As filed with the Securities and Exchange Commission on April 7,
2000
Registration No.
333-96099
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 4
to
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT
OF 1933
CCBN.COM,
INC.
(Exact name of
registrant as specified in its charter)
| Delaware
(State or other
jurisdiction of
incorporation or
organization)
|
|
7375
(Primary
Standard Industrial
Classification
Code Number)
|
|
04-3468317
(I.R.S.
Employer
Identification
No.)
|
|
200 Portland
Street
Boston,
Massachusetts 02114
(617)
850-7900
(Address,
including zip code, and telephone number, including area code, of registrant
’s principal executive offices)
Jeffrey P.
Parker
Chairman of the
Board and Chief Executive Officer
200 Portland
Street
Boston,
Massachusetts 02114
(617)
850-7900
(Name, address,
including zip code, and telephone number, including area code, of agent for
service)
Copies
to:
| Paul P.
Brountas, Esq.
Peter B. Tarr,
Esq.
Hale and Dorr
LLP
60 State
Street
Boston,
Massachusetts 02109
Telephone: (617)
526-6000
Telecopy: (617)
526-5000
|
|
Stephen A.
Riddick, Esq.
Brobeck, Phleger
& Harrison LLP
701 Pennsylvania
Avenue
Washington, DC
20004
Telephone: (202)
220-6000
Telecopy: (202)
220-5200
|
|
Approximate date
of commencement of proposed sale to the public:
As soon as
practicable after the effective date of this registration
statement.
If any of the securities being registered on
this Form are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the following box.
¨
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the
same offering. ¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
¨
If delivery of the prospectus is expected to
be made pursuant to Rule 434, please check the following box.
¨
The Registrant hereby amends this registration
statement on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically
states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
SUBJECT TO
COMPLETION, DATED MARCH 28, 2000
PROSPECTUS
4,200,000
Shares
[CCBN.COM LOGO
APPEARS HERE]
Series A Common
Stock
This is an initial public
offering of shares of Series A common stock of CCBN.COM, Inc. Prior to this
offering, there has been no public market for our shares. We currently
expect the initial public offering price will be between $11.00 and $13.00
per share.
We have applied for
quotation of our Series A common stock on the Nasdaq National Market under
the symbol “CCBX.”
Our business involves
significant risks. These risks are described under the caption “Risk
Factors” beginning on page 5.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.
| |
|
Per
Share |
|
Total |
| Public offering
price |
|
$
|
|
$
|
| Underwriting
discounts and commissions |
|
$
|
|
$
|
| Proceeds to CCBN.COM
|
|
$
|
|
$
|
The underwriters may also
purchase from us up to an additional 630,000 shares of Series A common stock
at the public offering price, less the underwriting discounts and
commissions, to cover over-allotments.
The underwriters expect to
deliver the shares in New York, New York on
,
2000.
SG
COWEN
|
U.S. BANCORP
PIPER JAFFRAY
|
, 2000.
The information in
this prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is declared effective. This prospectus is not an offer
to sell securities, and we are not soliciting offers to buy these
securities, in any state where the offer or sale is not permitted.
INSIDE FRONT
COVER ARTWORK:
The name CCBN appears in the
upper left corner of the page. The words “Where companies and investors
come together” appear next to the logo. Beneath this text, three
rectangular boxes representing screenshots taken from the Internet of
CCBN.com web-based products appear one after the other from top to bottom on
the page. The first screenshot sits on the left-hand side of the page. To
the right of the first screenshot the words “Corporate IR Web Site
Services” appear. Below this text sits the second screenshot on the
right side of the page. To the left of the screenshot the words
“Institutional Event Management Services” appear. Directly below
this text, on the left side of the page, sits the third screenshot. To the
right of this screenshot, the words “Portal Partner Relationships”
appear. The legend “All corporate names referenced above are the
property of their respective owners” appears beneath the
artwork.
TABLE OF
CONTENTS
“CCBN” is a
trademark owned by us. This prospectus contains other trademarks, trade
names and service marks of other companies which are the property of their
respective owners.
Our web site is located
at www.ccbn.com. The information contained on our web site is not
incorporated by reference into and is not a part of this
prospectus.
You should rely only on
the information contained in this prospectus. We have not authorized anyone
to provide you with information that is different. We are offering to sell
and seeking offers to buy shares of Series A common stock only in
jurisdictions where offers and sales are permitted.
Until
, 2000, all dealers that effect transactions
in our Series A common stock, whether or not participating in this offering,
may be required to deliver a prospectus. This requirement is in addition to
the dealers’ obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
The following is only a
summary. You should carefully read the more detailed information contained
in this prospectus, including the consolidated financial statements and
related notes. Our business involves significant risks. You should carefully
consider the information under the heading “Risk Factors.
”
CCBN.COM,
Inc.
We provide Internet-based
solutions which enable direct communications between public companies and
the investment community. We have designed our solutions to offer access to
a wide variety of company-specific financial content, and to foster full
disclosure of company information on a timely basis to institutional and
individual investors. Our objective is to become the global standard for
direct communications between public companies and the investment community
by creating an online exchange for investment-related
information.
In our opinion, interest in
the U.S. securities markets has risen significantly in recent years,
resulting in a growing number of active investors and increased demand for
investment-related information. We believe that this growth has led to an
increasingly competitive investment environment, in which individual and
institutional investors face the challenge of effectively tracking and
reacting to a wide range of investment-related information. We believe that
many individual investors suffer from limited access to much of this
material information, making it more difficult for them to make informed
investment decisions in a timely manner.
At the same time, companies
seek solutions which enable them to communicate more effectively with the
investment community. A company’s stock price and its public image are
increasingly influenced by factors outside the company’s control,
including reports authored by third party analysts and widely accessible
online chat services which allow investors to share information and
opinions. As a result, effective dissemination of accurate, unedited
financial information directly to investors is critical for many companies.
Recently, a number of Internet sites have emerged to address various aspects
of investor relations.
We were formed in 1997 by
Jeffrey P. Parker, the founder of First Call, to meet escalating demand for
the timely exchange of information between public companies and investors.
We offer new opportunities for companies and investors from around the world
to exchange information directly in real-time and in a standardized format.
By enabling direct communications among participants, we improve the flow of
information to investors, and give companies direct exposure to a wider
audience of potential investors. Through hosted applications on the
Internet, we have created a central repository of company information that
can be searched, retrieved and organized more efficiently than traditional
information sources, such as print and broadcast media, and can be delivered
in more content-rich forms of media, such as audio and video
communications.
Our current offerings are
designed to address specific needs of public companies and
investors:
|
Ÿ
|
IR Online is
our outsourced communications solution through which we build,
manage and host the investor relations section of a company’s web
site and provide related services. More than 1,300 public companies
currently subscribe to IR Online, including Akamai Technologies,
Dell Computer, FleetBoston, Hershey Foods and Sears.
|
|
Ÿ
|
StreetEvents
is our Internet-based portal for event information of interest to
investors, the brokerage community and companies. Over 200 financial
institutions currently subscribe to StreetEvents including AIM
Funds, Alliance Capital, Goldman Sachs Asset Management, Morgan Stanley
Dean Witter and Salomon Smith Barney.
|
In addition, as part of our
strategy to reach individual investors, we recently entered into a
relationship with America Online (AOL). As part of this relationship, we
will offer to approximately 50 million AOL, CompuServe and Netscape
Netcenter users convenient access to company information on several web
sites, which CCBN.COM and AOL are building and branding jointly. We believe
that aligning with market leaders such as AOL enhances the profile and
attractiveness of our online information exchange.
We were formed as a limited
liability company in February 1997 and reorganized as a corporation in April
1999. Our principal executive offices are located at 200 Portland Street,
Boston, Massachusetts 02114. Our telephone number is (617)
850-7900.
The
Offering
Series A common
stock we are
offering |
|
4,200,000
shares |
|
|
| |
Series A common
stock to be
outstanding after this offering |
|
23,050,006
shares |
|
|
| |
| Use of
proceeds |
|
We intend to use
the net proceeds for working capital
and other general corporate purposes, as well as capital
expenditures, expansion of our marketing and
distribution activities, product development and
potential acquisitions. |
|
|
| |
Proposed Nasdaq
National Market
symbol |
|
CCBX |
|
|
The number of shares of
Series A common stock to be outstanding after this offering is based on the
number of shares outstanding as of December 31, 1999, and assumes the
conversion of all outstanding shares of Series B, Series C, Series D and
Series E common stock and convertible preferred stock into Series A common
stock. This number excludes 2,570,601 shares of Series A common stock
issuable upon exercise of options outstanding as of December 31, 1999 with a
weighted average exercise price of $1.57 per share, 4,926,699 additional
shares of Series A common stock reserved under our 1999 stock plan as of
December 31, 1999 and 550,000 shares of Series A common stock reserved for
issuance under our 2000 stock plans, 1,596,650 additional shares of Series E
convertible preferred stock issuable upon exercise of warrants outstanding
as of December 31, 1999, which convert to warrants for 4,789,950 shares of
Series A common stock, and assumes no exercise of the underwriters’
over-allotment option.
Assumptions That
Apply to This Prospectus
This offering is for
4,200,000 shares. The underwriters have a 30-day option to purchase up to
630,000 additional shares of Series A common stock from us to cover
over-allotments. Some of the disclosures in this prospectus will be
different if the underwriters exercise the over-allotment option. Unless we
state otherwise, the information in this prospectus assumes that the
underwriters will not exercise the over-allotment option.
Except where we state
otherwise, the information we present in this prospectus
reflects:
|
Ÿ
|
a three-for-one
split of common stock effected as of March 22, 2000;
|
|
Ÿ
|
the conversion of
all outstanding shares of Series B, Series C, Series D and Series E common
stock and convertible preferred stock into 6,542,199 shares of Series A
common stock upon the closing of this offering; and
|
|
Ÿ
|
amendments to our
certificate of incorporation and bylaws effective upon the closing of this
offering.
|
All references in this
prospectus to “we,” “us,” “ours,” “CCBN
” and “CCBN.COM” are references to CCBN.COM, Inc., together
with our subsidiary TalkPoint Communications, Inc. and our predecessor
entity CCBN.COM, LLC, unless the context otherwise
requires.
SUMMARY
CONSOLIDATED FINANCIAL DATA
The following summary
consolidated financial data should be read in conjunction with our financial
statements and related notes and with “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and other
financial data included elsewhere in this prospectus. The statement of
operations data for the period from inception (February 13, 1997) to
December 31, 1997 and the years ended December 31, 1998 and 1999 and the
balance sheet data as of December 31, 1999 are derived from audited
financial statements included elsewhere in this prospectus.
Unaudited pro forma basic
and diluted net loss per share have been calculated assuming the conversion
of all outstanding shares of our Series B, Series C, Series D and Series E
common stock and convertible preferred stock into shares of Series A common
stock, as if the shares had converted immediately upon issuance.
| |
|
Period from
February 13,
1997 through
December 31,
1997
|
|
Fiscal Year
Ended
December 31,
|
| |
|
|
1998
|
|
1999
|
| |
|
(in thousands,
except per share data) |
| Consolidated
Statement of Operations Data: |
|
|
|
|
|
|
|
|
|
| Revenue |
|
$
27 |
|
|
$
1,582 |
|
|
$
8,697 |
|
| Operating
expenses |
|
845 |
|
|
3,889 |
|
|
14,166 |
|
| |
|
|
|
|
|
|
|
|
|
| Loss from
operations |
|
(818 |
) |
|
(2,307 |
) |
|
(5,469 |
) |
| Interest income,
net |
|
2 |
|
|
33 |
|
|
76 |
|
| Net loss |
|
(816 |
) |
|
(2,274 |
) |
|
(5,393 |
) |
| Deemed dividend on
Series E preferred stock |
|
—
|
|
|
—
|
|
|
(1,848 |
) |
| |
|
|
|
|
|
|
|
|
|
| Net loss
attributable to common stockholders |
|
$
(816 |
) |
|
$(2,274 |
) |
|
$(7,241 |
) |
| Basic and diluted
net loss per share |
|
$(0.20 |
) |
|
$
(0.24 |
) |
|
$
(0.68 |
) |
| Shares used in
computing basic and diluted net loss per share |
|
4,059 |
|
|
9,434 |
|
|
10,664 |
|
| Unaudited pro forma
basic and diluted net loss per share |
|
|
|
|
|
|
|
$
(0.49 |
) |
Shares used in
computing pro forma basic and diluted net loss per share
(unaudited) |
|
|
|
|
|
|
|
14,717 |
|
The following table contains
a summary of our consolidated balance sheet:
|
Ÿ
|
on an actual basis
at December 31, 1999; and
|
|
Ÿ
|
on a pro forma as
adjusted basis to reflect: (a) the conversion of all outstanding shares of
our Series B, Series C, Series D and Series E common stock and convertible
preferred stock into shares of Series A common stock upon the closing of
this offering; and, (b) net proceeds from the sale of 4,200,000 shares of
Series A common stock offered hereby at an assumed initial public offering
price of $12.00 per share.
|
| |
|
December 31,
1999
|
| |
|
Actual
|
|
Pro Forma
As Adjusted
|
| |
|
(in
thousands) |
| Consolidated
Balance Sheet Data: |
|
|
|
|
|
| Cash and cash
equivalents |
|
$
3,202 |
|
|
$48,709 |
| Working
capital |
|
3,236 |
|
|
48,743 |
| Total
assets |
|
14,714 |
|
|
60,221 |
| Long-term capital
lease obligation |
|
193 |
|
|
193 |
| Convertible
preferred stock |
|
12,889 |
|
|
—
|
| Total stockholders
’ equity (deficit) |
|
(4,324 |
) |
|
54,072 |
You should carefully
consider the risks described below before making an investment decision. You
should also refer to the other information in this prospectus, including our
financial statements and the related notes. The risks and uncertainties
described below are those that we currently believe may materially affect
our company. Additional risks and uncertainties that we are unaware of or
that we currently deem immaterial also may become important factors that
affect our company.
Risks Related to
Our Operations
We have incurred
substantial losses in the past and may not be profitable in the
future.
Since our formation in 1997,
we have not been profitable on an annual or quarterly basis. We incurred net
losses of $816,000, $2.3 million and $7.2 million for the period from
February 13, 1997 through December 31, 1997 and the years ended December 31,
1998 and 1999. We expect operating losses and negative cash flows to
continue for the foreseeable future as we continue to incur significant
operating expenses and make capital investments in our business. We may
never achieve profitability. Even if we do achieve profitability, we may not
sustain or increase profitability on a quarterly or annual basis in the
future. If we fail to achieve profitability within the timeframe expected by
investors, the market price of our stock may fall. At December 31, 1999, we
had an accumulated deficit of $10.3 million. We have financed our operations
to date primarily through the sale of equity securities and
borrowings.
Our limited
operating history makes it difficult to evaluate our ability to compete and
attain profitability in a new and rapidly evolving market.
Our company was founded in
February 1997 and has a limited operating history, which makes it difficult
for investors to evaluate our future prospects. We introduced our first
product, IR Online, in August 1997, and introduced
StreetEvents in November 1999. To date, substantially all of our
revenues have resulted from sales of IR Online. In order to be
successful, we must increase our revenues from subscription fees for IR
Online and StreetEvents, add content and features to IR
Online and StreetEvents and develop new service offerings.
However, as an early participant in the new and rapidly evolving market for
outsourced online business information services, we face numerous risks and
uncertainties in connection with the development of new service offerings.
Some of these risks relate to our ability to:
|
Ÿ
|
attract more
subscribers for our services;
|
|
Ÿ
|
anticipate and
adapt to changing technologies;
|
|
Ÿ
|
implement our sales
and marketing initiatives, both domestically and
internationally;
|
|
Ÿ
|
continue to develop
relationships with more content and service providers;
|
|
Ÿ
|
continue to build
an infrastructure to effectively manage our anticipated growth;
and
|
|
Ÿ
|
integrate acquired
businesses, technologies, products and services.
|
If we are unsuccessful in
addressing these or similar risks or in executing our business strategy, our
business, results of operations and financial condition would be materially
and adversely affected.
Fluctuations in
our operating results may cause the market price of our Series A common
stock to fall.
Our revenue and operating
results have fluctuated significantly in the past and are expected to
continue to fluctuate significantly in the future. If our revenues or
operating results fall below the expectations of investors, the market price
of our Series A common stock may fall.
Our revenues and operating
results may fluctuate for numerous reasons, including the other risks
identified in this prospectus. For a discussion of some of these risks, see
“Management’s Discussion and Analysis of Financial Condition and
Results of Operation—Quarterly Results of Operations.”
A substantial portion of our
operating expenses is related to personnel costs, sales and marketing
programs and overhead, which cannot be adjusted quickly and are therefore
relatively fixed in the short term. Our operating expenses are based, in
significant part, on our expectations of future revenue on a quarterly
basis. If actual revenue on a quarterly basis is below management’s
expectations, or if our expenses continue to exceed revenue, both gross
margins and results of operations would be materially and adversely affected
because a relatively small amount of our operating expenses varies with our
revenue in the short term.
Due to all of the foregoing
factors and the other risks discussed in this prospectus, you should not
rely on period-to-period comparisons of our results of operations as an
indication of future performance. It is possible that in some future periods
our results of operations may be below the expectations of public market
analysts and investors. In this event, the market price of our Series A
common stock is likely to fall.
System failures
that interrupt or delay the delivery of our Internet-based services could
cause a loss of clients and a decline in revenue.
The continued and
uninterrupted performance of our computer system is critical to our success.
Any system failure that causes interruptions or delays in our ability to
deliver our products and services to our clients, including failures that
affect our ability to collect information from our corporate clients, could
reduce client satisfaction and, if these failures are sustained, they could
reduce the attractiveness of our products and services to companies and
investors. We also face the risk of a security breach of our computer system
which could disrupt the distribution of information.
Our operations are dependent
on our ability to protect our computer system against damage from computer
viruses, fire, power loss, telecommunications failures, vandalism and other
malicious acts, and similar unexpected adverse events. In addition, a
failure of our telecommunication providers to provide the data
communications capacity in the time frame required by us for any reason
could cause interruptions in the delivery of our products. Substantially all
of our computer and
communication hardware is located at facilities in Boston, Massachusetts and
Cambridge, Massachusetts, and the loss of this hardware or the data it
contains would cause us to be unable to operate our business for a
substantial period of time. Unanticipated problems could interrupt or delay
access to our Internet-based products. Although we carry general liability
insurance, our insurance may not cover claims by dissatisfied subscribers or
may not be adequate to indemnify us for any liability we may incur if we are
sued. Any system failure, security breach or other damage could interrupt or
delay our operations, damage our reputation and cause us to lose
clients.
Our operating
results may suffer due to the uncertain development of the market for our
outsourced online business information services.
The market for outsourced
business information services over the Internet has only recently begun to
develop, is rapidly evolving and is characterized by an increasing number of
market entrants. Because the market for our services is new and rapidly
evolving, it is difficult to predict the growth rate and ultimate size of
this market. If the market fails to develop, develops more slowly than
expected, or becomes saturated with competitors, if our products and
services do not achieve market acceptance, or if our pricing becomes subject
to significant competitive pressures, our business, results of operations
and financial condition would be materially and adversely
affected.
Historically we
have depended on sales of IR Online for substantially all of our
revenues and a decrease in sales of IR Online would cause a dramatic
decline in revenue.
To date, substantially all
of our revenues have resulted from sales of IR Online. Revenues from
IR Online may continue to constitute substantially all of our
revenues for the foreseeable future. Consequently, any decline in the demand
for IR Online, or its failure to achieve broad market acceptance,
would seriously harm our ability to generate significant revenue on a
sustained basis.
If our
StreetEvents service does not achieve broad market acceptance our
prospects for profitability may be materially and adversely
affected.
We introduced a beta version
of our StreetEvents service in February 1999 and launched
StreetEvents commercially in November 1999. Broad and timely
acceptance of StreetEvents, and the addition of content and features
to the existing service, are critical to our future success. The failure of
StreetEvents to achieve market acceptance or to add new content and
features would seriously harm our future revenue and business
prospects.
If we lose the
services of our chief executive officer, president, chief operating officer
or chief financial officer or any of our other key personnel, our future
business prospects could suffer.
Our future success will
depend, in substantial part, on the continued service of our senior
management, including Jeffrey P. Parker, our Chief Executive Officer, Robert
I. Adler, our President, Roland C. Beaulieu, our Chief Operating Officer,
Lawrence P. Begley, our Chief Financial Officer, and key technical and sales
personnel. With the exception of Mr. Beaulieu and Mr. Begley, we do not have
employment agreements with our executive officers. We do not maintain
“keyman” life insurance that would result in a payment to us in
the event of the death of one of our officers. The loss of the services of
one or more of our key personnel could harm our ability to grow our business
as we anticipate.
If we are unable
to develop new and maintain current strategic distribution relationships,
our sales and competitive position will suffer.
We have formed relationships
with a number of third-party content distributors, including AOL, which are
not currently generating significant revenue for us. We will depend on these
strategic relationships for subscription revenue and revenue generated from
the sale of advertisements on web sites that use our content. If we are
unable to retain our strategic relationships and increase the utilization of
our content by these distributors, our business, results of operations and
financial condition could be materially and adversely affected.
We may not be successful in
entering into additional strategic content distribution relationships or
additional relationships necessary to further develop our business. Any
additional relationships, if entered into, may not be on terms favorable to
us. In addition, our existing strategic distributors have the right to
terminate their agreements with us under various specified circumstances, in
some circumstances on short notice without penalty. Furthermore, we may not
be able to renew these agreements when they expire on acceptable terms. If
we are unable to maintain our existing strategic distribution relationships
or to enter into new strategic distribution relationships, our ability to
generate revenue and grow our business could be materially and adversely
affected. AOL may terminate our strategic relationship if we merge with or
sell substantially all of our assets to an AOL competitor.
Our lengthy and
unpredictable sales cycle could adversely affect our net sales and operating
results.
We have a long sales cycle
because we generally need to educate potential customers regarding the
benefits of our outsourced online business information products and services
prior to sale. Our sales cycle varies depending on size and type of customer
contemplating a purchase and whether we have conducted business with a
potential customer in the past. Potential customers frequently need to
obtain approvals from multiple decision makers within their organization
prior to making purchase decisions. Our long sales cycle, which can range
from several weeks to several months or more, makes it difficult to predict
when sales may occur. Delays in sales could cause signficant variability in
our revenues and operating results for any particular period.
The likely
increase in competition in the market for outsourced online business
information may reduce the number of our customers and the pricing of our
products and services.
The market for the
distribution of business information over the Internet is intensely
competitive and we expect competition to increase. Increased competition
could result in price reductions, reduced gross margins and loss of market
share, any of which would have a material and adverse effect on our
business. For more detailed information on our competitors, see
“Business—Competition.”
We also face competition due
to the fact that extensive company-specific information may be obtained,
frequently without charge, from various public sources.
We believe that our ability
to compete successfully will depend upon a number of factors, many of which
are outside of our control. See “Business—Competition” for
additional details.
Our competitors vary in size
and in the scope and breadth of services they offer. Many of our existing
competitors, as well as a number of potential new competitors, have longer
operating histories, greater name recognition, larger client bases and
significantly greater financial, technical and marketing resources than we
do. This may enable them to respond more quickly to new or emerging
technologies and changes in investor requirements, or to devote greater
resources to the development, promotion and sale of their services than we
can. Our competitors may be able to undertake more extensive marketing
campaigns, adopt more aggressive pricing policies and make more attractive
offers to potential employees, subscribers, strategic partners and content
providers. Our competitors may develop services that are equal or superior
to the services offered by us or that achieve greater market acceptance than
our services do. In addition, current and potential competitors have
established or may establish cooperative relationships among themselves or
with third parties to improve their ability to address the
needs of our existing and prospective clients. As a result, it is possible
that new competitors may emerge and rapidly acquire significant market
share. Increased competition is likely to result in price reductions,
reduced gross margins and loss of market share, which could harm our results
of operations.
A decrease in the
demand for our products and services may result from a downturn in the
equity markets and initial public offerings.
We are dependent upon the
continued demand for access to financial information, making our business
susceptible to a downturn in the equity markets and initial public
offerings. A downturn in the equity markets could decrease investor demand
for financial information. A downturn in the market for initial public
offerings could decrease the number of companies going public which may
subscribe to IR Online. In addition, companies and financial
institutions are continuing to consolidate, potentially decreasing the
overall market for some of our offerings. These factors, as well as other
changes in the equity markets and the market for initial public offerings
could result in decreased demand for our products and services and harm our
ability to generate revenue.
Our generation of
revenue and development of market share depend on our relationships with our
significant content and service providers.
Our future results of
operations will depend upon our relationships with content providers whose
data is used in our products and services. We also outsource some portions
of our offerings to a group of service providers. Some of these
relationships are not governed by written contracts and many of these
relationships may be terminated by the provider on short notice without
penalty. Some of our content providers compete with one another and, to some
extent, with us for subscribers. None of the content providers are obligated
to provide information exclusively to us. The loss of one or more
significant content or service providers would decrease the information and
services which we can offer our clients and could decrease the demand for
our products and services. A decrease in demand for our products and
services could have a material and adverse effect on our sales and
generation of revenue.
If we are unable
to hire and retain skilled personnel in a highly competitive labor market
for the Internet industry, we will not be able to grow our business as we
anticipate.
Qualified personnel are in
great demand throughout the Internet industry. Our success depends in large
part upon our ability to attract, train, motivate and retain highly skilled
employees, particularly sales and marketing personnel, professional services
personnel, software engineers and other senior personnel. We have
experienced, and we expect to continue to experience in the future,
difficulty in hiring and retaining highly skilled employees. Our failure to
attract and retain the highly trained technical personnel that are integral
to our direct sales, professional services and product development teams may
limit the rate at which we can generate sales and develop new products or
product enhancements.
Our prospects for
profitability could be adversely affected by legal claims in connection with
the content we distribute.
As a distributor of online
content, we face potential direct and indirect liability for claims of
defamation, negligence, copyright, patent or trademark infringement,
violation of the securities laws and other claims based upon the reports and
data that we publish. Computer failures may also result in incorrect data
being published and distributed widely. In these and other instances, we may
be required to engage in protracted and expensive litigation, which could
have the effect of diverting
management’s attention and require us to expend significant financial
resources. Our general liability insurance may not necessarily cover any of
these claims or may not be adequate to protect us against all liability that
may be imposed. Any claims or resulting litigation could have a material and
adverse effect on our ability to attain profitability.
Rapid growth in
our future operations could strain our managerial, operational, technical
and financial resources.
We have experienced rapid
growth in our operations. At December 31, 1999, we had a total of 142
employees, as compared to 60 employees at December 31, 1998 and 23 employees
at December 31, 1997. We expect that the number of our employees will
continue to increase for the foreseeable future. This rapid growth has
placed, and our anticipated future growth will continue to place, a
significant strain on our managerial, operational, technical and financial
resources. Any future growth may require us, among other things,
to:
|
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expand and upgrade
our hardware and software systems;
|
|
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expand and improve
our operational and financial procedures, systems and
controls;
|
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improve our
financial and management information systems;
|
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expand, train and
manage a larger workforce; and
|
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improve the
coordination among our technical, sales and marketing, financial,
accounting and management personnel.
|
Our inability to efficiently
accomplish any of these objectives could disrupt our business and operating
results.
Our prospects for
profitability would be materially and adversely affected if we are not
successful in establishing brand awareness for CCBN.COM and its specific
product offerings.
Our future success will
depend, in part, on our ability to increase brand awareness of CCBN.COM and
our specific product and service offerings. In order to build brand
awareness we must succeed in our marketing efforts and provide high quality
services. If our marketing efforts are unsuccessful or if we cannot increase
our brand awareness, we may not be able to grow our business as we
anticipate.
The vesting of
warrants pursuant to our service agreement with AOL could cause the market
price of our Series A common stock to fall.
As part of our service
agreement with AOL, we granted AOL a stock subscription warrant which
potentially entitles AOL to purchase up to 4,789,950 shares of our Series A
common stock. Under the stock subscription warrant, AOL becomes entitled to
subscribe for and purchase shares of our common stock if advertising sales
under our service agreement with AOL meet specified objectives. If AOL
becomes eligible to purchase our Series A common stock under the warrant and
subsequently does so, the resulting dilution of our Series A common stock
could cause the market price to fall. See “Certain Transactions
—Other Transactions” for additional information.
The expansion of
our international operations will subject our business to new risks that may
adversely affect our operating results.
Historically, we have not
derived significant revenue from sales to clients outside the United States.
We expect to expand our international operations in the future. Given our
limited experience in international markets, we cannot be sure that our
international expansion will be successful. This
expansion will require additional resources and management attention and could
subject us to new regulatory, economic and political risk. These risks could
reduce demand for our products and services, lower the prices at which we
can sell our products and services, or otherwise have an adverse effect on
our operating results. Among the risks we believe are most likely to affect
us are:
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longer payment
cycles and problems in collecting accounts receivable;
|
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adverse changes in
trade and tax regulations;
|
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the absence or
significant lack of legal protection for intellectual property
rights;
|
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the adoption of
data privacy laws or regulations;
|
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political and
economic instability; and
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Our failure to
successfully integrate any future acquisitions could strain our managerial,
operational and financial resources which may harm our ability to achieve
profitability.
As part of our strategy, we
may pursue acquisitions of businesses, content providers, products or
technologies that complement or expand our existing business. We evaluate
potential acquisition opportunities from time to time, including those that
could be material in size and scope. Acquisitions in our industry involve a
number of risks, including the diversion of management’s attention from
day-to-day operations to the assimilation of the operations and personnel of
the acquired companies and the incorporation of acquired operations,
products or technologies. Acquisitions could also have a material and
adverse effect on our business, results of operations or financial
condition, and could result in dilutive issuances of equity securities, the
incurrence of debt and the loss of key employees. In addition, many
acquisitions are accounted for using the purchase method of accounting and,
because most software-related acquisitions in our industry involve the
purchase of significant intangible assets, these acquisitions typically
result in substantial amortization charges and charges for acquired research
and development projects, which could have a material and adverse effect on
our business, results of operations and financial condition. Future
acquisitions, if any, may not be successfully completed or, if one or more
acquisitions are completed, the acquired businesses, products or
technologies may not generate sufficient revenue to offset the associated
costs or other adverse effects.
If we cannot keep
pace with the evolving standards of our industry and demands of our clients,
we may be unable to enhance our existing services or introduce new
services.
The market in which we
operate is characterized by rapidly changing technology, evolving industry
standards, frequent new service announcements, introductions and
enhancements, and evolving client demands. These market characteristics are
exacerbated by the emerging nature of the Internet and the electronic
distribution of financial information. Accordingly, our future success will
depend on our ability to adapt to rapidly changing technologies and industry
standards, and our ability to continually improve the performance, features
and reliability of our services in response to both evolving client demands
and competitive service offerings. Our inability to successfully adapt to
these changes in a timely manner could have a material and adverse effect on
our business, results of operations and financial condition. Furthermore, we
may experience difficulties that could delay or prevent the successful
design, development, testing, introduction or marketing of new services. Any
enhancements to existing services may fail to meet the requirements of our
current and prospective
clients and achieve any degree of significant market acceptance. If we are
unable, for technological or other reasons, to develop and introduce new
services or enhancements to existing services in a timely manner or in
response to changing market conditions or client requirements, or if our
services or enhancements contain defects or do not achieve a significant
degree of market acceptance, our business, results of operations and
financial condition could be materially and adversely affected.
Software defects
could be costly for us to correct.
Complex software such as the
software we develop for our products may contain errors or defects,
especially when first implemented, that may be costly to correct. Major
defects or errors also could result in downtime and our business could
suffer significantly from potentially adverse client reaction, negative
publicity and harm to our reputation. The reasonable possibility of major
defects or errors occurring in the development of complex software such as
ours presents a risk that could adversely affect our operations.
Our competitive
position would be adversely affected if we were unable to protect our
proprietary technology.
Our success depends to a
significant degree upon the protection of our proprietary technology. If we
fail to protect our proprietary rights, other companies might copy our
technology and introduce products or services which compete with ours,
without paying us for our technology. This could have a material adverse
effect on our business, operating results and financial condition. We have
filed a patent application but we currently have no patents. We depend upon
a combination of trademark laws, license agreements, non-disclosure and
other contractual provisions to protect proprietary and distribution rights
in our products. Existing trade secret, copyright and trademark laws,
however, offer only limited protection. The validity, enforceability and
scope of protection of proprietary rights in Internet-related industries is
uncertain and still evolving. Moreover, the laws of other countries in which
we market our products currently or in the future may afford little or no
effective protection of our intellectual property. If we resort to legal
proceedings to enforce our intellectual property rights, the proceedings
could be burdensome and expensive, even if we were to prevail.
