<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT ON UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE OF 1934
For the quarterly period ended March 31, 2000.
| | 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)
State the number of shares outstanding of each of the Issuer's classes
of common equity, as of the latest practicable date. 13,695,363 shares of
common, $.001 par value as of March 31, 2000.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FindWhat.com
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, December 31,
ASSETS 2000 1999
------------- -------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,824,210 $ 906,931
Accounts receivable 130,502 97,675
Prepaid expenses and other current assets 95,918 17,250
------------ ------------
Total current assets 2,050,630 1,021,856
EQUIPMENT, FURNITURE AND FIXTURES - NET 543,048 242,429
OTHER ASSETS 22,595 2,595
------------- -------------
Total assets $ 2,616,273 $ 1,266,880
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 535,056 $ 134,773
Current portion of capital lease obligation 29,272 7,025
Deferred income 72,133 31,402
Due to affiliate 20,392 59,781
------------- ------------
Total current liabilities 656,853 232,981
CAPITAL LEASE OBLIGATION, less current portion 26,653 6,363
------------- ------------
Total liabilities 683,506 239,344
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; authorized,
500,000 shares; none issued and outstanding
Common stock, $.001 par value; authorized, 50,000,000 shares; issued and
outstanding, 13,695,363 shares at March 31,2000 and
12,591,750 shares at December 31, 1999 13,695 12,592
Additional paid-in capital 20,174,018 3,273,267
Deferred service costs (14,344,263) (401,491)
Accumulated deficit (3,910,684) (1,856,832)
------------ ----------
Total stockholders' equity 1,932,767 1,027,536
------------ ----------
Total liabilities and stockholders' equity $ 2,616,273 $ 1,266,880
=========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
2
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FindWhat.com
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended
March 31,
------------------------------------
2000 1999
-------------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Revenues $ 216,725 $ 87,457
Cost of revenues 153,488 23,631
------------ --------
Gross profit 63,237 63,826
Operating expenses
Sales and marketing 875,178 12,682
General and administrative 1,160,441 22,615
Product development 100,121 24,923
------------ --------
Total operating expenses 2,135,740 60,220
------------ --------
Loss from operations (2,072,503) 3,606
Interest income, net 18,652 --
------------ --------
NET (LOSS) EARNINGS $ (2,053,851) $ 3,606
============ ========
(Loss) earnings per share - basic and diluted $ (0.15) $ 0.00
============ ========
Unaudited pro forma information (i):
Increase in officer salaries -- $ 90,000
============ ========
Pro forma net loss after increase in officer salaries -- $(86,394)
============ ========
Pro forma loss per share after increase
in officer salaries -- $ (0.01)
============ ========
Weighted-average number of common
shares outstanding 13,346,735 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 (date of
inception).
The accompanying notes are an integral part of these statements.
3
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FindWhat.com
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------------------
2000 1999
-------------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities
Net (loss) earnings $(2,053,851) $ 3,606
Adjustments to reconcile net (loss) earnings to net cash (used in)
provided by operating activities
Depreciation 43,871 --
Deferred service cost, net 742,671 --
Options issued to nonemployees, net 222,180 --
Executive compensation -- 18,000
Changes in operating assets and liabilities
Accounts receivable (32,827) (2,866)
Other current assets (78,668)
Other assets (20,000)
Accounts payable and accrued expenses 399,282 2,801
Deferred income 40,731 (3,557)
Due to affiliate (38,388) (5,989)
----------- -------
Net cash (used in) provided by operating activities (774,999) 11,995
----------- -------
Cash flows from investing activities
Purchase of equipment (296,402) --
----------- -------
Cash flows from financing activities
Gross proceeds from private placement 2,000,000 --
Payment of financing costs (5,669) --
Payments made on capital leases (5,651) --
----------- -------
Net cash provided by financing activities 1,988,680 --
----------- -------
INCREASE IN CASH AND
EQUIVALENTS 917,279 11,995
Cash and cash equivalents at beginning of period 906,931 6,702
----------- -------
Cash and cash equivalents at end of period $ 1,824,210 $18,697
=========== =======
Supplemental noncash investing and financing activities
Capital lease obligations for purchase of equipment $ 48,088 --
</TABLE>
The accompanying notes are an integral part of these statements.
4
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FindWhat.com
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A - NATURE OF BUSINESS
FindWhat.com was organized under the laws of the State of Nevada under the
name Collectibles America, Inc., and, beginning June 17, 1999, conducted
its operations through its wholly-owned subsidiary, BeFirst Internet
Corporation. On June 17, 1999, the Company changed its name from
Collectibles America, Inc. to BeFirst.com. 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 operates in one
reportable business segment.
NOTE B - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly
FindWhat.com's financial position as of March 31, 2000 and the results of
its operations and its cash flows for the three months ended March 31, 2000
and 1999. Certain financial information which is normally included in
financial statements prepared in accordance with generally accepted
accounting principles, but which is not required for interim reporting
purposes, has been condensed or omitted. The accompanying financial
statements need to be read in conjunction with the audited financial
statements and notes for the year ended December 31, 1999, which were
included in the Company's Form 10-K, as filed with the Securities and
Exchange Commission (the "SEC") on March 30, 2000.
Results of the interim period are not necessarily indicative of results
that may be expected for the entire year.
