of all broadcast advertising provided hereunder
shall be as provided in Exhibit B hereto.
(c) Within twenty (20) days of the end of each calendar month,
Beasley will provide to Findwhat monthly invoices (each, an "ADVERTISING
INVOICE") dated as of the last day of the month in question (the "ADVERTISING
INVOICE DATE") showing the (i) value attributable to each of the placement types
with respect to the advertising purchased by Findwhat during the statement
period and (ii) the value of total advertising purchased for the period in
question (the "MONTHLY ADVERTISING AMOUNT") and the calculations performed to
determine such value.
(d) Within ten (10) business days of receipt of an Advertising
Invoice, Findwhat shall pay to Beasley, by certified or cashier's check, an
amount equal to the Monthly Advertising Amount, PROVIDED, HOWEVER, that Findwhat
may elect, in its sole discretion, to offset such payment obligation by reducing
the amounts owed under that certain Promissory Note, dated as of the date
hereof, made by Beasley, in the aggregate principal amount of Three Million
Dollars ($3,000,000) (the "Note"). Unless Findwhat provides Beasley written
notice to the contrary within five (5) business days of receipt of an
Advertising Invoice, Findwhat shall be deemed to have elected to reduce the
principal amount owed by Beasley under the Note and any accrued interest thereon
by the amount indicated in the Advertising Invoice in order to satisfy
Findwhat's obligation under this Section 2.1(d). Such reduction shall be deemed
to be made effective as of the Advertising Invoice Date.
2.2 ACCESS TO BOOKS AND RECORDS.
(a) Beasley will maintain accurate books and records which
report the value of advertising purchased by Findwhat and information from which
the calculation can be derived. Findwhat may, at its own expense, examine those
books and records on an annual basis.
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Findwhat may request such an examination upon no less than ten (10) business
days written notice to Beasley which shall commence on a date (the
"EXAMINATION COMMENCEMENT DATE") mutually agreeable to Beasley and Findwhat.
Such annual examination shall be completed within seven (7) days of the
Examination Commencement Date. Findwhat may make its examination only during
Beasley's usual business hours, and at the address set forth herein for the
provision of notices to Beasley, unless otherwise notified. No such
examination shall materially interfere with the normal business operations of
Beasley.
(b) Subject to the limitations of Section 2.2(a) hereof, if
upon examination of Beasley's books and records, Findwhat determines that
Beasley has failed to properly account for the value of advertising purchased by
Findwhat hereunder, Findwhat shall advise Beasley in writing of the basis for
its assertion, together with the information necessary to demonstrate Beasley's
failure to properly account for the value of advertising purchased by Findwhat
("FINDWHAT'S OBJECTION"). If Beasley agrees with Findwhat, then Beasley will
make appropriate adjustment(s) to the cumulative total of advertising to be run
during the remainder of the Term. If Beasley disagrees with Findwhat's
assertion, the parties shall negotiate in good faith to resolve any differences
for a period of seven (7) days, after which time if the parties continue to
disagree, they shall select a firm of independent certified public accountants
of national recognition (other than a firm which then serves as the independent
auditor for Beasley or Findwhat or any of their respective Affiliates) to
resolve the matter, whose decision on the matter shall be binding. If Beasley
and Findwhat are unable to agree on such a firm, then the regular independent
auditors for Findwhat and Beasley shall mutually agree upon a third independent
certified public accounting firm of national recognition, whose decision on the
matter shall be binding. Beasley and Findwhat shall share equally the fees and
expenses of the certified public accounting firm ultimately chosen. If Beasley
has not received Findwhat's Objection within fourteen (14) days of the
Examination Commencement Date, Findwhat shall be deemed to have been satisfied
with the results of its examination and shall not be entitled to the remedies
set forth in this Section 2.2(b).
2.3 SUSPENSION OF ADVERTISING. Beasley shall have the right to
suspend and/or withdraw placement of all advertising that includes any
trademark or tradename used by Findwhat, including but not limited to,
"FINDWHAT" and "FINDWHAT.COM": (i) pending resolution of any third party
claim alleging infringement of such third party's rights because of use by
Findwhat in the United States of the tradename or trademark in question
and/or (ii) during such time as Findwhat is enjoined from using the tradename
or trademark in question in the United States on or in connection with the
Findwhat Site and has not ceased use of the tradename or trademark in
question.