Claims by other
companies that we infringe on their proprietary technology could force us to
redesign our products or otherwise hurt our financial
condition.
Third parties may claim that
we have infringed their patents or other proprietary rights. From time to
time we may be subject to claims by third parties in the ordinary course of
our business, including claims of alleged infringement of the trademarks and
other proprietary rights of third parties. Claims or litigation, should they
occur, may subject us to significant liability for damages and could result
in the invalidation of our proprietary rights. In addition, even if we
prevail, this litigation could be time-consuming and expensive to defend,
and could result in the diversion of our time and attention, any of which
could materially and adversely affect our business, results of operations
and financial condition. Any claims or litigation from third parties may
also result in limitations on our ability to use the trademarks and other
intellectual property subject to these claims or litigation unless we enter
into agreements with the third parties responsible for these claims or
litigation which may be unavailable on commercially reasonable
terms.
Risks Related to
the Internet Industry
If Internet usage
does not continue to grow, we may not be successful.
The Internet is relatively
new and is rapidly evolving. Our business would be materially and adversely
affected if Internet usage does not continue to grow. Internet usage may be
inhibited for a number of reasons, including concerns relating
to:
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performance and
reliability;
|
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security and
authentication; and
|
Moreover, critical issues
concerning the commercial use of the Internet, including security, cost,
ease of use and access, intellectual property ownership and other legal
liability issues, remain unresolved and could materially and adversely
affect both the growth of Internet usage generally and our business in
particular.
If the Internet
infrastructure is not adequately maintained, we may be unable to provide our
products and services in a timely manner.
Our future success will
depend, in substantial part, upon the maintenance of the Internet
infrastructure. To the extent that the Internet continues to experience
increased numbers of users, frequency of use or increased bandwidth
requirements of users, the Internet infrastructure may not continue to
support the demands placed on it and, as a result, the performance or
reliability of the Internet may be adversely affected. Furthermore, the
Internet has experienced a variety of outages and other delays as a result
of damage to portions of its infrastructure or otherwise. The relatively
complex and unproven technology that makes up the Internet infrastructure
poses a risk of material outages or delays that could adversely affect the
web sites of our contributors, subscribers or distributors. In addition, the
Internet could lose its viability as a form of media due to delays in the
development or adoption of new standards and protocols that can handle
increased levels of activity. The infrastructure and complementary products
and services necessary to maintain the Internet as a viable commercial
medium may not be developed or maintained. Any failure in performance or
reliability of the Internet could adversely affect our ability to provide
our products and services and, consequently, hurt our operating
results.
Increased
government regulation and legal uncertainties may impair the growth of the
Internet and decrease demand for our services or increase our cost of doing
business.
The laws governing the
Internet remain largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing
laws, including those governing intellectual property, privacy, libel and
taxation, apply to the Internet generally and the electronic distribution of
investment research in particular. Legislation could dampen the growth in
the use of the Internet generally and decrease the acceptance of the
Internet as a communications and commercial medium, which could have a
material and adverse effect on our business, results of operations and
financial condition. In addition, because the growing popularity and use of
the Internet has burdened the existing telecommunications infrastructure and
many areas with high Internet usage have begun to experience interruptions
in phone service, some local telephone carriers have petitioned governmental
agencies to regulate Internet service providers and online service providers
in a manner similar to long distance telephone carriers and to impose access
fees on Internet service
providers and online service providers. If any of these petitions or the
relief that they seek is granted, the costs of communicating on the Internet
could increase substantially, potentially adversely affecting the growth in
the use of the Internet. Further, due to the global nature of the Internet,
it is possible that governments of various states, the United States or
foreign countries might attempt to regulate our services or levy sales or
other taxes on our activities. In a rapidly evolving and unsettled legal
environment such as this, it is possible that we will be charged with
violations of local or other laws by local, state, federal or foreign
governments, that we might unintentionally violate these laws or that these
laws will be modified, or new laws enacted, in the future. Any of these
developments could have a material and adverse effect on our business,
results of operations and financial condition.
Risks Related to
the Offering
Investor interest
in our Series A common stock may not develop which may cause the price of
our common stock after this offering to be lower than the price you
pay.
Prior to this offering,
there has been no public market for our Series A common stock. Investor
interest in our Series A common stock may not be sufficient to lead to the
development of an active trading market. The market price of the Series A
common stock may decline below the initial public offering price. The
initial public offering price for the shares will be determined by
negotiations between us and the representatives of the underwriters and may
not be indicative of prices that will prevail in the trading market
following the completion of this offering.
The market price
of our shares may experience extreme price and volume
fluctuations.
The stock market has, from
time to time, experienced extreme price and volume fluctuations. The market
prices of the securities of Internet-related companies have been especially
volatile, including fluctuations that are often unrelated to the operating
performance of the affected companies. Broad market fluctuations of this
type may adversely affect the market price of our Series A common
stock.
The market price of our
Series A common stock could be subject to significant fluctuations due to a
variety of factors, including:
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public
announcements concerning us, our competitors, or the Internet
industry;
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fluctuations in
operating results;
|
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additions or
departures of key personnel;
|
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introductions of
new products or services by us or our competitors;
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general conditions
in the financial markets;
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changes in analysts
’ earnings estimates; and
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announcements of
technological innovations.
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In the past, companies that
have experienced volatility in the market price of their stock have been the
object of securities class action litigation. If we were the object of
securities class action litigation, it could result in substantial costs and
a diversion of our management’s attention and resources and have a
material adverse effect on our business, results of operation and financial
condition.
The significant
concentration of ownership of our common stock will limit the ability of
investors to influence corporate actions.
We anticipate that our
executive officers, directors and existing stockholders who each own greater
than 5% of the outstanding Series A common stock before the closing of this
offering and their affiliates will, in the aggregate, based on the number of
shares outstanding on December 31, 1999, beneficially own approximately
74.9% of our outstanding Series A common stock following the closing of this
offering, or 72.8% if the underwriters’ over-allotment option is
exercised in full, assuming no exercise of outstanding options as of
December 31, 1999. As a result, our executive officers, directors and 5% or
greater stockholders will be able to exercise significant control over all
matters requiring approval by our stockholders, including the election of
directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying or
preventing a change in control of us.
We may spend a
substantial portion of the net proceeds in ways with which you may not
agree.
We currently have no
specific uses for a substantial portion of the net proceeds of this
offering. Accordingly, investors in this offering will be relying on
management’s judgment with only limited information about our specific
intentions regarding the use of proceeds. We may spend most of the net
proceeds from this offering in ways with which you may not agree. Our
failure to apply these funds effectively could have a material and adverse
effect on our business, results of operations and financial
condition.
Our corporate
documents and Delaware law make a takeover of our company more difficult,
which may limit the market price of our Series A common
stock.
Our charter and by-laws and
Section 203 of the Delaware Corporation Law contain provisions that might
enable our management to resist a takeover of our company. These provisions
might discourage, delay or prevent a change in the control of CCBN.com or a
change in our management. These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders to elect
directors and take other corporate actions. The existence of these
provisions could limit the price that investors might be willing to pay in
the future for shares of our Series A common stock. AOL’s right to
terminate our strategic relationship if we merge with or sell substantially
all of our assets to a competitor of AOL might discourage or prevent a
change of control.
The future sale of
shares of our Series A common stock may negatively affect our stock
price.
If our stockholders sell
substantial amounts of our Series A common stock, including shares issuable
upon the exercise of outstanding options and warrants in the public market
following this offering, the market price of our Series A common stock could
fall. These sales also might make it more difficult for us to sell equity
securities in the future at a time and price that we deem appropriate. After
the closing of this offering, based on the number of shares outstanding as
of December 31, 1999, we will have outstanding 23,050,006 shares of Series A
common stock. Of these shares, the 4,200,000 shares being offered in this
offering will be freely tradeable. Our executive officers, directors, and
substantially all of our stockholders have agreed that they will not sell,
directly or indirectly, any Series A common stock without the prior written
consent of SG Cowen Securities Corporation for a period of 180 days from the
date of this prospectus. However, SG Cowen Securities Corporation may, in
its sole discretion and at any time or from time to time, without notice,
release all or any portion of the securities subject to the lock-up
agreements.
Investors in this
offering will suffer immediate and substantial dilution.
Investors purchasing shares
in this offering will incur immediate and substantial dilution in net
tangible book value per share. To the extent outstanding options and
warrants to purchase Series A common stock are exercised, there will be
further dilution.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains
forward-looking statements that involve substantial risks and uncertainties.
You can identify these statements by forward-looking words such as “may,
” “will,” “expect,” “intend,”
“anticipate,” “believe,” “estimate,”
“continue” and other similar words. You should read statements
that contain these words carefully because they discuss our future
expectations, make projections of our future results of operations or of our
financial condition or state other “forward-looking” information.
We believe that it is important to communicate our future expectations to
our investors. However, there may be events in the future that we are not
able to accurately predict or control. The factors listed in the sections
captioned “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” as well
as any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking
statements. Before you invest in our Series A common stock, you should be
aware that the occurrence of the events described in the “Risk Factors
” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” sections and elsewhere in this
prospectus could have a material adverse effect on our business, operating
results and financial condition.
We estimate that our net
proceeds from the sale of 4,200,000 shares of Series A common stock we are
offering will be approximately $45.5 million ($52.5 million if the
underwriters exercise their over-allotment option in full) at the assumed
initial public offering price of $12.00 and after deducting estimated
offering expenses of $1.4 million and underwriting discounts and commissions
payable to us.
The principal purposes of
this offering are to increase our equity capital, create a public market for
our Series A common stock under market conditions that we believe are
favorable, facilitate future access by us to public equity markets and
provide us with increased visibility in our markets. We currently estimate
that $12.6 million of the net proceeds of this offering will be used to
satisfy obligations to AOL over the term of our services agreement with
them. The balance of the net proceeds will be used for working capital and
other general corporate purposes, as well as capital expenditures, expansion
of our marketing and distribution activities, product development and
potential acquisitions.
Our management will have
significant flexibility in applying the net proceeds of this offering. We
may use a portion of the net proceeds to acquire businesses, products or
technologies. For example, we would consider acquiring businesses outside
the United States in order to expand our geographic reach. We may also
consider acquiring products or technologies to expand our current service
offerings in order to provide more content of interest to the investment
community. While we consider potential acquisitions from time to time, we
currently have no agreements for any potential acquisition. Pending any such
uses of the proceeds of this offering, we will invest the net proceeds of
this offering in short-term, investment grade, interest-bearing
instruments.
We have never declared or
paid any cash dividends on any series of our common stock or preferred
stock, and we do not intend to pay cash dividends on our Series A common
stock in the foreseeable future. We currently expect to retain any future
earnings to fund the operation and expansion of our business.
The following table sets
forth our capitalization at December 31, 1999. The pro forma information
gives effect to the conversion of all of our outstanding Series B, Series C,
Series D and Series E common stock and convertible preferred stock as of
December 31, 1999. The pro forma as adjusted information reflects the net
proceeds from the issuance and sale of the 4,200,000 shares of Series A
common stock offered by us in this offering at an assumed initial public
offering price of $12.00 per share. The outstanding share information
excludes:
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2,570,601 shares of
Series A common stock subject to outstanding options under our 1999
Incentive and Non-Statutory Stock Option Plan with a weighted average
exercise price of $1.57 per share;
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4,926,699
additional shares of Series A common stock reserved for issuance under our
1999 Incentive and Non-Statutory Stock Option Plan as of December 31,
1999;
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550,000 shares of
Series A common stock reserved for issuance under our 2000 Outside
Director Stock Option Plan and 2000 Employee Stock Purchase Plan;
and
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warrants for
1,596,650 shares of Series E preferred stock which convert to warrants for
4,789,950 shares of Series A common stock upon the closing of this
offering.
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This table should be
read in conjunction with “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our financial
statements and accompanying notes and other financial data included
elsewhere in this prospectus.
| |
|
December 31,
1999
|
| |
|
Actual
|
|
Pro
Forma
|
|
Pro Forma
As Adjusted
|
| Cash and cash
equivalents |
|
$
3,202,278 |
|
|
$
3,202,278 |
|
|
$
48,709,278 |
|
| |
|
|
|
|
|
|
|
|
|
| Capital lease
obligation |
|
$
193,342 |
|
|
$
193,342 |
|
|
$
193,342 |
|
| |
|
|
|
|
|
|
|
|
|
| Convertible
preferred stock: |
|
|
|
|
|
|
|
|
|
Series A convertible preferred stock; $0.01 par value; 562,500
shares authorized,
562,500 issued and
outstanding actual (at liquidation value); none authorized,
issued and outstanding pro
forma and pro forma as adjusted |
|
1,500,000 |
|
|
—
|
|
|
—
|
|
Series B convertible preferred stock; $0.01 par value; 344,043
shares authorized,
344,043 issued and
outstanding actual (at liquidation value); none authorized,
issued and outstanding pro
forma and pro forma as adjusted |
|
1,146,810 |
|
|
—
|
|
|
—
|
|
Series C convertible preferred stock; $0.01 par value; 41,544 shares
authorized,
41,544 issued and
outstanding actual (at liquidation value); none authorized,
issued and outstanding pro
forma and pro forma as adjusted |
|
208,274 |
|
|
—
|
|
|
—
|
|
Series D convertible preferred stock; $0.01 par value; 891,314
shares authorized,
709,970 issued and
outstanding actual (at liquidation value); none authorized,
issued and outstanding pro
forma and pro forma as adjusted |
|
6,685,793 |
|
|
—
|
|
|
—
|
|
Series E convertible preferred stock; $0.01 par value; 1,804,630
shares
authorized, 207,980 issued
and outstanding actual (at liquidation value); none
authorized, issued and
outstanding pro forma and pro forma as adjusted |
|
3,348,478 |
|
|
—
|
|
|
—
|
|
| |
|
|
|
|
|
|
|
|
|
|
Total convertible preferred stock |
|
12,889,355 |
|
|
—
|
|
|
—
|
|
| |
|
|
|
|
|
|
|
|
|
| Stockholder’s
equity (deficit): |
|
|
|
|
|
|
|
|
|
Series A common stock; $0.001 par value; 30,000,000 shares
authorized,
11,436,573 issued and
outstanding, actual; 17,978,744 shares issued and
outstanding, on a pro forma
basis, and 22,178,774 shares issued and
outstanding, on a pro forma
as adjusted basis |
|
11,437 |
|
|
17,979 |
|
|
22,179 |
|
Series B common stock; $0.001 par value; 192,093 shares authorized,
189,563
issued and outstanding
actual; none authorized, issued and outstanding pro
forma and pro forma as
adjusted |
|
189 |
|
|
—
|
|
|
—
|
|
Series C common stock; $0.001 par value; 244,098 shares authorized,
196,565
issued and outstanding
actual; none authorized, issued and outstanding pro
forma and pro forma as
adjusted |
|
196 |
|
|
—
|
|
|
—
|
|
Series D common stock; $0.001 par value; 204,047 shares authorized,
156,801
issued and outstanding
actual; none authorized, issued and outstanding pro
forma and pro forma as
adjusted |
|
157 |
|
|
—
|
|
|
—
|
|
Series E common stock; $0.001 par value; 750,150 shares authorized,
420,966
issued and outstanding
actual; none authorized, issued and outstanding pro
forma and pro forma as
adjusted |
|
421 |
|
|
—
|
|
|
—
|
|
| Additional
paid-in-capital |
|
15,933,957 |
|
|
28,817,733 |
|
|
74,320,533 |
|
| Deferred
compensation and other equity related charges |
|
(9,928,634 |
) |
|
(9,928,634 |
) |
|
(9,928,634) |
|
| Accumulated
deficit |
|
(10,341,978 |
) |
|
(10,341,978 |
) |
|
(10,341,978) |
|
| |
|
|
|
|
|
|
|
|
|
|
Total stockholder’s equity
(deficit) |
|
(4,324,255 |
) |
|
8,565,100 |
|
|
54,072,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total
capitalization |
|
$
8,758,442 |
|
|
$
8,758,442 |
|
|
$
54,265,442 |
|
| |
|
|
|
|
|
|
|
|
|
Our pro forma net tangible
book value at December 31, 1999 was $4.5 million, or $0.25 per share of
Series A common stock. Pro forma net tangible book value per share
represents the amount of our total tangible assets reduced by the amount of
our total liabilities, divided by the pro forma number of shares of Series A
common stock outstanding as of December 31, 1999, after giving effect to the
conversion of all outstanding shares of our Series B, Series C, Series D and
Series E common stock and convertible preferred stock into 6,542,199 shares
of Series A common stock.
Dilution in pro forma net
tangible book value per share represents the difference between the amount
per share paid by purchasers of shares of Series A common stock in this
offering and the pro forma net tangible book value per share of Series A
common stock immediately after the completion of this offering. After giving
effect to our sale of 4,200,000 shares of Series A common stock in this
offering at an assumed initial public offering price of $12.00 per share and
after deducting underwriting discounts and commissions and estimated
offering expenses payable by us, our adjusted pro forma net tangible book
value at December 31, 1999 would have been $50.0 million or $2.26 per share.
This amount represents an immediate increase in pro forma net tangible book
value to our existing stockholders of $2.01 per share and an immediate
dilution to new investors of $9.74 per share. The following table
illustrates this per share dilution:
| Assumed initial
public offering price per share |
|
|
|
$12.00 |
| Pro forma net
tangible book value per share at December 31, 1999 |
|
$0.25 |
|
|
Increase in pro
forma net tangible book value per share attributable to new
investors |
|
2.01 |
|
|
| |
|
|
|
|
| Pro forma net
tangible book value per share after this offering |
|
|
|
2.26 |
| |
|
|
|
|
| Dilution per share
to new investors |
|
|
|
$
9.74 |
| |
|
|
|
|
If the underwriters exercise
their over-allotment option in full, our adjusted pro forma net tangible
book value at December 31, 1999 would have been $57.1 million, or $2.50 per
share, representing an immediate increase in pro forma net tangible book
value to our existing stockholders of $2.25 per share and an immediate
dilution to new investors of $9.50 per share.
The following table
summarizes, on a pro forma basis, at December 31, 1999, after giving effect
to the pro forma adjustments described above, the differences between the
number of shares of Series A common stock purchased from us, the aggregate
cash consideration paid to us and the average price per share paid by our
existing stockholders and by new investors purchasing shares of Series A
common stock in this offering. The calculation below is based on an assumed
initial public offering price of $12.00 per share, before deducting
underwriting discounts and commissions and estimated offering expenses
payable by us:
| |
|
Shares
Purchased
|
|
Total
Consideration
|
|
Average
Price
Per Share
|
| |
|
Number
|
|
Percent
|
|
Amount
|
|
Percent
|
| Existing
stockholders |
|
17,978,774 |
|
81.1 |
% |
|
$12,894,484 |
|
20.4 |
% |
|
$
.72 |
| New
investors |
|
4,200,000 |
|
18.9 |
|
|
50,400,000 |
|
79.6 |
|
|
12.00 |
| |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
22,178,774 |
|
100 |
% |
|
$63,294,484 |
|
100 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
This discussion and table
assume no exercise of any stock options outstanding at December 31, 1999. At
December 31, 1999, there were options outstanding under our stock plans to
purchase a total of 2,570,601 shares of Series A common stock with a
weighted average exercise price of $1.57 per share. To the extent all such
options had been exercised as of December 31, 1999, net tangible book
value per share after the offering would be $54.1 million and total dilution
per share to new investors would be $9.82. At March 28, 2000, there were
options outstanding under our stock plans to purchase a total of 3,873,654
shares of Series A common stock with a weighted average exercise price of
$2.77 per share, and there were 871,232 additional shares of Series A common
stock outstanding which provided proceeds of $4,197,620. To the extent all
such options had been exercised and stock had been issued as of December 31,
1999, net tangible book value per share after the offering would be $64.9
million and total dilution per share to new investors would be
$9.59.
SELECTED
CONSOLIDATED FINANCIAL DATA
The following selected
consolidated financial data should be read in conjunction with our financial
statements and related notes and with “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and other
financial data included elsewhere in this prospectus. The statement of
operations data for the period from inception (February 13, 1997) to
December 31, 1997 and the years ended December 31, 1998 and 1999 and the
balance sheet data as of December 31, 1998 and 1999 are derived from audited
financial statements included elsewhere in this prospectus. The balance
sheet data as of December 31, 1997 has been derived from audited financial
statements not included in this prospectus.
Unaudited pro forma basic
and diluted net loss per share have been calculated assuming the conversion
of all outstanding shares of Series B, Series C, Series D and Series E
common stock and convertible preferred stock into shares of Series A common
stock, as if the shares had converted immediately upon issuance.
| |
|
Period from
February 13,
1997 through
December 31,
1997
|
|
Fiscal Year
Ended
December 31,
|
| |
|
|
1998
|
|
1999
|
| |
|
(in thousands,
except per share data) |
| Consolidated
Statement of Operations Data: |
| Revenue |
|
$
27 |
|
|
$
1,582 |
|
|
$
8,697 |
|
| Operating
expenses: |
Cost of revenue (excluding equity-related
compensation of $13 for the
year
ended December 31, 1999) |
|
55 |
|
|
958 |
|
|
3,761 |
|
Sales and marketing (excluding equity-related
compensation of $3 and
$1,175 for the years ended December 31, 1998 and 1999,
respectively) |
|
438 |
|
|
1,960 |
|
|
5,256 |
|
General and administrative (excluding
equity-related compensation of
$288
for the year ended December 31, 1999) |
|
155 |
|
|
600 |
|
|
2,225 |
|
Research and development (excluding equity-related
compensation of
$217
for the year ended December 31, 1999) |
|
197 |
|
|
368 |
|
|
806 |
|
|
Equity-related compensation |
|
—
|
|
|
3 |
|
|
1,693 |
|
|
Amortization of intangible assets |
|
—
|
|
|
—
|
|
|
425 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
845 |
|
|
3,889 |
|
|
14,166 |
|
| |
|
|
|
|
|
|
|
|
|
| Loss from
operations |
|
(818 |
) |
|
(2,307 |
) |
|
(5,469 |
) |
| Interest income,
net |
|
2 |
|
|
33 |
|
|
76 |
|
| |
|
|
|
|
|
|
|
|
|
| Net loss |
|
(816 |
) |
|
(2,274 |
) |
|
(5,393 |
) |
| Deemed dividend on
Series E preferred stock |
|
—
|
|
|
—
|
|
|
(1,848 |
) |
| |
|
|
|
|
|
|
|
|
|
| Net loss
attributable to common stockholders |
|
$
(816 |
) |
|
$(2,274 |
) |
|
$(7,241 |
) |
| Basic and diluted
net loss per share |
|
$(0.20 |
) |
|
$
(0.24 |
) |
|
$
(0.68 |
) |
| Shares used in
computing basic and diluted net loss per share |
|
4,059 |
|
|
9,434 |
|
|
10,664 |
|
| Unaudited pro forma
basic and diluted net loss per share |
|
|
|
|
|
|
|
$
(0.49 |
) |
Shares used in
computing pro forma basic and diluted net loss per share
(unaudited) |
|
|
|
|
|
|
|
14,717 |
|
|
| |
|
December
31,
|
| |
|
1997
|
|
1998
|
|
1999
|
| |
|
(in
thousands) |
| Consolidated
Balance Sheet Data: |
| Cash and cash
equivalents |
|
$1,112 |
|
|
$
1,067 |
|
|
$
3,202 |
|
| Working capital
(deficit) |
|
618 |
|
|
(590 |
) |
|
3,236 |
|
| Total
assets |
|
1,277 |
|
|
2,854 |
|
|
14,714 |
|
| Long-term capital
lease obligation |
|
—
|
|
|
51 |
|
|
193 |
|
| Convertible
preferred stock |
|
1,500 |
|
|
2,855 |
|
|
12,889 |
|
| Total stockholders
’ deficit |
|
(814 |
) |
|
(3,085 |
) |
|
(4,324 |
) |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion
should be read in conjunction with the consolidated financial statements and
related notes which appear elsewhere in this prospectus. The following
discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those discussed below and elsewhere in this prospectus,
particularly under the heading “Risk Factors.”
Overview
We were formed by Jeffrey P.
Parker, the founder of First Call, in February 1997 as a limited liability
company and reorganized as a “C” corporation in April 1999. From
February 1997 to August 1997, we were in the development stage, conducting
research and developing our initial products. We launched IR Online
in August 1997 and to date we have derived substantially all of our
revenue from corporate clients for this service. We made a beta version of
the StreetEvents web site available to selected users in February
1999 and we launched StreetEvents commercially in November 1999.
StreetEvents has recently begun to generate subscription and
distribution revenue. In December 1999, we entered into an agreement with
AOL to provide content to and host two web sites that CCBN.COM and AOL are
building and branding jointly on the AOL Personal Finance Channel,
CompuServe, and Netscape Netcenter.
In October 1999, we
completed the acquisition of TalkPoint Communications, Inc. We acquired all
of the outstanding shares of TalkPoint in exchange for 520,137 shares of our
Series A common stock, $971,000 in cash and the assumption of liabilities of
$800,000. The total purchase price was approximately $4.3 million and the
acquisition was accounted for as a purchase business combination. The
operational results of TalkPoint are included with our consolidated results
beginning on the effective date of the acquisition.
Our revenue totaled $27,000,
$1.6 million and $8.7 million, and net loss totaled $816,000, $2.3 million
and $7.2 million for the period from February 13, 1997 through December 31,
1997, and the years ended December 31, 1998 and 1999, respectively. During
the eight quarters in the period ended December 31, 1999, we experienced
increased revenue in each successive quarter, while incurring substantial
net losses due to continued investment in our business.
We sell IR Online and
StreetEvents services through 12-month contracts, which renew
automatically unless cancelled 90 days prior to expiration. We recognize
revenue from subscription fees in the month in which the service is
provided. One-time set up fees charged to clients are deferred and
recognized over the client’s initial contract term. We sell additional
services on an as-used basis and recognize these fees as the services are
delivered. We anticipate that advertising revenue will be generated under
our agreement with AOL and will be recognized as earned.
Our operating expenses are
classified into six general categories as described below:
|
Ÿ
|
Our cost of revenue
includes: (a) salaries and other personnel-related costs for our client
service personnel; (b) costs associated with services provided to our
clients by outsourced vendors; (c) server hosting costs; (d) audio
streaming costs; (e) fees paid for financial and market data included in
our services; and (f) amortization of internally developed software in
accordance with SOP 98-1.
|
|
Ÿ
|
Sales and marketing
expenses consist primarily of: (a) salaries and other personnel-related
costs; (b) commissions earned by sales personnel; (c) travel costs
associated with selling efforts; (d) costs associated with marketing
programs, including trade shows and seminars, public relations activities
and new service launches; and (e) non-cash charges related to the equity
investment by AOL. Commissions paid to sales personnel are deferred and
recognized over the term of the contract.
|
|
Ÿ
|
General and
administrative expenses consist primarily of salaries and other
personnel-related costs for executive, financial, and other administrative
personnel, and legal and professional costs.
|
|
Ÿ
|
Research and
development expenses consist primarily of salaries and other
personnel-related costs for technical personnel performing maintenance on
existing software or research on projects which have not reached
technological feasibility. Research and development costs are expensed as
incurred.
|
|
Ÿ
|
Equity-related
compensation expenses represent charges related to options granted to
employees below fair value, performance-based options and restricted stock
granted to employees, and the fair value of options and restricted stock
granted to non-employees.
|
|
Ÿ
|
Amortization of
intangible assets consists of the amortization of goodwill and other
intangible assets resulting from the acquisition of TalkPoint.
|
We have only a limited
operating history on which to base an evaluation of our business and
prospects. Our prospects must be considered in light of the risks and
uncertainties encountered by companies in an early stage of development in
new and rapidly evolving markets. Although we have experienced revenue
growth in recent periods, there can be no assurance that such growth rates
are sustainable, and therefore such growth rates should not be considered
indicative of future operating results. There can also be no assurance that
we will be able to attain profitability or, if profitability is achieved,
that it can be sustained. We believe that period-to-period comparisons of
our historical operating results are not meaningful and should not be relied
upon as an indication of future performance.
We have experienced
substantial net losses since our inception and, as of December 31, 1999, we
had an accumulated deficit of $10.3 million. These net losses and
accumulated deficit resulted from our lack of substantial revenue and the
significant costs incurred in the development of our products and in the
establishment of our sales and marketing organization. We expect to increase
our expenditures in all areas in order to execute our business plan,
particularly in sales and marketing. The planned increase in sales and
marketing expenses will primarily result from the hiring of additional sales
personnel and the expansion of marketing programs, including both cash and
non-cash expenses associated with our relationship with AOL.
Recent
Developments
In December 1999, we sold
93,168 shares of Series E convertible preferred stock to AOL, one of our
strategic partners. AOL also entered into a service agreement with us under
which we have been granted preferred status as the provider of certain
investment-related content to AOL subscribers. Links to our content will
also be provided to CompuServe’s subscribers and users of Netscape
Netcenter.
Under the service agreement,
we will pay AOL $14.1 million in carriage fees over the 40-month term of the
agreement. We paid $1.5 million to AOL in December of 1999 and the terms
provide for payments of $4.8 million, $3.9 million, and $3.9 million in the
years ending December 31, 2000,
2001, and 2002. Upon our initial public offering, our payment schedule to AOL
will be accelerated by one quarter. Carriage fees will be recognized as
sales and marketing expense ratably over the term of the agreement. During
that term, AOL has committed to provide us with significant promotional
exposure in the form of impressions to the web sites that CCBN.COM and AOL
are building and branding jointly we will host and manage on the AOL
network. In addition, AOL has the right to sell advertisements on CCBN sites
and sites that CCBN.COM and AOL are building and branding jointly within the
AOL network. AOL will pay us a percentage of the advertising fees earned
depending on the volume of advertising sold. We did not recognize any
advertising revenue under this arrangement in the year ended December 31,
1999.
As part of our strategic
relationship, we granted AOL warrants to purchase additional shares of our
Series E convertible preferred stock which vest based on gross revenue
generated by advertising sold by AOL on CCBN sites. As of December 31, 1999,
no warrants have vested. The fair value of the warrants will be calculated
using the Black Scholes valuation model at the time the performance criteria
are met and the warrants vest. The value of the vested warrants will be
recognized as sales and marketing expense in the period the warrants become
vested.
Subsequent
Events
In January 2000, the Company
sold 149,067 shares of Series A common stock to an executive of the Company
in exchange for $200,000 in cash and a note for $600,000. The difference
between the fair value of the stock and the purchase price for the number of
shares purchased totals $1,186,573 and is considered to be compensation
expense to be recognized in the quarter ending March 31, 2000. In addition,
the Company granted options for the purchase of 600,000 shares of Series A
common stock with an exercise price of $3.33 per share and 150,000 options
with an exercise price of $5.37 per share to the same executive. These
option grants result in deferred compensation expense of $7,194,000, which
will be amortized over the vesting period of 36 months.
In March 2000, the Company
sold 374,067 shares of Series A common stock to an executive of the Company
in exchange for $1,408,747 in cash and a note for $600,000. The difference
between the fair value of the stock and the purchase price for the number of
shares purchase totals $2,977,573 and is considered to be compensation
expense to be recognized in the quarter ending March 31, 2000. In addition,
the Company granted options for the purchase of 300,000 shares of Series A
common stock with an exercise price of $5.37 per share to the same
executive. These option grants result in deferred compensation expense of
$2,388,000 which will be amortized over the vesting period of 36
months.