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FindWhat.com
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
NOTE C - EQUIPMENT, FURNITURE AND FIXTURES
Equipment, furniture and fixtures consist of the following:
<TABLE>
<CAPTION>
MARCH 31, December 31,
2000 1999
--------------- ------------
<S> <C> <C>
Computer equipment $488,620 $193,921
Furniture and fixtures 80,060 67,835
Leased equipment 51,983 14,418
-------- --------
620,663 276,174
Less accumulated depreciation (77,615) (33,745)
-------- --------
$543,048 $242,429
======= =======
</TABLE>
NOTE D - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
MARCH 31, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Accounts payable and other $209,880 $ 64,818
Professional fee 283,525 24,955
Database license -- 45,000
Accrued salaries and bonuses 40,650 --
-------- --------
$534,055 $134,773
======== ========
</TABLE>
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FindWhat.com
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
NOTE E - DEFERRED INCOME
Deferred income 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
three-month period ended March 31, 2000 and for the year ended December 31,
1999 was approximately $106,400 and $34,500, respectively, of which
approximately $78,000 was recognized for the three-month period ended March
31, 2000.
NOTE F - DEFERRED SERVICE COSTS
Deferred service costs, which are shown as a reduction to stockholders'
equity, consist of the value of common stock and stock options issued for
services that will be provided to the Company in future periods.
NOTE G - PRIVATE PLACEMENT
In February 2000, the Company completed a private placement to offer
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.
NOTE H - COMMON STOCK AND STOCK OPTIONS ISSUED FOR SERVICES
In January 2000, the Company entered into an advertising agreement with
Beasley Internet Ventures LLC ("Beasley") whereby the Company issued
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 a noncash advertising charge of
$4,425,000 over the term of the contract, including $466,180 recorded
during the three months ended March 31, 2000.
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FindWhat.com
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
NOTE H (CONTINUED)
In March 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.
NOTE I - STOCK INCENTIVE PLAN
In January 2000, the Board of Directors of the Company amended its 1999
Stock Incentive Plan (the "Plan") 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 1,975,000 shares,
subject to shareholder approval in July 2000.
During the three months ended March 31, 2000, the Company granted 217,500
options under the terms of the Plan to its employees and 43,000 options to
nonemployees. Total expense recognized for stock options given to
nonemployees amounted to $217,580, which is included as a noncash charge in
the general and administrative expenses for the three months ended March
31, 2000.
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ITEM 2. 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:
- to drive qualified traffic to Internet web sites and
- 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 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 on 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. 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 May 1, 2000, consumers could find relevant search listings for
information, products and services from over 3,100 participating advertisers who
had placed approximately 2.35 million bids on search keywords or key phrases, up
from approximately 1,200 advertisers and more than 750,000 bids as of December
31, 1999. For the quarter ending March 31, 2000, the FindWhat.com search engine
had approximately 1.2 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.
The FindWhat.com search engine generates revenue consisting of search
listing paid 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.
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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 search listings. To date, we have primarily attracted
consumers through our affiliates, who list some or all of our search listings on
their web sites, as well as through marketing to attract consumers to our web
site, including radio and outdoor advertising as well as advertising on the
Internet. 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.
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. 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 31, 2000,
BeFirst.com had approximately 100 clients, including eBay, Avenue A, and
Ebags.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 three months ended March 31, 2000 and the year ended
December 31, 1999 were $2,053,851 and $1,789,667, 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
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 three months ended March 31,
2000 and the three months ended March 31, 1999 have limited meaning.
REVENUE
Revenue for the three months ended March 31, 2000 increased to $216,725
compared to $87,457 for the three months ended March 31, 1999 as a result of
growth in demand for our BeFirst.com service and revenue from the FindWhat.com
search engine, which was not operational during the first three months of 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.
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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 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. Costs associated with providing the
BeFirst.com service include salaries of related personnel, payments to
consultants, and web site domain registration expenses for clients. Cost of
revenues increased to $153,488 for the three months ended March 31, 2000 from
$23,631 for the three months ended March 31, 1999. 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. 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:
- revenue-sharing or other arrangements with our FindWhat.com
affiliates,
- advertising expenditures for the FindWhat.com search engine,
such as radio, outdoor and banner advertising campaigns and
sponsorships,
- promotional expenditures, including proprietary contests to
attract consumers to the FindWhat.com web site and
sponsorships of seminars, trade shows and expos,
- fees to marketing and public relations firms, and
- 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.
Our sales and marketing expense was $875,178 for the three months ended
March 31, 2000 compared to $12,682 for the three months ended March 31, 1999.
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. The increase in sales and marketing expense
was primarily related to an increase in sales force compensation due to hiring
our sales force directly and expanding the number of marketing, customer
service, and sales employees, along with expenses not incurred during the three
months ended March 31, 1999, including spending to advertise and promote the
FindWhat.com search engine, revenue-sharing and other fees paid to affiliates,
and fees to our public relations firm. We have issued shares of common stock or
warrants to purchase shares of common stock to several of our advertising
vendors and affiliates in lieu of cash payments. We record non-cash charges over
the terms of our contracts with these vendors and affiliates. These non-cash
charges totaled $592,115 for the three months ended March 31, 2000, consisting
primarily of stock grants to national outdoor and radio companies for billboards
and radio commercial time during the period. We did not have any such expense
for the three months ended March 31, 1999. We believe that continued investment
in sales and marketing, including attracting consumers and advertisers to
utilize the FindWhat.com search engine and attracting affiliates to display our
search engine's results, is critical to attaining our strategic objectives. As a
result, we 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; depreciation of furniture and
equipment for non-technical employees; non-cash stock compensation expense for
the issuance of stock and stock options to non-employees, and other general
corporate expenses; as well as fees to affiliates which provide office space and
other general and administrative services. Our Chairman and our Chief Executive
Officer did not receive salaries until July 1, 1999. General and administrative
expenses increased to $1,160,441 for the three months ended March 31, 2000 from
$22,615 for the three months ended March 31, 1999. These increases were
primarily due to increases in administrative headcount and related
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expenses associated with the hiring of personnel; increased rent, insurance and
professional services; increases in general corporate expenses; and increased
services provided by our affiliates, along with expenses not incurred during the
three months ended March 31, 1999, including costs associated with being a
public company, including the cost of directors' and officers' liability
insurance expense; executive officer salaries; depreciation; and non-cash stock
compensation expense. In December 1999, we issued options for the purchase of
shares of common stock to an investor public relations firm. As a result, we
recorded $108,281 in non-cash general and administrative charges for the three
months ended March 31, 2000. We also recorded $217,580 in other non-cash stock
option compensation expense. 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,
consulting fees to a technical consultant, depreciation for related equipment,
and license fees for software used in product development. Product development
increased to $100,121 for the three months ended March 31, 2000 from $24,923 for
the three months ended March 31, 1999, as a result of increases in compensation
expense, as well as expenses not incurred during the three months ended March
31, 1999, including technical consulting services and depreciation. In November
1999, we issued shares of common stock to a technical consultant. As a result,
we recorded $46,875 in non-cash product development charges for the three months
ended March 31, 2000. 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 $18,652 for the three months ended March 31,
2000. We did not earn any interest income or incur any interest expense for the
three months ended March 31, 1999. Our 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 and February 2000 private placements of common
stock. Our interest expense consisted of interest on leases of computer
equipment.