ARTICLE III.
TERM
The term of this Agreement shall begin as of the date hereof
and shall continue in full force and effect for a period of two (2) consecutive
years from the Effective Date (I.E., through and including January 13, 2002)
unless it is terminated earlier in accordance with the terms and conditions
stated herein (the "TERM").
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ARTICLE IV.
WARRANTIES, REPRESENTATIONS AND COVENANTS
4.1 BEASLEY. Beasley represents and warrants that:
(a) it has full power and authority to enter into and fully
perform this Agreement; and
(b) this Agreement has been duly authorized and is enforceable
in accordance with its terms.
4.2 FINDWHAT. Findwhat represents and warrants that:
(a) it has full power and authority to enter into and fully
perform its obligations under this Agreement; and
(b) this Agreement has been duly authorized and is enforceable
in accordance with its terms.
4.3 FINDWHAT COVENANTS. Findwhat covenants that:
(a) at all times during the Term, Findwhat shall comply with
all applicable federal, state, local and foreign laws;
(b) at all times during the Term, Findwhat shall maintain the
Findwhat Site in a professional manner consistent with industry standards;
(c) advertising material and any portion thereof created by or
on behalf of Findwhat and furnished by Findwhat to Beasley and the use thereof
shall not violate any law or infringe upon or violate the rights of any Person.
(d) Findwhat shall prevent the Findwhat Site from ceasing to
operate (i) more than two (2) consecutive hours per week over a sixty (60) day
period or (ii) more than ten (10) consecutive days, PROVIDED, HOWEVER, that if
the failure of the Findwhat Site to operate is as a result of circumstances
beyond Findwhat's control, Findwhat shall not be deemed to be in breach of this
Section 4.3(d)(ii) unless the Findwhat Site ceases to operate for more than
twenty (20) consecutive days.
ARTICLE V.
INDEMNIFICATION
5.1 INDEMNIFICATION BY FINDWHAT. Findwhat shall indemnify
Beasley, its members and each of their respective directors, officers,
employees, Agents and representatives (hereinafter referred to collectively
as "Beasley Indemnitees") against, and hold them harmless from, any and all
losses, damages, costs, liabilities, claims, obligations and expenses,
including reasonable legal fees and expenses, incurred or suffered by a
Beasley Indemnitee, as incurred (payable promptly upon written request),
arising from, in connection with or otherwise with
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respect to any breach, misrepresentation, or other violation of any covenant,
representation, warranty, term, condition or agreement of Findwhat contained
in this Agreement. The foregoing indemnity is intended by Findwhat to cover
all acts, suits, proceedings, claims, demands, assessments, adjustments,
diminution in value, costs and expenses with respect to any and all of the
specific matters in this indemnity set forth.
5.2 INDEMNIFICATION BY BEASLEY. Beasley shall indemnify
Findwhat, its directors, officers, employees, Agents and representatives
(hereinafter referred to collectively as "FINDWHAT INDEMNITEES") against, and
hold them harmless from, any and all losses, damages, costs, liabilities,
claims, obligations and expenses, including reasonable legal fees and
expenses, incurred or suffered by a Findwhat Indemnitee, as incurred (payable
promptly upon written request), arising from, in connection with or otherwise
with respect to any breach, misrepresentation, or other violation of any
covenant, representation, warranty, term, condition or agreement of Beasley
contained in this Agreement. The foregoing indemnity is intended by Beasley
to cover all acts, suits, proceedings, claims, demands, assessments,
adjustments, diminution in value, costs and expenses with respect to any and
all of the specific matters in this indemnity set forth.
5.3 CONDUCT OF PROCEEDINGS. If any claim or proceeding covered
by Sections 5.1 or 5.2 shall arise, the party which seeks indemnification
(the "INDEMNIFIED PARTY") shall give written notice thereof to the other
party (the "INDEMNITOR") promptly after the Indemnified Party learns of the
existence of such claim or proceeding; PROVIDED, HOWEVER, that the
Indemnified Party's failure to give the Indemnitor prompt notice shall not
bar the Indemnified Party's right to indemnification unless such failure has
materially prejudiced the Indemnitor's ability to defend the claim or
proceeding. The Indemnitor shall have the right to employ counsel reasonably
acceptable to the Indemnified Party to defend against any such claim or
proceeding, or to compromise, settle or otherwise dispose of the same, if the
Indemnitor deems it advisable to do so, all at the expense of the Indemnitor.