Results of
Operations
The following table sets
forth results of operations data expressed as a percentage of revenue for
the periods indicated:
| |
|
Fiscal Year Ended
December 31,
|
| |
|
1998
|
|
1999
|
| Revenue |
|
100.0 |
% |
|
100.0 |
% |
| Operating
expenses: |
|
Cost of revenue |
|
60.6 |
|
|
43.2 |
|
|
Sales and
marketing |
|
123.9 |
|
|
60.4 |
|
|
General and
administrative |
|
37.9 |
|
|
25.6 |
|
|
Research and
development |
|
23.2 |
|
|
9.3 |
|
|
Equity-related
compensation |
|
0.2 |
|
|
19.5 |
|
|
Amortization of intangible
assets |
|
—
|
|
|
4.9 |
|
| |
|
|
|
|
|
|
|
Total operating
expenses |
|
245.8 |
|
|
162.9 |
|
| |
|
|
|
|
|
|
| Loss from
operations |
|
(145.8 |
) |
|
(62.9 |
) |
| Interest income,
net |
|
2.1 |
|
|
0.9 |
|
| |
|
|
|
|
|
|
| Net loss |
|
(143.7 |
)% |
|
(62.0 |
)% |
| |
|
|
|
|
|
|
Comparison of
Fiscal Years Ended December 31, 1998 and 1999
Revenue.
Our revenue increased 450% from $1.6 million in 1998, to $8.7
million in 1999. The change was due to the increase in the number of
subscribers to IR Online from 509 at December 31, 1998 to 1,157 at
December 31, 1999, and to a lesser extent, to increased sales of additional
services to our existing clients. No single customer accounted for more than
2.0% of our revenue in 1998 or 0.5% in 1999. All customer contracts
automatically renew on each anniversary of the effective date of the
contract unless 90 days’ prior written notice is given by the
customer.
Through December 31, 1999,
over 90% of our customers renewed contracts with us, excluding customers
that were acquired and terminated their contracts in connection with their
acquisition. In view of our short operating history and the rapidly evolving
market for our service offerings, we do not know whether this renewal rate
is sustainable.
Cost of revenue.
Our cost of revenue increased 293% from $958,000, or
61% of revenue, in 1998 to $3.8 million (excluding equity-related
compensation of $13,618), or 43% of revenue in 1999. The dollar increase was
attributable to increases in client service personnel, outsourced vendor,
server hosting, streaming audio, and data costs, and the amortization of
internally developed software. The percentage of revenue decrease was due to
the fact that our server hosting and client service personnel costs
increased at a lower rate than our revenue.
Sales and marketing.
Our sales and marketing expenses increased 168% from
$2.0 million (excluding equity-related compensation of $2,622), or 124% of
revenue, in 1998 to $5.3 million (excluding equity-related compensation of
$1.2 million), or 60% of revenue, in 1999. The dollar increase was primarily
attributable to an increase in sales commissions associated with higher
IR Online sales, and to the hiring and development of our
StreetEvents salesforce. To a lesser extent, the increase was related
to an increase in travel costs associated with sales efforts, marketing
programs, trade shows, and advertising. The decrease as a percentage of
revenue was due to the predominantly fixed nature of our sales and marketing
expenses, with the exception of sales commissions.
We expect that sales and marketing expenses will continue to increase in
absolute dollars to support sales and marketing programs for our existing
services, international expansion, AOL carriage fees and expenses in
connection with the vesting of performance-based warrants earned by
AOL.
General and
administrative. Our general and administrative
expenses increased 271% from $600,000, or 38% of revenue, in 1998 to $2.2
million (excluding equity-related compensation of $287,770), or 26% of
revenue, in 1999. The dollar increase primarily resulted from expenditures
related to expansion of our administrative infrastructure, including newly
hired personnel, and professional services. The decrease as a percentage of
revenue was due primarily to the relatively fixed nature of our general and
administrative expenses. We expect that general and administrative expenses
will continue to increase in absolute dollars, as we continue to add
personnel to support our expanding operations and incur additional costs
related to the growth of our business.
Research and development.
Our research and development expenses increased
119% from $368,000, or 23% of revenue, in 1998 to $806,000 (excluding
equity-related compensation of $216,887), or 9% of revenue, in 1999. The
increase primarily resulted from salaries and personnel-related costs
associated with newly hired technical personnel, particularly for
StreetEvents. On January 1, 1999 we adopted Statement of Position
98-1 Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use. During 1999, $297,000 of internal software development costs
was capitalized and is being amortized through cost of revenue over a 30
month period. We expect research and development expenses will continue to
increase in absolute dollars as additional technical development personnel
are added.
Equity-related
compensation. In 1999, we recognized $1.7 million
in equity-related charges resulting from grants of options and
performance-based restricted stock to employees and non-employees. We
incurred expenses of $788,000 in 1999 related to the issuance of stock
options to employees. These employee options generally vest over periods of
up to four years, which will result in additional compensation expense of
approximately $6.1 million for periods ending subsequent to December 31,
1999. If all employee options vest in accordance with the original terms, we
expect to incur charges of at least $2.2 million in 2000, $2.1 million in
2001, $1.7 million in 2002, and $127,000 in 2003. We incurred expenses of
$905,000 in 1999 related to performance-based restricted stock and options
granted to employees, and non-employee restricted stock and option grants.
Performance-based and non-employee equity grants are variable and the
expense to be recognized in future periods cannot be estimated and will be
dependent on a number of variables including our stock price.
Comparison of the
Period from February 13 (date of inception) through December 31, 1997 and
the Fiscal Year Ended December 31, 1998
Our revenue increased from
$27,000 in 1997 to $1.6 million in 1998 due to the increase in the number of
subscribers to IR Online from 64 at December 31, 1997 to 509 at
December 31, 1998. During the same period our employees increased in all
areas from 32 at December 31, 1997 to 60 at December 31, 1998. As a result,
our operating expenses increased due to increases in personnel expenses, as
well as increases in sales commissions, server hosting costs, administrative
infrastructure costs and data costs.
Quarterly Results
of Operations
The following table presents
our unaudited quarterly results of operations for the eight fiscal quarters
ended December 31, 1999. You should read the following table in conjunction
with our consolidated financial statements and related notes appearing
elsewhere in this prospectus. You should not draw any conclusions about our
future results from the results of operations for any quarter.
| |
|
Quarter
Ended
|
| |
|
Mar. 31,
1998
|
|
June 30,
1998
|
|
Sept. 30,
1998
|
|
Dec. 31,
1998
|
|
Mar. 31,
1999
|
|
June 30,
1999
|
|
Sept. 30,
1999
|
|
Dec. 31,
1999
|
| |
|
(in
thousands) |
| Revenue |
|
$
89 |
|
|
$268 |
|
|
$
486 |
|
|
$
739 |
|
|
$1,198 |
|
|
$1,840 |
|
|
$
2,491 |
|
|
$
3,168 |
|
| Operating
expenses: |
|
Cost of revenue(1) |
|
101 |
|
|
147 |
|
|
252 |
|
|
458 |
|
|
472 |
|
|
787 |
|
|
1,103 |
|
|
1,399 |
|
|
Sales and marketing(2) |
|
360 |
|
|
455 |
|
|
524 |
|
|
621 |
|
|
708 |
|
|
1,183 |
|
|
1,569 |
|
|
1,796 |
|
|
General and administrative(3) |
|
106 |
|
|
132 |
|
|
161 |
|
|
201 |
|
|
384 |
|
|
390 |
|
|
757 |
|
|
694 |
|
|
Research and development(4) |
|
51 |
|
|
56 |
|
|
84 |
|
|
177 |
|
|
164 |
|
|
134 |
|
|
228 |
|
|
280 |
|
|
Equity-related compensation |
|
— |
|
|
2 |
|
|
1 |
|
|
— |
|
|
278 |
|
|
134 |
|
|
385 |
|
|
896 |
|
Amortization of intangible
assets |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
425 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
618 |
|
|
792 |
|
|
1,022 |
|
|
1,457 |
|
|
2,006 |
|
|
2,628 |
|
|
4,042 |
|
|
5,490 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from
operations |
|
(529 |
) |
|
(524 |
) |
|
(536 |
) |
|
(718 |
) |
|
(808 |
) |
|
(788 |
) |
|
(1,551 |
) |
|
(2,322 |
) |
| Interest income
(expense), net |
|
8 |
|
|
14 |
|
|
10 |
|
|
1 |
|
|
(8 |
) |
|
12 |
|
|
52 |
|
|
20 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$(521 |
) |
|
$(510 |
) |
|
$
(526 |
) |
|
$
(717 |
) |
|
$
(816 |
) |
|
$
(776 |
) |
|
$(1,499 |
) |
|
$(2,302 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Cost of revenue is
shown excluding equity-related compensation of $3, $2, and $8 for the
quarters ended June 30, 1999, September 30, 1999 and December 31, 1999,
respectively.
|
(2)
|
Sales and marketing
is shown excluding equity-related compensation of $2, $1, $278, $61, $365
and $471 for the quarters ended June 30, 1998, September 30, 1998, March
31, 1999, June 30, 1999, September 30, 1999 and December 31, 1999,
respectively.
|
(3)
|
General and
administrative is shown excluding equity-related compensation of $27, $15,
and $246 for the quarters ended June 30, 1999, September 30, 1999 and
December 31, 1999, respectively.
|
(4)
|
Research and
development is shown excluding equity-related compensation of $42, $3, and
$172 for the quarters ended June 30, 1999, September 30, 1999 and December
31, 1999, respectively.
|
Our revenue has increased in
each of the last eight quarters primarily due to the growth of our client
base. Cost of revenue has also increased in absolute dollars over the
periods presented, due primarily to an increase in the number of client
service personnel and costs of outsourced vendors. Other operating expenses
have grown primarily due to higher sales commissions, and additions of
salaries and personnel-related costs. We believe these expenses will
continue to grow as our client base expands.
Our current expense levels
are based, in part, on expectations of higher future revenue, and to a large
extent, such expenses are fixed, particularly in the short term. There can
be no assurance that our expectations regarding future revenue are accurate.
Moreover, we may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Accordingly, any
significant shortfall in revenue in relation to our expectations would
likely cause significant increases in our net loss for that
period.
A variety of factors, many
of which are outside of our control, may affect our quarterly operating
results. These factors include:
|
Ÿ
|
uncertainty
regarding when we will incur, and the amount of, expenses resulting from
the vesting of AOL warrants;
|
|
Ÿ
|
the evolution of
the market for investor information;
|
|
Ÿ
|
market acceptance
of our services;
|
|
Ÿ
|
our success and
timing in developing and introducing new services and enhancements to
existing services;
|
|
Ÿ
|
market entry by new
competitors, and the introduction of products and services by existing
competitors;
|
|
Ÿ
|
our ability to
attract and retain employees;
|
|
Ÿ
|
changes in pricing
policies by us or our competitors;
|
|
Ÿ
|
the length of our
sales cycle; and
|
|
Ÿ
|
changes in client
buying patterns.
|
The foregoing factors, our
limited operating history, and the undeveloped nature of the market for our
services make predicting future revenue difficult. We believe that
period-to-period comparisons of our operating results are not meaningful and
you should not rely on them as indicative of our future performance. You
should also evaluate our prospects in light of the risks, expenses and
difficulties commonly encountered by comparable early-stage companies in new
and rapidly emerging markets. We cannot assure you that we will successfully
address the risks and challenges that face us. In addition, although we have
experienced significant revenue growth recently, we cannot assure you that
our revenue will continue to grow or that we will become or remain
profitable in the future.
Liquidity and
Capital Resources
Since inception, we have
funded our operations primarily through private sales of equity securities
and a note issued to Jeffrey P. Parker, resulting in net proceeds of $12.8
million.
Net cash used in operating
activities was $654,000, $1.5 million and $4.2 million in the period from
February 13, 1997 (date of inception) through December 31, 1997, and the
years ended December 31, 1998 and 1999, respectively. Cash used in
operations in 1998 was primarily due to our net loss and to a lesser extent
growth in receivables, prepaid expenses and current assets and was offset in
part by increased deferred revenue, and payroll and accrued liabilities.
Cash used in operations in 1999 was primarily due to our net loss and to an
increase in receivables, prepaid expenses and current assets and was offset
in part by increased deferred revenue, and payroll and accrued
liabilities.
Net cash used in investing
activities was $l36,000, $317,000 and $2.3 million in the period from
February 13, 1997 through December 31, 1997 and the years ended December 31,
1998 and 1999, respectively. Capital expenditures were approximately
$129,000, $238,000 and $1.3 million in the period from February 13, 1997
through December 31, 1997 and the years ended December 31, 1998 and 1999,
respectively. These capital expenditures were incurred primarily to acquire
computer hardware and software for our operations and to a lesser extent
furniture, fixtures and leasehold improvements. In 1999, we paid $971,000 as
part of our acquisition of TalkPoint.
Net cash from financing
activities was $1.9 million, $1.8 million and $8.6 million in the period
from February 13, 1997 through December 31, 1997 and the years ended
December 31, 1998 and 1999, respectively. For 1997, proceeds from financing
activities were primarily received from the private sale of convertible
preferred stock of $1.5 million and the issuance of a $400,000 note to
Jeffrey P. Parker. For 1998, proceeds from financing activities were
primarily received from the private sales of convertible preferred stock of
$1.4 million and issuance of notes of $850,000 offset by repayment of notes
of $400,000 to Jeffrey P. Parker. For 1999, proceeds from financing
activities were primarily received from the issuance of convertible
preferred stock of approximately $9.1 million offset by repayment of
$425,000 in TalkPoint notes payable and $60,000 in payments of capital lease
obligations.
At December 31, 1999, our
principal sources of liquidity were our cash and cash equivalents of $3.2
million.
We believe our current cash
and cash equivalents, proceeds from this offering and funds generated from
operations, if any, will provide adequate liquidity to meet our capital and
operating requirements through fiscal 2001. We believe that without the
proceeds from this offering we may be required to raise additional financing
or scale back our expansion plans. We may utilize cash resources to fund
acquisitions or investments in complementary businesses, technologies or
services. Therefore, we could be required, or could elect, to raise
additional capital in the future. In the event additional financing is
required, we may not be able to raise it on acceptable terms or at
all.
Our future long-term capital
needs will be highly dependent on our rate of expansion and our results of
operations. Thus, any projections of future long-term cash needs and cash
flows are subject to substantial uncertainty. If the net proceeds of this
offering together with our available funds and cash generated from
operations are insufficient to satisfy our long-term liquidity requirements,
we may seek to borrow funds or to sell additional equity or debt securities.
If additional funds are raised through the issuance of debt securities,
these securities could have rights, preferences and privileges senior to
those accruing to holders of our common stock, and the terms of these debt
securities or other debt financing could impose restrictions on our
operations. The sale of additional equity or convertible debt securities
could result in additional dilution to our stockholders. We cannot be
certain that additional financing will be available in amounts or on terms
acceptable to us, if at all. If we need and are unable to obtain additional
financing, we may be required to reduce the scope of our planned technology,
services or product development and sales and marketing efforts.
We consider all highly
liquid investment instruments purchased with an original maturity of three
months or less to be cash equivalents. We invest our cash and cash
equivalents in money market accounts. We place our cash and temporary cash
investments with financial institutions which management believes are of
high credit quality.
We have not invested in any
financial instruments that expose us to material market risk.
Recent
Pronouncements
In June 1998, the FASB
issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging
activities.” The new standard establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. In June 1999, the FASB issued SFAS
No. 137, which defers the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. We are currently analyzing this new
standard.
Year 2000
Compliance
We are a comparatively new
enterprise, and, accordingly, the majority of software and hardware we use
to manage our business has been purchased or developed by us within the last
24 months. To date, we have not experienced significant Year 2000
disruptions to our operating or administrative systems. We believe that our
significant vendors and service providers are Year 2000 compliant and have
not, to date, been made aware that any of our significant vendors or service
providers have suffered Year 2000 disruptions in their systems.
Accordingly, we do not
anticipate incurring material expenses or experiencing any material
operational disruptions as a result of any Year 2000 problems. We spent an
immaterial amount on Year 2000 testing and compliance during the year ended
December 31, 1999. Most of our expenses related to the operating costs
associated with time spent by our employees in the evaluation and planning
process and Year 2000 compliance matters.
Overview
We provide Internet-based
solutions which facilitate direct communications between public companies
and the investment community. We believe our solutions benefit all members
of the investment community by enabling efficient, direct access to timely
financial information in a consistent format from a centralized location.
IR Online is our solution under which we build, manage and host the
investor relations section of a company’s web site and provide related
services. More than 1,300 public companies currently subscribe
to IR Online, including Akamai Technologies, Dell Computer,
FleetBoston, Hershey Foods and Sears. In November 1999, we launched
StreetEvents, a comprehensive Internet portal for company event and
financial data. StreetEvents is currently in use at more than 200
financial institutions, including AIM Funds, Alliance Capital, Goldman Sachs
Asset Management, Morgan Stanley Dean Witter and Salomon Smith Barney. In
addition, we recently entered into an agreement with AOL under which we will
provide content to and host two web sites on the AOL Personal Finance
channel, which we and AOL are building and branding jointly. Working through
the AOL Personal Finance Channel, as well as CompuServe and Netscape
Netcenter, we will provide AOL’s audience of approximately 50 million
users with real-time access to a wide variety of company information. Our
objective is to become the global standard for direct communications between
public companies and the investment community by creating an online exchange
for investment-related information.
Industry
Overview
We believe that interest and
investment in the U.S. securities markets has risen significantly in recent
years. This growth has been driven by both an increase in the number of
companies issuing public securities and an increase in the number of active
investors, who have enjoyed greater access to the securities markets through
online trading, lower commissions and the proliferation of
employer-sponsored, stock-based compensation programs. The Investment
Company Institute reports that the percentage of U.S. households owning
stock directly or through mutual funds was 19% in 1983 and has grown to 48%
in 1999, a 153% increase. In addition, we believe that participation in
securities markets outside the United States will rise as trading on global
exchanges increases.
In this market environment,
investors face the challenge of promptly accessing, selectively processing
and effectively reacting to the increasing amount of investment-related
information that is continuously being delivered across an expanding variety
of media. Historically, it was not uncommon for investors to wait several
days for an annual report, an investor kit or investment research provided
by a brokerage firm to arrive by mail prior to making an investment
decision. Today, companies’ stock prices and trading volumes react
immediately to critical data such as breaking company news and periodic
earnings reports. The speed with which markets react to such information
greatly compresses the time frame surrounding the typical investment
decision and places a premium on the ability to make informed decisions
quickly.
Frequently, timely access to
breaking company news is not equally available to all investors, with
companies often providing material information to financial analysts and
select groups of institutional investors before making it available to the
public. The SEC has recently expressed concern with this practice of
selectively disclosing material information and, in an address to the New
York Economic Club on October 18, 1999, Arthur Levitt, Chairman of the SEC,
stated, “I appeal to companies in the spirit of fair play: Make your
quarterly conference calls open to everyone, post them on the Internet,
invite the press.” In December 1999, the SEC proposed rules designed to
foster full disclosure of material information by requiring public disclosure
in either a press release, a filing with the SEC, or by providing public
access to conference calls and meetings by telephone or through the
Internet.
A key factor in a public
company’s success is its stock price because it impacts the company
’s ability to raise capital, hire and retain key personnel, and
consummate mergers, acquisitions and other strategic relationships.
Unfortunately for companies, their stock price and public image are
increasingly influenced by factors outside their control, including reports
authored by third-party analysts and widely accessible online chat services
that allow investors to share information and opinions. As a result,
effective dissemination of accurate, unedited financial information directly
to the investment community is critical for many companies. In addition,
with the number of U.S. public companies exceeding 12,000 in 1999, as well
as the growth in the number of foreign public companies, competition for
investor attention is intensifying.
This large number of public
companies poses challenges for investors and analysts who must keep abreast
of all the events related to the companies they follow. With so many
companies releasing earnings, hosting conference calls, and conducting
investor presentations and press conferences each quarter, it has become
increasingly difficult for investors and analysts to both track company
activity and participate in these events.
As a result of these
intensifying pressures, investors and companies increasingly seek
comprehensive, integrated solutions which provide equal access to timely
information and enable efficient and interactive communications.
Our
Solution
We were formed in 1997 by
Jeffrey P. Parker, the founder of First Call, to meet escalating demand for
the timely exchange of information between public companies and investors.
We believe we offer new opportunities for companies and investors from
around the world to exchange information directly in real-time and in a
standardized format. By enabling direct communications among participants,
we believe we improve the flow of information to investors and give
companies direct exposure to a wider audience of potential investors.
Through hosted applications on the Internet, we have created a central
repository of company information that can be searched, retrieved and
organized more efficiently than traditional information sources, and can be
delivered in more content-rich forms of media, such as audio and video
communications.
Our products and services
enable direct communications between companies and investors and are
designed to foster fuller, more timely disclosure of company information.
Our current offerings include:
|
Ÿ
|
IR Online
— our outsourced communications solution through which
we build, manage and host the investor relations section of a company
’s web site and provide related services, and
|
|
Ÿ
|
StreetEvents
— our Internet-based portal for event information of
interest to investors, the brokerage community and companies.
|
In addition, as part of
our strategy to reach individual investors, we recently entered into a
relationship with AOL. As part of this relationship we will offer to
approximately 50 million AOL, CompuServe and Netscape Netcenter users
convenient access to company information on several co-branded web sites. We
believe that aligning with market leaders such as AOL enhances the profile
and attractiveness of our online information exchange.
Benefits to
Investors
Ÿ
|
Equal access to
information. Our solutions enable both
institutions and individuals to receive important company information
simultaneously. By making this information readily available, we believe
we enable all investors to make informed investment decisions more
quickly.
|
Ÿ
|
Convenient
access to standardized information. IR
Online and StreetEvents each present a wide variety of
information via the Internet in an easy to use and consistent format that
is familiar to investors.
|
Ÿ
|
Enhanced
productivity. With over 12,000 public companies
in the United States, and thousands more worldwide, it is difficult for
investors and financial analysts to track the timing of key corporate
events, such as earnings releases and conference calls. StreetEvents
provides immediate access to a central repository of corporate event
information, thereby reducing the time and expense required to gather data
from numerous sources. We also provide tools to enable investors to
personalize our content by tailoring it to their specific
interests.
|
Benefits to
Public Companies
Ÿ
|
More direct
access to investors. Our Internet-based
solutions enable companies to interact directly with investors. By using a
direct communications channel, companies can deliver their own messages
globally, unaltered by third parties such as reporters and brokerage
analysts. Also, using the Internet allows companies to instantly
disseminate information, enabling them to continually provide investors
with the most current information available.
|
Ÿ
|
More efficient
use of resources. We enable companies to
completely outsource the creation, hosting and maintenance of investor
relations web sites and other investor communications functions. We
believe our solutions enable our corporate clients to improve
communications with the investment community, reduce the costs of investor
relations administration and focus their technical staff on core
operations.
|
Ÿ
|
Greater investor
visibility. We believe companies that publish
their activities on StreetEvents can attract greater attention from
investors through direct contact with the investment community. Also,
because many companies have similar fiscal years, the reporting period for
earnings is often a busy time during which many companies announce their
financial results at or about the same time. StreetEvents enables
companies to avoid scheduling investor events at times already scheduled
by other companies which may be followed by the same analysts or
investors.
|
Ÿ
|
Improved
disclosure. Securities regulators have been
increasingly critical of selective disclosure practices and are seeking to
compel companies to disseminate material information simultaneously to
financial institutions and the general public. We believe our solutions
enable companies to meet these requirements by allowing them to elect to
make information simultaneously available to both institutional and
individual investors.
|
Our
Strategy
Our objective is to become
the global standard for direct communications between public companies and
the investment community by creating an online exchange of
investment-related information. Key elements of our strategy to achieve this
objective include:
|
Ÿ
|
Expand client
relationships. We intend to expand our IR
Online client base and our StreetEvents client base by
increasing our sales and marketing efforts and further develop our
strategic relationships. We believe that continuing to provide
comprehensive client service, support and education programs is critical
to expanding our client relationships.
|
|
Ÿ
|
Build our
information database for efficient presentation and delivery.
Our corporate client relationships enable us to
continuously collect and organize information from our clients in a
centralized database. We intend to expand our database to increase the
depth of content and enhance the efficiency of information access, thereby
improving the productivity of all members of our online
exchange.
|
|
Ÿ
|
Expand our
audience of investors through strategic relationships.
We seek strategic relationships that enable us to expand our
audience of investors. Our strategic relationship with AOL enables our
corporate clients to reach a wide audience of investors through our
co-branded web sites within the AOL Personal Finance channel and
CompuServe and on Netscape Netcenter. We have also entered into agreements
to distribute StreetEvents through a number of other web sites,
including Raging Bull, Yahoo!, Motley Fool and Standard & Poor’s
Personal Wealth. To increase our presence among institutional investors,
we have entered into distribution agreements with a number of financial
information providers, including First Call and ILX Systems.
|
|
Ÿ
|
Maximize the
network effect among the participants in our business information exchange.
Growing the number of corporate clients for
our IR Online services will enable us to add more content to our
StreetEvents database, thereby making StreetEvents more
valuable to our existing investor audience. As our audience of individual
and institutional investors grows, we expect that the opportunity to reach
this audience will cause more companies to subscribe to our services. We
believe successful implementation of our strategy will maximize the
network effect within our business information exchange where the value to
each company and investor participating in the exchange increases with the
addition of each new participant.
|
|
Ÿ
|
Expand service
offerings. To reinforce long-term relationships
with our clients and to generate additional revenue, we intend to continue
to develop new services and technologies through internal research and
development, strategic relationships and/or the acquisition of
complementary technologies and businesses. As part of this strategy, we
acquired TalkPoint in October 1999 in order to enhance our multimedia
offerings.
|
|
Ÿ
|
Increase brand
awareness. We plan to increase the brand
awareness of CCBN and its specific product offerings to develop and
reinforce long term relationships with companies and investors. We intend
to accomplish this strategy through a combination of online and print
advertising, direct marketing, trade shows, seminars and conferences,
public relations, and other marketing activities.
|
|
Ÿ
|
Build and expand
international presence. We intend to expand the
scope of our business information community globally. We believe that
interest by foreign investors in U.S. markets, and interest on the part of
U.S. investors in major foreign markets, represent significant growth
opportunities for our solutions.
|
Products and
Services
We currently offer two
complementary lines of Internet-based communications solutions to three
distinct client segments. Public companies subscribe to our IR Online
suite of Internet and non-Internet communication products and services.
Individual and institutional investors use IR Online to directly
access company information in a standardized format. StreetEvents
serves the entire investment community—companies, institutional
investors and individual investors—with an interactive database of
investment-related event information.
| Product
Line |
|
Description |
|
Revenue
Model |
| |
|
| IR
Online |
|
Outsourced web
solution for
the investor relations section of
a company web site |
|
Monthly
subscription paid
quarterly by companies |
| |
|
| StreetEvents |
|
Database of company
event
information and live/archived
audio event content |
|
Monthly
subscription paid
quarterly by investors |
| |
We believe IR
Online is a comprehensive, cost-effective, outsourced solution that
improves the quality and dissemination of investor information on a public
company’s Internet web site. We manage and host the investor relations
section of a company’s web site, organizing and presenting to investors
information of interest about the company. Our IR Online solution
enables companies to offer information such as First Call consensus earnings
estimates, SEC filings and stock quotes in a non-commercial format, as well
as conference calls, corporate slideshows and other essential information
such as annual reports, news releases, and historical financial data.
Although we host the investor relations section of a company’s web site
on our servers, we match the “look and feel” of the company’s
web site. As a result, investors seeking financial information from a company
’s web site are generally unaware that we are hosting the investor
section of the web site.
We offer IR Online in
five service packages with monthly fees ranging from $495 to $2,500. Service
contracts run 12 months with automatic renewal unless the client provides
notice of cancellation 90 days prior to the expiration of the initial or
renewal term. The Basic and Standard packages include a collection of
financial information feeds such as stock quotes, historical stock charts,
financial releases and reports, and an event calendar. Additionally, our
extranet web site enables IR Online clients to monitor activity on
their investor relations web sites, submit service requests to update the
content on their web site, and input event information into our
StreetEvents database. Our current extranet functionality is the
first element in establishing a formal feedback mechanism through which
investor relations departments can gain insight into investor preferences.
By understanding the type of information investors are accessing, companies
can alter the content on their web sites to provide information of greatest
interest to investors.
The following additional
features are available in a premium package or on a stand-alone
basis:
PremierCast and audio
archiving. Our PremierCast service
provides a live webcast of the audio portion of a company event (earnings
conference call or investor meeting) and offers a range of premium features
including:
|
Ÿ
|
an indexed archive
of the event for future replay;
|
|
Ÿ
|
promotion of the
event on the First Call network;
|
|
Ÿ
|
a guestbook feature
which captures listener information; and
|
|
Ÿ
|
the option to make
the webcast accessible from the company’s web site, from
StreetEvents and/or through the sites of our strategic distribution
partners.
|
TalkPoint.
Using TalkPoint, our corporate clients can present
slides to investors listening to or participating in a live webcast. Clients
can convert the presentation into an archived version in which the audio and
visual portions are synchronized and can be accessed via the Internet or the
telephone. TalkPoint’s ability to deliver “on-demand”
the audio portion of a presentation using the telephone facilitates access
for audiences who cannot listen to streaming audio due to their personal
computer’s lack of multimedia functionality or due to corporate
policies which prohibit audio streaming through their internal corporate
networks.
E-mail alerts.
The e-mail alert feature enables visitors to the investor
relations section of a company’s web site to register to be alerted
when changes are made to any of the selected sections of the web site, such
as press releases or the conference call page.
SmartBlast.
SmartBlast facilitates communication from a
company to its investors using e-mail and facsimile capabilities that can
target custom messages to select audiences.
InvestorConnect.
InvestorConnect includes both mail fulfillment
services and an interactive voice response service. Investors submit
requests for printed annual reports and investor kits via the web site or
via telephone and we fulfill those requests by priority mail through a third
party. We can also create for the client a toll-free investor hotline
service that allows callers to hear a company’s recent press release or
its current stock price.
Financial and annual
report conversion. We provide conversion of
printed financial materials from many common document formats into PDF or
HTML for posting on the company web site.
StreetEvents is an
Internet-based portal that organizes event information into our easy-to-use,
interactive and downloadable master calendar. We gather this
investment-related event information directly from more than 4,000 U.S.
companies; more than 500 international companies, including all of the FTSE
100; and more than 75 investment firms. StreetEvents is used
primarily by institutional and individual investors, financial
intermediaries, investment professionals and corporate investor relations
professionals. Among its many features, StreetEvents provides live
and archived audio webcasts of investor conference calls. Access to the
StreetEvents database is provided to institutional and individual
investors through the Internet or a data feed on a subscription
basis.
Our database of
investment-related events includes comprehensive information about the
dates, times and locations of the following event types:
|
Ÿ
|
investor
conferences; and
|
To ensure the accuracy and
timeliness of our content, we allow companies to enter event information
directly into the StreetEvents database through a password-protected
web site. We also solicit permission from companies to allow
StreetEvents to webcast their conference calls live over the Internet
and to archive these events for replay.
We market variations of
StreetEvents to three distinct audiences:
StreetEvents
Institutional. StreetEvents
Institutional is a master calendar of investment-related events that is
provided as either a browser-based application (hosted by us at
www.streetevents.com), or as a data feed (internally hosted by the customer)
to institutional investment firms. StreetEvents Institutional
provides First Call consensus earnings estimates and event-related
information, including date, time, location and dial-in information. Users
can also access live or archived audio webcasts of investor events for a
growing number of companies.
To enhance use of the data,
the browser-based version of StreetEvents Institutional also offers
the following user tools:
|
Ÿ
|
Personalized
portfolio. Users can set up portfolios of
companies they wish to follow within the StreetEvents Institutional
product, thereby personalizing the web site and enhancing their
productivity.
|
|
Ÿ
|
Event calendar.
An interactive event calendar enables users to
view event information in a calendar interface across various timeframes
(today, this week, this month, etc.). This event information can then be
downloaded to a user’s personal computer or personal digital
assistant.
|
|
Ÿ
|
Calendar e-mail
updates. Users can choose to be alerted via
e-mail prior to a scheduled event for a chosen company. By clicking an
icon embedded in the e-mail, users can subsequently download the event
information directly to Microsoft’s Outlook calendar on their
personal computers, thereby integrating StreetEvents into their
daily calendars.
|
StreetEvents
Institutional is provided on a monthly subscription basis for a fee
based on the number of users.
StreetEvents
Individual Investor. StreetEvents
Individual Investor is a master calendar of investment events that is
offered either via a web site (hosted by us), or as a data feed (internal
hosting) to selected individual investor web portals. We intend to generate
revenue from this product through advertising or sponsorship revenue shared
with our distribution partners, such as AOL. The product offers access to a
limited set of the information contained in the StreetEvents
Institutional product, including:
|
Ÿ
|
conference calls of
companies which have authorized access to the individual investor
community;
|
|
Ÿ
|
limited calendar
functionality; and
|
StreetEvents IR.
