<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____________ to____________
Commission File No: 0-28703
DEMANDSTAR.COM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-3590973
------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1200 SOUTH PINE ISLAND ROAD
SUITE 600
PLANTATION, FLORIDA 33324
(954) 577-6500
------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF NOVEMBER 7, 2000
-------------------------- -----------------------------------
Common Stock
Par value $.0001 per share 7,638,480
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<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DEMANDSTAR.COM, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DEMANDSTAR.COM, INC.
(THE COMPANY)
------------------------------------------
DECEMBER 31, 1999 SEPTEMBER 30, 2000
----------------- -------------------
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 127,733 $ 1,899,195
Accounts receivable 8,593 18,803
Prepaid assets 92,844 368,791
----------- -----------
Total current assets 229,170 2,286,789
----------- -----------
PROPERTY AND EQUIPMENT, net 108,855 867,945
----------- -----------
OTHER ASSETS:
Deposits 8,900 8,900
Customer lists and vendor database, net 245,268 170,693
Goodwill, net 719,198 500,523
----------- -----------
Total other assets 973,366 680,116
----------- -----------
Total assets $ 1,311,391 $ 3,834,850
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 191,558 $ 951,905
Due to HTE -- 10,401
Current portion of note payable 200,000 200,000
Deferred revenue 139,252 523,454
----------- -----------
Total current liabilities 530,810 1,685,760
----------- -----------
NOTE PAYABLE, less current portion 1,106,885 1,550,000
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock 125 764
Preferred stock -- 1,500,000
Additional paid-in capital 812,413 6,595,701
Accumulated deficit (1,138,842) (7,497,375)
----------- -----------
Total shareholders' (deficit) equity (326,304) 599,090
----------- -----------
Total liabilities and shareholders'
(deficit) equity $ 1,311,391 $ 3,834,850
=========== ===========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
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<PAGE> 3
THE PURCHASE METHOD OF ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND
LIABILITIES ASSUMED BY THE COMPANY. SUCH ACCOUNTING RESULTS IN INCREASED
AMORTIZATION REPORTED IN FUTURE PERIODS. ACCORDINGLY, THE ACCOMPANYING FINANCIAL
STATEMENTS OF THE PREDECESSOR AND THE COMPANY ARE NOT COMPARABLE IN ALL MATERIAL
RESPECTS SINCE THOSE FINANCIAL STATEMENTS REPORT RESULTS OF OPERATIONS AND CASH
FLOWS OF THESE TWO SEPARATE ENTITIES.
DEMANDSTAR.COM, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(THE
PREDECESSOR) (THE COMPANY)
------------ -------------------------------------------------------------------------
INFORMATION
ON INFORMATION INFORMATION
DEMAND, INC. ON ON DEMANDSTAR.COM, DEMANDSTAR.COM,
FOR THE DEMAND, INC. DEMAND, INC. INC. INC.
PERIOD FROM FOR THE FOR THE FOR THE FOR THE
JANUARY 1, THREE MONTHS PERIOD FROM THREE MONTHS NINE MONTHS
1999 MONTHS JUNE 1, 1999 MONTHS MONTHS
TO ENDED TO ENDED ENDED
JUNE 17, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1999 1999 2000 2000
----------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUE $ 132,135 $ 92,794 $ 92,891 $ 206,883 $ 435,480
OPERATING EXPENSES
Marketing and
advertising 15,866 101,138 107,888 1,481,740 3,257,784
Research and development 136,279 55,043 55,609 211,930 449,388
General and
administrative 250,349 159,935 177,677 1,102,283 2,720,737
Depreciation and
amortization -- 110,783 110,783 129,472 359,996
--------- --------- --------- ----------- -----------
Total operating
expenses 402,494 426,899 451,957 2,925,425 6,787,905
--------- --------- --------- ----------- -----------
OPERATING LOSS (270,359) (334,105) (359,066) (2,718,542) (6,352,425)
INTEREST INCOME (EXPENSE), net -- (10,900) (10,900) 44,057 (6,108)
--------- --------- --------- ----------- -----------
LOSS BEFORE INCOME TAX
BENEFIT (270,359) (345,005) (369,966) (2,674,485) (6,358,533)
INCOME TAX BENEFIT -- -- -- -- --
--------- --------- --------- ----------- -----------
NET LOSS $(270,359) $(345,005) $(369,966) $(2,674,485) $(6,358,533)
========= ========= ========= =========== ===========
BASIC AND DILUTED LOSS PER
COMMON SHARE $ (0.35) $ (1.31)
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,638,480 4,845,283
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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THE PURCHASE METHOD OF ACCOUNTING WAS USED TO RECORD ASSETS ACQUIRED AND
LIABILITIES ASSUMED BY THE COMPANY. SUCH ACCOUNTING RESULTS IN INCREASED
AMORTIZATION REPORTED IN FUTURE PERIODS. ACCORDINGLY, THE ACCOMPANYING FINANCIAL
STATEMENTS OF THE PREDECESSOR AND THE COMPANY ARE NOT COMPARABLE IN ALL MATERIAL
RESPECTS SINCE THOSE FINANCIAL STATEMENTS REPORT RESULTS OF OPERATIONS AND CASH
FLOWS OF THESE TWO SEPARATE ENTITIES.