NET LOSS
As a result of the factors described above, we incurred a net loss of
$2,053,851 for the three months ended March 31, 2000 compared to net income of
$3,606 for the three months ended March 31, 1999.
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
$4.5 million through private equity financings. To date, space 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. We have been billed
for these services at competitive rates.
Net cash used in operating activities totaled approximately $774,999
for the three months ended March 31, 2000 and net cash provided by operating
activities was $11,995 for the three months ended March 31, 1999. The increase
in net cash used in the three months ended March 31, 2000 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, interest income, non-cash compensation and increases in other
current assets.
Net cash used in investing activities totaled approximately $296,402
for the three months ended March 31, 2000 and $0 for the three months ended
March 31, 1999. This increase resulted from capital expenditures for equipment.
Net cash provided by financing activities totaled approximately
$1,988,680 for the three months ended March 31, 2000. We did not have any cash
financing activities in the three months ended March 31, 1999. In
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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 $1.8 million of cash
and cash equivalents as of March 31, 2000. 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 will 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
above. As we raise 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
anticipated or future financing arrangements will be available in amounts or on
terms acceptable to us, if at all.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
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 during the period covered by this
report. None of these securities was registered under the Securities Act.
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 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 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 pursuant to Section 4(2) of the Securities Act and the rules
promulgated thereunder.
In February 2000, we issued options under our 1999 Stock Incentive Plan
to purchase up to an aggregate of 24,500 shares of our common stock to certain
employees and non-employee directors at a weighted average exercise price of
$6.03 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 pursuant to
Section 4(2) of the Securities Act and the rules promulgated thereunder.
In March 2000, we entered into an agreement to issue 3,613 shares of
our common stock to Van Wagner Communications LLC in consideration of $43,250 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 pursuant to Section 4(2) of the Securities Act and the rules
promulgated thereunder.
In March 2000, we issued options under our 1999 Stock Incentive Plan to
purchase up to an aggregate of 5,000 shares of our common stock to an employee
at $12.00 per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
14
<PAGE> 15
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report.
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 March 29, 2000, between the
Registrant and Mamma.com.
10.8(R)*** Search Services Agreement, dated March 15, 2000, between the
Registrant and Go2Net, Inc.
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.
10.11 Executive Employment Agreement between FindWhat.com and
Phillip R. Thune.
10.12 Executive Employment Agreement between FindWhat.com and Peter
Neumann.
27 Financial Data Schedule
15
<PAGE> 16
* 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).
*** Incorporated by reference to the exhibit previously filed on March 30, 2000
with Amendment FindWhat.com's Form 10-K for the fiscal year ended December 31,
1999.
(R) Please note that certain confidential commercial information has been
redacted from some of the exhibits incorporated into and attached to this Form
10-QSB 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-QSB which have had
confidential information redacted are indicated as follows on the exhibit list
above: (R). Within the exhibits to this Form 10-QSB, redacted material is
indicated by the following sign where such redacted text would have appeared in
the relevant exhibit:
(**REDACTED**)
(b) Reports on Form 8-K
None
16
<PAGE> 17
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FINDWHAT.COM
Date: May 15, 2000 By: /s/Phillip R. Thune
------------------------------------
Phillip R. Thune
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
17
<PAGE> 1
Exhibit 10.7(R)
[MAMMA.COM LOGO]
388 St-Jacques West, # 900
Montreal, Quebec
H2Y ISI
(514) 844-2700
SEARCH RESULT AGREEMENT
MARCH 29, 2000
This is to acknowledge that a content integration agreement between Find
What.com ("PARTNER") and Mamma.com ("Mamma.com") entered on December 22,
1999 has been discontinued.
The parties have entered into this agreement with the intent to
distinguish between paid and unpaid search results of the PARTNER, to
better synchronize the count of visits "clickthroughs" of Mamma.com to the
PARTNER's site by both parties, to emphasize the importance of relevancy
of search results provided by the PARTNER and to outline the collaborative
measures between the two parties to ensure end user satisfaction.