StreetEvents IR is an Internet-based
calendar of investment-related events used by public companies to schedule
quarterly earnings announcements and avoid conflict with other market
activity. StreetEvents IR enables companies to deliver information
regarding their event activity directly to investors and to provide links to
the audio webcast of a company’s quarterly earnings conference call on
their corporate web sites, the StreetEvents site for institutional
investors, or through our strategic distribution partners. We currently
offer public companies free access to StreetEvents IR as a means of
building the StreetEvents database.
AOL
Relationship
We entered into a strategic
relationship with AOL in December 1999 as part of our ongoing strategy to
reach individual investors. We believe the relationship is significant
because it affords our corporate clients the opportunity to reach today
’s largest online community of individual investors in an efficient and
cost-effective manner and because it provides us significant revenue
potential. As part of this relationship, AOL has invested $1.5 million in
our capital stock.
Under our agreement with
AOL, we have been granted preferred status as the provider of certain
investment-related content to the approximately 22 million subscribers to
AOL. Links to our content will also be provided to CompuServe’s
subscribers and users of Netscape Netcenter. This content consists of
corporate event calendar information; audio, video, or accompanying
presentations of company-sponsored investor-related events; and aggregated
links to corporate investor relations web sites. In accordance with the
agreement, we will host and maintain two fully-integrated and co-branded web
sites within the AOL online service. One site will be a centralized area of
investor relations information, containing significant financial information
provided directly by companies to us for Internet distribution. The other
site will be a comprehensive financial calendar dedicated to financial event
information, including earnings release and conference call information,
stock splits, dividend dates, dates of initial public offerings, and key
events on the economic calendar. The events in the Finance Calendar can
automatically be downloaded to an AOL subscriber’s “My Calendar
” page in the AOL web site.
AOL has agreed to provide us
with significant promotional exposure in the form of impressions to our two
co-branded web sites, as well as contextual integration within the quote
screen for every ticker-specific query. As part of our agreement, we will
make quarterly payments to AOL for inclusion of our content on the web sites
during its 40-month term, and we will share revenue with AOL from the sale
of advertising and sponsorships on the two sites we will host. All
advertising will be sold by AOL’s interactive marketing organization.
If AOL achieves specified advertising revenue targets, it will be entitled
to exercise warrants to acquire additional shares of our capital stock. For
additional details regarding our relationship with AOL see “Certain
Transactions.”
Clients
Over 1,300 public
companies across a wide variety of industries currently subscribe to IR
Online, including more than 20% of the companies listed in the Fortune
500. Set forth below is a representative list of our IR Online
clients that have subscribed to our service on substantially similar terms
and conditions. All of these clients are operating under renewal
contracts:
| Banks &
Financial Services
Allied
Capital
FleetBoston
John Nuveen
Company
Nextcard
SouthTrust
Summit
Bancorp
Energy &
Utilities
Chevron
Cinergy
CMS
Energy
Conoco
DTE
Energy
Basic
Industry
Crown
Pacific
Hexcel
Owens
Corning
Parker
Hannafin
USG
Consumer
Hershey
Foods
Pennzoil-Quaker
State
Pepsi
Bottling
Polaroid
Quaker
Oats
Robert
Mondavi
Stanley
Works
Media &
Communications
ADC
Telecommunications
Cablevision
Systems
Charter
Communications
GTE
Loews Cineplex
Entertainment
Meredith
NorthPoint
Communications
ZDNet
|
|
Retail
Costco
CVS
Federated
Department Stores
Musicland
Pier 1
Imports
Sears
Stride-Rite
Today’s
Man
Real
Estate
Equity Office
Properties
Great Lakes
REIT
Keystone Property
Trust
Pacific Gulf
Properties
Starwood Hotels
& Resorts
Transportation
AirTran
RailAmerica
Smurfit-Stone
Container
Wisconsin Central
Transportation
Healthcare
Alteon
EntreMed
GeneLogic
ICN
Pharmaceuticals
Millipore
Respironics
Services
Edison
Schools
eFax.com
Equifax
Hagler
Baily
NationsRent
Preview
Travel
ProBusiness
Services
|
|
Internet
Ask
Jeeves
Beyond.com
CareerBuilder.com
CBS
Marketwatch.com
Earthlink
Excite@Home
FTD.com
Internet Capital
Group
Kana
Communications
Liquid
Audio
Lycos
PlanetRX.com
priceline.com
Prodigy
RoweCom
VerticalNet
Computer &
Communications Equipment
Alpha
Industries
Analog
Devices
Cisco
Systems
Crossroads
Systems
Dell
Computer
Gadzoox
Networks
Scientific-Atlanta
Computer
Software & Services
Akamai
Technologies
Accrue
Software
Interwoven
Modem Media.Poppe
Tyson
Onyx
Software
Progress
Software
|
|
We continue to develop our
relationships with the institutional investor community through
StreetEvents. Currently, more than 200 buy- and sell-side financial
institutions subscribe to StreetEvents, including AIM Funds, Alliance
Capital, Goldman Sachs Asset Management, Morgan Stanley Dean Witter and
Salomon Smith Barney.
Sales and
Marketing
We sell IR Online
through a direct sales force currently focused on the U.S. and Canada,
which, as of December 31, 1999, consisted of 21 sales professionals. We
compensate our sales professionals primarily on the basis of sales
commissions.
To support our ongoing
direct sales effort, we have established referral relationships with
organizations we believe can increase sales of IR Online. These
organizations include investor relations consulting firms, web design firms,
annual report design firms and other strategic advisors to investor
relations and financial professionals.
To promote our brand
awareness and further service our community of investor relations
professionals, we maintain a relationship with the National Investor
Relations Institute, NIRI, the primary trade organization for investor
relations professionals, through local and national membership. We have
developed and maintain local NIRI chapter websites in Boston, Massachusetts;
Chicago, Illinois; Houston, Texas; Philadelphia, Pennsylvania; Portland,
Oregon; and San Diego, California.
We sell subscriptions to
StreetEvents Institutional through a separate direct sales force
which consisted of eight sales professionals as of December 31, 1999.
Similar to the IR Online sales force, these personnel are also
compensated primarily on the basis of sales commissions.
To enhance our sales
efforts, we employ a variety of methods to promote our solutions and our
brand name, including direct mail, print advertisements, e-mail newsletters,
public relations efforts, trade shows and conferences, telemarketing and our
corporate web site.
Strategic
Distribution Relationships
In addition to our
relationship with AOL, we have established contractual distribution
relationships with other web sites that attract individual investors,
including Raging Bull, Yahoo!, Motley Fool and Standard & Poor’s
Personal Wealth. Separately, we have established distribution relationships
with several institutional services, such as First Call and ILX Systems, to
distribute our content on their respective electronic information products.
We provide StreetEvents calendar data to First Call, and First Call
supplies earnings estimate data for our IR Online and StreetEvents
products. ILX Systems will also include limited StreetEvents
calendar data inside the ILX Workstation product for use by securities
firms, banks, and asset managers. Both First Call and ILX Systems are
divisions of Thomson Financial Services, one of our principal
stockholders.
Content and
Service Relationships
We obtain some of the
content used in IR Online and StreetEvents through agreements
with third parties, including the following:
| Content |
|
Information
Provider |
| Earnings
estimates |
|
First Call (Thomson
Financial Services) |
| Institutional
holding information |
|
Technimetrics
(Thomson Financial Services) |
| Stock
quotes/charts |
|
BigCharts,
Inc. |
| Summary financial
data |
|
Media General
Financial Services, Inc. |
| News and financial
releases |
|
PR
Newswire/Business Wire |
| SEC
Filings |
|
Edgar
Online |
Client
Service
We believe that
comprehensive client service, support and training programs have enabled us
to better attract and retain corporate clients. Client service is available
to our corporate clients via
e-mail, telephone, fax and an interactive web site.
We assign a client service
team and development manager to each IR Online client. They are
responsible for building and developing the investor section of the client
’s web site, providing ongoing technical and service support, and
facilitating the delivery of non-web services such as InvestorConnect
or SmartBlast. We also assign an account manager to consult with the
client and manage the regular updates and changes to the investor relations
section of the client’s web site over time. As of December 31, 1999 we
employed 36 people in client service.
Technology,
Research & Development
We develop web sites and
proprietary applications using industry standard architecture. We believe
that our systems and the applications that we have deployed will be
sufficient to sustain our future growth and maintain our competitive
position in the markets we serve.
Our sites are designed to
provide continuous availability of service to investors accessing our
information. They are also designed and provisioned to handle not only the
growing popularity of the sites we host but also the cyclical traffic
increases that occur during the quarterly earnings reporting
period.
The critical components of
our system are redundant, and our software runs in parallel on multiple
servers. We believe that the parallelism and redundancy will enable us to
minimize downtime in case of component failure, to limit user-access
interruptions for maintenance and upgrades, and to quickly adjust capacity
to accommodate broader content and an expanding client base. Our server
farms are hosted at GTE Internetworking in Cambridge, Massachusetts. We
maintain several data feeds from third-party information providers at our
server farms and at our offices at 200 Portland Street, Boston,
Massachusetts.
In order to enhance our
technological capabilities, we acquired TalkPoint in October 1999. TalkPoint
’s proprietary technology enables companies to publish their own
multimedia presentations, complete with graphics such as PowerPoint
presentations and a synchronized audio track, and deliver these
presentations to virtually anyone with access to the Internet. Our
TalkPoint technology is currently licensed to Yahoo! for use in its
NetRoadshow product offering. We retain a trademark registration for
TalkPoint that we expect to remain in effect until March 9, 2009.
While valuable, the trademark is not material to our ongoing
success.
We have taken steps to
protect our StreetEvents technology by filing a patent application
with the United States Patent and Trademark Office. If issued, the patent is
expected to remain in effect until January 28, 2020. The patent is not
material to our ongoing success. We are also in the process of preparing
other applications to cover other aspects of our technology. No assurances
can be given however, that any patents based on the pending application or
on applications filed in the future will issue or that the scope of any
patent protection obtained will exclude competitors or provide competitive
advantage to us.
Our future success will
depend on our ability to maintain and develop competitive technologies, to
continue to enhance our current services and to develop and introduce new
services in a timely and cost-effective manner that meets changing
conditions, including evolving client needs, new competitive service
offerings, emerging industry standards and rapidly changing technology. We
have a dedicated research and development organization that develops new
features and functionality for our existing services as well as the software
that supports new services. The research and development team has expertise
in network development and maintenance, Internet and intranet protocols,
software development, database maintenance and development and a variety of
programming tools and languages and operating systems. At December 31, 1999,
28 employees were engaged in research and development. Research and
development expenses were $197,000 from February 13 (date of inception) to
December 31, 1997, $367,584 in 1998 and $806,000 in 1999. We expect to
continue making substantial expenditures on research and development in the
future.
Competition
As demand for investor
communication services grows, our market is becoming more competitive. In
particular, we anticipate that competition for online investor relations
services will intensify as companies seek to address an increasingly
knowledgeable investment community that relies on timely financial
information. While we believe we will continue to compete with traditional
providers of investor relations services, we anticipate that the market for
Internet-based services will see a larger number of entrants and will expand
rapidly.
Our competitors vary in size
and in the scope and breadth of services offered. We encounter direct
competition for IR Online from a number of sources, including
in-house investor relations, marketing, corporate communications and
management information services departments, traditional providers of
investor relations advice and execution strategy, and other providers of
investor relations services such as Business Wire, Direct Report, Merrill
Corporation, PR Newswire, PrimeZone and StockMaster. We anticipate that we
may also compete with web design consulting firms.
Our StreetEvents
product competes with both recently-established Internet companies such as C
–call, through its subsidiary StreetFusion, and Investor Broadcast
Network, through its service Vcall, and with more traditional
facsimile services such as Wall Street Calender and First Fax. We also
encounter competition for StreetEvents from in-house investor
relations departments and investors who contact companies directly seeking
event information.
We also face direct and
indirect competition from:
|
Ÿ
|
investors who
contact companies directly seeking investment-related
information;
|
|
Ÿ
|
large and
well-established distributors of financial information, including Multex
and Thomson Financial Services, through its subsidiaries First Call and
Investext;
|
|
Ÿ
|
companies that
provide investment research, including investment banks and brokerage
firms, many of whom have their own web sites;
|
|
Ÿ
|
providers of either
free or subscription research services on the Internet, including on-line
discount brokers and finance portals;
|
|
Ÿ
|
services provided
by some of our strategic distributors which are competitive in one or more
respects with our service offerings; and
|
|
Ÿ
|
numerous
prospective competitors which offer investment research-based services,
including Standard & Poor’s, Value Line, Market Guide, Moody
’s and Zacks Investment Research.
|
Extensive company-specific
information and general investment research relating to particular
industries, including annual reports, news releases, and Standard & Poor
’s company-specific reports may be obtained, frequently without charge,
from public sources and company web pages.
Our competitors may be able
to respond more quickly than we can to advances in technology and changes in
investor and company requirements. Increased competition could result in
price reductions, loss of clients, decreased access to the information we
provide, reduced gross margins and loss of market share, any of which could
materially and adversely affect our business, financial condition and
operations.
We believe that our ability
to compete depends upon many factors both within and outside our control,
including:
|
Ÿ
|
effectiveness, ease
of use, performance and features of our technology and
services;
|
|
Ÿ
|
client perceptions
of the effectiveness of our services and technology;
|
|
Ÿ
|
our ability to
attract and retain personnel;
|
|
Ÿ
|
our ability to
sustain relationships with our corporate clients and content and service
providers;
|
|
Ÿ
|
ease of use,
performance, price, reliability, client service and support;
|
|
Ÿ
|
sales and marketing
efforts;
|
|
Ÿ
|
the price of our
services;
|
|
Ÿ
|
our ability to
service our clients effectively over a broad geographical
basis;
|
|
Ÿ
|
the timing and
acceptance of new services and enhancements to existing services developed
by us or our competitors; and
|
|
Ÿ
|
our reputation and
brandname.
|
Employees
As of December 31, 1999, we
had 142 full-time employees, consisting of 56 employees engaged in sales and
marketing, 28 in technical services, including research and development, 36
in client service, 8 in product development, and 14 in administration and
finance. Our employees are not represented by any collective bargaining
organization, and we consider relations with our employees to be
good.
Facilities
Our corporate headquarters
are located in 23,167 square feet in Boston, Massachusetts, under a lease
that expires on January 31, 2002. In addition, we maintain a sales and
service office in San Francisco, California of 3,196 square feet under a
lease that expires on April 30, 2004, and a product development office in
Atlanta, Georgia of 2,890 square feet under a lease that expires on November
15, 2000. We believe that our existing facilities and offices and additional
or alternative available spaces are adequate to meet our requirements for
the foreseeable future.
Litigation
We are not a party to any
material legal proceedings.
Executive
Officers, Directors and Other Key Employees
Our executive officers,
directors and other key employees and their ages as of January 15, 2000 are
as follows:
Name
|
|
Age
|
|
Position(s)
|
| Executive
Officers and Directors: |
|
|
|
|
| Jeffrey P.
Parker(1) |
|
56 |
|
Chairman of the
Board of Directors
and Chief Executive Officer |
| Robert I.
Adler |
|
33 |
|
President and
Director |
| Roland C.
Beaulieu |
|
46 |
|
Chief Operating
Officer |
| Lawrence P.
Begley |
|
44 |
|
Executive Vice
President, Chief Financial Officer
and Treasurer |
| Richard E.
Hanlon(2) |
|
52 |
|
Director |
| Keith B.
Jarrett(1) |
|
51 |
|
Director |
| Robert C.
McCormack(1)(2) |
|
60 |
|
Director |
| Robert C. Shenk,
Jr.(1)(2). |
|
34 |
|
Director |
| |
|
| Key
Employees: |
|
|
|
|
| Andrew W.
Augustine |
|
26 |
|
Chief Technology
Officer—IR Online |
| Sunil H.
Bhatt |
|
33 |
|
Director of
Business Development |
| Timothy
Bryan |
|
44 |
|
Senior Vice
President, Institutional Sales |
| Peter E.
Hall |
|
55 |
|
Senior Vice
President, Corporate Sales |
| P. Lynn
Little |
|
35 |
|
Senior Vice
President, Marketing |
| John D. Phillips,
Jr. |
|
35 |
|
Senior Vice
President, Product Development |
| J. Hoyt
Prisock |
|
44 |
|
Senior Vice
President, TalkPoint Services |
| Jose L.
Robles |
|
35 |
|
Chief Technology
Officer—StreetEvents |
| Carol A.
Walker |
|
37 |
|
Senior Vice
President, Corporate Services |
(1)
|
Member of the
compensation committee of the board of directors.
|
(2)
|
Member of the audit
committee of the board of directors.
|
Executive Officers and Directors
Jeffrey P. Parker
co-founded CCBN.COM in 1997 and has served as our Chief Executive
Officer and Chairman of the Board since March 1999. From February 1997 to
March 1999, Mr. Parker served as Chief Executive Officer, President, and a
member of the Members Committee of CCBN.COM, LLC. Prior to founding CCBN,
Mr. Parker co-founded 38 Newbury Ventures in June 1994, a venture capital
firm focusing on start-up and early stage companies and has served as a
general partner of the firm since its inception in June 1994. Mr. Parker
currently serves as President of Private Equity Investments, a general
partner of 38 Newbury Ventures. In 1980, Mr. Parker founded Technical Data
Corporation. In 1982, he became Chairman and Chief Executive Officer of
Business Research Corporation, and in 1983 founded First Call Corporation.
In 1986, he sold these businesses to International Thomson, which has since
changed its name to The Thomson Corporation, and became Chairman and Chief
Executive Officer of Thomson Financial, the financial services subsidiary of
The Thomson Corporation. Under his leadership, Thomson Financial became a
major provider of proprietary financial information to the investment and
corporate communities. Prior to 1980, Mr. Parker served as Vice President
and Senior Fixed Income Portfolio Manager at Fidelity Investments. Mr. Parker
’s current directorships include MicroFinancial, Inc., a specialized
commercial finance company. Mr. Parker is a Trustee of Cornell University
where he founded the Parker Center for Investment Research. Mr. Parker
earned a B.S. and M.S. in Engineering and an M.B.A. from Cornell
University.
Robert I. Adler
co-founded CCBN in February 1997 and has served as President, Chief
Operating Officer, and a director since March 1999. Mr. Adler was Vice
President and served as our Chief Operating Officer from February 1997 to
March 1999, and served as a member of the Members Committee of CCBN.COM, LLC
from October 1997 to March 1999. Prior to founding CCBN, from June 1995 to
February 1997, Mr. Adler was a partner of 38 Newbury Ventures, a venture
capital firm investing in early stage start-up companies. Before joining 38
Newbury Ventures, Mr. Adler helped found DigiTrace Care Services, Inc., a
Boston-based medical technology company. Mr. Adler earned a B.A. from Brown
University and an M.B.A. from Harvard Business School in June
1995.
Roland C. Beaulieu
joined our company as Chief Operating Officer in January 2000. From
October 1996 to December 1999, Mr. Beaulieu served as President and Chief
Executive Officer of Thomson Trading Services Group (TTSG), a financial
services company. Prior to his appointment at TTSG, Mr. Beaulieu joined
Thomson Financial Services, a financial services company, in 1987 where he
served as Senior Executive Vice President and Chief Operating Officer of
First Call Corporation, a financial services company, from December 1994 to
December 1996, and as Senior Vice President of Operations and Technology for
Thomson Financial Services and Manager of Operations for Technical Data
Corporation. Before joining Thomson Financial Services, Mr. Beaulieu held
positions at Lotus-One Source and McGraw-Hill DRI.
Lawrence P. Begley
joined our company as Executive Vice President, Chief Financial Officer and
Treasurer in March 2000. From November 1999 to February 2000, Mr. Begley
served as Executive Vice President, Chief Financial Officer and Director of
Razorfish Inc., a company that acquired i-Cube, his prior employer, in
November 1999. Prior to his appointment at Razorfish, he was Executive Vice
President, Chief Financial Officer and Director of i-Cube, an electronic
business professional services firm, from October 1996 until November 1999.
Before joining i-Cube, Mr. Begley was employed by The Boston Consulting
Group, an international management consulting firm, where he served as Chief
Financial Officer and Treasurer from December 1990 to October 1996. Mr.
Begley is a Certified Public Accountant and earned a B.S.B.A. from Boston
College and an M.B.A. from Babson College. Mr. Begley is a member of the
Board of Directors of Mainspring Communications, Inc.
Richard E. Hanlon has
served as a director since January 2000. Since February 1995, Mr. Hanlon has
served as Vice President for Investor Relations for AOL, an interactive
Internet services and technology company. Prior to joining AOL, from 1988 to
February 1995, Mr. Hanlon served as Vice President, Corporate Communications
and Secretary of Legent Corporation. Mr. Hanlon was educated at King George
V School, Hong Kong and the University of London.
Keith B. Jarrett has
served as a director since March 1999. Prior to our reorganization as a
corporation, Dr. Jarrett served as a member of the Members Committee of
CCBN.COM, LLC from October 1997 to March 1999. He has been an Executive Vice
President of Thomson Financial, a financial services company, and the
President and Chief Executive Officer of Thomson Financial International, a
financial services company, and Thomson Financial Ventures, a financial
services company, since January 1995. Dr. Jarrett joined Thomson Financial
in 1986, with the acquisition of Technical Data Corporation, where he was
Managing Director and Chief Economist. He received his Ph.D. in Financial
Economics from Harvard Business School and subsequently taught at the
Simmons College Graduate Management Program before joining Technical Data in
1983. Previously, he served as a Captain in the United States Army after
graduating from the United States Military Academy at West
Point.
Robert C. McCormack
has served as a director since June 1999. Mr. McCormack has served as
Co-Chairman of Trident Capital Inc., a venture capital firm, from 1993 to
the present. Prior to joining Trident Capital, Mr. McCormack served as
Assistant Secretary of the Navy (Financial Management and Controller) from
1990 to 1992. From 1987 to 1992, Mr. McCormack held various positions on the
staff of the Secretary of Defense. Prior to his work for the Secretary of
Defense, Mr. McCormack was a Managing Director of Morgan Stanley & Co.
Inc. from 1981 to 1987. Mr. McCormack currently serves as a director of
Illinois Tool Works, Inc., Devry Inc., and MapQuest Inc. and is on the
boards of several privately owned Trident portfolio companies. Mr. McCormack
earned a B.A. from the University of North Carolina and an M.B.A. from the
University of Chicago. Mr. McCormack was elected to the board of directors
pursuant to a voting agreement by and among us and some of our stockholders,
which will terminate upon the closing of this offering.
Robert C. Shenk, Jr.
has served as a director since January 2000. Since March 1999, Mr. Shenk
has served as Executive Director for the Personal Finance Channel of AOL, an
interactive internet services and technology company. From August 1998 to
March 1999, Mr. Shenk was Group Director for AOL Channel Programming. Mr.
Shenk served as Director of Programming for the Personal Finance Channel of
AOL from October 1995 to August 1998. He was Production Manager of the
Personal Finance Channel of AOL from May 1995 to October 1995. From February
1994 to May 1995, Mr. Shenk served as Lead Producer for the AOL Personal
Finance Channel. Mr. Shenk earned a B.A. in Political Economy of Industrial
Societies from the University of California at Berkeley and a M.A. in
National Security Studies from Georgetown University. Mr. Shenk was elected
to the board of directors pursuant to a voting agreement by and among us and
some of our stockholders, which will terminate upon the closing of this
offering.
Key Employees
Andrew W. Augustine
has served as our Chief Technology Officer, Web Services since June
1999. Mr. Augustine previously served as Vice President, Development from
March 1998 to June 1999. Previously, Mr. Augustine co-founded Virtual
Emporium, an electronic commerce virtual mall, where he served as Vice
President of Technology from March 1996 to March 1998. From January 1995 to
March 1996, Mr. Augustine served as a consultant for Electric Power Research
Institute, an energy technology consulting firm.
Sunil H. Bhatt has
served as our Director of Business Development since July 1999. From April
1998 to June 1999, Mr. Bhatt served as Director of Partnership Development
at CardioResponse, a cardiac services and technology company. From May 1993
to April 1998, Mr. Bhatt was Director of Sales for DigiTrace Care Services,
Inc., a Boston-based medical technology company. From 1988 to 1993, Mr.
Bhatt held various positions in sales with Eli Lilly and Xerox. Mr. Bhatt
earned a B.A. in Biology from Brown University.
Timothy Bryan has
served as our Senior Vice President, Institutional Sales since August 1999.
From 1989 to August 1999, Mr. Bryan held various positions at First Call
Corporation, a financial services company, where he most recently served as
a member of the Board of Directors from February 1998 to July 1999 and
Executive Vice President of the Capital Markets Group from March 1989 to
March 1996. Mr. Bryan earned a B.S. in Business Administration from the
University of North Carolina at Chapel Hill and completed an executive
management program at the Columbia Business School.
Peter E. Hall has
served as our Senior Vice President, Corporate Sales since August 1997. From
December 1996 to August 1997, Mr. Hall served as a consultant to our
founders and us. From 1988 to December 1996, Mr. Hall served as General
Manager, First Call Corporate Services for Thomson
Financial Services, a financial services company. Prior to 1988, he was
director of Advest’s Executive Briefing Program, which sponsored
corporate meetings to the financial community in leading money centers
throughout the United States. Mr. Hall earned a B.A. from Harvard University
and an M.B.A. from Northeastern University.
P. Lynn Little joined
us as Senior Vice President, Marketing in January 2000. From May 1995 to
December 1999, Ms. Little served in a number of positions at ConAgra, a
multinational food conglomerate where most recently she was Director of
Business Management at ConAgra’s Refrigerated Prepared Foods Division
from October 1999 to December 1999. From June 1991 to May 1995, Ms. Little
served in a number of brand management positions at Kraft Foods. Ms. Little
earned a B.S. from Santa Clara University and an M.B.A. from Cornell
University.
John D. Phillips, Jr.
has served as our Senior Vice President, Product Development since May
1999. Mr. Phillips was not employed from February 1999 to May 1999. From
September 1995 to February 1999, Mr. Phillips served in a number of
positions at Internet Securities, Inc., an emerging market information
provider owned by Euromoney PLC, including Director of Business Development
from February 1998 to February 1999, Vice President of Product Development
from June 1997 to February 1998 and Vice President of Sales from September
1995 to June 1997. Mr. Phillips earned a B.A. from Williams College and an
M.B.A. from Harvard Business School.
J. Hoyt Prisock has
served as our Senior Vice President, TalkPoint Services since October 1999.
Mr. Prisock founded TalkPoint Communications, Inc., an Internet services
provider, and, prior to our acquisition of the company, served as its
President from July 1996 to October 1999. Mr. Prisock served as President of
Contact Point Technologies, Inc., a telecommunications services provider,
from March 1996 to July 1996. From July 1994 to March 1996, he served as
President of Caleo Software, a telecommunications services
provider.
Jose L. Robles has
served as our Chief Technology Officer, StreetEvents since April
1999. Prior to joining us, Mr. Robles was involved in project management for
D. E. Shaw & Co., L.P., a specialized securities and investment company,
from April 1997 to January 1999. Mr. Robles earned a B.S. in Engineering
from Ecole Polytechnique in Paris, and an M.S. in Computer Science from the
University of Paris. From January 1990 to June 1997 Mr. Robles attended the
Massachusetts Institute of Technology. He earned a Ph.D. in Computer Science
from the Massachusetts Institute of Technology.
Carol A. Walker has
served as our Senior Vice President, Corporate Services since January 2000.
Prior to that appointment, Ms. Walker served as Senior Vice President,
Operations from October 1998 to January 2000. From 1984 to July 1997, Ms.
Walker served in a number of positions at The Chubb Corporation, a major
property and casualty insurance firm, including Regional Casualty Manager
from March 1996 to July 1997, Global Commercial Lines Manager from January
1991 to March 1996 and International Department Manager from 1988 to 1991.
Ms. Walker earned a B.A. from Dartmouth College and an M.B.A. from Simmons
Graduate School of Business Management.
Board
Composition
Upon the closing of this
offering, our board of directors will be divided into three staggered
classes, each of whose members will serve for a three-year term. The board
will consist of two Class I Directors (Messrs. Adler and Hanlon), two Class
II Directors (Messrs. Jarrett and
McCormack) and two Class III Directors (Messrs. Parker and Shenk). At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are
then expiring. The terms of the Class I Directors, Class II Directors and
Class III Directors will expire upon the election and qualification of
successor directors at the annual meeting of stockholders to be held during
calendar years 2000, 2001 and 2002, respectively.
Each officer serves at the
discretion of the board of directors and holds office until his or her
successor is elected and qualified or until his or her earlier resignation
or removal. A voting agreement by and among us and certain of our
stockholders provides for the election of a nominee designated by AOL, and a
nominee to be designated by the holders of a majority of the shares of
Series D preferred stock. The agreement terminates upon the closing of this
offering.
Board
Committees
The board of directors has a
compensation committee composed of Messrs. Parker, Jarrett and McCormack,
which makes recommendations concerning salaries and incentive compensation
for our employees and administers and recommends stock option grants to the
board of directors under our stock option plans. The board has an audit
committee composed of Messrs. McCormack, Shenk and Hanlon, which reviews the
results and scope of the audit and other services provided by our
independent accountants.
Director
Compensation
We reimburse each director
for reasonable out-of-pocket expenses incurred in attending meetings of the
board of directors and any of its committees. Neither employee nor
non-employee directors receive compensation for services performed in their
capacity as directors. Non-employee directors will be eligible for formula
option grants under our 2000 Outside Director Stock Option Plan.
Compensation
Committee Interlocks and Insider Participation
The current members of our
compensation committee are Messrs. Parker, Jarrett and McCormack. Mr. Parker
has served as our Chief Executive Officer, since February 1997 and as our
President from February 1997 to March 1999. No other executive officers have
served as members of the compensation committee, other committee serving an
equivalent function, or any entity whose executive officers served as a
member of the compensation committee of our board of directors. Prior to the
formation of the compensation committee in July 1999, the entire board of
directors made decisions regarding the compensation of executive officers.
Messrs. Parker and Adler, each an executive officer, are members of our
board of directors, which performed the functions generally performed by the
compensation committee of the board prior to the formation of the
compensation committee. However, neither Mr. Parker nor Mr. Adler
participated in any discussions regarding his respective compensation. For a
description of transactions between us and entities affiliated with Messrs.
Jarrett, McCormack, Hanlon and Shenk, see “Certain Transactions”
below.
Limitation of
Liability and Indemnification
Our certificate of
incorporation limits the liability of our directors to us or our
stockholders for breaches of the directors’ fiduciary duties to the
fullest extent permitted by Delaware law. In addition, our certificate of
incorporation and bylaws provide for mandatory indemnification of directors
and officers to the fullest extent permitted by Delaware law. We also plan
to obtain directors’ and officers’ liability
insurance.
Executive
Compensation
The following table presents
the total compensation paid or accrued in 1999 to our Chief Executive
Officer and any executive officers who were serving as executive officers on
December 31, 1999 and whose total annual salary and bonuses were in excess
of $100,000 in fiscal 1999.
Summary
Compensation Table
Name and
Principal Position
|
|
Annual
Compensation(1)
|
|
Long-Term
Compensation
|
| |
Salary
($)
|
|
Bonus
($)
|
|
Securities
Underlying
Options (#)
|
| Jeffrey P.
Parker |
|
$
91,667 |
(2) |
|
—
|
|
|
621,288 |
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
| Robert I.
Adler(3) |
|
104,167 |
(4) |
|
$75,000 |
(5) |
|
621,288 |
|
President |
|
|
|
|
|
|
|
|
(1)
|
The column for
“Other Annual Compensation” has been omitted because there is no
compensation required to be reported in that column. The aggregate amount
of perquisites and other personal benefits provided to each employee above
is less than 10% of the total annual salary and bonus of that
employee.
|
(2)
|
Total represents
1999 compensation for services beginning July 1, 1999. Mr. Parker did not
receive any compensation for services prior to July 1, 1999. Actual
current annual compensation is $200,000.
|
(3)
|
At December 31,
1999, Mr. Adler held 178,736 restricted shares of Series A common stock
having an aggregate value of $104,812, based on the fair market value on
the date of issuance less the consideration paid. 146,250 of these shares
vest monthly in 13 equal installments beginning January 2000. 32,486 of
these shares vest in 10 installments of 2,953 shares at the end of each
three month period beginning January 2000 with a final installment of
2,956 shares. No cash dividends will be paid on these restricted
shares.
|
(4)
|
Includes
compensation of $31,250 earned in 1999, which was paid in
2000.
|
(5)
|
Includes a bonus of
$50,000 earned in 1999, which was paid in 2000.
|
Option Grants in
Last Fiscal Year
The following table sets
forth grants of stock options for the year ended December 31, 1999 to each
individual named in the Summary Compensation Table. We have never granted
any stock appreciation rights.