DEMANDSTAR.COM, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(THE
PREDECESSOR)
---------------
INFORMATION ON (THE COMPANY)
DEMAND, INC. --------------------------------------------------
FOR THE PERIOD INFORMATION ON
FROM DEMAND, INC.
JANUARY 1, FOR THE PERIOD FROM DEMANDSTAR.COM, INC.
1999 TO JUNE 1, 1999 TO FOR THE NINE MONTHS
JUNE 17, 1999 SEPTEMBER 30, 1999 ENDED SEPTEMBER 30, 2000
--------------- ------------------- ------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(270,359) $ (369,966) $(6,358,533)
Adjustments to reconcile net loss to net
cash used in operating activities-
Depreciation and amortization -- 110,783 359,996
Compensation from stock transactions -- -- 34,266
Changes in operating assets and
liabilities-
Increase in accounts receivable (2,663) (22,240) (10,210)
Increase in prepaid assets -- -- (275,947)
Increase in accounts payable and accrued
liabilities 146,634 144,856 760,347
Increase in due to HTE -- 486,321 10,401
Increase (decrease) in deferred revenue 66,232 (66,484) 384,202
--------- ----------- -----------
Net cash (used in) provided by
operating activities (60,156) 283,270 (5,095,476)
--------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition -- (1,000,000) --
Capital expenditures (3,064) (79,103) (825,838)
--------- ----------- -----------
Net cash used in investing activities (3,064) (1,079,103) (825,838)
--------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions of capital 50,441 -- --
Proceeds from issuance of common stock, net
of offering costs -- 800,000 5,749,661
Proceeds from issuance of Series A preferred
stock -- -- 1,500,000
Borrowings under note payable -- -- 443,115
--------- ----------- -----------
Net cash provided by financing
activities 50,441 800,000 7,692,776
--------- ----------- -----------
NET (DECREASE) INCREASE IN CASH (12,779) 4,167 1,771,462
CASH, beginning of period 17,564 -- 127,733
--------- ----------- -----------
CASH, end of period $ 4,785 $ 4,167 $ 1,899,195
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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DEMANDSTAR.COM, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 2000
The financial statements included herein have been prepared by DemandStar.com,
Inc. (the "Company" or "DemandStar"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed financial statements should be read in conjunction with the financial
statements for the year ended December 31, 1999, and the notes thereto, included
in the Company's registration statement on Form S-1, as amended (Registration
No. 333-93445).
The unaudited financial statements included herein include normal recurring
adjustments and reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of such financial statements. The interim
results are not indicative of results for a full year.
Information On Demand, Inc. (the "Predecessor") was formed as a Florida
corporation in June 1997 and commenced operations in January 1998. The
Predecessor was an S corporation. On June 1, 1999, H.T.E., Inc. ("HTE"), formed
a wholly-owned subsidiary, HTE-IOD, Inc., by purchasing 1,250,000 shares for
$800,000 and advancing $200,000 of cash. On June 18, 1999, HTE-IOD, Inc.
purchased the business and certain net assets of the Predecessor. On August 23,
1999, HTE-IOD, Inc. changed its name to Information On Demand, Inc. and on
December 21, 1999, its name was changed to DemandStar.com, Inc. The registration
statement on Form S-1 filed by the Securities and Exchange Commission (the
"SEC") in connection with the Company's public rights offering (File No.