THEREFORE the PARTNER and Mamma.com have agreed to the following:
1. Mamma.com will include only PARTNER's paid for listing search
results, "search results", in the "meta search" returns that result
from queries at the http://www.mamma.com service. Under normal
circumstances, and it is the general intent of the parties, that,
where available, 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 of 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. However, at the initial
introductory stage, until the relevancy of the search results have
been determined by Mamma.com, the PARTNER's search results will be
listed among the second five of all results displayed on the first
page. It is anticipated that the introductory period will not last
more than four weeks.
2. Mamma.com at its sole discration may remove any single search
result of the PARTNER shown on Mamma.com search result pages based
on relevance or poor quality, and will notify the PARTNER to
improve the result.
3. (**REDACTED**)
3. Payment terms: Mamma.com and Partner will electronically monitor
the number of visits and clickthroughs of Mamma.com on a daily
basis and will provide each other of such count. Mamma.com will
issue an invoice at the end of each month to the PARTNER and the
PARTNER will pay Mamma.com within 30 days of receipt of such
invoice.
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
<PAGE> 2
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 BE1OW.
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.
8. Logos/Trademarks: 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 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. Mutual no solicitation: The parties agree not to solicit each
others employees unless mutually agree. This will be for the term
of this agreement and for a period of 12 months after.
13. 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 he deemed effective
three (3) days after deposit with postal authorities.
14. 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.
15. 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 and/or
replaces any prior or contemporaneous agreement, either written or
oral.
<PAGE> 3
16. 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.
17. 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.
18. 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 to FindWhat.com.
Agreed and Accepted:
<TABLE>
<S> <C>
MAMMA.COM: /s/ Simon Aznavour FINDWHAT.COM: /s/ Robert B. Brahms
Name: Simon Aznavour Name: Robert D. Brahms
Its: COO Its: CEO
Date: 4/3/00 Date: 43/00
</TABLE>
<PAGE> 1
EXHIBIT 10.11
FINDWHAT.COM
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 24th day of April,
2000, (the "Agreement") between FindWhat.com ("FindWhat.com" or the "Company"),
a Nevada corporation, and Phillip Thune (the "Executive").
RECITALS
A. Executive is currently employed as an employee of FindWhat.com.
B. The parties desire to continue Executive's employment by
FindWhat.com to promote Executive to the position of Chief Financial Officer, on
the terms and conditions stated herein.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued
employment, the parties agree as follows:
1. Employment. The Company hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective on execution of this Agreement (the "Effective Time").
2. Duties.
(a) Executive shall be employed: (i) to serve as Chief
Financial Officer of FindWhat.com, subject to the authority and direction of the
Board of Directors of FindWhat.com; and (ii) to perform such other duties and
responsibilities similar to those performed by Executive prior hereto and
exercise such other authority, perform such other or additional duties and
responsibilities as the Board of Directors of FindWhat.com may, from time to
time, prescribe. The Board of Directors of FindWhat.com will periodically review
the addition of the Executive to the Company's Board of Directors at least
annually while this Agreement is in effect. Additionally, the Board of Directors
of FindWhat.com will periodically review the addition of the title and
responsibilities of Chief Operating Officer with Executive at least annually
while this Agreement is in effect.
(b) So long as employed under this Agreement, Executive agrees
to devote full time and efforts exclusively on behalf of the Company and to
competently, diligently and effectively discharge all duties of Executive
hereunder. Executive shall not be prohibited from engaging in such personal,
charitable, or other nonemployment activities as do not interfere with full time
employment hereunder and which do not violate the other provisions of this
Agreement.
<PAGE> 2
Executive further agrees to comply fully with all reasonable policies of the
Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered to the
Company pursuant to this Agreement, in whatever capacity rendered, the Company
shall pay to Executive during the term hereof a minimum base salary at the rate
of $150,000 per year (the "Basic Salary"), payable bi-weekly or in other more
frequent installments, as determined by the Company. The Basic Salary thereafter
may be increased, but not decreased, from time to time, by the Board of
Directors in connection with reviews and increases of the salaries of the
Chairman, Chief Executive Officer and the President of the Company. The Board of
Directors will review the Basic Salary after the Company's next round of equity
financing and at least annually. Furthermore, Executive will be entitled to
receive incentive compensation pursuant to the terms of plans adopted by the
Board of Directors from time to time. The Executive has been granted stock
options under the Company's 1999 Stock Incentive Plan; the Company agrees to
grant the Executive an additional stock option to purchase 100,000 shares of the
Company's common stock with an exercise price of $20 per share one business day
after the closing price of the common stock hits $15 or higher. The vesting
period of such option shall begin one business day after the closing price of
the common stock hits $20 for the tenth time (the "Vesting Commencement Date"),
or upon execution of an agreement by the Company which will give rise to a
"Change in Control" of the Company as defined in the 1999 Stock Incentive Plan
with a per share consideration equal to or greater than $20 per share. The
vesting of such option shall be at the rat of 25% per year from the Vesting
Commencement Date, with cliff vesting upon consummation of a "Change in Control"
of the Company. Such option shall terminate on the tenth anniversary from the
date of grant.
4. Business Expenses. The Company shall promptly pay directly, or
reimburse Executive for, all business expenses to the extent such expenses are
paid or incurred by Executive during the term of employment in accordance with
Company policy in effect from time to time and to the extent such expenses are
reasonable and necessary to the conduct by Executive of the Company's business
and properly substantiated.
5. Benefits. During the term of this Agreement and Executive's
employment hereunder, the Company shall provide to Executive such insurance,
vacation, sick leave and other like benefits as are provided to other executive
officers of the Company from time to time.
6. Term; Termination.
(a) The Company shall employ the Executive, and the Executive
accepts such employment, for an initial term commencing on the date of this
Agreement and ending on December 31, 2000. Thereafter, this Agreement shall be
extended automatically on each January 1 for an additional twelve-month period.