The exercise prices
represent our board’s estimate of the fair market value of the Series A
common stock on the grant date. In establishing these prices, our board
considered many factors, including our financial condition and operating
results, recent transactions and the market for comparable
stocks.
The amounts shown as
potential realizable value represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These amounts represent certain assumed rates of appreciation in the
value of our Series A common stock. The 5% and 10% assumed annual rates of
compounded stock price appreciation are mandated by rules of the Securities
and Exchange Commission and do not represent our estimate or projection of
the future price of our Series A common stock. The potential realizable
value is calculated based on the ten year term of the option at its time of
grant. It is calculated based on the assumption that the share
value appreciates from the assumed initial public offering price, $12.00 per
share, at the indicated annual rate compounded annually for the entire term
of the option and that the option is exercised and sold on the last day of
its term for the appreciated stock price. Actual gains, if any, on stock
option exercises depend on the future performance of our Series A common
stock. The amounts reflected in the table may not necessarily be
achieved.
We granted these options
under our 1999 Incentive and Non-Statutory Stock Option Plan. Each option
has a maximum term of ten years, subject to earlier termination if the
optionee’s services are terminated. Each option represents the right to
purchase one share of Series A common stock.
The percentage of total
options granted to our employees in the last fiscal year is based on options
to purchase an aggregate of 2,582,976 shares of common stock granted during
fiscal 1999.
Option Grants in
Fiscal 1999
| |
|
Individual
Grants
|
|
Exercise
Price
per Share
|
|
Expiration
Date
|
|
Potential
Realizable Value
of Assumed Annual Rates
of Stock Price
Appreciation
for Option Term ($)
|
Name
|
|
Number of
Securities
Underlying
Options
Granted (#)
|
|
Percent of
Total
Options
Granted
to Employees
in Fiscal 1999 (%)
|
|
|
|
5%
|
|
10%
|
| Jeffrey P.
Parker |
|
621,288 |
(1) |
|
24.1 |
% |
|
$ 2.00 |
|
10/21/09 |
|
$10,901,576 |
|
$18,094,957 |
| Robert I.
Adler |
|
621,288 |
(2) |
|
24.1 |
|
|
2.00 |
|
10/21/09 |
|
10,901,576 |
|
18,094,957 |
(1)
|
This option vests
as to 207,096 shares on November 1, 2000 and the remainder in eight equal
installments of 51,774 shares at the end of every three-month period
thereafter.
|
(2)
|
This option vests
as to 310,644 shares on February 28, 2002 and the remaining 310,644 shares
on February 28, 2003.
|
Fiscal Year-End
Option Values
The following table provides
information about stock options held as of December 31, 1999 by each of the
individuals named in the Summary Compensation Table. None of these
individuals exercised any options in fiscal 1999. Actual gains on exercise,
if any, will depend on the value of our Series A common stock on the date on
which the shares are sold. The values included were calculated by
determining the difference between the exercise price and the deemed fair
market value of the securities underlying the options at December 31, 1999
based on the value used in calculating equity-based compensation expense
included in our financial statements.
Fiscal Year-End
Option Values
| |
|
Number of
Securities Underlying
Unexercised Options at
December 31, 1999 (#)
|
|
Value of
Unexercised
In-the-Money Options at
December 31, 1999 ($)
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
| Jeffrey P.
Parker |
|
—
|
|
621,288 |
|
—
|
|
$7,041,264 |
| Robert I.
Adler |
|
—
|
|
621,288 |
|
—
|
|
7,041,264 |
Stock
Plans
1999 Incentive and
Non-Statutory Stock Option Plan. On May 12,
1999, our 1999 Incentive and Non-Statutory Stock Option Plan was adopted by
our board of directors and approved by our stockholders. A maximum of
7,500,000 shares of Series A common stock have been made available for grant
under the 1999 plan. As of December 31, 1999, options to purchase an
aggregate of 2,570,601 shares of Series A common stock at a weighted average
exercise price of $1.57 per share were outstanding under the 1999 plan. As
of December 31, 1999, 2,700 shares of Series A common stock had been issued
upon exercise of options outstanding under the 1999 plan.
Under the 1999 plan,
eligible persons may be granted options intended to qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as
amended, and options that are not intended to so qualify (non-qualified
options). Options may only be granted to our officers and other employees,
including members of the board of directors who are also employees. Under
present law, however, incentive stock options may only be granted to
employees.
In accordance with present
law, incentive stock options and options intended to qualify as
performance-based compensation may not be granted at an exercise price less
than the fair market value of the Series A common stock on the date of
grant. The exercise price of incentive options granted to an option holder
who owns stock possessing more than 10% of the voting power of our
outstanding capital stock must be at least equal to 110% of the fair market
value of the Series A common stock on the date of grant, and such option
holder must exercise his or her option within five years from the date of
the grant of such option. We may grant non-qualified options at an exercise
price less than, equal to or greater than the fair market value of the
Series A common stock on the date of grant.
Our board of directors has
authorized the compensation committee to administer the 1999 plan. The
compensation committee has the authority to interpret the 1999 plan, to
prescribe, amend and rescind rules and regulations relating to the 1999 plan
and otherwise administer the 1999 plan except
for the granting of options. The board must approve any option grants. Subject
to any applicable limitations contained in the 1999 plan, the board of
directors or the compensation committee to which the board of directors has
delegated authority, as the case may be, selects the recipients of options
and determines:
|
Ÿ
|
the type of option
to be granted (incentive or non-qualified);
|
|
Ÿ
|
the number of
shares of Series A common stock covered by options and the dates upon
which such options become exercisable;
|
|
Ÿ
|
the duration of
options;
|
|
Ÿ
|
the exercise price
of options; and
|
|
Ÿ
|
the manner in which
option holders may pay the exercise price of their options, including in
cash, in shares of our Series A common stock or in some combination of
cash and shares of our Series A common stock.
|
Generally, the board of
directors has granted options that become exercisable at a rate of 25%
annually over a four year period from the date of grant. The first 25% vests
on the first anniversary of the date of grant, and the remainder vest in
equal quarterly installments over the remaining three years.
The 1999 plan provides that,
in the event of a corporate transaction, any options remaining outstanding
after the corporate transaction may be:
|
Ÿ
|
exercisable for
shares of our Series A common stock or shares of stock or other
securities, cash or property received by the holders of shares of our
Series A common stock as a result of the corporate
transaction;
|
|
Ÿ
|
made immediately
exercisable in full by approval of the board of directors; or
|
|
Ÿ
|
cancelled, provided
that the option holders are first given the opportunity to exercise any
vested options or any options made immediately exercisable in full by
approval of the board of directors.
|
For the purposes of the 1999
plan, a “corporate transaction” means the occurrence of any of the
following:
|
Ÿ
|
a reorganization or
merger whether or not CCBN.COM is the surviving or resulting entity
thereafter;
|
|
Ÿ
|
the consolidation
of CCBN.COM with one or more other entities; or
|
|
Ÿ
|
the liquidation of
CCBN.COM or the sale or disposition of substantially all of its assets or
outstanding stock.
|
No option may be granted
under the 1999 plan after May 11, 2009, but the vesting and effectiveness of
options previously granted may extend beyond that date. All options granted
terminate upon expiration, or 10 days following the termination of the
option holder’s employment by the employee or termination of an option
holder’s employment for cause. If an option holder is terminated
without cause or retires because of old age or disability, the option holder
shall have 30 days or 90 days, in each respective case, to exercise any
options that have not expired.
The board of directors may
amend, suspend or terminate the 1999 plan or any portion thereof at any
time. However, our stockholders must approve any amendment to the 1999 plan
that increases the number of shares which may be granted or substantially
alters the eligibility provisions.
2000 Outside Director
Stock Option Plan. Our 2000 Outside Director
Stock Option Plan was adopted by our board of directors in January 2000,
subject to stockholder approval. Under the terms of the director stock
option plan, directors who are not our employees or employees of our
subsidiaries receive non-qualified options to purchase shares of our Series
A common stock. A total of 250,000 shares of our Series A common stock may
be issued upon exercise of options granted under the director stock option
plan.
The board of directors has
the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the director stock option plan. Under
the terms of the director stock option plan, each non-employee director
continuing as a director following this offering will receive an option to
purchase 20,000 shares of our Series A common stock on the effective date of
this offering at a price per share equivalent to the public offering price.
In addition, each such non-employee director will receive an option to
purchase 7,500 shares of our Series A common stock on the date of each
annual meeting of stockholders commencing with the 2000 annual meeting of
stockholders, at an exercise price per share equal to the closing price of
our Series A common stock on the date of grant. In addition, individuals who
become directors after this offering and are not our employees will receive
an option to purchase 20,000 shares of Series A common stock on the date of
his or her initial election to the board of directors and an option to
purchase 7,500 shares of our Series A common stock on the date of each
annual meeting of stockholders after his or her election. The exercise price
per share of such options will be the closing price per share of our Series
A common stock on the date of the grant. All options granted under the
director stock option plan will be fully vested upon grant.
2000 Employee Stock
Purchase Plan. Our 2000 Employee Stock
Purchase Plan was adopted by our board of directors in January 2000, subject
to stockholder approval. The employee stock purchase plan authorizes the
issuance of up to a total of 300,000 shares of Series A common stock to
participating employees.
All of our employees, whose
customary employment is more than 20 hours per week for more than five
months in any calendar year, including our directors who are employees, and
all employees of any participating subsidiaries, are eligible to participate
in the employee stock purchase plan. Employees who would immediately after
the grant own five percent or more of the total combined voting power or
value of our stock or any subsidiary are not eligible to participate. As of
January 31, 2000, approximately 140 of our employees were eligible to
participate in the employee stock purchase plan.
On the first day of a
designated payroll deduction period, the offering period, we will grant to
each eligible employee who has elected to participate in the 2000 plan an
option to purchase shares of Series A common stock as follows: the employee
may authorize an amount (a whole percentage (up to 10%) of such employee
’s base pay) to be deducted from such employee’s base pay during
the offering period. On the last day of the offering period, the employee is
deemed to have exercised the option, at the option exercise price, to the
extent of accumulated payroll deductions. Under the terms of the 2000 plan,
the option price is an amount equal to 85% of the average market price (as
defined)
per share of the Series A common stock on either the first day or the last day
of the offering period, whichever is lower. In no event may an employee
purchase in any one offering period a number of shares which exceeds the
number of shares determined by dividing the product of (i) $2,083 and (ii)
the number of full months in the offering period by the closing market price
of a share of Series A common stock on the commencement date of the offering
period or such other lower number as may be determined by the board prior to
the commencement date of the offering period. The compensation committee
may, in its discretion, choose an offering period of 12 months or less for
each offering and may choose a different offering period for each
offering.
An employee who is not a
participant on the last day of the offering period, as a result of voluntary
withdrawal, termination of employment or for any other reason, is not
entitled to exercise any option, and the employee’s accumulated payroll
deductions will be refunded. However, upon termination of employment because
of death, the employee’s beneficiary has certain rights to elect to
exercise the option to purchase the shares that the accumulated payroll
deductions in the participant’s account would purchase at the date of
death.
Because participation in the
2000 plan is voluntary, currently we cannot determine the number of shares
of Series A common stock to be purchased by any particular current executive
officer, by all current executive officers as a group or by non-executive
employees as a group.
401(k)
Plan
We offer a 401(k) plan to
our United States employees who meet certain defined requirements. Under the
terms of the 401(k) plan, eligible employees may elect to make tax-deferred
contributions. We do not match any amounts contributed to the plan by our
employees.
Employment
Agreements
We have entered into an
employment agreement with Roland C. Beaulieu, our Chief Operating Officer.
His employment agreement provides for an initial annual base salary of
$150,000 for 2000. His base salary may be increased, but not decreased, in
subsequent years at the discretion of our Board of Directors. Each annual
increase must at least be equal to the change in the Consumer Price Index.
The employment agreement also calls for an annual bonus of up to 70% of his
base salary, if he completes performance objectives established by our Board
of Directors. The level of his bonus will be comparable to the bonus level
set for other comparable senior executives.
Under the agreement, Mr.
Beaulieu received an option to purchase 600,000 shares of our Series A
common stock at a price of $3.33 per share and 150,000 shares at $5.37 per
share. Also, if we complete an initial public offering before December 31,
2000 we will grant Mr. Beaulieu an option to purchase 225,000 shares at the
public offering price. If the public offering is not completed before
December 31, 2000, we will grant Mr. Beaulieu an option to purchase 225,000
shares of Series A common stock at a price of $5.37 per share. These options
vest over the period from December 31, 2000 through December 31, 2002.
Additionally, the vesting of the options will accelerate by one year if
there is a change in control after December 31, 2000 and during the term of
the agreement, if Mr. Beaulieu dies or becomes disabled, or if there is a
sustained increase in the price of the stock after a public offering. Only
one year of acceleration may occur on the vesting schedule.
The employment agreement
expires on December 31, 2002, subject to extension or earlier termination.
If the agreement is terminated by us without cause or by Mr. Beaulieu after
a material breach of the agreement which is not cured by us, all options
become fully vested. If the agreement
is terminated by us without cause or if the agreement is not extended past
December 31, 2002, Mr. Beaulieu will continue to receive his base salary for
12 months or the period left in the term of the contract, whichever is
longer.
Under the employment
agreement Mr. Beaulieu has purchased an additional 149,067 shares of Series
A common stock at a price of $5.37 per share. He has paid $200,000 in cash
and the balance through a loan from us. The loan is to be repaid in 12 equal
quarterly installments, beginning on January 1, 2001 and will bear interest
at 1% below the prime rate. The loan will be secured by the stock purchased
with the loan, and we will have full recourse against Mr. Beaulieu if the
collateral is insufficient.
The employment agreement
prohibits Mr. Beaulieu from competing with us, or soliciting our employees
or customers, for a period of one year after termination of employment,
unless Mr. Beaulieu terminates his agreement with us on account of a
material breach by us which is not cured.
Mr. Lawrence P. Begley, our
Executive Vice President, Chief Financial Officer and Treasurer has
purchased 149,067 shares of Series A common stock at a price of $5.37 per
share. He has paid $200,000 in cash and the balance through a loan from us.
The loan is to be repaid in 12 equal quarterly installments, beginning on
January 1, 2001 and will bear interest at 1% below the prime rate. The loan
will be secured by the stock purchased with the loan, and we will have full
recourse against Mr. Begley if the collateral is insufficient. In addition,
Mr. Begley has purchased another 225,000 shares of Series A common stock at
a price of $5.37 per share. We may repurchase all of these 225,000 shares if
Mr. Begley’s employment terminates before March 6, 2001. After that
date the number of shares that may be repurchased reduces until March 6,
2003 at which time the repurchase right expires. The repurchase right will
expire upon a change in control. Also, the number of shares which may be
repurchased will decrease if Mr. Begley dies or becomes disabled or if there
is a sustained increase in the price of the stock after a public
offering.
We have also granted Mr.
Begley an option to purchase 300,000 shares of our Series A common stock at
a price of $5.37 per share. Also, if we complete an initial public offering
before December 31, 2000 we will grant Mr. Begley an option to purchase
300,000 shares at the public offering price. If the public offering is not
completed before December 31, 2000, we will grant Mr. Begley an option to
purchase 300,000 shares at a price of $5.37 per share. These options vest
over the period from March 6, 2000 through March 6, 2003. Additionally, the
vesting of the options will accelerate by one year if Mr. Begley dies or
becomes disabled, or if there is a sustained increase in the price of the
stock after a public offering. In addition, the options will become fully
vested if there is a change in control.
In April 1999, CCBN.COM, LLC
merged with and into CCBN.COM, Inc., a Delaware corporation, thereby
reorganizing the limited liability company as a corporation. Pursuant to the
merger, our shares, previously designated “LLC common units” were
converted into shares of common stock or convertible preferred stock based
on a ratio of three shares of common stock or convertible preferred stock
for every one LLC common unit. For the purposes of this section,
transactions occurring prior to the reorganization are expressed in terms of
the number of shares of convertible preferred stock issued upon conversion
of LLC units at the time of merger and the number of shares of common stock
reflects the three-for-one split effected as of March 22, 2000.
Private Placements
of Equity
|
Sales of
Common Stock and Convertible Preferred Stock
|
In August and November 1997,
we sold a total of 11,273,400 shares of Series A common stock for gross
proceeds of $1,253:
|
Ÿ
|
we sold 7,740,000
of these shares to Jeffrey P. Parker, our Chief Executive Officer for a
total price of $860.
|
|
Ÿ
|
we sold 2,373,750
of these shares to Robert I. Adler, our President, for a total price of
$263.75.
|
In October 1997, we sold
562,500 shares of Series A convertible preferred stock to Thomson
Information Services at a price of $2.67 per share, for a total price of
$1,500,000.
In March 1998, we sold
344,043 shares of Series B convertible preferred stock at a price of $3.33
per share for gross proceeds of $1,146,810:
|
Ÿ
|
we sold 44,043 of
these shares to Thomson Information Services for a total price of
$146,810.
|
|
Ÿ
|
we sold 30,000 of
these shares to The Robert C. McCormack 1967 Trust, a trust for the
benefit of Robert C. McCormack, one of our directors, for a total price of
$100,000.
|
In July and August 1998, we
sold 311,400 shares of Series D common stock for gross proceeds of $34.60,
of which we sold 47,250 shares to Robert I. Adler, our President, for a
total price of $5.25. We issued 47,250 shares of Series C common stock to
Mr. Adler instead of Series D common stock. Prior to the completion of this
offering we intend to cancel the Series C common stock and issue Series D
common to Mr. Adler in lieu thereof.
In October 1998, we sold
41,544 shares of Series C convertible preferred stock to Thomson Information
Services, Inc. at a price of $5.01 per share, for a total price of
$208,274.
In March 1999, we issued
92,046 shares of Series D convertible preferred stock at a conversion price
of $9.42 per share to the Parker Family Limited Partnership in satisfaction
of certain demand notes dated November 23, 1998 and December 7, 1998 in the
aggregate principal amount of $850,000, and accrued interest in the amount
of $16,797, for a total amount of $866,797. Jeffrey P. Parker, one our
Founders and our Chief Executive Officer, manages the Parker Family Limited
Partnership.
Also in March 1999, we
sold 94,500 shares of Series E common stock for gross proceeds of
$10.50.
|
Ÿ
|
we sold 54,000 of
these shares to Robert I. Adler, our President for a total purchase price
of $6.00
|
In June 1999, we sold
617,924 shares of Series D convertible preferred stock at a price of $9.42
per share, for gross proceeds of $5,818,996.
|
Ÿ
|
we sold 86,358 of
these shares to Thomson Information Services for a total price of
$813,234.
|
|
Ÿ
|
we sold 200,676 of
these shares to Information Associates-II, L.P. for a total price of
$1,889,765. Robert C. McCormack, one of our directors, is affiliated with
Information Associates-II, L.P.
|
|
Ÿ
|
we sold 11,706 of
these shares to IA-II Affiliates Fund, L.L.C. for a total price of
$110,235. Robert McCormack, one of our directors, is affiliated with IA-II
Affiliates Fund, L.L.C.
|
|
Ÿ
|
we sold 53,095 of
these shares to Richard E. Hanlon, one of our directors, for a total price
of $499,996.
|
|
Ÿ
|
we sold 3,568 of
these shares to Robert C. McCormack, one of our directors, for a total
price of $33,600.
|
In December 1999, we sold
207,980 shares of Series E convertible preferred stock at a price of $16.10
per share, for gross proceeds of $3,348,478.
|
Ÿ
|
we sold 93,168 of
these shares to AOL for a total price of $1,500,005. Richard E. Hanlon and
Robert C. Shenk, our directors, are affiliated with AOL.
|
|
Ÿ
|
we sold 114,812 of
these shares to Thomson Information Services for a total price of
$1,848,473.
|
In January 2000, we sold
149,067 shares of Series A common stock to Roland C. Beaulieu, our Chief
Operating Officer, at a price of $5.37 per share. Mr. Beaulieu has paid
$200,000 in cash and the balance through a loan from us in the principal
amount of $600,000.
In March 2000, we sold
374,067 shares of our Series A common stock to Lawrence P. Begley, our
Executive Vice President, Chief Financial Officer and Treasurer, at a price
of $5.37 per share. Mr. Begley has paid $1,408,740 in cash and the balance
through a loan from us in the principal amount of $600,000.
In March 2000, in accordance
with rights granted to Thomson Financial Services, Inc. in March 1999, we
sold to Thomson Financial Services, Inc. 82,720 shares of our Series A
common stock at $3.33 per share and 182,606 shares of our Series A common
stock at $5.37 per share for gross proceeds of $1,256,055.
Other
Transactions
As of the closing of this
offering, the holders of 4,963,437 shares of Series A common stock will be
entitled to rights to register their shares under the Securities Act. These
rights are provided under the terms of an agreement between us and the
holders of registrable securities. These holders include:
|
Ÿ
|
The Parker Family
Limited Partnership, controlled by Jeffrey P. Parker, one of our founders
and our Chief Executive Officer, which will own 276,138 shares of Series A
common stock;
|
|
Ÿ
|
AOL, which is
affiliated with Richard E. Hanlon and Robert C. Shenk, our directors, and
which will own 279,504 shares of Series A common stock;
|
|
Ÿ
|
Thomson Information
Services, which will own 2,813,097 shares of Series A common
stock;
|
|
Ÿ
|
Richard E. Hanlon,
one of our directors, who will own 159,285 shares of Series A common
stock; and
|
|
Ÿ
|
Robert C.
McCormack, one of our directors, who will own 10,704 shares of Series A
common stock.
|
The registration
rights:
|
Ÿ
|
are held by all
persons and entities that participated in our Series D and Series E
convertible preferred stock financings;
|
|
Ÿ
|
allow holders to
require us to register their shares under the Securities Act;
and
|
|
Ÿ
|
allow holders to
include their shares in registration statements filed by us.
|
For a more detailed
description of the registration rights, see “Description of Capital
Stock—Registration Rights.”
|
Thomson
Information Services
|
In April 1999, we entered
into a data exchange agreement with Thomson Financial Investor Relations
(TFIR), a division of Thomson Information Services, one of our principal
stockholders. Under the agreement, we provide TFIR, through its divisions
First Call and Technimetrics, with calendar data gathered by CCBN in
exchange for daily and weekly data feeds of earnings estimates from First
Call and institutional holding information from Technimetrics. The term of
the agreement continues until there is a change of control at CCBN, or until
such time as Thomson Information Services no longer retains a financial
interest in CCBN.
In July 1999, we entered
into a data exchange and distribution agreement with First Call. Under the
agreement, First Call provides us with a data feed of earnings estimates for
use in StreetEvents Institutional. In exchange, First Call
distributes StreetEvents Institutional content to certain First Call
users.
In December 1999, we entered
into a service distribution agreement with ILX Systems, a division of
Thomson Information Services. Under the agreement, we grant ILX the right to
distribute and market CCBN products to ILX subscribers, in exchange for
monthly royalty payments. The term of the agreement is two
years.
In December 1999, we entered
into a service agreement with AOL. Under the agreement, we will pay $14.1
million to AOL in quarterly installments over the 40-month term of the
agreement. We initially paid $1.5 million to AOL in December of 1999 and
will pay $4.8 million, $3.8 million, and $3.9 million in the years ending
December 31, 2000, 2001, and 2002. Upon an initial public offering, these
quarterly payments will be accelerated by one quarter. In exchange, we
obtained “Premier Status” as the premier aggregator and provider
of investor relations information to subscribers of AOL over the term of the
agreement.
AOL has the exclusive right
to sell advertisements on our co-branded sites within the AOL network agreed
upon as long as advertising revenue targets are met. AOL will share with us
a portion of the advertising revenues generated, depending on the volume of
advertising sold.
As an additional incentive
we have granted to AOL a stock subscription warrant which potentially
entitles AOL to purchase up to 1,596,650 additional shares of our of Series
E convertible preferred stock. Upon the closing of this offering and the
conversion of Series E preferred stock to Series A common stock, the stock
subscription warrant will potentially entitle AOL to purchase 4,789,950
shares of our Series A common stock. Under the Stock Subscription Warrant,
AOL becomes entitled to subscribe for and purchase shares of our Series E
convertible preferred stock if advertising sales under our service agreement
with AOL meet specified objectives. Warrants for up to 532,217 shares may
vest from commencement of the agreement until March 31, 2001. Warrants for
up to 1,065,432 (including the number of warrants vested in the first
vesting period) may be vested in the period from April 1, 2001 to March 31,
2002. Warrants for up to 1,596,650 (including the number of warrants vested
in the first two vesting periods) may vest in the period from April 1, 2002
to March 31, 2003. The vesting of those warrants may accelerate upon change
of control. All of the warrants may become immediately exercisable
if:
|
Ÿ
|
the services
agreement between us and AOL is terminated because of our material breach
of that agreement;
|
|
Ÿ
|
an AOL competitor
consolidates or merges with us and our current stockholders do not own a
majority of the voting stock of the resulting or surviving
corporation;
|
|
Ÿ
|
Jeffrey P. Parker,
our Chief Executive Officer, becomes the holder of more than 60% of our
voting stock; or
|
|
Ÿ
|
we sell all of our
assets to an AOL competitor.
|
Warrants for the first
250,000 shares of Series E convertible preferred stock have an exercise
price of $16.10 per share. The exercise price of the remaining warrants will
be set at 90% of the fair market value at the date the warrants vest or, in
the event of a merger, AOL may elect to exercise the warrants for a price
determined based on the merger consideration. As of December 31, 1999 no
warrants had vested.
A voting agreement by and
among us and some of our stockholders provides for the election of a nominee
to be designated by AOL to the board of directors, provided that AOL
maintains a specified percentage equity interest in us. This agreement
terminates upon the closing of this offering.
Also in December 1999, AOL
purchased 93,168 shares of our Series E convertible preferred stock. In
connection with this investment, AOL was granted rights to acquire
additional shares of our capital stock and a right of first offer in the
event of our proposed sale, all of which terminate upon the closing of this
offering.
For additional details
regarding our relationship with AOL see “AOL Relationship.
”
|
Stock
Options Granted to Executive Officers
|
For additional information
regarding the grant of stock options to executive officers and directors,
see “Management — Director Compensation,” “
— Management Compensation,” and “ —
Stock Plans — 1999 Incentive and Non-Qualified Stock
Option Plan,” and “—Employment Agreements” and
“Principal Stockholders.”
In November
and December 1998, we borrowed an aggregate amount of $850,000 from the
Parker Family Limited Partnership, which is managed by Jeffrey P. Parker,
one of our founders and our Chief Executive Officer, by making two demand
promissory notes, one dated November 23, 1998 in the amount of $500,000 and
the second dated December 7, 1998 in the amount of $350,000. In March 1999,
the Parker Family Limited Partnership accepted 92,046 shares of Series D
convertible preferred stock at a price of $9.42 per share as satisfaction in
full of the demand notes, including interest.
Terms of
Transactions
We believe that all of the
transactions described above were made on terms no less favorable to us than
would have been obtained from unaffiliated third-parties. We have adopted a
policy under which all future transactions between us and any of our
directors or executive officers must be on terms no less favorable to us
than would have been obtained from unaffiliated third-parties and must be
approved by a majority of the disinterested members of the board of
directors.
The following table sets
forth information regarding the beneficial ownership of our Series A common
stock as of April 6, 2000, as adjusted to reflect the sale of Series A
common stock offered by us in this offering for:
|
Ÿ
|
each person or
entity or group of affiliated persons or entities known by us to
beneficially own 5% or more of our outstanding shares of Series A common
stock;
|
|
Ÿ
|
each individual
named in the Summary Compensation Table on page 50;
|
|
Ÿ
|
each of our
directors; and
|
|
Ÿ
|
all of our
executive officers and directors as a group.
|
Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission. The information is not necessarily indicative of beneficial
ownership for any other purpose. Except as indicated by the footnotes below,
none of these persons or entities has a relationship with us or, to our
knowledge, any of the underwriters or their respective affiliates. Unless
otherwise indicated, subject to applicable community property laws, each
person or entity named in the table below has sole voting and investment
power (or shares such power with his or her spouse) with respect to all
shares of Series A common stock shown as beneficially owned by them.
Percentage of beneficial ownership is based on 18,823,741 shares of Series A
common stock outstanding as of April 6, 2000, assuming the conversion of the
outstanding shares of our other series of common stock and each series of
convertible preferred stock as a result of this offering. In computing the
number of shares of Series A common stock beneficially owned by a person and
the percentage ownership of that person, shares of Series A common stock
subject to options held by that person that are exercisable within 60 days
of April 6, 2000 are deemed outstanding. These shares, however, are not
deemed outstanding for the purpose of computing the percentage ownership of
any other person. Percentage of beneficial ownership after the offering is
based on 23,050,006 shares, including the 4,200,000 shares to be sold in
this offering.
Our company may sell up to
630,000 shares in connection with the exercise of the underwriters’
over-allotment option. The post-offering ownership percentages in the table
below do not take into account any exercise of the underwriters’
over-allotment option.
Name of
Beneficial Owner
|
|
Shares
Beneficially
Owned (#)
|
|
Percentage
of
Series A Common Stock
Beneficially Owned(%)
|
|
|
Before
the
Offering
|
|
After
the
Offering
|
| Executive
Officers and Directors: |
|
Jeffrey P. Parker |
|
8,016,138 |
|
42.6 |
% |
|
34.8 |
% |
|
Robert I. Adler |
|
2,321,719 |
|
12.3 |
|
|
10.1 |
|
|
Roland C. Beaulieu |
|
149,067 |
|
* |
|
|
* |
|
|
Lawrence P. Begley |
|
349,067 |
|
1.9 |
|
|
1.5 |
|
|
Keith B. Jarrett |
|
2,562,771 |
|
13.6 |
|
|
11.1 |
|
|
Robert C. McCormack |
|
737,850 |
|
3.9 |
|
|
3.2 |
|
|
Richard E. Hanlon |
|
438,789 |
|
2.3 |
|
|
1.9 |
|
|
Robert C. Shenk, Jr. |
|
—
|
|
* |
|
|
* |
|
| All directors and
executive officers as a group (8 persons) |
|
14,575,401 |
|
77.4 |
|
|
63.2 |
|
| |
|
|
|
|
|
|
|
|
| 5% Stockholders
Not Listed Above: |
|
|
|
|
|
|
|
|
Thomson Information Services,
Inc.
22 Thomson Place, Boston, MA 02210 |
|
2,813,098 |
|
14.9 |
% |
|
12.2 |
% |
*
|
Indicates
beneficial ownership of less than 1% of the total outstanding Series A
common stock.
|
Executive Officers and
Directors
Additional information
regarding the beneficial ownership of shares held by our executive officers
and directors is contained below. The address for each executive officer and
director named above is 200 Portland Street, Boston, Massachusetts
02114.
|
Ÿ
|
Jeffrey P.
Parker. These shares include 276,138 shares
held by the Parker Family Limited Partnership which Mr. Parker control.
Mr. Parker disclaims beneficial ownership of the shares held by the Parker
Family Limited Partnership except to the extent of his pecuniary interest
in such shares arising from his general partnership interest in the Parker
Family Limited Partnership.
|
|
Ÿ
|
Keith B.
Jarrett. These shares include 2,547,771 shares
indicated as owned by Mr. Jarrett due to his affiliation with Thomson
Financial Information. Mr. Jarrett disclaims beneficial ownership of the
shares held by Thomson Financial Information, Inc. The remaining 15,000
shares are issuable upon the exercise of vested options.
|
|
Ÿ
|
Robert C.