333-93445), as amended, was declared effective by the SEC on March 27, 2000 and
expired on May 1, 2000. The offering period for the rights offering commenced on
March 27, 2000 and expired on May 1, 2000, with the offering closing May 5,
2000. Each right was exercisable for one share of common stock at an exercise
price of $1.00 per share. Upon closing, rights to purchase an aggregate of
4,998,050 registered shares of common stock and an aggregate of 1,376,030
restricted shares of common stock were exercised for an aggregate purchase price
of $6,374,080. After deducting reasonable estimated total expenses incurred in
connection with the offering of $624,419, the Company's net proceeds from the
offering were $5,749,661.
The Company is a provider of Internet based procurement systems for business to
government eCommerce over the Internet. The Company's electronic marketplace
enables governmental agencies to purchase goods and services more efficiently
and makes it easier for commercial vendors to do business with government
agencies. Membership in the Company's Internet-based procurement network is
provided free to governmental agencies that enter into an agreement to
distribute all of their formal bids and request for proposals through the
Internet site. Businesses pay an annual subscription fee to be registered
vendors in the Company's procurement network.
1. LOSS PER SHARE
The Company's basic and diluted net loss per share are found in the accompanying
statement of operations. Basic and diluted per share information are the same as
the Company generated a net loss for the period. Options to purchase
approximately 3,381,700 shares were outstanding as of September 30, 2000, but
were not included in the computation of diluted loss per share because they are
antidilutive. Loss per share information for the Predecessor has not been
presented as this information is not meaningful given the Predecessor's capital
structure.
2. DUE TO HTE
Due to HTE represents amounts owed to HTE in excess of the loan agreement
discussed below. This amount results from timing of payments. HTE charged the
Company a management fee for finance, accounting, management and basic
processing services based on a percentage of total expenses for the first
quarter and actual hours incurred thereafter. The total of these charges was
approximately $74,500 for the nine months ended September 30, 2000, which are
included in general and administrative expenses in the accompanying statement of
operations of the Company. The amount owed to HTE as of September 30, 2000 is
$10,401.
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3. RELATED PARTY TRANSACTIONS
The Predecessor used office space owned by the shareholder for which rent of
approximately $4,200 was paid for the period January 1, 1999 to June 17, 1999.
This rent charge is included in general and administrative expenses in the
accompanying statement of operations of the Predecessor.
4. NOTE PAYABLE
During 1999 and 2000, the Company borrowed money from HTE to acquire the
business and certain net assets of the Predecessor and to fund its operations.
On October 31, 1999, the Company issued an unsecured note in the principal
amount of $1,750,000 in favor of HTE (the "Loan"). As of September 30, 2000,
borrowings under the Loan totaled $1,750,000, with no available balance.
Interest at a rate of eight percent, which totaled approximately $107,500, was
charged by HTE during the nine months ended September 30, 2000, pursuant to the
terms of the Loan. Approximately $134,800 related to accrued interest is
included in accounts payable and accrued liabilities in the accompanying balance
sheet as of September 30, 2000. Principal and interest due under the Loan are
payable in annual installments on each anniversary of the note, with the entire
remaining outstanding balance due upon the earlier of the maturity date of the
Loan or the date of the effectiveness of a secondary public offering of the
Company's common stock yielding gross proceeds of at least $10,000,000. On
October 31, 2000, the repayment terms of the unsecured note were modified, as
more fully described in the subsequent events disclosure in Note 6.
In accordance with the modification agreement scheduled principal reductions of
the Loan will be as follows as of September 30, 2000:
OCTOBER 31, AMOUNT
----------- -----------
2001 $ 450,000
2002 350,000
2003 450,000
2004 500,000
-----------
$ 1,750,000
===========
5. INCOME TAXES
The Predecessor elected to be taxed as an S corporation for both federal and
state income tax reporting purposes. Accordingly, the losses related to periods
presented for the Predecessor are includable in the personal income tax returns
of the Predecessor's shareholder. The operating results of the Company were
included in the consolidated federal and state income tax returns of HTE prior
to May 1, 2000. The Company's income tax provision is computed as if it were
filing separate federal and state tax returns. The Company accounts for income
taxes using an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, the Company generally considers
all expected future events other than enactments of changes in the tax laws or
rates. Changes in tax laws or rates will be recognized in the future years in
which they occur.