Executive's employment may be terminated at any time as provided in this Section
6. For purposes of this Section 6, "Termination Date" shall mean the date on
which any notice period required under this Section 6 expires or, if no notice
period is specified in this Section 6, the effective date of the termination
referenced in the notice.
2
<PAGE> 3
(b) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(b), the Company will
pay Executive the earned but unpaid portion of Executive's Basic Salary and pro
rata portion of Executive's bonus, if any, through the Termination Date, and
will continue to pay Executive his Basic Salary and any incentive compensation
and insurance under and consistent with plans adopted by the Company prior to
the Termination Date until the first anniversary of the Termination Date (the
"Severance Period"), and the Company will provide executive level outplacement
services by a firm selected and contracted by the Company for up to six months
following the Termination Date (the "Outplacement Services").
(c) The Company may terminate Executive's employment upon a
determination by the Company that "Good Cause" exists for Executive's
termination and the Company serves written notice of such termination upon
Executive. As used in this Agreement, the term Good Cause shall refer only to
any one or more of the following grounds:
(i) commission of a material and substantive act of
theft, including, but not limited to, misappropriation of funds or any
property of the Company;
(ii) intentional engagement in activities or conduct
clearly injurious to the best interests or reputation of the Company
which in fact result in material and substantial injury to the Company;
(iii) refusal to perform his assigned duties and
responsibilities after receipt by Executive of written detailed notice
and reasonable opportunity to cure;
(iv) gross insubordination by Executive, which shall
consist only of a willful refusal to comply with a lawful written
directive to Executive issued pursuant to a duly authorized resolution
adopted by the Company;
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or agreements
Executive may from time to time have with the Company (following
30-days' written notice from the Company specifying the violation and
Executive's failure to cure such violation within such 30-day period);
(vi) Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol or any
narcotic drug or other controlled or illegal substance which materially
and substantially prevents Executive from performing his duties
hereunder; or
(vii) the final and unappealable conviction of
Executive of a crime which is a felony or a misdemeanor involving an
act of moral turpitude, or a misdemeanor committed in connection with
his employment by the Company, which causes the Company a substantial
detriment.
3
<PAGE> 4
In the event of a termination under this Section 6(c), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(c)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(d) of this Agreement. If any determination of "Good Cause" is made
under items 6(c), (i), (ii), (iii), (iv), (v), or (vii) which Executive
contests, Executive shall have the opportunity, within 30 days of such
determination, to personally appear in front of the Board of Directors and
present his case to the Board of Directors and have the Board of Directors
reconsider the determination of Good Cause.
(d) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent disability,"
shall mean the inability of the Executive, as determined by the Board of
Directors of FindWhat.com, by reason of physical or mental illness to perform
the duties required of him under this Agreement for more than 180 days in any
one year period. Successive periods of disability, illness or incapacity will be
considered separate periods unless the later period of disability, illness or
incapacity is due to the same or related cause and commences less than 180 days
from the ending of the previous period of disability. Upon a determination by
the Board of Directors of FindWhat.com that Executive's employment shall be
terminated under this Section 6(d), the Board of Directors shall give Executive
30 days' prior written notice of the termination. If a determination of the
Board of Directors under this Section 6(d) is disputed by Executive, the parties
agree to abide by the decision of a panel of three physicians. FindWhat.com will
select a physician, Executive will select a physician and the physicians
selected by FindWhat.com and Executive will select a third physician. Executive
agrees to make himself available for and submit to examinations by such
physicians as may be directed by the Company. Failure to submit to any
examination shall constitute a breach of a material part of this Agreement.
(e) The Executive may terminate his employment for Good Reason
(as defined below) upon giving 30 days advance written notice to the Company. If
Executive's employment is terminated with Good Reason under this Section 6(e),
the Company will pay Executive the earned but unpaid portion of Executive's
Basic Salary and incentive compensation, if any, through the Termination Date,
and will continue to pay Executive his Basic Salary and any incentive
compensation under and consistent with plans adopted by the Company prior to the
Termination Date until the first anniversary of the Termination Date (the
"Severance Period"), and the Company will provide executive level outplacement
services by a firm selected and contracted by the Company for up to six months
following the Termination Date (the "Outplacement Services"). As used in this
Agreement, the term "Good Reason" means:
(i) without Executive's written consent, a change in
status, position or responsibilities which, in the Executive's
reasonable judgment, does not represent a promotion from existing
status, position or responsibilities; the assignment of any duties or
responsibilities which, in the Executive's reasonable judgment, are
inconsistent with such status, position or responsibilities as of the
Effective Date; or
4
<PAGE> 5
(ii) a change in control of the Company as defined in
the 1999 Stock Incentive Plan.
(f) The Executive may terminate his employment for any reason
upon giving 30 days' advance written notice to the Company. If Executive's
employment is so terminated under this Section 6(f), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date and any incentive compensation under and consistent with plans
adopted by the Company prior to the Termination Date.
7. Indemnity.
(a) Subject only to the exclusions set forth in Section 7(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (excluding an action by
or in the right of the Company) to which Executive is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Executive is, was or at any time becomes a director, officer, employee or agent
of the Company, or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(b) No indemnity pursuant to Section 7(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is
rendered against Executive for an accounting of profits made from the
purchase or sale by Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any federal, state or
local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
(v) on account of Executive's act or omission being
finally adjudged to involve intentional misconduct, a knowing violation
of law, or grossly negligent conduct; or
5
<PAGE> 6
(vi) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is
not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an officer
or director of the Company or serving in any other capacity referred to herein.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 7, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 7. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 7(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company. After notice
from the Company to Executive of its election so to assume the defense
thereof, the Company will not be liable to Executive under this Section
7 for any legal or other expenses subsequently incurred by Executive in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Executive shall have the
right to employ his counsel in such action, suit or proceeding but the
fees and expenses of such counsel incurred after notice from the
Company of its assumption of the defense thereof shall be at the
expense of Executive, unless (A) the employment of counsel by Executive
has been authorized by the Company, or (B) the Company shall not in
fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the Company. The Company shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
the Company.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither
the Company nor Executive will unreasonably withhold their consent to
any proposed settlement.