McCormack. These shares include 637,146 shares
indicated as owned by Mr. McCormack due to his affiliation with funds
affiliated with Information Associates. Mr. McCormack is a general partner
of Information Associates-II, L.P., and a general partner of IA-II
Affiliates Fund, L.L.C. Mr. McCormack disclaims beneficial ownership of
the shares held by Information Associates-II, L.P. and by IA-II Affiliates
Fund, L.L.C., except to the extent of his pecuniary interest in such
shares arising from his general partnership interest in Information
Associates-II, L.P. and IA-II Affiliates Fund. These shares also include
90,000 shares indicated as owned by The Robert C. McCormack 1967 Trust, a
trust for the benefit of Mr. McCormack. Mr. McCormack disclaims beneficial
ownership of the shares held by The Robert C. McCormack 1967 Trust, except
to the extent of his pecuniary interest therein.
|
|
Ÿ
|
Richard E.
Hanlon. These shares include 279,504 shares
indicated as owned by Mr. Hanlon due to his affiliation with AOL. Mr.
Hanlon disclaims beneficial ownership of the shares held by
AOL.
|
DESCRIPTION OF CAPITAL STOCK
General
After this offering, our
authorized capital stock will consist of 150,000,000 shares of Series A
common stock, $.001 par value per share, and 5,000,000 shares of convertible
preferred stock, $.001 par value per share.
As of December 31, 1999,
there were outstanding the following shares of our capital stock held by the
number of stockholders indicated:
Series of
Capital Stock
|
|
Shares
Outstanding
|
|
Number of
Stockholders
of Record
|
| Series B common
stock |
|
189,563 |
|
11 |
| Series C common
stock |
|
196,565 |
|
14 |
| Series D common
stock |
|
156,801 |
|
18 |
| Series E common
stock |
|
420,966 |
|
18 |
| Series A
convertible preferred stock |
|
562,500 |
|
1 |
| Series B
convertible preferred stock |
|
344,043 |
|
17 |
| Series C
convertible preferred stock |
|
41,544 |
|
1 |
| Series D
convertible preferred stock |
|
709,970 |
|
24 |
| Series E
convertible preferred stock |
|
207,980 |
|
2 |
As of December 31, 1999,
there were outstanding options to purchase an aggregate of 2,570,601 shares
of Series A common stock. All outstanding shares of Series B, Series C,
Series D and Series E common stock and Series A, Series B, Series C, Series
D and Series E convertible preferred stock will convert to Series A common
stock automatically in connection with this offering.
The following summary of
certain provisions of our securities and various provisions of our amended
and restated certificate of incorporation and our amended and restated
by-laws, in each case in effect following this offering, is not intended to
be complete and is qualified by reference to the provisions of applicable
law and to our amended and restated certificate of incorporation and amended
and restated by-laws included as exhibits to the registration statement of
which this prospectus is a part. See “Where You Can Find Additional
Information.”
Series A Common
Stock
Holders of Series A common
stock are entitled to one vote for each share held on all matters submitted
to a vote of stockholders and do not have cumulative voting rights.
Accordingly, holders of a majority of the shares of Series A common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Series A common stock are entitled to
receive proportionately any such dividends declared by the board of
directors, subject to any preferential dividend rights of outstanding
preferred stock. Upon our liquidation, dissolution or winding up, the
holders of our Series A common stock are entitled to receive ratably our net
assets available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. Holders of
Series A common stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Series A common stock are, and
the shares offered by us in this offering will be, when issued and paid for,
fully paid and nonassessable. The rights, preferences and privileges of
holders of Series A common stock are subject to the rights of the holders of
shares of any series of preferred stock which we may designate and issue in
the future. Certain holders of Series A common stock have the right to
require us to register their shares of Series A common stock under the
Securities Act in certain circumstances. See “Shares Eligible for
Future Sale.”
Preferred
Stock
Under the terms of our
amended and restated certificate of incorporation, our board of directors is
authorized to issue shares of preferred stock in one or more series without
stockholder approval. The board has discretion to determine the rights,
preferences, privileges and restrictions, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences
of each series of preferred stock.
The purpose of authorizing
our board of directors to issue preferred stock and determine its rights and
preferences is to eliminate delays associated with a stockholder vote on
specific issuances. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a third-party to
acquire, or could discourage a third-party from acquiring, a majority of our
outstanding voting stock.
Registration
Rights
According to the terms of an
investors’ rights agreement, beginning January 1, 2003, the holders of
an aggregate of 4,963,437 shares of Series A common stock upon the closing
of this offering, including Thomson Information Services, AOL and other
stockholders, may require us to file a registration statement under the
Securities Act of 1933 with respect to the resale of their shares. To demand
such registration, stockholders holding an aggregate of at least 50% of
these shares must request that we file a registration statement to register
the resale of their shares. Those stockholders must also request that at
least 25% of the shares originally held by the stockholders upon the closing
date of this offering or enough shares so that the offering would have an
anticipated aggregate offering price of $10.0 million.
Beginning 180 days after the
effective date of this offering, AOL may require us to file a registration
statement under the Securities Act of 1933 with respect to the resale of its
shares, if AOL owns at least 5% of our Series A common stock on a
fully-diluted basis, including Series A common stock issuable to AOL upon
exercise of vested warrants to purchase Series A common stock. To demand
such registration, AOL must request that we file a registration statement to
register enough shares so that the offering would have an anticipated
aggregate offering price of $2.5 million. AOL may demand only two of these
registrations and the second request may only be made at least nine months
after the first.
Additionally, the holders of
4,963,437 shares of Series A common stock, including Thomson Information
Services, AOL and other shareholders, will have piggyback registration
rights with respect to the future registration of our shares of Series A
common stock under the Securities Act. If we propose to register any shares
of Series A common stock under the Securities Act, the holders of shares
having piggyback registration rights are entitled to receive notice of such
registration and are entitled to include their shares in the
registration.
At any time after we become
eligible to file a registration statement on Form S-3 under the Securities
Act, holders of demand registration rights may require us to file an
unlimited number of registration statements on Form S-3 with respect to
their shares of Series A common stock. However, they may only request one
registration within any twelve month period and the minimum anticipated
aggregated offering price must be $1.0 million.
These registration rights
are subject to conditions and limitations, including our right and, in the
case of an underwritten public offering, the right of the managing
underwriter, to limit the number of
shares of Series A common stock to be included in the registration. We are
generally required to bear all of the expenses of registrations under the
registration rights agreement, except underwriting discounts and
commissions. The registration rights agreement also contains our commitment
to indemnify the holders of registration rights for losses they incur in
connection with registrations under the agreement. Registration of any of
the shares of Series A common stock held by stockholders with registration
rights would result in those shares becoming freely tradeable without
restriction under the Securities Act.
Warrants
As of December 31, 1999 we
had granted a stock subscription warrant to AOL. As of December 31, 1999,
the stock subscription warrant did not entitle AOL to purchase any shares of
our capital stock. See “Certain Transactions — Other
Transactions” for a description of the features of the stock
subscription warrant issued to AOL.
Delaware
Anti-Takeover Law and Charter and By-law Provisions
We are subject to the
provisions of Section 203 of the General Corporation Law of Delaware. In
general, the statute prohibits a publicly held Delaware corporation from
engaging in a business combination with an interested stockholder for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is
approved in a prescribed manner. A business combination includes mergers,
asset sales and other transactions resulting in a financial benefit to the
interested stockholder. Subject to certain exceptions, an interested
stockholder is a person who, together with affiliates and associates, owns,
or within three years did own, 15% or more of the corporation’s voting
stock.
The amended and restated
by-laws which will be effective upon the closing of this offering provides
for the division of our board of directors into three classes as nearly
equal in size as possible with staggered three-year terms. See
“Management.” Under the by-laws, any vacancy on the board of
directors, including a vacancy resulting from an enlargement of the board of
directors, may only be filled by vote of a majority of the directors then in
office. The classification of the board of directors and the limitation on
and filling of vacancies could make it more difficult for a third-party to
acquire, or discourage a third-party from acquiring, control of our
company.
The amended and restated
by-laws also provide that after this offering, any action required or
permitted to be taken by our stockholders at an annual meeting or special
meeting of stockholders may only be taken if it is properly brought before
such meeting and may not be taken by written action in lieu of a meeting.
Our amended and restated by-laws will further provide that special meetings
of the stockholders may only be called by our chairman of the board, the
president or our board of directors. In order for any matter to be
considered “properly brought” before a meeting, a stockholder must
comply with certain requirements regarding advance notice and provide us
with certain information. These provisions could have the effect of delaying
until the next stockholders meeting stockholder actions which are favored by
the holders of a majority of our outstanding voting securities. These
provisions could also discourage a third-party from making a tender offer
for the Series A common stock, because even if it acquired a majority of our
outstanding voting securities, it would be able to take action as a
stockholder (such as electing new directors or approving a merger) only at a
duly called stockholders’ meeting, and not by written
consent.
The General Corporation Law
of Delaware provides generally that the affirmative vote of a majority of
the shares entitled to vote on any matter is required to amend a corporation
’s certificate
of incorporation or by-laws, unless a corporation’s certificate of
incorporation or by-laws, as the case may be, requires a greater percentage.
Our by-laws will require the affirmative vote of holders of at least 75% of
the votes which all the stockholders would be entitled to cast in any annual
election of directors or class of directors to amend or repeal any of the
provisions described in the prior two paragraphs.
The amended and restated
certificate of incorporation which will be effective upon the closing of
this offering contains certain provisions permitted under the General
Corporation Law of Delaware relating to the liability of directors. The
provisions eliminate a director’s liability for monetary damages for a
breach of fiduciary duty, except in certain circumstances involving wrongful
acts, such as the breach of a director’s duty of loyalty or acts or
omissions which involve intentional misconduct or a knowing violation of
law. Further, our amended and restated certificate of incorporation will
contain provisions to indemnify our directors and officers to the fullest
extent permitted by the General Corporation Law of Delaware. We believe that
these provisions will assist us in attracting and retaining qualified
individuals to serve as directors.
Transfer Agent and
Registrar
The transfer agent and
registrar for our Series A common stock is EquiServe Trust Company,
N.A.
Nasdaq National
Market Listing
We have applied for approval
for quotation of our Series A common stock on the Nasdaq National Market
under the trading symbol “CCBX.”
SHARES ELIGIBLE FOR FUTURE SALE
If our stockholders sell
substantial amounts of our Series A common stock in the public market
following this offering, the prevailing market price of our Series A common
stock could decline. Furthermore, because we do not expect any shares will
be available for sale for 180 days after this offering as a result of the
contractual and legal restrictions on resale described below, sales of
substantial amounts of our Series A common stock in the public market after
these restrictions lapse could adversely affect the prevailing market price
of the Series A common stock and our ability to raise equity capital in the
future.
Upon the closing of this
offering, we will have outstanding an aggregate of 23,050,006 shares of our
Series A common stock, assuming no exercise of the underwriters’
over-allotment option and no exercise of any outstanding options. Of these
shares, all shares sold in this offering will be freely tradeable without
restriction or further requirement for registration under the Securities Act
unless they are purchased by our “affiliates,” as that term is
defined in Rule 144 under the Securities Act. The remaining shares will be
eligible for sale in the public market as follows:
Number of
Shares
|
|
Date
|
|
4,200,000 |
|
After the
completion of this offering, freely tradeable shares sold in this offering
and shares saleable under Rule 144(k) that are not subject to 180-day lock-up
agreements |
| |
|
| 17,960,740 |
|
After 180 days from
the completion of this offering, the 180-day lock-up will be
released and these shares will eligible for sale in the public market under
Rule 144
(subject, in some cases, to volume limitations), Rule 144(k) or Rule
701. |
| |
|
|
889,266 |
|
After 180 days from
the completion of this offering, restricted securities that have
been held for less than one year and are not eligible for sale in the public
market
under Rule 144. |
Lock-up Agreements.
All of our directors and officers and substantially
all of our stockholders and option holders have signed or are otherwise
subject to lock-up agreements under which they have agreed not to transfer
or dispose of, directly or indirectly, any shares of our Series A common
stock or any securities convertible into or exercisable or exchangeable for
shares of our Series A common stock for 180 days after the date of this
prospectus. Transfers or dispositions can be made sooner: (a) with the prior
written consent of SG Cowen Securities Corporation, in the case of certain
transfers to affiliates who sign identical lock-up agreements; or (b) if the
transfer is a bona fide gift and the donee signs an identical lock-up
agreement. SG Cowen Securities Corporation may, in its sole discretion, at
any time and without prior notice, release all or any portion of the shares
subject to the lock-up agreements.
Rule 144.
In general, under Rule 144 as currently in effect, beginning
90 days after the date of this prospectus, a person who has beneficially
owned shares of our Series A common stock for at least one year, including
the holding period of certain prior owners other than affiliates, is
entitled to sell within any three-month period a number of shares that does
not exceed the greater of: (a) 1% of the number of shares of our Series A
common stock then outstanding, which will equal approximately 230,500 shares
immediately after the offering; or (b) the average weekly trading volume of
our Series A common stock on the Nasdaq National Market during the four
calendar weeks preceding the filing of a notice on Form 144 with respect to
that sale. Sales under Rule 144 are also subject to certain manner-of-sale
provisions, notice requirements and the availability of current public
information about us.
Rule 144(k).
Under Rule 144(k), a person who is not deemed to have been
one of our affiliates at any time during the three months preceding a sale
and who has beneficially owned shares for at least two years, including the
holding period of certain prior owners other than affiliates, is entitled to
sell those shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, Rule 144(k) shares may be sold immediately upon
the closing of this offering.
Rule 701.
In general, under Rule 701 of the Securities Act as
currently in effect, each of our directors, officers, employees, consultants
or advisors who purchased shares from us before the date of this prospectus
in connection with a compensatory stock plan or other written compensatory
agreement is eligible to resell such shares 90 days after the effective date
of this offering in reliance on Rule 144, but without compliance with
certain restrictions, including the holding period, contained in Rule
144.
Registration Rights.
After this offering, the holders of 4,963,437 shares
of our Series A common stock will be entitled to certain rights with respect
to the registration of their shares under the Securities Act. See
“Description of Capital Stock—Registration Rights.” After any
such registration of these shares, such shares will be freely tradeable
without restriction under the Securities Act. These sales could cause the
market price of our Series A common stock to decline.
Stock Plans.
As of December 31, 1999, options to purchase 2,570,601
shares of Series A common stock were outstanding under our 1999 Incentive
and Non-Statutory Stock Option Plan. After this offering, we intend to file
registration statements on Form S-8 under the Securities Act of 1933
covering shares of Series A common stock reserved for issuance under our
1999 plan, our director stock option plan and our employee stock purchase
plan. Based on the number of options outstanding and shares reserved for
issuance under our 1999 plan, our director stock option plan and employee
stock purchase plan, the registration statements on Form S-8 will cover
8,050,000 shares. The Form S-8 registration statements will become effective
immediately upon filing, whereupon, subject to the satisfaction of
applicable exercisability periods, Rule 144 volume limitations applicable to
affiliates and the agreements with the underwriters referred to above,
shares of Series A common stock to be issued upon exercise of outstanding
options granted pursuant to our 1999 plan and our director stock option plan
and shares of Series A common stock issued pursuant to our employee stock
purchase plan (to the extent that such shares were not held by affiliates)
will be available for immediate resale in the public market.
We have entered into an
underwriting agreement with the underwriters named below regarding to the
shares being offered. Subject to the terms and conditions of the
underwriting agreement, each underwriter has severally agreed to purchase
the number of shares indicated in the following table at the public offering
price less the underwriting discounts and commissions set forth on the cover
page of this prospectus. SG Cowen Securities Corporation, Dain Rauscher
Incorporated, U.S. Bancorp Piper Jaffray Inc. and William Blair &
Company, L.L.C. are the representatives of the underwriters.
Name
|
|
Amount
|
| SG Cowen Securities
Corporation |
|
|
| Dain Rauscher
Incorporated |
|
|
| U.S. Bancorp Piper
Jaffray Inc. |
|
|
| William Blair &
Company, L.L.C. |
|
|
| |
|
|
|
Total |
|
4,200,000 |
| |
|
|
The underwriting agreement
provides that the obligations of the underwriters are conditional and may be
terminated at their discretion based on their assessment of the state of the
financial markets. The obligations of the underwriters may also be
terminated upon the occurrence of other events specified in the underwriting
agreement. The underwriters are severally committed to purchase all of the
Series A common stock being offered by us if any shares are purchased, other
than those covered by the over-allotment option described below.
The underwriters propose to
offer the Series A common stock directly to the public at the public
offering price set forth on the cover page of this prospectus. The
underwriters may offer the Series A common stock to securities dealers at
that price less a concession not in excess of $
per share. Securities dealers may reallow a concession
not in excess of $ per share
to other dealers. After the shares of the Series A common stock are released
for sale to the public, the underwriters may vary the offering price and
other selling terms from time to time.
We have granted to the
underwriters an option to purchase up to 630,000 additional shares of Series
A common stock, at the public offering price set forth on the cover of this
prospectus to cover over-allotments, if any. The option is exercisable for a
period of 30 days after the initial public sale of the Series A common
stock. If the underwriters exercise their over-allotment option, the
underwriters have severally agreed to purchase shares in approximately the
same proportion as shown in the table above.
We have agreed to indemnify
the underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, and to contribute to payments that the
underwriters may be required to make in respect of those
liabilities.
We, our directors and
executive officers, and substantially all of our stockholders who hold an
aggregate of approximately 18,071,385 shares have agreed with the
underwriters or are otherwise subject to agreements which provide that for a
period of 180 days following the date of this prospectus, they will not
dispose of or hedge any shares of Series A common stock or any securities
convertible into or exchangeable for Series A common stock. SG Cowen
Securities Corporation may, in its sole discretion, at any time without
prior notice, release all or any portion of the shares from the restrictions
in any such agreement to which SG Cowen Securities Corporation is a
party.
The representatives may
engage in over-allotment, stabilizing transactions, syndicate covering
transactions, penalty bids and passive market making in accordance with
Regulation M under the Securities Exchange Act of 1934. Over-allotment
involves syndicate sales in excess of the offering size, which creates a
syndicate short position. Stabilizing transactions permit bids to purchase
the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
Series A common stock in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit
the representatives to reclaim a selling concession from a syndicate member
when the Series A common stock originally sold by such syndicate member is
purchased in a syndicate covering transaction to cover syndicate short
positions. In passive market making, market makers in the Series A common
stock who are underwriters or prospective underwriters may, subject to
certain limitations, make bids for or purchases of the Series A common stock
until the time, if any, at which a stabilizing bid is made. These
stabilizing transactions, syndicate covering transactions and penalty bids
may cause the price of the Series A common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may
be discontinued at any time.
Prior to this offering,
there has been no public market for the Series A common stock. Consequently,
the initial public offering price was determined by negotiations between us
and the underwriters. Among the factors considered in these negotiations
were prevailing market conditions, the market capitalizations and the states
of development of other companies that we and the underwriters believe to be
comparable to us, estimates of our business potential, our results of
operation in recent periods, the present state of our development and other
factors deemed relevant.
We estimate that our
out-of-pocket expenses for this offering will be approximately $1.4
million.
The validity of the Series A
common stock offered hereby will be passed upon for us by Hale and Dorr LLP.
Certain legal matters in connection with this offering will be passed upon
for the underwriters by Brobeck, Phleger & Harrison LLP, Washington,
D.C.
The consolidated financial
statements of CCBN.COM, Inc. as of December 31, 1998 and 1999 and for the
period from February 13, 1997 (date of inception) through December 31, 1997
and for each of the two years in the period ended December 31, 1999 included
in this prospectus have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The financial statements of
TalkPoint Communications, Inc. as of December 31, 1998 and September 30,
1999 and the year ended December 31, 1998 and for the nine months ended
September 30, 1999 included in this prospectus have been included in
reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the
Securities and Exchange Commission a registration statement on Form S-1.
This prospectus, which is a part of the registration statement, does not
contain all of the information included in the registration statement.
Certain information is omitted and you should refer to the registration
statement and its exhibits. With respect to references made in this
prospectus to any contract, agreement or other document of CCBN.COM, such
references are not necessarily complete and you should refer to the exhibits
attached to the Registration Statement for copies of the actual contract,
agreement or other document. You may review a copy of the registration
statement, including exhibits, at the Commission’s public reference
room at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 or
Seven World Trade Center, 13th Floor, New York, New York 10048 or Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please
call the Commission at 1-800-SEC-0330 for further information on the
operation of the public reference rooms.
As a result of this offering
we will be required to file annual, quarterly and current reports, proxy
statements and other information with the Commission.
You may read and copy any
reports, statements or other information on file at the public reference
rooms. You can also request copies of these documents, for a copying fee, by
writing to the Commission.
Our Commission filings and
the registration statement can also be reviewed by accessing the Commission
’s Internet site at http://www.sec.gov, which contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the Commission.
CCBN.COM,
INC.
INDEX TO FINANCIAL STATEMENTS
| |
|
Page(s)
|
| CCBN.COM,
Inc. |
|
|
|
Report of Independent
Accountants |
|
F-2 |
|
Consolidated Balance
Sheets at December 31, 1998 and 1999 |
|
F-3 |
Consolidated Statements of
Operations for the period from February 13, 1997 (date of
inception) through December 31, 1997 and the years
ended December 31, 1998
and 1999 |
|
F-4 |
Consolidated Statements of
Changes in Stockholders’ Equity (Deficit) for the period
from February 13, 1997 (date of inception) through
December 31, 1997 and the
years ended December 31, 1998 and 1999 |
|
F-5 |
Consolidated Statements of
Cash Flows for the period from February 13, 1997 (date of
inception) through December 31, 1997 and the years
ended December 31, 1998
and 1999 |
|
F-7 |
|
Notes to Consolidated
Financial Statements |
|
F-8 |
| |
|
| TalkPoint
Communications, Inc. |
|
|
|
Report of Independent
Accountants |
|
F-22 |
|
Balance Sheets as of
December 31, 1998 and September 30, 1999 |
|
F-23 |
Statements of Operations
for the year ended December 31, 1998 and the nine months
ended September 30, 1999 |
|
F-24 |
Statements of Stockholders
’ Deficit for the year ended December 31, 1998 and the nine
months ended September 30, 1999 |
|
F-25 |
Statements of Cash Flows
for the year ended December 31, 1998 and the nine months
ended September 30, 1999 |
|
F-26 |
|
Notes to Financial
Statements |
|
F-27 |
| |
|
| Unaudited Pro
Forma Consolidated Financial Information |
Unaudited Pro Forma
Consolidated Statement of Operations for the year ended
December 31, 1999 |
|
F-33 |
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Board of
Directors and Shareholders
of CCBN.COM,
Inc.:
In our opinion, the
accompanying consolidated balance sheets and the related consolidated
statements of operations and changes in stockholders’ equity (deficit)
and cash flows present fairly, in all material respects, the financial
position of CCBN.COM, Inc. at December 31, 1998 and 1999, and the results of
their operations and their cash flows for the period from February 13, 1997
(date of inception) through December 31, 1997 and for the years ended
December 31, 1998 and 1999, in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Company’s management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
|
/s/
PricewaterhouseCoopers LLP
|
Boston,
Massachusetts
January 31, 2000,
except as to Note 12
for which the date is
March 14, 2000 and
Note 9 for which the
date is March 22, 2000
CCBN.COM,
INC.
CONSOLIDATED
BALANCE SHEETS
| |
|
December
31,
|
|
Pro Forma
(Note 3)
December 31,
1999
|
| |
|
1998
|
|
1999
|
| |
|
|
|
|
|
(unaudited) |
| Current
assets: |
|
|
|
| Cash and cash
equivalents |
|
$1,067,269 |
|
|
$
3,202,278 |
|
|
$
3,202,278 |
|
Accounts receivable, net of allowance for doubtful accounts of
$22,000 and $155,046 in
1998 and 1999,
respectively |
|
911,802 |
|
|
3,606,914 |
|
|
3,606,914 |
|
|
Prepaid and other current assets (Note 5) |
|
463,173 |
|
|
2,383,182 |
|
|
2,383,182 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
2,442,244 |
|
|
9,192,374 |
|
|
9,192,374 |
|
| |
|
|
|
|
|
|
|
|
|
| Other
assets |
|
85,304 |
|
|
115,466 |
|
|
115,466 |
|
| Property and
equipment, net (Note 6) |
|
326,059 |
|
|
1,631,968 |
|
|
1,631,968 |
|
| Intangible assets,
net |
|
— |
|
|
3,774,528 |
|
|
3,774,528 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$2,853,607 |
|
|
$14,714,336 |
|
|
$14,714,336 |
|
| |
|
|
|
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
Accounts payable and accrued liabilities |
|
$
187,365 |
|
|
$
1,137,740 |
|
|
$
1,137,740 |
|
|
Accrued payroll and payroll taxes |
|
358,151 |
|
|
794,162 |
|
|
794,162 |
|
|
Capital lease obligation |
|
18,981 |
|
|
76,527 |
|
|
76,527 |
|
|
Deferred revenue |
|
1,617,854 |
|
|
3,947,465 |
|
|
3,947,465 |
|
|
Notes payable to stockholder (Note 8) |
|
850,000 |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
$3,032,351 |
|
|
$
5,955,894 |
|
|
$
5,955,894 |
|
| |
|
|
|
|
|
|
|
|
|
| Capital lease
obligation |
|
$
51,394 |
|
|
$
193,342 |
|
|
$
193,342 |
|
| Convertible
preferred stock: |
|
|
|
Series A convertible preferred stock; $0.01 par value; 562,500
shares authorized, 562,500
issued and outstanding at
December 31, 1998 and 1999 (at liquidation value), no
shares issued and
outstanding pro forma December 31, 1999 |
|
1,500,000 |
|
|
1,500,000 |
|
|
— |
|
Series B convertible preferred stock; $0.01 par value; 344,043
shares authorized, 344,043
issued and outstanding at
December 31, 1998 and 1999 (at liquidation value), no
shares issued and
outstanding pro forma December 31, 1999 |
|
1,146,810 |
|
|
1,146,810 |
|
|
— |
|
Series C convertible preferred stock; $0.01 par value; 41,544 shares
authorized, 41,544
issued and outstanding at
December 31, 1998 and 1999 (at liquidation value), no
shares issued and
outstanding pro forma December 31, 1999 |
|
208,274 |
|
|
208,274 |
|
|
— |
|
Series D convertible preferred stock; $0.01 par value; 891,314
shares authorized, 0 and
709,970 issued and
outstanding at December 31, 1998 and 1999 (at liquidation value),
respectively, no shares
issued and outstanding pro forma December 31, 1999 |
|
— |
|
|
6,685,793 |
|
|
— |
|
Series E convertible preferred stock; $0.01 par value; 1,804,630
shares authorized, 0 and
207,980 issued and
outstanding at December 31, 1998 and 1999 (at liquidation value),
respectively, no shares
issued and outstanding pro forma December 31, 1999 |
|
— |
|
|
3,348,478 |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
Total convertible preferred stock |
|
2,855,084 |
|
|
12,889,355 |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 7) |
|
|
|
| Stockholder’s
equity (deficit) (Notes 8, 9, and 10): |
|
|
|
Series A common stock; $0.001 par value; 30,000,000 shares
authorized; 11,250,000 and
11,436,573 issued and
outstanding at December 31, 1998 and 1999, respectively,
17,980,755 shares issued and
outstanding pro forma December 31, 1999 |
|
11,250 |
|
|
11,437 |
|
|
17,980 |
|
Series B common stock; $0.001 par value; 192,093 shares authorized;
212,400 and
189,563 issued and
outstanding at December 31, 1998 and 1999, respectively, no
shares issued and
outstanding pro forma December 31, 1999 |
|
212 |
|
|
189 |
|
|
— |
|
Series C common stock; $0.001 par value; 244,098 shares authorized;
266,400 and
196,565 issued and
outstanding at December 31, 1998 and 1999, respectively, no
shares issued and
outstanding pro forma December 31, 1999 |
|
266 |
|
|
196 |
|
|
— |
|
Series D common stock; $0.001 par value; 204,047 shares authorized;
189,900 and
156,801 issued and
outstanding at December 31, 1998 and 1999, respectively, no
shares issued and
outstanding pro forma December 31, 1999 |
|
190 |
|
|
157 |
|
|
— |
|
Series E common stock; $0.001 par value; 750,150 shares authorized;
657,450 and
420,966 issued and
outstanding at December 31, 1998 and 1999, respectively, no
shares issued and
outstanding pro forma December 31, 1999 |
|
657 |
|
|
421 |
|
|
— |
|
| Additional
paid-in-capital |
|
101,674 |
|
|
15,933,957 |
|
|
28,817,732 |
|
| Deferred
compensation and other equity-related charges |
|
(98,838 |
) |
|
(9,928,634 |
) |
|
(9,928,634 |
) |
| Accumulated
deficit |
|
(3,100,633 |
) |
|
(10,341,978 |
) |
|
(10,341,978 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Total stockholder’s equity (deficit) |
|
(3,085,222 |
) |
|
(4,324,255 |
) |
|
8,565,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholder’s equity (deficit) |
|
$2,853,607 |
|
|
$14,714,336 |
|
|
$14,714,336 |
|
| |
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the consolidated financial
statements.
CCBN.COM,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
for the period
from February 13, 1997 (date of inception) through
December 31, 1997
and the years ended December 31, 1998 and 1999
| |
|
1997
|
|
1998
|
|
1999
|
| Revenue |
|
$
27,311 |
|
|
$1,581,865 |
|
|
$8,696,829 |
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
Cost of revenue (Excluding
equity-related
compensation of $13,618 for the year ended
December 31, 1999) |
|
54,713 |
|
|
957,954 |
|
|
3,760,689 |
|
Sales and marketing
(Excluding equity-related
compensation of $2,622 and $1,175,182 for the
years ended December 31, 1998 and 1999,
respectively) |
|
438,055 |
|
|
1,960,040 |
|
|
5,256,298 |
|
General and administrative
(Excluding equity-related
compensation of $287,770 for the year ended
December 31, 1999) |
|
155,541 |
|
|
600,004 |
|
|
2,225,094 |
|
Research and development
(Excluding equity-related
compensation of $216,887 for the year ended
December 31, 1999) |
|
196,768 |
|
|
367,584 |
|
|
805,521 |
|
|
Equity-related
compensation |
|
— |
|
|
2,622 |
|
|
1,693,457 |
|
|
Amortization of intangible
assets |
|
— |
|
|
— |
|
|
424,986 |
|
| |
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
845,077 |
|
|
3,888,204 |
|
|
14,166,045 |
|
| |
|
|
|
|
|
|
|
|
|
| Loss from
operations |
|
(817,766 |
) |
|
(2,306,339 |
) |
|
(5,469,216 |
) |
| Interest income,
net |
|
2,215 |
|
|
32,718 |
|
|
76,344 |
|
| |
|
|
|
|
|
|
|
|
|
| Net loss |
|
(815,551 |
) |
|
(2,273,621 |
) |
|
(5,392,872 |
) |
| Deemed dividend on
Series E preferred stock |
|
— |
|
|
— |
|
|
(1,848,473 |
) |
| |
|
|
|
|
|
|
|
|
|
| Net loss
attributable to common stockholders |
|
$(815,551 |
) |
|
$(2,273,621 |
) |
|
$(7,241,345 |
) |
| |
|
|
|
|
|
|
|
|
|
| Basic and diluted
net loss per share |
|
$
(0.20 |
) |
|
$
(0.24 |
) |
|
$
(0.68 |
) |
Shares used in
computing basic and diluted net loss
per share |
|
4,058,603 |
|
|
9,434,174 |
|
|
10,664,025 |
|
Unaudited pro forma
basic and diluted net loss
per share |
|
|
|
|
|
|
|
$
(0.49 |
) |
Shares used in
computing pro forma basic and
diluted net loss per share
(unaudited) |
|
|
|
|
|
|
|
14,717,032 |
|
The accompanying
notes are an integral part of the consolidated financial
statements.
CCBN.COM,
INC.