Due to uncertainties regarding the Company's ability to realize the benefits of
its deferred tax assets through future operations, a valuation allowance has
been established that completely offsets the net operating loss as of September
30, 2000.
6. SUBSEQUENT EVENTS
On October 31, 2000, a modification agreement to the $1,750,000 unsecured note
in favor of HTE (the "Loan") was entered into between the Company and HTE.
Effective November 1, 2000, the modified payment terms include (i) an increase
in the interest rate from eight percent to ten percent, (ii) the deferral of the
October 31, 2000 payment of principal and interest to October 31, 2001 and (iii)
a one -time modification fee of $10,000 payable January 15, 2001. In exchange
for the modifications agreed to by HTE, in the event that, prior to October 31,
2001, the Company issues a new equity security in a third- party transaction in
which equity capital in excess of $3,000,000 is raised, the Company agrees to
issue HTE within thirty days of third-party financing, in full and complete
satisfaction of the October 31, 2000 note payment, that amount of such new
equity security which is equivalent in " fair market value" to the amounts due
on the October 31, 2000 note payment, taking into account the interest increase
provided for in the modification agreement. For purposes thereof, "fair market
value" shall mean the face value of such new security issued in the third party
financing. In the event the Company does not issue a new equity security as a
result of third party financing prior to October 31, 2001, the deferred note
payment plus all additional accrued interest due as a result of the deferral
shall be paid in cash on October 31, 2001, in addition to the normal scheduled
principal and interest payment.
6
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DEMANDSTAR.COM, INC.
SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
This Report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. Discussions containing
such forward-looking statements may be found in Management's Discussion and
Analysis of Financial Condition and Results of Operations under the captions
"Comparison of Three Months Ended September 30, 2000 and 1999" and "Comparison
of the Nine Months Ended September 30, 2000 and the Period from June 1, 1999 to
September 30, 1999," and "Liquidity and Capital Resources." These statements by
their nature involve substantial risks and uncertainties, certain of which are
beyond the Company's control, and actual results for future periods could differ
materially from those discussed in this Item depending on a variety of important
factors. A comprehensive summary of these and other risks and uncertainties can
be found in the Company's filings with the Securities and Exchange Commission
from time to time, including the Company's registration statement on Form S-1,
as amended (Registration No. 333-93445).
<TABLE>
<CAPTION>
(THE PREDECESSOR) (THE COMPANY)
------------------- -------------------------------------------------------------------------------------
INFORMATION ON INFORMATION ON INFORMATION ON
DEMAND, INC. DEMAND, INC. DEMAND, INC. DEMANDSTAR.COM, INC. DEMANDSTAR.COM, INC.
FOR THE PERIOD FROM FOR THE THREE FOR THE PERIOD FOR THE THREE FOR THE NINE
JANUARY 1, 1999 TO MONTHS ENDED FROM JUNE 1, 1999 TO MONTHS ENDED MONTHS ENDED
JUNE 17, 1999 SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
------------------- ------------------ -------------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C>
REVENUE 100 % 100 % 100 % 100 % 100%
OPERATING EXPENSES
Marketing and
advertising 12 109 116 716 748
Research and
development 103 59 60 102 103
General and
administrative 190 173 191 533 625
Depreciation and
amortization 0 119 119 63 83
---- ---- ---- ----- -----
Total operating
expenses 305 460 486 1414 1559
---- ---- ---- ----- -----
OPERATING LOSS (205) (360) (386) (1314) (1459)
INTEREST INCOME 0 (12) (12) 21 (1)
---- ---- ---- ----- -----
(EXPENSE), net
LOSS BEFORE INCOME TAX
BENEFIT (205) (372) (398) (1293) (1460)
INCOME TAX BENEFIT 0 0 0 0 0
---- ---- ---- ----- -----
NET LOSS (205)% (372)% (398)% (1293)% (1460)%
==== ==== ==== ===== =====
</TABLE>
Comparison of Three Months Ended September 30, 2000 and 1999
Revenues
Revenues include amounts received from vendors for registration fees and bid
document mailings. Total revenues increased by 123% to $206,883 for the three
months ended September 30, 2000, from $92,794 for the three months ended
September 30, 1999. The increase in revenues is due primarily to the increased
marketing effort in 2000.