6
<PAGE> 7
(e) Executive agrees that Executive will reimburse the Company
for all customary and reasonable expenses paid by the Company in defending any
civil or criminal action, suit or proceeding against Executive in the event and
only to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the provisions
of Nevada law, federal securities laws, the Company's By-laws or this Agreement.
8. Assignment. This Agreement is personal to Executive and Executive
may not assign or delegate any of his rights or obligations hereunder. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the respective parties hereto, their heirs, executors, administrators,
successors and assigns.
9. Waiver. The waiver by either party hereto of any breach or violation
of any provision of this Agreement by the other party shall not operate as or be
construed to be a waiver of any subsequent breach by such waiving party.
10. Notices. Any and all notices required or permitted to be given
under this Agreement will be sufficient and deemed effective three (3) days
following deposit in the United States mail if furnished in writing and sent by
certified mail to Executive at:
-------------------
-------------------
-------------------
and to the Company at:
FindWhat.com
127 West 27th Street
New York, NY 10001
Attention: Chief Executive Officer
with a copy to:
John B. Pisaris
Porter, Wright, Morris & Arthur LLP
41 S. High St.
Columbus, OH 43215
11. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of New York. Any action brought to
enforce the terms of this Agreement must be brought in either the federal or
state courts of New York.
12. Amendment. This Agreement may be amended in any and every respect
only by agreement in writing executed by both parties hereto.
7
<PAGE> 8
13. Section Headings. Section headings contained in this Agreement are
for convenience only and shall not be considered in construing any provision
hereof.
14. Entire Agreement. With the exception of the Confidentiality,
Assignment and Noncompetition Agreement of even date herewith, and the
Executive's stock option agreements with the Company, this Agreement terminates,
cancels and supersedes all previous employment or other agreements relating to
the employment of Executive with the Company or any predecessor, written or
oral, and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement. EXECUTIVE
ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE HAS READ THE ENTIRE
AGREEMENT AND HAS THIS DAY RECEIVED A COPY HEREOF.
15. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement or parts thereof.
16. Survival. Sections 6 and 7 of this Agreement and this Section 16
shall survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE:
/s/ Phillip R. Thune
-------------------------------------
Phillip R. Thune
FINDWHAT.COM
By: /s/ Robert B. Brahms
---------------------------------
Its: CEO
---------------------------------
8
<PAGE> 1
EXHIBIT 10.12
FINDWHAT.COM
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT is made this 13th day of April
2000, (the "Agreement") between FindWhat.com ("FindWhat.com" or the "Company"),
a Nevada corporation, and Peter Neumann (the "Executive").
RECITALS
The Company desires to retain the services of Executive pursuant to the
terms of this Agreement.
STATEMENT OF AGREEMENT
In consideration of the foregoing, and of Executive's continued
employment, the parties agree as follows:
1. Employment. The Company hereby employs Executive and Executive
accepts such employment upon the terms and conditions hereinafter set forth to
become effective on execution of this Agreement (the "Effective Time").
2. Duties.
(a) Executive shall be employed: (i) to serve as Vice
President - Business Development of FindWhat.com, subject to the authority and
direction of the Board of Directors of FindWhat.com; and (ii) to perform such
other or additional duties and responsibilities as the Board of Directors of
FindWhat.com may, from time to time, prescribe.
(b) So long as employed under this Agreement, Executive agrees
to devote full time and efforts exclusively on behalf of the Company and to
competently, diligently and effectively discharge all duties of Executive
hereunder. Executive shall not be prohibited from engaging in such personal,
charitable, or other nonemployment activities as do not interfere with full time
employment hereunder and which do not violate the other provisions of this
Agreement. Executive further agrees to comply fully with all reasonable policies
of the Company as are from time to time in effect.
3. Compensation. As full compensation for all services rendered to the
Company pursuant to this Agreement, in whatever capacity rendered, the Company
shall pay to Executive during the term hereof a minimum base salary at the rate
of $140,000 per year (the "Basic Salary"), payable bi-weekly or in other more
frequent installments, as determined by the Company. The Basic Salary thereafter
may be increased, but not decreased, from time to time, by the Board of
Directors in connection with reviews and increases of the salaries of other
<PAGE> 2
executives of the Company. Executive will be entitled to receive incentive
compensation pursuant to the terms of plans adopted by the Board of Directors
from time to time.
4. Business Expenses. The Company shall promptly pay directly, or
reimburse Executive for, all business expenses to the extent such expenses are
paid or incurred by Executive during the term of employment in accordance with
Company policy in effect from time to time and to the extent such expenses are
reasonable and necessary to the conduct by Executive of the Company's business
and properly substantiated.
5. Benefits. During the term of this Agreement and Executive's
employment hereunder, the Company shall provide to Executive such insurance,
vacation, sick leave and other like benefits as are provided to other executive
officers of the Company from time to time.
6. Term; Termination.
(a) Executive is employed by the Company "at will."
Executive's employment may be terminated at any time as provided in this Section
6. For purposes of this Section 6, "Termination Date" shall mean the date on
which any notice period required under this Section 6 expires or, if no notice
period is specified in this Section 6, the effective date of the termination
referenced in the notice.