The parties will fully cooperate in any such action, and shall make available
to each other any books or records useful for the defense of any such claim
or proceeding.
5.4 EXCLUSIVE REMEDY. Except with respect to third party claims
for which each party shall fully indemnify the other in accordance with the
procedures set forth in this Article 5 neither party shall be liable to the
other party for any "business interruption" or any loss of profits, any
indirect, incidental, special, punitive or consequential damages hereunder,
whether foreseeable or not.
5.5 LIMITS ON AND CONDITIONS OF INDEMNIFICATION; THRESHOLD AND
CAP. Notwithstanding any other provision hereof, no Indemnified Party shall
be entitled to make a claim against an Indemnitor in respect of any breach of
this Agreement except to the extent that the aggregate amount of such damages
exceeds the amount of Thirty Thousand Dollars ($30,000); PROVIDED, HOWEVER,
that once such aggregate has been exceeded, such Indemnitor shall be liable
for the full amount of such damages. Notwithstanding any other provision of
the Agreement, neither the indemnity obligation of Seller nor the indemnity
obligation of Buyer shall exceed Three Million Dollars ($3,000,000).
Notwithstanding the preceding sentence, any amount of damages counted toward
the indemnity threshold and Three Million Dollar ($3,000,000) cap on
Findwhat's indemnification obligations in Section 12.6 of
5
<PAGE>
the Purchase Agreement shall also be counted against the indemnity threshold
and cap on Findwhat's indemnification obligations in this Section 5.5.
5.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
RIGHTS. The several covenants, representations, warranties, terms, conditions
or agreements contained herein, and the parties respective indemnification
rights pursuant to Article 5, shall endure for the Term, at which time the
same shall expire (except for Claims asserted during the Term).
ARTICLE VI.
REMEDIES
6.1 FINDWHAT'S RIGHT OF TERMINATION. The Agreement may be
terminated by Findwhat if Findwhat is not then in material default, upon
written notice to Beasley upon the occurrence of any of the following:
(a) Beasley breaches any material term or condition of this
Agreement or the Purchase Agreement and has failed to cure such breach within
thirty (30) days following notice of default. The foregoing cure period will not
apply to: (i) a term or condition for which a specific cure period is provided,
or (ii) a breach incapable of being cured.
(b) If the BRN Cume (as defined in Exhibit B, paragraph 2)
drops below One Million Five Hundred Thousand (1,500,000) listeners.
(c) If Beasley sells each and every one of the radio stations
listed on Exhibit D in one or more transactions during the Term.
6.2 UPON TERMINATION. Upon termination of this Agreement
pursuant to Section 6.1, the parties shall be released and discharged from
any further obligation under this Agreement. Notwithstanding the foregoing,
the rights and obligations of the parties with respect to Article 5
(Indemnification), Section 7.1 (Permitted Assignments), Section 7.3 (Notice)
and Section 7.7 (Governing Law) hereof shall not terminate.
6.3 NO FORFEITURE OF FINDWHAT STOCK. As between Beasley and
Findwhat, Findwhat agrees that under no circumstances are the shares of
common stock of Findwhat, $.001 par value per share, issued to Beasley
pursuant to the Purchase Agreement, returnable to Findwhat or subject to
forfeiture. Findwhat covenants not to seek the return of the shares in any
proceeding, between Beasley, its successors and assigns and Findwhat, its
successors and assigns provided, however, the foregoing shall not limit
Findwhat's right to enforce its rights under the Note.
ARTICLE VII.
GENERAL
7.1 PERMITTED ASSIGNMENTS. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. No party may assign its respective rights and obligations,
in whole or in part, under this Agreement without prior written consent of
the other party hereto. Any attempt to assign this Agreement without such
consent shall be void and of no effect ab initio. Notwithstanding the
foregoing, a party hereto may assign this Agreement or any of its rights and
obligations hereunder to any entity
6
<PAGE>
controlling, controlled by or under common control with, such party, or to
any entity that acquires such party by purchase of stock or by merger or
otherwise, or by obtaining substantially all of such party's assets (the
"PERMITTED ASSIGNEE"), provided that (i) no such assignment shall relieve the
assigning party of any of its obligations under this Agreement; (ii) with
respect to any assignments effected by Findwhat, no such Assignee (or any
division thereof) is a Beasley Competitor and (iii) such Permitted Assignee
shall agree in writing to be bound by the terms and conditions hereof.