CONSOLIDATED
STATEMENTS OF CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS
’ DEFICIT
for the period
from February 13, 1997 (date of inception) through December 31, 1997 and the
years end
December 31, 1998
and 1999
| |
|
Series A
Convertible
Preferred Stock
|
|
Series B
Convertible
Preferred Stock
|
|
Series C
Convertible
Preferred Stock
|
|
Series D
Convertible
Preferred Stock
|
|
Series E
Convertible
Preferred Stock
|
| |
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
| Issuance of common
stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted stock
grants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Issuance of Series
A convertible preferred stock |
|
562,500 |
|
$1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at
December 31, 1997 |
|
562,500 |
|
1,500,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted stock
grants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Forfeitures of
restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of
deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Series
B and C convertible preferred
stock |
|
|
|
|
|
344,043 |
|
$1,146,810 |
|
41,544 |
|
$208,274 |
|
|
|
|
|
|
|
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December
31, 1998 |
|
562,500 |
|
1,500,000 |
|
344,043 |
|
1,146,810 |
|
41,544 |
|
208,274 |
|
|
|
|
|
|
|
|
| Issuance of Series
D convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
617,924 |
|
$5,818,996 |
|
|
|
|
| Conversion of notes
payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
92,046 |
|
866,797 |
|
|
|
|
| Issuance of Series
E convertible preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
207,980 |
|
$3,348,478 |
| Restricted stock
grants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Forfeitures of
restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exercise of stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
compensation related to grant of stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of
deferred compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock in connection with
Talkpoint acquisition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Amortization of
discount on Series E preferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December
31, 1999 |
|
562,500 |
|
$1,500,000 |
|
344,043 |
|
$1,146,810 |
|
41,544 |
|
$208,274 |
|
709,970 |
|
$6,685,793 |
|
207,980 |
|
$3,348,478 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the consolidated financial
statements.
CCBN.COM, INC.
CONSOLIDATED
STATEMENTS OF CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS
’ DEFICIT (continued)
for the period
from February 13, 1997 (date of inception) through December 31, 1997 and the
years end
December 31, 1998
and 1999
Series A
Common Stock
|
|
Series B
Common Stock
|
|
Series C
Common Stock
|
|
Series D
Common Stock
|
|
Series E
Common Stock
|
|
Additional
paid-in
capital
|
|
Deferred
compensation
and other
equity
related
charges
|
|
Accumulated
deficit
|
|
Total
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
| 11,273,400 |
|
|
$11,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
(10,020) |
|
$
1,253 |
|
|
|
|
|
|
|
225,900 |
|
|
$226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(201) |
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(815,551) |
|
(815,551 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11,273,400 |
|
|
11,273 |
|
|
225,900 |
|
|
226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(825,772) |
|
(814,273 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
427,050 |
|
|
$427 |
|
|
311,400 |
|
|
$312 |
|
|
657,450 |
|
|
$657 |
|
|
$
101,460 |
|
|
$
(101,460 |
) |
|
(1,240) |
|
156 |
|
| (23,400 |
) |
|
(23 |
) |
|
(13,500 |
) |
|
(14 |
) |
|
(160,650 |
) |
|
(161 |
) |
|
(121,500 |
) |
|
(122 |
) |
|
|
|
|
|
|
|
214 |
|
|
|
|
|
|
|
(106 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,622 |
|
|
|
|
2,622 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,273,621) |
|
(2,273,621 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11,250,000 |
|
|
11,250 |
|
|
212,400 |
|
|
212 |
|
|
266,400 |
|
|
266 |
|
|
189,900 |
|
|
190 |
|
|
657,450 |
|
|
657 |
|
|
101,674 |
|
|
(98,838 |
) |
|
(3,100,633) |
|
(3,085,222 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(42,610 |
) |
|
|
|
|
|
|
(42,610 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,811,754 |
|
|
(3,009,056 |
) |
|
(1,848,473) |
|
(45,775 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,500 |
|
|
95 |
|
|
1,538,091 |
|
|
(1,314,525 |
) |
|
|
|
223,661 |
|
| (336,264 |
) |
|
(336 |
) |
|
(22,837 |
) |
|
(23 |
) |
|
(69,835 |
) |
|
(70 |
) |
|
(33,099 |
) |
|
(33 |
) |
|
(330,984 |
) |
|
(331 |
) |
|
530 |
|
|
|
|
|
|
|
(263 |
) |
| 2,700 |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,597 |
|
|
|
|
|
|
|
3,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,993,575 |
|
|
(6,993,575 |
) |
|
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,469,807 |
|
|
|
|
1,469,807 |
|
| |
| 520,137 |
|
|
520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,527,346 |
|
|
|
|
|
|
|
2,527,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,553 |
|
|
|
|
17,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,392,872) |
|
(5,392,872 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11,436,573 |
|
|
$11,437 |
|
|
189,563 |
|
|
$189 |
|
|
196,565 |
|
|
$196 |
|
|
156,801 |
|
|
$157 |
|
|
420,966 |
|
|
$421 |
|
|
$15,933,957 |
|
|
$(9,928,634 |
) |
|
$(10,341,978) |
|
$(4,324,255 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the consolidated financial
statements.
CCBN.COM,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
for the period
from February 13, 1997 (date of inception) through
December 31, 1997
and the years ended December 31, 1998 and 1999
| |
|
1997
|
|
1998
|
|
1999
|
| Cash flow from
operating activities: |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$
(815,551 |
) |
|
$(2,273,621 |
) |
|
$(5,392,872 |
) |
Adjustments to reconcile net loss to cash used in operating
activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
43,075 |
|
|
76,067 |
|
|
789,138 |
|
|
Provision for bad
debts |
|
— |
|
|
22,000 |
|
|
130,046 |
|
|
Interest expense |
|
— |
|
|
— |
|
|
16,797 |
|
|
Equity-based
compensation |
|
— |
|
|
2,622 |
|
|
1,693,457 |
|
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
(45,629 |
) |
|
(888,173 |
) |
|
(2,813,313 |
) |
|
Prepaid and other current assets |
|
(47,875 |
) |
|
(415,298 |
) |
|
(1,966,727 |
) |
|
Accounts payable and accrued liabilities |
|
42,864 |
|
|
144,502 |
|
|
618,514 |
|
|
Accrued payroll and payroll taxes |
|
87,731 |
|
|
270,420 |
|
|
436,011 |
|
|
Deferred revenue |
|
81,680 |
|
|
1,536,174 |
|
|
2,329,611 |
|
| |
|
|
|
|
|
|
|
|
|
|
Net cash used by operating
activities |
|
(653,705 |
) |
|
(1,525,307 |
) |
|
(4,159,338 |
) |
| |
|
|
|
|
|
|
|
|
|
| Cash flow from
investing activities: |
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
(129,224 |
) |
|
(237,789 |
) |
|
(1,301,672 |
) |
|
Acquisition of TalkPoint |
|
— |
|
|
— |
|
|
(970,788 |
) |
|
Deposits and other long-term assets |
|
(6,541 |
) |
|
(78,763 |
) |
|
(30,162 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Net cash used by investing
activities |
|
(135,765 |
) |
|
(316,552 |
) |
|
(2,302,622 |
) |
| |
|
|
|
|
|
|
|
|
|
| Cash flow from
financing activities: |
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of preferred stock |
|
1,500,000 |
|
|
1,355,084 |
|
|
9,079,089 |
|
|
Proceeds from the issuance of restricted stock |
|
1,278 |
|
|
155 |
|
|
11 |
|
|
Repurchase of forfeited restricted grants |
|
— |
|
|
(106 |
) |
|
(263 |
) |
|
Exercise of stock options |
|
— |
|
|
— |
|
|
3,600 |
|
|
Proceeds from issuance of notes payable to
stockholder |
|
400,000 |
|
|
850,000 |
|
|
— |
|
|
Repayment of notes payable to stockholder |
|
— |
|
|
(400,000 |
) |
|
— |
|
|
Repayment of TalkPoint notes payable |
|
— |
|
|
— |
|
|
(425,078 |
) |
|
Payments of capital lease obligations |
|
— |
|
|
(7,813 |
) |
|
(60,390 |
) |
| |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities |
|
1,901,278 |
|
|
1,797,320 |
|
|
8,596,969 |
|
| |
|
|
|
|
|
|
|
|
|
| Net change in cash
and cash equivalents |
|
1,111,808 |
|
|
(44,539 |
) |
|
2,135,009 |
|
| Cash and cash
equivalents at beginning of the period |
|
— |
|
|
1,111,808 |
|
|
1,067,269 |
|
| |
|
|
|
|
|
|
|
|
|
| Cash and cash
equivalents at end of the period |
|
$1,111,808 |
|
|
$1,067,269 |
|
|
$3,202,278 |
|
| |
|
|
|
|
|
|
|
|
|
| Supplemental cash
flow information: |
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for interest |
|
— |
|
|
$
22,775 |
|
|
$
12,106 |
|
| Supplemental
disclosures of noncash transactions: |
|
|
|
|
|
|
|
|
|
Acquisition of property and equipment under capital leases
—
Note 6 |
|
|
|
|
|
|
|
|
|
|
Conversion of note payable to shareholder—Note
8 |
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for acquisition—Note
4 |
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the consolidated financial
statements.
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of
Business:
|
CCBN.COM, Inc. (the
“Company” or “CCBN”) provides internet-based solutions
which enable direct communications between companies and investors. The
Company’s primary services include:
|
|
Ÿ
|
IR Online
—a comprehensive solution for public companies, which provides a
range of services designed to enable companies and their investors to
communicate more efficiently, and
|
|
Ÿ
|
StreetEvents
—a comprehensive, Internet-based portal for investment related event
information of interest to investors, the brokerage community and
companies.
|
|
IR Online was
launched in August of 1997. The StreetEvents service was launched
commercially in November 1999. Revenue recognized from StreetEvents
in 1999 was not material. Substantially all revenue earned to date has
been generated from customers based in North America. The Company
currently has no foreign operations.
|
|
The Company was formed as
an LLC in February of 1997 and reorganized as a “C” corporation
in April 1999. As part of such reorganization, each Member received three
shares of common stock and of preferred stock of the Company that was
equal to the number of common and preferred Members’ Interests that
such Member held immediately prior to the reorganization. The assets and
liabilities of the limited liability corporation were transferred to CCBN
at historical cost. The reorganization has been accounted for
retroactively in the accompanying consolidated financial
statements.
|
|
Effective October 10, 1999
the Company acquired all of the outstanding shares of TalkPoint
Communications, Inc. (“TalkPoint”) for cash and stock. The
acquisition was accounted for as a purchase. The results of operations of
TalkPoint are included with the consolidated results of the Company
beginning on the effective date of the acquisition.
|
|
The Company has incurred
net losses since inception and expects to incur additional operating
losses in the future as the Company continues to expand its service
offerings and customer base. Without the proceeds of the contemplated
initial public offering, the Company may be required to scale back its
growth plans or raise additional financing, from new or previous
investors.
|
2. Summary of
Significant Accounting Policies
|
Principles of
Consolidation
|
|
The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiary. All intercompany transactions have been eliminated in
consolidation.
|
|
Cash and Cash
Equivalents
|
|
All highly liquid
investments purchased with a maturity of three months or less are
considered to be cash equivalents and are carried at market
value.
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
The Company charges its
clients subscription fees for the IR Online and StreetEvents
services. The Company also charges a one-time set-up fee at the initiation
of a contract. Clients may also purchase services for additional fees over
and above the subscription fee.
|
|
Revenue for the Company
’s services is recognized ratably over the contract term for the
services provided. Payments received and billings for service revenue,
prior to the service period, are classified as deferred revenue. One-time
set-up fees charged to clients are deferred and recognized over the client
’s initial contract term. One-time commission fees paid to the sales
force are deferred and are recognized over the client’s initial
contract term, since these commissions are required to be repaid on a
pro-rata basis if a customer cancels or terminates their service agreement
prior to expiration of its initial term. Fees for additional services are
recognized when the service is delivered to the client.
|
|
Property and equipment is
carried at cost, less accumulated depreciation. Expenditures for repairs
and maintenance are charged to expense as incurred. When assets are
retired or disposed of, the assets and related accumulated depreciation
are eliminated from accounts and any resulting gain or loss is reflected
in income.
|
|
Depreciation is expensed
over the estimated useful lives of the assets, which are three years for
computer equipment, purchased software, and furniture and fixtures.
Leasehold improvements are depreciated over the lesser of their useful
life or the remaining period of the related leases.
|
|
Research and
Development Costs
|
|
Research and development
costs are charged to expense when incurred. On January 1, 1999, the
Company adopted American Institute of Certified Public Accountants
Statement of Position 98-1, “Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use” (“SOP 98-1
”). Accordingly, the Company’s policy is to capitalize costs
associated with the development and implementation of its operating
systems, including internally and externally developed software. Internal
costs eligible for capitalization under SOP 98-1 of $297,060 were
capitalized in 1999. These costs are being amortized over 30 months.
Amortization expense for the year ended December 31, 1999 was
$26,733.
|
|
Recently Issued
Accounting Pronouncements
|
|
In June 1998, the FASB
issued SFAS No. 133, “Accounting for Derivative Instruments and
Hedging Activities.” The new standard establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred
to as derivatives) and for hedging activities. In June 1999, the FASB
issued SFAS No. 137, which defers the effective date of SFAS No. 133 to
fiscal years beginning after June 15, 2000. The Company is currently
analyzing this new standard.
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
The Company operates in
one segment and is subject to a number of risks similar to other companies
in the industry, including but not limited to, rapid technological change,
uncertainty of market acceptance of the product, competition from
substitute products and larger companies, protection of proprietary
technology, ability to scale up its operations to support thousands of
simultaneous users of its service, the need to obtain additional financing
to support growth, and dependence on third parties and key
individuals.
|
|
Financial instruments
which potentially subject the company to concentrations of credit risk
consist principally of money market funds and accounts receivable. The
company maintains all of its money market funds with one banking
institution.
|
|
The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
|
|
Intangible assets include
the completed technology, trademarks and goodwill assumed in the
acquisition of TalkPoint. These assets are being amortized using the
straight-line method over the estimated economic lives ranging from two to
three years. Accumulated amortization was $424,986 at December 31,
1999.
|
|
Accounting for
Stock-Based Compensation
|
|
CCBN accounts for
stock-based awards to employees using the intrinsic value method as
prescribed by Accounting Principles Board (“APB”) Opinion No.
25, “Accounting for Stock Issued to Employees,” and related
interpretations. Accordingly, no compensation expense is recorded for
options issued to employees in fixed amounts and with fixed exercise
prices at least equal to the fair market value of CCBN’s common stock
at the date of grant. From time to time the Company grants performance
based options and restricted stock to employees. These grants are
accounted for as variable grants, and are remeasured at each balance sheet
date and a charge is recorded as the performance criteria are met and the
restricted stock or options vest. Options and restricted stock granted to
nonemployees are considered variable grants under EITF 96-18. The value of
the grants are remeasured over the shorter of the vesting period or the
period of performance and the related charge is recorded. CCBN has adopted
the provisions of SFAS No. 123, “Accounting for Stock-Based
Compensation,” through disclosure only (Note 10). All stock-based
awards to nonemployees are accounted for at their fair value in accordance
with SFAS No. 123.
|
|
The Company periodically
evaluates the net realizable value of long-lived assets, including
goodwill and other intangible assets and property, plant and equipment,
relying on a number of
factors including operating results, business plans, economic projections
and anticipated future cash flows. An impairment in the carrying value of
an asset is assessed when the undiscounted, expected future operating cash
flows derived from the asset are less than its carrying value.
|
|
Prior to its
reorganization as a C Corporation in 1999 (Note 1), CCBN was treated as a
Limited Liability Corporation for federal and state income tax purposes.
Accordingly, no provision for corporate income taxes was recorded during
this period and all losses were passed through to CCBN’s members. Had
the Company recognized a provision for income taxes during such period the
provision would have been nominal due to net operating losses incurred
since inception. At the time of its reorganization, CCBN adopted the
liability method of accounting for income taxes as set forth in SFAS No.
109, “Accounting for Income Taxes.”
|
|
CCBN recognizes
advertising expense as incurred. Advertising expense was approximately $0,
$2,338 and $25,160 for the period from February 13, 1997 through December
31, 1997 and the years ended December 31, 1998 and 1999,
respectively.
|
|
The Company adopted SFAS
No. 130, “Reporting Comprehensive Income,” effective January 1,
1998. No differences exist between net loss and comprehensive
loss.
|
|
Certain prior year amounts
have been reclassified to conform with current year
presentation.
|
|
Pro Forma
Balance Sheet (Unaudited)
|
|
Upon the closing of the
Company’s initial public offering, all of the outstanding shares of
Series A, B, C, D and E convertible preferred stock will automatically
convert on a 3-for-1 basis and Series B, C, D and E common stock will
automatically convert on a .9885-for-1, .9845-for-1, .9848-for-1 and
.9758-for-1 basis respectively, to shares (approximately 6,544,180 shares)
of the Company’s Series A common stock assuming an offering price of
greater than $13.33 per share. The unaudited pro forma presentation of the
balance sheet has been prepared assuming the conversion of the convertible
preferred stock into common stock at December 31, 1999.
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
3.
Net Loss per Share and Unaudited Pro Forma Net Loss per
Share
|
Net loss per share is
computed under SFAS No. 128, “Earnings Per Share.” Basic net
loss per share is computed using the weighted average number of shares of
common stock outstanding. Diluted loss per share does not differ from
basic loss per share since potential common shares from conversion of
preferred stock and exercise of stock options are antidilutive for all
periods presented and therefore are excluded from the calculation of
diluted loss per share. Pro forma basic and diluted net loss per share
have been calculated assuming the conversion of all outstanding shares of
preferred stock into common shares, as if the shares had converted
immediately upon their issuance.
|
|
The following sets forth
the computation of net loss per share:
|
| |
|
Period from
February 13,
1997
through
December 31,
1997
|
|
Year Ended
December 31,
|
|
|
1998
|
|
1999
|
| Numerator: |
|
|
|
|
|
|
|
|
|
Net loss attributable to
common
shareholders |
|
$
(815,551 |
) |
|
$(2,273,621 |
) |
|
$(7,241,345 |
) |
| |
|
|
|
|
|
|
|
|
|
| Denominator: |
|
|
|
|
|
|
|
|
|
Weighted average common
shares, basic
and diluted |
|
4,058,603 |
|
|
9,434,174 |
|
|
10,664,025 |
|
| |
|
|
|
|
|
|
|
|
|
| Net loss per
share: |
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
$
(0.20 |
) |
|
$
(0.24 |
) |
|
$
(0.68 |
) |
| |
|
|
|
|
|
|
|
|
|
|
The following potentially
dilutive common shares were excluded because their effect was
antidilutive:
|
| |
|
1997
|
|
1998
|
|
1999
|
| Convertible
preferred stock |
|
1,687,500 |
|
2,844,261 |
|
5,598,111 |
| Stock
options |
|
— |
|
— |
|
2,570,601 |
| Warrants |
|
— |
|
— |
|
4,789,950 |
| Unvested restricted
stock |
|
2,709,297 |
|
2,734,529 |
|
730,898 |
|
Pro forma net loss per
share is computed using the weighted average number of shares of common
stock outstanding, including potentially dilutive common shares arising
from the convertible preferred stock (using the if-converted method),
which will automatically convert into Series A common stock upon an
initial public offering as if converted at the original date of issuance,
for both basic and diluted earnings per share.
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
The following sets forth
the computation of pro forma net loss per share:
|
| |
|
Year Ended
December 31,
1999
|
| Numerator: |
|
|
|
|
Net loss |
|
$
(7,241,345 |
) |
| |
|
|
|
| Denominator: |
|
|
|
Weighted average common
shares (denominator for basic and
diluted calculation) |
|
14,717,032 |
|
| |
|
|
|
| Proforma net loss
per share: |
|
|
|
|
Basic and
diluted |
|
$
(0.49 |
) |
| |
|
|
|
|
The following potentially
dilutive common shares were excluded because their effect was
antidilutive: 2,570,601 options for common stock; 1,596,650 warrants for
preferred stock (on initial public offering converts to 4,789,950 warrants
for common stock); and 730,898 unvested restricted stock.
|
4.
Acquisition
|
CCBN entered into an
agreement effective October 10, 1999, for the purchase of TalkPoint, a
provider of web-based presentation tools and services. The purchase price
consisted of $970,788 in cash (including transaction costs) the issuance
of 520,137 shares of Series A Common Stock and the assumption of
liabilities of $800,071, for a total purchase price of $4,298,710. The
purchase price was allocated to the fair value of the assets acquired
including tangible assets of $99,196 consisting primarily of computer and
office equipment, and intangible assets of $4,199,514 consisting primarily
of completed technology of $1,698,278 and trademarks of $102,353. No
patents, material non-competition agreements or operating know-how was
acquired. No value was ascribed to the employee base. The remaining excess
of purchase price of $2,398,883 was allocated to goodwill, which is being
amortized over its estimated useful life of three years. The following
unaudited pro forma data summarizes the results of operations for the year
ended December 31, 1998 as if the acquisition of TalkPoint had been
completed on January 1, 1998. The unaudited pro forma data gives effect to
actual operating results prior to the acquisition for adjustments to
amortization of goodwill and other intangible assets. These pro forma
amounts do not purport to be indicative of actual results had the
acquisition had occurred on January 1, 1998 or that may be obtained in the
future.
|
| |
|
Year Ended
December 31,
|
| |
|
1998
|
|
1999
|
| |
|
(unaudited) |
| Net
Revenue |
|
$1,611,426 |
|
|
$8,751,340 |
|
| Net loss
attributable to common shareholders |
|
(2,646,840 |
) |
|
(9,211,453 |
) |
| Net loss per common
share: |
|
|
|
|
|
|
|
Basic and diluted |
|
(0.27 |
) |
|
(0.83 |
) |
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
5.
Prepaid Expenses
|
As of December 31, 1998
and 1999, prepaid expenses includes:
|
| |
|
1998
|
|
1999
|
| Prepaid
commissions |
|
$374,264 |
|
$
682,049 |
| Prepaid carriage
fees |
|
— |
|
1,417,750 |
| Other |
|
88,909 |
|
283,383 |
| |
|
|
|
|
| |
|
$463,173 |
|
$2,383,182 |
| |
|
|
|
|
6.
Property and Equipment
|
Property and equipment are
stated at cost and consist of the following at December 31:
|
| |
|
1998
|
|
1999
|
Computer equipment,
purchased software and internally de-
veloped software |
|
$
289,468 |
|
|
$1,452,914 |
|
| Furniture and
fixtures |
|
98,688 |
|
|
575,628 |
|
| Leasehold
improvements |
|
62,703 |
|
|
84,531 |
|
| |
|
|
|
|
|
|
|
Total property and
equipment |
|
450,859 |
|
|
2,113,073 |
|
| Less accumulated
depreciation |
|
(124,800 |
) |
|
(481,105 |
) |
| |
|
|
|
|
|
|
| Property and
equipment, net |
|
$
326,059 |
|
|
$1,631,968 |
|
| |
|
|
|
|
|
|
|
Furniture and fixtures
acquired under capital leases were $78,139 and $264,926, for the years
ended December 31, 1998 and 1999, respectively. Accumulated depreciation
for furniture and fixtures acquired under capital leases is $2,424 and
$53,409 at December 31, 1998 and 1999, respectively.
|
7.
Commitments and contingencies
|
The Company leases certain
facilities under operating lease agreements expiring in 2004. Minimum
lease payments as of December 31, 1999 are as follows:
|
Year
|
|
|
| 2000 |
|
$
602,828 |
| 2001 |
|
627,926 |
| 2002 |
|
160,725 |
| 2003 |
|
118,252 |
| 2004 |
|
39,417 |
| |
|
|
| |
|
$1,549,148 |
| |
|
|
|
Rent expense for the years
ended December 31, 1998 and 1999 was $153,725 and $389,600, respectively.
For the period from February 13, 1997 (date of inception) to December 31,
1997, rent expense was $41,625.
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
The Company entered into
capital lease agreements for furniture and fixtures. Future minimum
payments under these leases at December 31, 1999 are as
follows:
|
Year
|
|
|
| 2000 |
|
$
96,155 |
|
| 2001 |
|
91,795 |
|
| 2002 |
|
79,369 |
|
| 2003 |
|
28,476 |
|
| 2004 |
|
11,963 |
|
| |
|
|
|
| Total |
|
307,758 |
|
| Less amount
representing interest |
|
(37,889 |
) |
| |
|
|
|
| Present value of
future lease payments |
|
269,869 |
|
| Less current
portion |
|
(76,527 |
) |
| |
|
|
|
| Long-term
portion |
|
$193,342 |
|
| |
|
|
|
|
The Company has commitments for payments to America Online (“AOL
”) for $4,837,037, $3,881,481, and $3,881,481 in the years ending
December 31, 2000, 2001 and 2002, respectively (see Note 9).
|
|
In 1999 the Company
entered into a two year agreement for hosting services. The future minimum
commitments under this agreement are $725,832.
|
8.
Note Payable to Stockholder
|
The Company issued demand
notes to the Parker Family Limited Partnership (“the Investor”).
Mr. Jeffrey Parker, general partner of the Investor, serves as Chairman of
the Board of Directors and Chief Executive Officer for the Company and
owns 44.5% of the outstanding shares of the Company. At December 31, 1997
and 1998, the Company had $400,000 and $850,000 outstanding, respectively,
under the terms of the demand note. The demand notes bear interest at a
rate of 6% annually on the average aggregate principal amount outstanding
and are payable on demand. Interest expense was $14,000 and $7,177 for the
years ending December 31, 1997 and 1998, respectively. In June 1999 notes
payable in the amount of $850,000 and accrued interest of $16,797 were
converted into 92,046 shares of Series D convertible preferred
stock.
|
9.
Capital Structure
|
The authorized capital
stock of the Company consists of (i) 31,390,388 shares of voting common
stock (“Common Stock”) authorized for issuance with a par value
of $0.001, of which 30,000,000 shares are designated as Series A common
stock, 192,093 are designated as Series B common stock, 244,098 are
designated as Series C common stock, 204,047 are designated as Series D
common stock and 750,150 are designated as Series E common stock and (ii)
3,644,031 shares of preferred stock with a par value of $0.01, of which
562,500 shares are designated as Series A convertible preferred stock (
“Series A preferred stock”), 344,043 shares are designated as
Series B convertible preferred stock (“Series B preferred stock
”), 41,544 shares are designated as Series C convertible preferred
stock (“Series C preferred stock”),
891,314 shares are designated as Series D convertible preferred stock (
“Series D preferred stock”) and 1,804,630 shares are designated
as Series E convertible preferred stock (“Series E preferred stock,
” collectively “preferred stock”). The limit on shares
authorized did not come into effect until April 1999, when the Company
reorganized from an LLC to a “C” Corporation.
|
|
In October of 1997, the
Company issued 562,500 shares of Series A preferred stock at $2.67 per
share to investors for total consideration of $1,500,000.
|
|
The holders of the
preferred stock have voting rights equivalent to the number of shares of
common stock into which their shares convert. Preferred stock is
convertible at any time by the holders, at a conversion rate of 3-to-1
adjusted for certain events including stock splits and dividends. Upon
liquidation, holders of Series A, B, C, D and E preferred stock are
entitled to receive, out of funds then generally available, $2.67, $3.33,
$5.01, $9.42 and $16.10; respectively per share, plus any declared and
unpaid dividends, thereon. Following payment to holders of all other
classes of preferred stock to which each series of preferred stock is
subordinate, holders of each series of preferred stock are entitled to
share in remaining available funds on an “as-if converted” basis
with holders of common stock, if any.
|
|
In the event preferred
stock is issued to any party, the Series A preferred stockholder has the
right to purchase additional preferred stock, at a price equal to the
greater of the fair market value of the common stock or the price paid in
the Company’s most recent equity financing, to retain its percentage
of ownership. Such preemptive right does not apply to common stock issued
in connection with an initial public offering, following such time as the
Series A Convertible preferred stockholder ownership is less than 5%, or
to issuances less than 990,000 common shares to consultants, or agents of
the Company.
|
|
In March 1998, the Company
issued 344,043 shares of Series B preferred stock at $3.33 per share to
investors for total consideration of $1,146,810.
|
|
In October 1998, the
Company issued 41,544 shares of Series C preferred stock at $5.01 per
share to investors for total consideration of $208,274.
|
|
In June 1999, the Company
issued 617,974 shares of Series D preferred stock at $9.42 per share to
investors for total consideration of $5,776,386 (net of offering costs of
$42,610).
|
|
In December 1999, the
Company issued 207,980 shares of Series E preferred stock at $16.10 per
share to strategic investors for total consideration of $3,302,703 (net of
offering costs of $45,775). The 114,812 shares of Series E preferred stock
sold to a strategic investor were considered to be sold below fair value,
which results in a beneficial conversion feature, which was limited to the
amount of proceeds received, of $1,848,473. This beneficial conversion
feature has been recognized as a deemed dividend and increases net loss
attributable to common shareholders. 93,168 shares of the Series E
preferred stock were sold to AOL, a strategic partner of the Company. In
December 1999, AOL also entered into a service agreement with the Company.
The 93,168 shares of Series E preferred stock sold to AOL were considered
to be
sold below fair value, which results in a deferred charge of $3,009,056
which is being amortized over the life of the services agreement with AOL.
$17,553 has been included in selling and marketing expense in
1999.
|
|
Under the services
agreement, the Company will pay AOL $14,100,000 in carriage fees over the
term of the agreement which is 40 months. The Company paid $1,500,000 to
AOL in December of 1999 and payment terms provide for payments of
$4,837,037, $3,881,481, and $3,881,481 in the years ending December 31,
2000, 2001, and 2002. Upon an initial public offering, such payments will
be accelerated by one quarter. Carriage fees will be recognized as sales
and marketing expense ratably over the term of the agreement. In exchange,
the Company will be the premier provider of investor relations information
to subscribers of AOL over the term of the agreement. During that term AOL
has committed to provide a minimum number of impressions to the Company
’s presence on the AOL network. In addition, AOL has the right to
sell advertisement on the Company’s sites and co-branded sites within
the AOL network. AOL will pay the Company a percentage of the advertising
fees earned, depending on the volume of advertising sold. The Company did
not recognize any advertising revenue under this arrangement in the year
ended December 31, 1999. Furthermore, the Company has granted to AOL
warrants to purchase 1,596,650 additional shares of Series E preferred
stock. Warrants for up to 532,217 shares may be vested during the period
from commencement of the agreement through March 31, 2001. Warrants for up
to 1,065,432 (including the number of warrants vested in the first vesting
period) may be vested in the period from April 1, 2001 to March 31, 2002.
Warrants for up to 1,569,650 (including the number of warrants vested in
the first vesting periods) may be vested in the period from April 1, 2002
to March 31, 2003. The number of warrants vested is based on the
advertising revenue generated by AOL on the Company’s site and
co-branded sites in the AOL network. Warrants for the first 250,000 shares
of Series E preferred stock have an exercise price of $16.10 per share.
The exercise price of the remaining warrants will be set at 90% of the
then fair market value at the date the warrants vest. At December 31, 1999
no warrants have vested. The fair value of the warrants will be calculated
using the Black Scholes valuation model at the time the performance
criteria are met and the warrants vest. The value of the vested warrants
will be recognized as sales and marketing expense in the period the
warrants become vested.
|
|
As of December 31, 1999,
all outstanding shares of preferred stock will automatically convert into
shares of common stock upon the closing of the anticipated public offering
as follows:
|
| |
|
Shares of
common stock
|
| Series A preferred
stock |
|
1,687,500 |
| Series B preferred
stock |
|
1,032,129 |
| Series C preferred
stock |
|
124,632 |
| Series D preferred
stock |
|
2,129,910 |
| Series E preferred
stock |
|
623,940 |
| |
|
|
| |
|
5,598,111 |
| |
|
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Stock
Split
|
On April 1, 1999, the
Company effected a 3-for-1 stock split through a stock dividend of common
stock and preferred stock. On March 22, 2000, the Company effected a
3-for-1 stock split through a stock dividend of common stock. All
references to preferred and common stock share and per share amounts
including options and warrants to purchase common stock have been
retroactively restated to reflect these stock splits for all periods
presented.
|
|
On the completion of an
initial public offering, all shares of Series B, C, D and E Common Stock
shall automatically convert into shares of Series A Common Stock. As of
December 31, 1999, the number of shares of Series A common stock into
which Series B, C, D and E common stock will automatically convert upon
the closing of the anticipated public offering is as follows:
|
| |
|
Shares of
Series A
|
| Common Stock
Series |
|
|
|
B |
|
187,383 |
|
C |
|
193,518 |
|
D |
|
154,418 |
|
E |
|
410,779 |
|
The common stockholders
are entitled to one vote per share. At December 31, 1999, the Company had
reserved 13,904,731 shares of Series A common stock, for future issuance
upon conversion of Series B, C, D, and E common stock, Series A, B, C, D
and E preferred stock, and the exercise of warrants and stock
options.
|
10. Stock
Plans
|
In 1999, the Board of
Directors adopted the 1999 Stock Incentive Plan (the “1999 Option Plan
”) for the issuance of incentive and nonqualified stock options and
restricted stock awards. The number of shares of common stock reserved for
issuance under the 1999 Option Plan is 4,926,699 shares. Options to
purchase common stock and restricted stock awards are granted at the
discretion of the Board of Directors.
|
|
Under the terms of the
1999 Option Plan, the exercise price of incentive stock options granted
must not be less than 100% (110% in certain cases) of the fair market
value of the common stock on the date of grant, as determined by the Board
of Directors. The exercise price of nonqualified stock options may be less
than the fair market value of the common stock on the date of grant, as
determined by the Board of Directors but in no case may the exercise price
be less than the statutory minimum. The options have a term of ten years.