(b) The Company may terminate Executive's employment without
cause upon giving 30 days' advance written notice to Executive. If Executive's
employment is terminated without cause under this Section 6(b), the Company will
pay Executive the earned but unpaid portion of Executive's Basic Salary and pro
rata portion of Executive's bonus, if any, through the Termination Date, and
will continue to pay Executive his Basic Salary prior to the Termination Date as
follows: (i) if this Agreement has been in effect for less than 12 months, for
the number of full months in which this Agreement was in effect prior to the
Termination Date; or (ii) if this Agreement has been in effect for 12 months or
longer, until the first anniversary of the Termination Date (the "Severance
Period").
(c) The Company may terminate Executive's employment upon a
determination by the Company that "Good Cause" exists for Executive's
termination and the Company serves written notice of such termination upon
Executive. As used in this Agreement, the term Good Cause shall refer only to
any one or more of the following grounds:
(i) commission of an act of dishonesty, including,
but not limited to, misappropriation of funds or any property of the
Company;
(ii) engagement in activities or conduct injurious to
the best interests or reputation of the Company;
(iii) refusal to perform his assigned duties and
responsibilities;
(iv) gross insubordination by the Executive;
2
<PAGE> 3
(v) the clear violation of any of the material terms
and conditions of this Agreement or any written agreement or agreements
the Executive may from time to time have with the Company (following
30-days' written notice from the Company specifying the violation and
Executive's failure to cure such violation within such 30-day period);
(vi) the Executive's substantial dependence, as
determined by the Board of Directors of the Company, on alcohol, or any
narcotic drug or other controlled or illegal substance; or
(vii) commission of a crime which is a felony, a
misdemeanor involving an act of moral turpitude, or a misdemeanor
committed in connection with his employment by the Company which causes
the Company a substantial detriment.
In the event of a termination under this Section 6(c), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date. If any determination of substantial dependence under Section
6(c)(vi) is disputed by the Executive, the parties hereto agree to abide by the
decision of a panel of three physicians appointed in the manner as specified in
Section 6(d) of this Agreement.
(d) Executive's employment shall terminate upon the death or
permanent disability of Executive. For purposes hereof, "permanent disability,"
shall mean the inability of the Executive, as determined by the Board of
Directors of FindWhat.com, by reason of physical or mental illness to perform
the duties required of him under this Agreement for more than 180 days in any
one year period. Successive periods of disability, illness or incapacity will be
considered separate periods unless the later period of disability, illness or
incapacity is due to the same or related cause and commences less than 180 days
from the ending of the previous period of disability. Upon a determination by
the Board of Directors of FindWhat.com that Executive's employment shall be
terminated under this Section 6(d), the Board of Directors shall give Executive
30 days' prior written notice of the termination. If a determination of the
Board of Directors under this Section 6(d) is disputed by Executive, the parties
agree to abide by the decision of a panel of three physicians. FindWhat.com will
select a physician, Executive will select a physician and the physicians
selected by FindWhat.com and Executive will select a third physician. Executive
agrees to make himself available for and submit to examinations by such
physicians as may be directed by the Company. Failure to submit to any
examination shall constitute a breach of a material part of this Agreement.
(e) The Executive may terminate his employment for Good Reason
(as defined below) upon giving 30 days advance written notice to the Company. If
Executive's employment is terminated with Good Reason under this Section 6(e),
the Company will pay Executive the earned but unpaid portion of Executive's
Basic Salary and incentive compensation, if any, through the Termination Date,
and will continue to pay Executive his Basic Salary and any incentive
compensation under and consistent with plans adopted by the Company prior to the
Termination Date until the first anniversary of the Termination Date (the
"Severance Period"), and the Company will provide executive level outplacement
services by a firm selected and contracted by the Company for up to six months
following the Termination Date (the "Outplacement Services"). As used in this
Agreement, the term "Good Reason"
3
<PAGE> 4
means: without Executive's written consent, a change in status, position or
responsibilities which, in the Executive's reasonable judgment, does not
represent a promotion from existing status, position or responsibilities; the
assignment of any duties or responsibilities which, in the Executive's
reasonable judgment, are inconsistent with such status, position or
responsibilities as of the Effective Date; or the failure of the Company to
obtain a satisfactory agreement from any successor or assign of the Company to
assume and agree to perform this Agreement.
(f) The Executive may terminate his employment for any reason
upon giving 30 days' advance written notice to the Company. If Executive's
employment is so terminated under this Section 6(f), the Company will pay
Executive the earned but unpaid portion of Executive's Basic Salary through the
Termination Date and any incentive compensation under and consistent with plans
adopted by the Company prior to the Termination Date.
7. Indemnity.
(a) Subject only to the exclusions set forth in Section 7(b)
hereof, the Company hereby agrees to hold harmless and indemnify Executive
against any and all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by Executive in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (excluding an action by
or in the right of the Company) to which Executive is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Executive is, was or at any time becomes a director, officer, employee or agent
of the Company, or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(b) No indemnity pursuant to Section 7(a) hereof shall be
paid by the Company:
(i) except to the extent the aggregate losses to be
indemnified hereunder exceed the amount of such losses for which
Executive is indemnified pursuant to any directors and officers
liability insurance purchased and maintained by the Company;
(ii) in respect to remuneration paid to Executive if
it shall be determined by a final judgment or other final adjudication
that such remuneration was in violation of law;
(iii) on account of any suit in which judgment is
rendered against Executive for an accounting of profits made from the
purchase or sale by Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any federal, state or
local statutory law;
(iv) on account of Executive's breach of any
provision of this Agreement;
4
<PAGE> 5
(v) on account of Executive's act or omission being
finally adjudged to involve intentional misconduct, a knowing violation
of law, or grossly negligent conduct; or
(vi) if a final decision by a Court having
jurisdiction in the matter shall determine that such indemnification is
not lawful.