7.2 SEVERABILITY. If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any Person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other
provision hereof (or the remaining portion thereof) or the application of
such provision to any other Persons or circumstances, and such provision will
be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain in full force and effect.
7.3 NOTICE. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand, sent by telecopy or sent, postage prepaid, by registered or certified
mail, return receipt requested, or reputable overnight courier service and
shall be deemed given when so delivered by hand, or if telecopied, when
received, or if mailed, five business days after mailing (one business day in
the case of express mail or overnight courier service), as follows:
(a) if to Findwhat,
Findwhat.com
121 West 27th Street
Suite 903
New York, New York 10001
Tel: (212) 255-1500
Fax: (212) 989-4392
Attention: Chief Executive Officer
with a copy to:
Leonard D. Steinman, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Tel: (212) 885-5524
Fax: (212) 885-5002
(b) if to Beasley,
Beasley Internet Ventures, LLC
3033 Riviera Drive, Suite 200
Naples, Florida 34103
7
<PAGE>
Tel: (941) 263-5000
Fax: (941) 434-8950
Attention: Caroline Beasley
with a copy to:
Joseph D. Sullivan, Esq.
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Tel: (202) 637-2221
Fax: (202) 637-2201
7.4 INDEPENDENT CONTRACTORS. The parties to this Agreement are
independent contractors. There is no relationship of partnership, joint
venture, employment, franchise, or agency between the parties. No party shall
have the power to bind any other party or incur obligations on any other
party's behalf without such other party's prior written consent.
7.5 WAIVER. The waiver by any party of a breach or default of
any provision of this Agreement by any other party shall not be construed as
a waiver of any succeeding breach of the same or any other provision, nor
shall any delay or omission on the part of any party to exercise or avail
itself of any right, power or privilege that it has, or may have hereunder,
operate as a waiver of any right, power or privilege by such party except as
otherwise specifically provided in this Agreement.
7.6 ENTIRE AGREEMENT. This Agreement, including any agreement
incorporated herein by reference, and any Exhibits hereto or thereto,
contains the entire agreement and understanding between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements
and understandings relating to such subject matter. No party shall be liable
or bound to any other party in any manner by any representations, warranties
or covenants relating to such subject matter except as specifically set forth
herein.
7.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
7.8 SOLE BENEFIT. This Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any Person, other than the
parties hereto and such assigns, any legal or equitable rights hereunder.
7.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been
signed by each party and delivered to each other party.
8
<PAGE>
7.10 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each party hereto. By an instrument
in writing Beasley or Findwhat, as the case may be, may waive compliance by
the other party with any term or provision of this Agreement that Beasley or
Findwhat, as the case may be, was or is obligated to comply with or perform.
7.11 HEADINGS. The headings contained in this Agreement hereto
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Any capitalized terms used in any
Exhibit but not otherwise defined therein, shall have the meaning as defined
in this Agreement. When a reference is made in this Agreement to a Section or
Exhibit, such reference shall be to a Section of, or an Exhibit to, this
Agreement unless otherwise indicated.
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives as of the date first above
written.
BEASLEY INTERNET VENTURES, LLC
By: BEASLEY FM ACQUISITION CORP.,
its Managing Member
By: /s/ B. Caroline Beasley
----------------------------
Name: B. Caroline Beasley
Title: Secretary
FINDWHAT.COM
By: /s/ Robert D. Brahms
--------------------------
Name: Robert D. Brahms
Title: chief Executive Officer
10
<PAGE>
EXHIBIT 10.10
MERCHANT AGREEMENT between LinkShare Corporation, a Delaware corporation
("LinkShare"), and the undersigned merchant ("Merchant" or "You"), dated July
13, 1999.
The LinkShare Network-TM- includes member websites that are potential on-line
sales affiliates for merchants ("LinkShare Sales Affiliates"). Using its
proprietary LinkShare Synergy-TM- software, LinkShare offers services to
facilitate establishing links between merchants and sales affiliates and
tracking sales through those links. This Agreement contains the terms agreed to
by the parties for Merchant's access to the LinkShare Network-TM- and use of
LinkShare's services as an on-line merchant.