Operating Expenses
Marketing and advertising expenses. Marketing and advertising expenses increased
1365% to $1,481,740 for the three months ended September 30, 2000, from $101,138
for the three months ended September 30, 1999. The increase in marketing and
advertising expenses primarily resulted from an increased marketing strategy to
promote DemandStar.
Research and development expenses. Research and development expenses increased
285% to $211,930 for the three months ended September 30, 2000, from $55,043 for
the three months ended September 30, 1999. During 1999, the Company was focused
on product development. During the three months ended September 30, 2000, the
focus was on expanding the products' features and improving the stability and
scalability of DemandStar's systems to support the Company's growth.
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<PAGE> 8
General and administrative expenses. General and administrative expenses, which
include the costs of corporate operations, finance and accounting, human
resources and other general operations, increased 589% to $1,102,283 for the
three months ended September 30, 2000, from $159,935 for the three months ended
September 30, 1999. The increase in general and administrative expenses is
necessary to support the growth in operations and infrastructure of DemandStar.
Depreciation and amortization. Depreciation and amortization increased 17% to
$129,472 for the three months ended September 30, 2000 from $110,783 for the
three months ended September 30, 1999. The increase resulted from the purchase
of equipment and leasehold improvements necessary to support the growth in
operations and infrastructure of DemandStar.
Interest income/(expense), net. Net interest income/(expense) for the three
months ended September 30, 2000 consists of interest income of $87,780 which
resulted primarily from the investment of the net proceeds from the rights
offering and interest expense of $43,723 which relates to the loan with HTE. Net
interest income/(expense) for the three months ended September 30, 1999 consists
of interest expense of $10,900.
Comparison of the Nine Months Ended September 30, 2000 and the period from June
1, 1999 to September 30, 1999
Revenues
Revenues include amounts received from vendors for registration fees and bid
document mailings. Total revenues increased by 369% to $435,480 for the nine
months ended September 30, 2000, from $92,891 for the period June 1, 1999 to
September 30, 1999. The increase in revenues is due primarily to the increased
marketing effort in 2000.
Operating Expenses
Marketing and advertising expenses. Marketing and advertising expenses increased
2920% to $3,257,784 for the nine months ended September 30, 2000, from $107,888
for the period June 1, 1999 to September 30, 1999. The increase in marketing and
advertising expenses primarily resulted from an increased marketing strategy to
promote DemandStar.
Research and development expenses. Research and development expenses increased
708% to $449,388 for the nine months ended September 30, 2000, from $55,609 for
the period June 1, 1999 to September 30, 1999. During 1999, the Company was
focused on product development. During the nine months ended September 30, 2000,
the focus was on expanding the products' features and improving the stability
and scalability of DemandStar's systems to support the Company's growth.
General and administrative expenses. General and administrative expenses, which
include the costs of corporate operations, finance and accounting, human
resources and other general operations, increased 1431% to $2,720,737 for the
nine months ended September 30, 2000, from $177,677 for the period June 1, 1999
to September 30, 1999. The increase in general and administrative expenses is
necessary to support the growth in operations and infrastructure of DemandStar.
Depreciation and amortization. Depreciation and amortization increased 225% to
$359,996 for the nine months ended September 30, 2000 from $110,783 for the
period June 1, 1999 to September 30, 1999. The increase resulted from the
purchase of equipment and leasehold improvements necessary to support the growth
in operations and infrastructure of DemandStar.
Interest income/(expense), net. Net interest income/(expense) for the nine
months ended September 30, 2000 consists of interest income of $102,129 which
resulted primarily from the investment of the net proceeds from the rights
offering and interest expense of $108,237 which relates to the loan with HTE.
Net interest income/(expense) for the period June 1, 1999 to September 30, 1999
consists of interest expense of $10,900.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the purchase of the Predecessor by DemandStar in June 1999, the
operations were funded primarily through cash generated from operations and
capital contributed from the sole shareholder of the Predecessor.
In conjunction with the purchase of the Predecessor, HTE purchased 1,250,000
shares of DemandStar's common stock for $800,000. In the first quarter of 2000,
HTE purchased 750,000 shares of Series A preferred stock for $1,500,000. In
addition to the stock
8
<PAGE> 9
purchases, HTE also loaned DemandStar $200,000 to purchase the business and
specified net assets of the Predecessor and $1,550,000 to fund operations, the
terms of which loan were evidenced by a five-year term promissory note payable
to HTE and dated October 31, 1999. As of September 30, 2000, the balance under
the note was $1,750,000.