(c) All agreements and obligations of the Company contained
herein shall continue during the period Executive is a director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Executive shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative, by reason of the fact that Executive was an officer
or director of the Company or serving in any other capacity referred to herein.
(d) Promptly after receipt by Executive of notice of the
commencement of any action, suit or proceeding, Executive will, if a claim in
respect thereof is to be made against the Company under this Section 7, notify
the Company of the commencement thereof; but the omission so to notify the
Company will not relieve it from any liability which it may have to Executive
otherwise than under this Section 7. With respect to any such action, suit or
proceeding as to which Executive notifies the Company under this Section 7(d):
(i) The Company will be entitled to participate
therein at its own expense.
(ii) Except as otherwise provided below, to the
extent that it may wish, the Company jointly with any other
indemnifying party similarly notified will be entitled to assume the
defense thereof, with counsel selected by the Company. After notice
from the Company to Executive of its election so to assume the defense
thereof, the Company will not be liable to Executive under this Section
7 for any legal or other expenses subsequently incurred by Executive in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Executive shall have the
right to employ his counsel in such action, suit or proceeding but the
fees and expenses of such counsel incurred after notice from the
Company of its assumption of the defense thereof shall be at the
expense of Executive, unless (A) the employment of counsel by Executive
has been authorized by the Company, or (B) the Company shall not in
fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the Company. The Company shall not be entitled to assume the
defense of any action, suit or proceeding brought by or on behalf of
the Company.
(iii) The Company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company
shall not settle in any manner which would impose any
5
<PAGE> 6
penalty or limitation on Executive without Executive's written consent.
Neither the Company nor Executive will unreasonably withhold their
consent to any proposed settlement.
(e) Executive agrees that Executive will reimburse the Company
for all customary and reasonable expenses paid by the Company in defending any
civil or criminal action, suit or proceeding against Executive in the event and
only to the extent that it shall be ultimately determined that Executive is not
entitled to be indemnified by the Company for such expenses under the provisions
of Nevada law, federal securities laws, the Company's By-laws or this Agreement.
8. Assignment. This Agreement is personal to Executive and Executive
may not assign or delegate any of his rights or obligations hereunder. Subject
to the foregoing, this Agreement shall be binding upon and inure to the benefit
of the respective parties hereto, their heirs, executors, administrators,
successors and assigns.
9. Waiver. The waiver by either party hereto of any breach or violation
of any provision of this Agreement by the other party shall not operate as or be
construed to be a waiver of any subsequent breach by such waiving party.
10. Notices. Any and all notices required or permitted to be given
under this Agreement will be sufficient and deemed effective three (3) days
following deposit in the United States mail if furnished in writing and sent by
certified mail to Executive at:
-----------------------
-----------------------
-----------------------
and to the Company at:
FindWhat.com
127 West 27th Street
New York, NY 10001
Attention: Chief Executive Officer
with a copy to:
John B. Pisaris
Porter, Wright, Morris & Arthur LLP
41 S. High St.
Columbus, OH 43215
11. Governing Law. This Agreement shall be interpreted, construed and
governed according to the laws of the State of New York.
6
<PAGE> 7
12. Amendment. This Agreement may be amended in any and every respect
only by agreement in writing executed by both parties hereto.
13. Section Headings. Section headings contained in this Agreement are
for convenience only and shall not be considered in construing any provision
hereof.
14. Entire Agreement. With the exception of the Confidentiality,
Assignment and Noncompetition Agreement of even date herewith, and the
Executive's stock option agreements with the Company, this Agreement terminates,
cancels and supersedes all previous employment or other agreements relating to
the employment of Executive with the Company or any predecessor, written or
oral, and this Agreement contains the entire understanding of the parties with
respect to the subject matter of this Agreement. This Agreement was fully
reviewed and negotiated on behalf of each party and shall not be construed
against the interest of either party as the drafter of this Agreement. EXECUTIVE
ACKNOWLEDGES THAT, BEFORE SIGNING THIS AGREEMENT, HE HAS READ THE ENTIRE
AGREEMENT AND HAS THIS DAY RECEIVED A COPY HEREOF.
15. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement or parts thereof.
16. Survival. Sections 6 and 7 of this Agreement and this Section 16
shall survive any termination or expiration of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
EXECUTIVE:
/s/ Peter Neumann
-------------------------------
Peter Neumann
FINDWHAT.COM
By: /s/ Courtney Jones
---------------------------
Its: COB
---------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINDWHAT.COM'S FINANCIAL STATEMENTS AS OF MARCH 31, 2000 AND FOR THE THREE
MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATMENTS.
</LEGEND>
<CIK> 0001094808
<NAME> FINDWHAT.COM
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,824,210
<SECURITIES> 0
<RECEIVABLES> 130,502
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,050,630
<PP&E> 620,663
<DEPRECIATION> (77,616)
<TOTAL-ASSETS> 2,616,273
<CURRENT-LIABILITIES> 656,853
<BONDS> 0
0
0
<COMMON> 13,695
<OTHER-SE> 1,919,072
<TOTAL-LIABILITY-AND-EQUITY> 2,616,273
<SALES> 216,725
<TOTAL-REVENUES> 216,725
<CGS> 153,488
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,135,740
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (18,652)
<INCOME-PRETAX> (2,053,851)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,053,851)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,053,851)
<EPS-BASIC> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