1. LINKSHARE NETWORK SERVICES. As a LinkShare merchant, Merchant may use the
relevant area of a LinkShare Website (the "LSN Site") to post offers to
establish Qualifying Links with LinkShare Sale Affiliates, receive and
respond to any counteroffers and, if agreement is reached, conclude binding
link exchange engagements with LinkShare Sales Affiliates. The detailed
procedures and rules governing those activities will be the same as those
applicable to LinkShare Merchants generally and posted on the LSN Site from time
to time.
2. PRIVATE LABEL SERVICES. If you select LinkShare's optional Private Label
Network Services, a special area of the LSN Site (the "PLN Site") under Your
brand or distinctive name Network will be available for You to establish
Qualifying Links with Your own sales affiliates who are not LinkShares Sales
Affiliates ("PLN Sales Affiliates"). Attachment C to this Agreement is part of
this Agreement if you have selected Private Label Network Services.
3. QUALIFYING LINKS; LICENSES SITES. A "Qualifying Link" is a hypertext link
between the website of a LinkShare Sales Affiliate or PLN Sales Affiliate (in
either case, a "Sales Affiliate") with whom You conclude an Engagement to a
Licensed Site of Merchant, with that link being established through the
interface of the LSN Site or the PLN Site using a code that is generated by
LinkShare Synergy client server software You install in the server for Your
relevant Licensed Site and an additional tracking code added at the LSN Site or
PLN Site by LinkShare's software. A "Licensed Site" is each of Your Websites
with the respective URLs identified below Your signature to this Agreement, as
well as any "mirror site" You designate in writing to LinkShare at least ten
business days before its first use in the LinkShare Network, in each case so
long as the site is owned and operated by You.
4. LINKSHARE'S PRICES. You agree to pay LinkShare the application fees and
charges provided for in the attached Pricing Schedule, as and when due. Your
obligations to pay any unpaid fees and charges accruing before expiration or
termination of this Agreement will survive expiration and termination.
5. MONTHLY REPORTS. Within ten business days after the end of each calendar
month during which You have a Qualifying Link, LinkShare will provide You,
online at a password-protected area of the LSN Site or PLN Site, with a report
showing Your attributable Gross Sales, calculated as explained in the attached
Pricing Schedule. To the extent Your Engagements provide for You to compensate a
Sales Affiliate by a commission based on Gross Revenues from sales through the
relevant Qualifying Link, that report will also show the commissions due from
You to that Sales Affiliate for the month. Our obligation to furnish such
reports or perform other tracking,
<PAGE>
date collection or reporting functions is conditioned on such links being
properly established, formatted and maintained in accordance with LinkShare's
requirements.
6. INTEROPERABILITY. LinkShare will provide You with the client server software
for the interface of each Licensed Site with the LinkShare website contemplated
by this Agreement. LinkShare will provide Merchant, at no separate charge, up to
four hours of telephonic technical assistance with regard to installing the
LinkShare software and establishing such interface. Additional technical
assistance may be purchased as provided in the Pricing Schedule. All technical
assistance will be provided on the same terms and conditions as LinkShare
provides it to LinkShare Merchants generally.
7. CERTAIN OTHER AGREEMENTS OF MERCHANT. Merchant agrees that it will not, and
will cause its corporate affiliates not to, directly or indirectly: (i) enter
into any agreement, arrangement or understanding or engage in any course of
conduct with the intent of reducing payments to which LinkShare otherwise would
be entitled hereunder or to otherwise take unfair advantage of LinkShare or its
services or that has any such effect, (ii) utilize or offer to affiliated or
unaffiliated third parties any service or software package (whether proprietary
to Merchant or a third party) that is in competition with or a substitute for
the LinkShare software or services made available pursuant to this Agreement, or
(iii) develop or actively assist a third party in the development of a system,
software, network or service that is competitive with or could serve as a
substitute for the LinkShare software, network or services made available
pursuant to this Agreement. If this Agreement is terminated during the initial
or any renewal term by LinkShare because of a material breach of this Agreement
by You or for just cause, Your obligations under this Section 7 shall continue
for a period of time after such termination equal in length to the unexpired
balance of such term as of the time of such termination plus an additional
twelve months.