With completion of the Company's rights offering of its common stock, which
provided gross proceeds of $6,374,080, the Company believes that it has
sufficient funds to continue operations for the remainder of the year 2000.
The Company is engaged in negotiations with a number of parties regarding
transactions that, if completed, would provide significant amounts of
additional capital to the Company. If the Company is not successful in
obtaining additional capital, the Company will be rquired to significantly
reduce or curtail its operations.
Net cash used in operating activities totaled $5,095,476 for the nine months
ended September 30, 2000, compared to net cash provided by operating activities
of $283,270 for the period June 1, 1999 to September 30, 1999. The increase in
net cash used in the 2000 period primarily resulted from the increased operating
expenses and net loss.
Net cash used in investing activities, comprised of cash paid for acquisition
and capital expenditures, totaled $825,838 for the nine months ended September
30, 2000 and $1,079,103 for the period June 1, 1999 to September 30, 1999. The
net cash used in the 2000 period resulted from purchases of equipment needed to
expand the infrastructure and support the Company's growth.
Net cash provided by financing activities totaled $7,692,776 for the nine months
ended September 30, 2000 and $800,000 for the period June 1, 1999 to September
30, 1999. The cash provided during 2000 reflects the sale of common stock
through the Company's rights offering, the sale of Series A preferred stock to
HTE and amounts borrowed under the Loan with HTE.
YEAR 2000 COMPLIANCE
Prior to January 1, 2000, there was considerable concern regarding the ability
of computers to adequately recognize 21st century dates from 20th century dates
due to the two-digit date fields used by many systems. Most reports today,
however, are that computer systems and software programs are functioning
normally and the compliance and remediation work accomplished during the years
leading up to 2000 was effective to prevent any problems. The Company is a
provider of Internet-based procurement systems for governmental agencies. As of
the date of this Report, the Company has not experienced any significant
disruption in its services as a result of any failure of any of its systems to
function properly as of January 1, 2000 or February 29, 2000. The Company also
has not experienced any Year 2000 failures related to any of its vendors,
suppliers or government clients.
Based on present trends, the Company does not expect to incur any significant
costs in 2000 related to Year 2000 activities. Year 2000 compliance has many
elements and potential consequences, some of which may not be foreseeable or may
be realized in future periods. In addition, unforeseen circumstances may arise,
and we may not, in the future, adequately identify equipment or systems that are
not Year 2000 compliant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No information has been presented pursuant to Item 3 as the Company does not
have any financial instruments outstanding as of September 30, 2000, requiring
market risk disclosure or material foreign currency exposure requiring market
risk disclosure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
9
<PAGE> 10
(d) The registration statement on Form S-1 filed by the Company with the
Securities and Exchange Commission (the "SEC") in connection with the
Company's public rights offering (File No. 333-93445), as amended was
declared effective by the SEC on March 27, 2000. Since the completion
of the public offering on May 5, 2000, the Company used the net
proceeds for working capital purposes and capital expenditures which
totaled approximately $3,139,398 and $744,743 with the remaining
proceeds as cash on hand of approximately $1,865,520.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
10
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
NUMBER NAME
------ --------------------------------------------------------------------
10.1 Modification to $1,750,000 Promissory Note issued by DemandStar.com,
Inc f/k/a Information on Demand, Inc.
27.1 Financial Data Schedule (submitted only in electronic format)
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended September 30, 2000.
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<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DEMANDSTAR.COM, INC.
Date: November 14, 2000 /s/ O. F. RAMOS
----------------------------------------
O. F. Ramos, Chief Executive
Officer and President
/s/ GERTRUDE J. SULZER
----------------------------------------
Gertrude J. Sulzer., Controller and
Chief Accounting Officer
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<PAGE> 13
EXHIBIT INDEX
NUMBER NAME
------ --------------------------------------------------------------------
10.1 Modification to $1,750,000 Promissory Note issued by DemandStar.com,
Inc f/k/a Information on Demand, Inc.
27.1 Financial Data Schedule (submitted only in electronic format)
13