8. TERM AND TERMINATION. (a) Unless terminated sooner as provided below, this
Agreement will remain in effect for an initial term of six consecutive months
beginning as of the date of this Agreement. Unless either party gives the other
written notice of termination no later than ten business days prior to the
expiration date of the then-existing initial or renewal term, this Agreement
will automatically renew for consecutive twenty-four months terms.
(b) Either party may terminate this Agreement if the other party
materially breaches its obligations hereunder and such breach remains uncured
for thirty days following written notice of the breach given to the breaching
party. Any rights or remedies of either party arising out of a breach or
violation of any terms of this Agreement by the other party will survive
expiration or termination of this Agreement.
(c) LinkShare may terminate or suspend Merchant's or any Sales
Affiliate's access to all or part of the LinkShare Network, the LSN Site and the
PLN Site for just cause, including, but not limited to, default in payment
obligations to LinkShare or Sales Affiliates, inappropriate use, persistent
failure to comply with the rules applicable to users generally, the posting of
content that is libelous, defamatory, obscene, pornographic, "adult-oriented,"
relates to gambling or use of illegal substances, abusive or overly violent or
LinkShare's good faith determination
<PAGE>
that Merchant's use adversely impacts LinkShare's reputation or good relations
with its merchants and Sales Affiliates generally or violates any law or any
third party's rights.
9. CERTAIN LIABILITY LIMITATIONS. (a) EXCLUSION OF WARRANTIES. TO THE FULLEST
EXTENT PERMISSABLE PURSUANT TO APPLICABLE LAW, EACH PARTY DISCAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR NONINFRINGEMENT.
(b) NO CONSEQUENTIAL DAMAGES. EXCEPT AS PROVIDED BELOW, NEITHER PARTY
WILL HAVE ANY LIABILITY IN CONNECTION WITH OR RESULTING FROM THIS AGREEMENT OR
ANY OF THE CONTEMPLATED LINKS, SERVICES, ACTIVITIES OR RELATIONSHIPS FOR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, RELIANCE OR SPECIAL DAMAGES, EVEN IF SUCH
PARTY WAS AWARE THAT SUCH DAMAGES COULD RESULT. The foregoing exclusion shall
not apply for the benefit of the breaching party in the case of any breach of
the provisions relating to confidentiality or intellectual property, any breach
of Section 7 or any purported termination of this Agreement not permitted by its
terms. This section 9(b) shall survive failure of an exclusive or limited
remedy.
(c) MAXIMUM LIABILITY. EXCEPT AS PROVIDED BELOW, THE MAXIMUM AGGREGATE
LIABILITY OF EACH PARTY UNDER OR RELATED TO THIS AGREEMENT IS LIMITED, FOR
LINKSHARE, TO THE AMOUNT OF FEES ACTUALLY PAID TO LINKSHARE BY MERCHANT DURING
THE TERM OF THIS AGREEMENT AND, FOR MERCHANT, TO THE AMOUNT OF FEES AND CHARGES
PAID OR ACCURED DURING THE TERM. The foregoing limitation shall not apply for
the benefit of the breaching party in the case of a breach of the provisions
relating to confidentiality or intellectual property, a breach of Section 7 or a
purported termination of this Agreement not permitted by its express terms.
(d) This Section 9 will survive any expiration or termination of this
Agreement.
10. MISCELLANEOUS. (a) The parties are independent contractors. Nothing in this
Agreement and no course of dealing between the parties will confer upon Merchant
any exclusive rights with respect to the LinkShare Network or LinkShare's
software or services.
(b) This Agreement may not be assigned by either party, in whole or in
part, without the express prior written consent of the other party, which will
not be unreasonably withheld or delayed. Reasonable grounds for LinkShare
withholding any such consent shall include, without limitation, that a proposed
assignee is a competitor or a corporate affiliate of a competitor. Assignment of
this Agreement to a successor to substantially all of either party's business
will not require the other party's consent, but LinkShare may terminate this
Agreement if direct or indirect control of your on-line merchandising business
is acquired by a LinkShare competitor.
(c) This Agreement shall be governed by the internal laws of the State
of New York. This Agreement is the entire agreement between the parties
pertaining to its subject matter and
<PAGE>
all written or oral agreements, representations, warranties or covenants, if
any, previously existing between the parties are canceled. The statements about
the LinkShare Network or LinkShare's Software or services on its Website or
otherwise are not representations, warranties or other contractual obligations.
Any amendments of this Agreement must be in writing and signed by both parties.
No failure or delay in exercising any power, right, or remedy under this
Agreement will operate as a waiver. A waiver, to be effective, must be written
and signed by the waiving party.
EACH PARTY HAS READ THIS AGREEMENT, INCLUDING THE ATTACHED PRICING SCHEDULE,
ATTACHMENT B AND, IF APPLICABLE, ATTACHMENT C, AND AGREES TO BE BOUND BY ALL THE
TERMS AND CONDITINS HEREOF (INCLUDING SUCH ATTACHMENTS).
LINKSHARE CORPORATION
BeFirst.com
- - ---------------------------------- By: /s/ Heidi S. Messer
[Insert Name of Merchant] --------------------------------
By: /s/ Courtney Jones
------------------------------
Name/Title: Courtney Jones
----------------------
Chairman BeFirst
----------------------
LICENSED SITE URL(S) INITIALS OF PARTIES
www.befirst.com
- - ---------------------------------- ------------------------------------
www.findwhat.com
- - ---------------------------------- ------------------------------------
<PAGE>
Exhibit 21
BeFirst Internet Corporation, a Delaware corporation
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
Each director and/or officer of FindWhat.com (the "Corporation") whose
signature appears below hereby appoints Courtney Phillips Jones, Robert D.
Brahms, and Craig A. Pisaris-Henderson as the undersigned's attorneys or any of
them individually as the undersigned's attorney, to sign, in the undersigned's
name and behalf and in any and all capacities stated below, and to cause to be
filed with the Securities and Exchange Commission (the "Commission"), the
Corporation's Annual Report on Form 10-K (the "Form 10-K") for the fiscal
year ended December 31, 1999, and likewise to sign and file with the Commission
any and all amendments to the Form 10-K, and the Corporation hereby also
appoints such persons as its attorneys-in-fact and each of them as its
attorney-in-fact with like authority to sign and file the Form 10-K and any
amendments thereto granting to each such attorney-in-fact full power of
substitution and revocation, and hereby ratifying all that any such
attorney-in-fact or the undersigned's substitute may do by virtue hereof.
IN WITNESS WHEREOF, we have hereunto set our hands this 27th day of
March, 2000.
SIGNATURE TITLE
/s/ Courtney P. Jones Chairman of the Board of Directors
- - -----------------------------------
Courtney P. Jones
/s/ Robert D. Brahms Chief Executive Officer and Director
- - -----------------------------------
Robert D. Brahms
/s/ Craig A. Pisaris-Henderson President, Chief Technical Officer
- - ----------------------------------- and Director
Craig A. Pisaris-Henderson
/s/ Michael Schulman Chief Financial Officer
- - -----------------------------------
Michael Schulman
/s/ David Medinis Director
- - -----------------------------------
David Medinis
/s/ Lee Simonson Director
- - -----------------------------------
Lee Simonson
/s/ Ken Christensen Director
- - -----------------------------------
Ken Christensen
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-START> JAN-01-1999 MAR-27-1998
<PERIOD-END> DEC-31-1999 DEC-31-1998
<CASH> 906,931 6,702
<SECURITIES> 0 0
<RECEIVABLES> 97,165 8,463
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,021,856 15,165
<PP&E> 276,174 1,700
<DEPRECIATION> (33,745) (340)
<TOTAL-ASSETS> 1,266,880 16,525
<CURRENT-LIABILITIES> 232,981 38,690
<BONDS> 0 0
0 0
0 0
<COMMON> 12,592 1,000
<OTHER-SE> 1,014,944 (23,165)
<TOTAL-LIABILITY-AND-EQUITY> 1,266,880 16,525
<SALES> 451,509 58,818
<TOTAL-REVENUES> 451,509 58,818
<CGS> (394,402) (36,837)
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> (1,895,431) (89,146)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 48,657 0
<INCOME-PRETAX> (1,789,667) (67,165)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,789,667) (67,165)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,789,667) (67,165)
<EPS-BASIC> (0.17) (0.01)
<EPS-DILUTED> (0.17) (0.01)
</TABLE>