Vesting of options granted is at the discretion of the Board of Directors,
which typically is four years. Certain options issued to the sales force
are immediately exercisable. Options issued to advisory board members vest
at the end of seven years, and accelerate vest based on attendance at
advisory board meetings.
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
A restricted stock award
provides for the issuance of common stock to directors, officers, advisory
board members and employees at prices determined by the Board of
Directors. Generally, 25% of the shares vest on the first anniversary of
the date of purchase and, thereafter, the remaining shares vest on a
quarterly basis through the fourth anniversary of the date of purchase.
Certain restricted stock awards to the sales force vest based on
performance of sales related goals. Restricted stock issued to advisory
board members vest at the end of seven years, and accelerate vest based on
attendance at advisory board meetings.
|
|
During the year ended
December 31, 1999, the Company recorded deferred compensation of
$6,920,957 for stock options granted to employees which were subsequently
determined to be below fair value. The Company is recognizing the
compensation expense over the vesting period. In the year ended December
31, 1999, related expense recognized was $788,013.
|
|
During the years ended
December 31, 1998 and 1999, the Company recorded deferred compensation of
$85,030 and $1,061,088 for performance based restricted stock granted to
employees. The Company is recognizing the compensation expense during the
period the performance criteria are met. In the year ended December 31,
1999, related expense recognized was $788,675.
|
|
During the year ended
December 31, 1999, the Company recorded deferred compensation of $72,618
for options granted to nonemployees. During the years ended December 31,
1998 and 1999, the Company recorded deferred compensation of $16,430 and
$253,437, respectively for restricted stock granted to nonemployees. The
Company is recognizing the compensation expense over the shorter of the
vesting period or the period of performance. In the period ended December
31, 1998 and 1999, related expense recognized was $2,622 and $116,769,
respectively.
|
|
A summary of activity
under the Company’s 1999 Option Plan for the year ended December 31,
1999 is presented below:
|
| |
|
Shares
|
|
Weighted
average
exercise
price
|
| Outstanding at
December 31, 1998 |
|
—
|
|
—
|
|
Granted |
|
2,588,976 |
|
$1.56 |
|
Exercised |
|
2,700 |
|
$1.33 |
|
Canceled |
|
15,675 |
|
$0.76 |
| |
|
|
|
|
| Outstanding at
December 31, 1999 |
|
2,570,601 |
|
$1.57 |
| |
|
|
|
|
|
The following table
summarizes information about stock options outstanding at December 31,
1999:
|
Range of
exercise prices
|
|
Number
of options
outstanding
|
|
Weighted
average
remaining
contractual
life
|
|
Weighted
average
exercise
price
|
|
Exercisable
|
|
|
|
|
Number
of options
|
|
Weighted
average
exercise
price
|
| $0.67 |
|
636,735 |
|
9.26 |
|
$0.67 |
|
50,142 |
|
$0.67 |
| $1.33 |
|
391,890 |
|
9.59 |
|
$1.33 |
|
7,800 |
|
$1.33 |
| $2.00 |
|
1,541,976 |
|
9.80 |
|
$2.00 |
|
39,675 |
|
$2.00 |
| |
|
|
|
|
|
|
|
|
|
|
| $.67 –
$2.00 |
|
2,570,601 |
|
9.64 |
|
$1.57 |
|
97,617 |
|
$1.26 |
| |
|
|
|
|
|
|
|
|
|
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
SFAS No. 123,
“Accounting for Stock-Based Compensation,” encourages but does
not require companies to record compensation cost for stock-based employee
compensation at fair value. The Company has chosen to account for
stock-based compensation granted to employees using the intrinsic value
method prescribed in APB No. 25, “Accounting for Stock Issued to
Employees,” and related interpretations. Accordingly, deferred
compensation cost for restricted stock awards and stock options granted to
employees is measured as the excess, if any, of the fair value of the
Company’s stock at the date of the grant over the amount that must be
paid to acquire the stock. For the year ended December 31, 1998 and 1999,
the Company recorded $101,460 and $8,308,100 in deferred compensation for
restricted stock awards and options to purchase common stock granted at
exercise prices subsequently determined to be below the fair value of the
common stock. Compensation expense of $2,622 and $1,693,457 was recognized
during the years ended December 31, 1998 and 1999,
respectively.
|
|
Had the value of option
granted been measured using the fair value method prescribed by SFAS No.
123, the fair value of the options granted for the year ended December 31,
1999 is estimated to be $2.98 per share. The fair value of the option
grant was estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions: weighted average risk-free
rate of 5.319%; no expected dividends; an expected life of 5 years; and no
volatility. Had the Company accounted for stock options to employees under
the fair value method prescribed under SFAS No. 123, net loss as reported
for the year ended December 31, 1999 would have been $7,813,625. Basic and
diluted net loss per share would have been $(0.73) on a pro forma basis
for the year ended December 31, 1999. The effects of applying SFAS No. 123
in this pro forma disclosure are not indicative of future
amounts.
|
11.
Income Taxes
|
There is no provision for
income taxes for any of the periods presented. The difference between the
amount of income tax benefit recorded of zero and the amount of income tax
benefit calculated using the federal statutory rate of 34% is due to net
operating losses being fully offset by a valuation allowance.
|
|
Deferred tax assets are
comprised of the following:
|
| |
|
December 31,
1999
|
| Deferred tax
assets: |
|
|
|
|
Net operating loss
carryforwards |
|
$1,200,000 |
|
|
Other temporary
difference |
|
624,000 |
|
| |
|
|
|
| Gross deferred tax
assets |
|
1,824,000 |
|
| Valuation
allowance |
|
(1,189,083 |
) |
| |
|
|
|
| Net deferred tax
asset |
|
634,917 |
|
| |
|
|
|
| Deferred tax
liability |
|
(634,917 |
) |
| |
|
|
|
| Net deferred tax
assets |
|
$
— |
|
| |
|
|
|
CCBN.COM,
INC.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
The Company has provided
a full valuation allowance for its net deferred tax assets since it is
more likely than not that these future benefits will not be realized. If
the Company achieves future profitability, a significant portion of these
deferred tax assets could be available to offset future income
taxes.
|
|
At December 31, 1999, the
Company has a net operating loss carryforward for federal and state
purposes of approximately $3 million available to reduce future federal
and state income taxes payable. These net operating loss carryforwards
begin to expire in 2017 and 2002, respectively.
|
|
Under the Internal Revenue
Code, certain substantial changes in the Company’s ownership could
result in an annual limitation on the amount of net operating loss and tax
credit carryforwards which can be utilized in future years.
|
12. Subsequent
Events
|
In January 2000, the
Company sold 149,067 shares of Series A common stock to an executive of
the Company in exchange for $200,000 in cash and a note for $600,000. The
difference between the fair value of the stock and the purchase price for
the number of shares purchased totals $1,186,573 and is considered to be
compensation expense to be recognized in the quarter ending March 31,
2000. In addition, the Company granted options for the purchase of 600,000
shares of Series A common stock with an exercise price of $3.33 per share
and 150,000 options with an exercise price of $5.37 per share to the same
executive. These option grants result in deferred compensation expense of
$7,194,000, which will be amortized over the vesting period of 36
months.
|
|
In January 2000, the 2000
Outside Director Stock Option Plan and the 2000 Employee Stock Purchase
Plan were adopted by the Board of Directors and are subject to shareholder
approval. A total of 250,000 and 300,000 shares of Series A common stock
may be issued under the director stock option plan and the employee stock
purchase plan, respectively.
|
|
In March 2000, the Company
sold 374,067 shares of Series A common stock to an executive of the
Company in exchange for $1,408,747 in cash and a note for $600,000. The
difference between the fair value of the stock and the purchase price for
the number of shares purchase totals $2,977,573 and is considered to be
compensation expense to be recognized in the quarter ending March 31,
2000. In addition, the Company granted options for the purchase of 300,000
shares of Series A common stock with an exercise price of $5.37 per share
to the same executive. These option grants result in deferred compensation
expense of $2,388,000 which will be amortized over the vesting period of
36 months.
|
REPORT OF
INDEPENDENT ACCOUNTANTS
To the Board of
Directors and Stockholders
of TalkPoint
Communications, Inc.
In our opinion, the
accompanying balance sheets and the related statements of operations,
stockholders’ deficit and of cash flows present fairly, in all material
respects the financial position of TalkPoint Communications, Inc. as of
September 30, 1999 and December 31, 1998, and the results of its operations
and its cash flows for the nine months ended September 30, 1999 and the year
ended December 31, 1998 in conformity with accounting principles generally
accepted in the United States. These financial statements are the
responsibility of the Company’s management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States which require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 10, on
October 10, 1999, TalkPoint Communications, Inc. was acquired by CCBN.COM,
Inc.
|
/s/
PricewaterhouseCoopers LLP
|
Boston,
Massachusetts
January 31,
2000
TALKPOINT
COMMUNICATIONS, INC.
BALANCE
SHEETS
| |
|
December 31,
1998
|
|
September 30,
1999
|
| ASSETS |
|
|
|
|
|
|
| Current
assets: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$
— |
|
|
$
1,442 |
|
Accounts receivable, net of
allowances for doubtful accounts of $0 and
$3,000 at December 31, 1998 and September 30, 1999,
respectively |
|
1,500 |
|
|
11,845 |
|
| |
|
|
|
|
|
|
|
Total current assets |
|
1,500 |
|
|
13,287 |
|
| Fixed assets,
net |
|
4,932 |
|
|
85,909 |
|
| |
|
|
|
|
|
|
|
Total assets |
|
$
6,432 |
|
|
$
99,196 |
|
| |
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
| Current
liabilities; |
|
|
|
|
|
|
|
Cash overdraft |
|
$
13,132 |
|
|
$
— |
|
|
Line of credit |
|
5,000 |
|
|
5,000 |
|
|
Accounts payable |
|
112,889 |
|
|
292,073 |
|
|
Accrued interest |
|
15,510 |
|
|
38,638 |
|
|
Accrued payroll taxes |
|
49,057 |
|
|
— |
|
|
Accrued expenses |
|
— |
|
|
41,389 |
|
|
Deferred revenue |
|
19,159 |
|
|
8,363 |
|
|
Notes payable |
|
80,000 |
|
|
80,000 |
|
|
Notes payable to related
parties |
|
113,550 |
|
|
340,078 |
|
| |
|
|
|
|
|
|
|
Total current liabilities |
|
408,297 |
|
|
805,541 |
|
| Commitments and
contingencies (Note 9) |
|
|
|
|
|
|
| Redeemable
convertible preferred stock: |
|
|
|
|
|
|
Redeemable convertible preferred
stock Series A, $.01 par value; 246,000
shares authorized, none issued and outstanding at
September 30, 1999 and
December 31, 1998 |
|
— |
|
|
— |
|
Redeemable convertible preferred
stock Series B, $.01 par value; 2,400,000
shares authorized, none issued and outstanding at
September 30, 1999 and
December 31, 1998 |
|
— |
|
|
— |
|
| Stockholders’
deficit: |
|
|
|
|
|
|
Common stock $.01 par value;
10,000,000 shares authorized, 3,080,303 and
3,105,303 issued and outstanding at December 31, 1998 and
September 30, 1999 |
|
30,803 |
|
|
31,053 |
|
| Additional paid-in
capital |
|
726,586 |
|
|
1,106,507 |
|
| Note receivable
from shareholder |
|
(10,500 |
) |
|
— |
|
| Accumulated
deficit |
|
(1,148,754 |
) |
|
(1,843,905 |
) |
| |
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
(401,865 |
) |
|
(706,345 |
) |
| |
|
|
|
|
|
|
Total liabilities, redeemable convertible
preferred stock and
stockholders’ deficit |
|
$
6,432 |
|
|
$
99,196 |
|
| |
|
|
|
|
|
|
The accompanying
notes are an integral part of these financial statements.
TALKPOINT
COMMUNICATIONS, INC.
STATEMENTS OF
OPERATIONS
| |
|
Year ended
December 31,
1998
|
|
Nine months
ended
September 30,
1999
|
| Revenue |
|
$
29,561 |
|
|
$
54,511 |
|
| Operating
expenses: |
|
|
|
|
|
|
|
Cost of revenue |
|
24,100 |
|
|
34,122 |
|
|
Selling, general and
administrative |
|
119,005 |
|
|
90,807 |
|
|
Research and
development |
|
259,675 |
|
|
246,934 |
|
| |
|
|
|
|
|
|
|
Total operating
expenses |
|
402,780 |
|
|
371,863 |
|
| |
|
|
|
|
|
|
| Loss from
operations |
|
(373,219 |
) |
|
(317,352 |
) |
| Interest
expense |
|
15,685 |
|
|
377,799 |
|
| |
|
|
|
|
|
|
| Net loss |
|
$(388,904 |
) |
|
$(695,151 |
) |
| |
|
|
|
|
|
|
The accompanying
notes are an integral part of these financial statements.
TALKPOINT
COMMUNICATIONS, INC.
STATEMENTS OF
CHANGES IN STOCKHOLDERS’ DEFICIT
for the year ended
December 31, 1998 and the nine months ended September 30,
1999
| |
|
Common
stock
|
|
Additional
paid-in
capital
|
|
Note
receivable
|
|
Accumulated
deficit
|
|
Total
stockholders’
deficit
|
| |
|
Shares
|
|
Par
value
|
| Balance at December
31, 1997 |
|
3,000,000 |
|
$30,000 |
|
$
645,480 |
|
$
— |
|
|
$
(759,850 |
) |
|
$
(84,370 |
) |
| Issuance of common
stock |
|
80,303 |
|
803 |
|
81,106 |
|
(10,500 |
) |
|
|
|
|
71,409 |
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
(388,904 |
) |
|
(388,904 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December
31, 1998 |
|
3,080,303 |
|
30,803 |
|
726,586 |
|
(10,500 |
) |
|
(1,148,754 |
) |
|
(401,865 |
) |
| Issuance of common
stocks |
|
25,000 |
|
250 |
|
25,250 |
|
|
|
|
|
|
|
25,500 |
|
| Repayment of note
receivable |
|
|
|
|
|
|
|
10,500 |
|
|
|
|
|
10,500 |
|
| Issuance of
warrants |
|
|
|
|
|
354,671 |
|
|
|
|
|
|
|
354,671 |
|
| Net loss |
|
|
|
|
|
|
|
|
|
|
(695,151 |
) |
|
(695,151 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at
September 30, 1999 |
|
3,105,303 |
|
$31,053 |
|
$1,106,507 |
|
$
— |
|
|
$(1,843,905 |
) |
|
$(706,345 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of these financial statements.
TALKPOINT
COMMUNICATIONS, INC.
STATEMENTS OF CASH
FLOWS
| |
|
Year ended
December 31,
1998
|
|
Nine months
ended
September 30,
1999
|
| Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net loss |
|
$(388,904 |
) |
|
$(695,151 |
) |
|
Adjustments to reconcile net loss to net cash used in
operating activities: |
|
|
|
|
|
|
|
Depreciation and
amortization |
|
3,544 |
|
|
9,885 |
|
|
Amortization of warrant issued
with notes payable |
|
— |
|
|
354,671 |
|
|
Provision for bad
debts |
|
|
|
|
3,000 |
|
|
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
5,475 |
|
|
(13,345 |
) |
|
Deferred revenue |
|
19,159 |
|
|
(10,796 |
) |
|
Accounts payable |
|
93,552 |
|
|
179,185 |
|
|
Accrued interest |
|
15,510 |
|
|
23,128 |
|
|
Accrued payroll taxes |
|
49,057 |
|
|
(49,057 |
) |
|
Accrued expenses |
|
— |
|
|
41,388 |
|
| |
|
|
|
|
|
|
|
Net cash used in operating
activities |
|
(202,607 |
) |
|
(157,092 |
) |
| |
|
|
|
|
|
|
| Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchases of fixed
assets |
|
— |
|
|
(90,862 |
) |
| |
|
|
|
|
|
|
|
Net cash used in investing
activities |
|
— |
|
|
(90,862 |
) |
| |
|
|
|
|
|
|
| Cash flows from
financing activities: |
|
|
|
|
|
|
|
Cash overdraft |
|
13,132 |
|
|
— |
|
|
Repayment of cash
overdraft |
|
— |
|
|
(13,132 |
) |
|
Proceeds from notes payable to
related parties |
|
93,550 |
|
|
226,528 |
|
|
Repayment of notes
payable |
|
(10,000 |
) |
|
— |
|
|
Issuance of common
stock |
|
71,409 |
|
|
36,000 |
|
| |
|
|
|
|
|
|
|
Net cash provided by financing
activities |
|
168,091 |
|
|
249,396 |
|
| |
|
|
|
|
|
|
| Net increase
(decrease) in cash and cash equivalents |
|
(34,516 |
) |
|
1,442 |
|
| Cash and cash
equivalents, beginning of period |
|
34,516 |
|
|
— |
|
| |
|
|
|
|
|
|
| Cash and cash
equivalents, end of period |
|
$
— |
|
|
$
1,442 |
|
| |
|
|
|
|
|
|
| Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
Interest paid |
|
$
175 |
|
|
$
— |
|
|
Conversion of notes payable to
common stock |
|
$
10,500 |
|
|
$
— |
|
The accompanying
notes are an integral part of these financial statements.
TALKPOINT
COMMUNICATIONS, INC.
NOTES TO FINANCIAL
STATEMENTS
1.
Nature of the Business and Basis of Financial
Statements
|
TalkPoint Communications,
Inc. (the “Company” or “TalkPoint”) was incorporated
on July 15, 1996 to bring effective web-based presentation tools and
services to market. The Company’s principal markets are companies
which utilize multimedia presentations synchronizing narrative with audio
using the telephone.
|
|
TalkPoint Communications
operates in one segment and is subject to the risks and uncertainties
common to growing companies, including reliance on certain customers,
growth and commercial acceptance of the Internet, dependence on principal
products and services and third-party technology, activities of
competitors and dependence on key personnel such as the Company’s
Chief Executive Officer, and limited operating history.
|
2.
Summary of Significant Accounting Policies
|
Significant accounting
policies followed in the preparation of the financial statements are as
follows:
|
|
The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amount of revenues and expenses during the reporting
period. Actual amounts could differ from those estimates.
|
|
The Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents. At September 30, 1999 and December 31, 1998,
the Company’s cash equivalents consisted of money market funds
totaling approximately $1,442 and $0, respectively. The carrying amount in
the financial statements approximates fair value due to the short maturity
and holding period of these instruments.
|
|
Revenue for the Company
’s service is recognized over the contract term for services
provided. Payments received and billings for service revenue, prior to the
service period, are classified as deferred revenue.
|
|
Fair Value of
Financial Instruments
|
|
The carrying amounts of
TalkPoint’s financial instruments, which include cash equivalents,
accrued expenses and notes payable, approximate their fair values at
September 30, 1999 and December 31, 1998.
|
TALKPOINT
COMMUNICATIONS, INC,
NOTES TO FINANCIAL
STATEMENTS—(Continued)
|
Concentrations
of Credit Risk
|
|
Financial instruments
which potentially expose the Company to concentrations of credit risk
include accounts receivable. The Company performs ongoing evaluations of
customers’ financial condition and does not generally require
collateral. The Company maintains reserves for potential credit losses,
which in the aggregate, have not exceeded management’s
expectations.
|
|
At September 30, 1999,
accounts receivable from three customers accounted for 100% of total
accounts receivable. At December 31, 1998, one customer represented 100%
of total accounts receivable.
|
|
During the nine months
ended September 30, 1999, revenue from two customers accounted for
approximately 42% of total revenue. During the year ended December 31,
1998, revenue from four customers accounted for approximately 61% of total
revenue.
|
|
Fixed assets are recorded
at cost and depreciated over their estimated useful lives, generally three
years, using the straight-line method. Capital leases and leasehold
improvements are amortized over the shorter of the lease life or the
estimated useful life of the asset. Upon retirement or sale, the cost of
the assets disposed and the related accumulated depreciation are removed
from the accounts and any resulting gain or loss is included in the
determination of income. Maintenance and repair costs are expensed as
incurred.
|
|
Research and
Development and Software Development Costs
|
|
Costs incurred in the
research and development of the Company’s products are expensed as
incurred.
|
|
The Company recognizes
advertising expense as incurred. Advertising expense was approximately
$500 and $0 for the year ended December 31, 1998, and the nine months
ended September 30, 1999, respectively.
|
|
The Company provides for
income taxes using the liability method whereby deferred tax liabilities
and assets are recognized based on temporary differences between the
amounts presented in the financial statements and the tax basis of assets
and liabilities using current statutory tax rates. A valuation allowance
is established against net deferred tax assets, if based on the weighted
available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.
|
TALKPOINT
COMMUNICATIONS, INC,
NOTES TO FINANCIAL
STATEMENTS—(Continued)
|
Statement of Financial
Accounting Standards No. 130, “Reporting Comprehensive Income”
(SFAS 130), is effective for fiscal years beginning after December 15,
1997. SFAS 130 requires that changes in comprehensive income be shown in a
financial statement that is displayed with the same prominence as other
financial statements. The Company adopted SFAS 130 in the fiscal year
ended December 31, 1998. No difference between comprehensive income and
net income exists.
|
4. Fixed
Assets
|
Fixed assets consist of
the following:
|
| |
|
Estimated
useful life
in years
|
|
September
30,
1999
|
|
December 31,
1998
|
| Computer equipment
and software |
|
3 |
|
$101,492 |
|
$10,630 |
| Less —
accumulated |
|
|
|
15,583 |
|
5,698 |
| |
|
|
|
|
|
|
| |
|
|
|
$
85,909 |
|
$
4,932 |
| |
|
|
|
|
|
|
|
Depreciation expense for
the nine months ended September 30, 1999 and the year ended December 31,
1998 was $9,885 and $3,544, respectively.
|
5.
Borrowings
|
In April 1999, the Company
entered into a line of credit with the CEO of the Company providing
borrowings of up to $200,000 at a lending rate of 9%. Borrowings under
this line of credit are payable on demand. At September 30, 1999 and
December 30, 1998 there was $5,000 outstanding under this line of
credit.
|
|
In January, March, April,
and May of 1999, the Company entered into convertible note agreements with
the CEO of CCBN.COM, Inc. totaling $220,000. The notes are payable 90 days
from the date of issuance and bear interest at a rate of prime plus 2%. At
September 30, 1999, the Company had $220,000 in convertible notes
outstanding. The convertible notes are secured by substantially all assets
of the Company. The notes are personally guaranteed by the CEO of the
Company.
|
|
In connection with the
convertible notes, the Company granted warrants to purchase 90,355 shares
of the Company’s common stock at an exercise price of $1.02 per
share. These warrants are exercisable immediately and expire ten years
from the grant date. The fair value of the warrants, estimated to be
approximately $84,016 at issuance, has been recorded as additional paid-in
capital and has been amortized to interest expense. The value of the
warrants was estimated using the Black-Scholes valuation model at the date
of grant.
|
|
On April 6, 1999 the
Company granted a warrant to the CEO of CCBN.COM, Inc. to purchase common
stock equal to 10% of the fully diluted shares of the Company, (317,102
shares at April 6, 1999, 319,566 shares at September 30, 1999). The
exercise price relating to this warrant is $1.35 per share. The warrant is
exercisable immediately and expires ten years
from the grant date. The fair value of the warrant, estimated to be
$354,671, has been recorded as additional paid-in capital and has been
amortized to interest expense. The value of the warrant was estimated
using the Black-Scholes valuation model at the date of grant.
|
On October 12, 1999, all of
the above warrants were forfeited by the holder (Note 10).
6. Redeemable
Preferred Stock
|
Series A and Series B
Preferred Stock are redeemable anytime after July 10, 2003 at the option
of the holders at a redemption price of $1.02 and $1.31 per share,
respectively, plus any accrued but unpaid dividends.
|
|
Each share of the Series A
and Series B Preferred Stock is convertible at any time at the option of
the holder into shares of common stock at a ratio of one share of common
stock for each share of Series A and Series B Preferred Stock, subject to
certain anti-dilution adjustments. The Series A and Series B Preferred
Stock will automatically convert to common stock immediately upon the
closing of a public offering of the Company’s common stock resulting
in gross proceeds of at least $15,000,000 based on an offering price per
share of not less than $8.00.
|
|
The holders of Series A
and Series B Preferred Stock are entitled to receive dividends at an
annual rate of 6% of the original purchase price. Dividends are payable
whether or not declared. There were no unpaid dividends on Series A and
Series B Preferred Stock at September 30, 1999 and December 31,
1998.
|
|
In the event of any
liquidation, dissolution or winding up of the affairs of the Company, the
holders of the Series A and Series B Preferred Stock are entitled to
receive on a pro rata basis, prior and in preference to the holders of
common stock, $1.02 per share and $1.31 per share, respectively, plus all
accrued and unpaid dividends.
|
|
After distribution of the
above liquidation preference, and after distribution of $400,000 to
holders of Special Designated Common Stock (Note 7), the holders of Series
A and Series B Preferred Stock are entitled to receive an amount that
would be distributable if converted into Common Stock.
|
|
Each holder of the Series
A and Series B Preferred Stock is entitled to the number of votes equal to
the number of shares of common stock into which such holder’s shares
are convertible at the record date for such vote.
|
TALKPOINT
COMMUNICATIONS, INC,
NOTES TO FINANCIAL
STATEMENTS—(Continued)
7. Stockholders
’ Equity
|
Each share of common stock
entitles the holder to one vote on all matters submitted to a vote of the
Company’s stockholders. Common stockholders are entitled to receive
dividends, if any, as may be declared by the Board of Directors, subject
to preferential dividend rights of the preferred stockholders.
|
|
The Company has reserved
409,921 shares of common stock for the conversion of outstanding
warrants.
|
|
Special
Designated Common Stock
|
|
If, and as long as shares
of Series A or Series B Preferred Stock are issued and outstanding, shares
of Common Stock held by Hoyt Prisock shall be identified as Special
Designated Common Stock so that he shall be entitled to a liquidation
preference of $400,000, but subject to the preference of Series A and
Series B Preferred Stock. After payment of Liquidation Preference to
Preferred Stockholders and after payment of $400,000 to Hoyt Prisock, the
remaining assets of the Company shall be distributed among common
shareholders.
|
8. Income
Taxes
|
There is no provision for
income taxes for any of the periods presented. The difference between the
amount of income tax benefit recorded of zero and the amount of income tax
benefit calculated using the federal statutory rate of 34% is due to net
operating losses being fully offset by a valuation allowance.
|
| |
|
September
30,
1999
|
|
December 31,
1998
|
| Net operating
carryforwards |
|
$296,077 |
|
|
$144,424 |
|
| Other temporary
differences |
|
119,698 |
|
|
15,485 |
|
| |
|
|
|
|
|
|
|
Gross deferred tax
assets |
|
415,775 |
|
|
159,909 |
|
| Deferred tax asset
valuation allowance |
|
(415,775 |
) |
|
(159,909 |
) |
| |
|
|
|
|
|
|
| |
|
$
— |
|
|
$
— |
|
| |
|
|
|
|
|
|
|
The Company has provided a
full valuation allowance for the deferred tax assets since it is more
likely than not that these future benefits will not be realized. If the
Company achieves future profitability, a significant portion of these
deferred tax assets could be available to offset future income
taxes.
|
|
At September 30, 1999, the
Company has federal and state net operating loss and research and
development tax credit carryforwards of approximately $750,000 available
to reduce future federal and state income taxes payable. These net
operating loss carryforwards expire beginning 2017.
|
|
Under the provisions of
the Internal Revenue Code, certain substantial changes in the Company
’s ownership could result in an annual limitation on the amount of
net operating loss and tax credit carryforward which can be utilized in
future years.
|
TALKPOINT
COMMUNICATIONS, INC,
NOTES TO FINANCIAL
STATEMENTS—(Continued)
9. Commitments
and Contingencies
|
The Company leases its
facilities under noncancelable operating leases.
|
|
Future lease obligations
as of September 30, 1999 are as follows:
|
| |
|
Operating
leases
|
|
Three months ending December 31,
1999 |
|
$2,486 |
|
Year ending December 31,
2000 |
|
5,100 |
| |
|
|
|
Total minimum lease payments |
|
$7,586 |
| |
|
|
|
Rental expense under
operating leases for the nine months ended September 30, 1999 and the year
ended December 31, 1998 was $7,423 and $7,863, respectively.
|
10. Subsequent
Events
|
On October 10, 1999 the
Company was acquired by CCBN.COM, Inc. In connection with this
acquisition, each shareholder of TalkPoint received $.31 in cash and .056
shares of CCBN.COM Series A common stock for each share of TalkPoint
common stock held. Upon consummation of the acquisition, TalkPoint’s
line of credit, notes payable and convertible notes payable, along with
related accrued interest were repaid by CCBN.COM. Additionally, the
warrants issued in connection with the convertible notes were forfeited by
the noteholder.
|
|
Prior to the acquisition,
in October 1999, TalkPoint issued 5,805 shares of common stock to a
consultant as payment for services rendered. Expense relating to the
issuance of these common shares was $11,293 based on the fair value of the
shares at the date of issuance.
|
CCBN.COM,
INC.
PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
On October 10, 1999, the
Company acquired TalkPoint Communications, Inc. (“TalkPoint”) for
approximately $970,788 in cash (including transaction costs), the issuance
of 520,137 shares of Series A Common Stock and the assumption of liabilities
of $800,071, for a total purchase price of $4,298,710. This transaction was
accounted for using the purchase method. The fair value of the net tangible
assets acquired, consisting primarily of computer, network and
communications equipment approximated $99,196. A portion of the purchase
price was allocated to the completed technology and trademark which are each
being amortized over two years. The remaining purchase price of $2,398,883
was allocated to goodwill which is being amortized over three years. No
patents, noncompetition agreements or other operating know-how was acquired.
No value was ascribed to the employee base.
The results of operations of
TalkPoint are included in the Company’s statement of operations from
October 10, 1999, the date of acquisition.
The following unaudited pro
forma condensed statement of operations for the year ended December 31,
1999, present CCBN.COM, Inc. and TalkPoint assuming that the acquisition had
occurred at the beginning of the year ended December 31, 1999. The unaudited
pro forma condensed statement of operations is not necessarily indicative of
the results of operations that would actually have occurred if the
transactions had been consummated as of January 1, 1999, and is not intended
to indicate the expected results for any future period. This statement
should be read in conjunction with the historical financial statements and
related notes of the Company and TalkPoint, included herewith.
CCBN.COM,
INC.
PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
| |
|
Year Ended
December 31, 1999
|
| |
|
CCBN.COM
|
|
Talkpoint
Communic-
ations, Inc. (A)
|
|
Adjustments
|
|
Total
|
| Revenue |
|
$8,696,829 |
|
|
$
54,511 |
|
|
|
|
|
$8,751,340 |
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of
revenue |
|
3,760,689 |
|
|
34,122 |
|
|
|
|
|
3,794,811 |
|
|
Selling and
marketing |
|
5,256,298 |
|
|
28,346 |
|
|
|
|
|
5,284,644 |
|
|
General and
administrative |
|
2,225,094 |
|
|
62,461 |
|
|
|
|
|
2,287,555 |
|
|
Research and
development |
|
805,521 |
|
|
246,934 |
|
|
|
|
|
1,052,455 |
|
|
Equity related
compensation |
|
1,693,457 |
|
|
|
|
|
|
|
|
1,693,457 |
|
|
Amortization of intangible
assets |
|
424,986 |
|
|
|
|
|
$1,274,957 |
(B) |
|
1,699,943 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses |
|
14,166,045 |
|
|
371,863 |
|
|
1,274,957 |
|
|
15,812,865 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from
operations |
|
(5,469,216 |
) |
|
(317,352 |
) |
|
(1,274,957 |
) |
|
(7,061,525 |
) |
| Interest income
(expense) |
|
76,344 |
|
|
(377,799 |
) |
|
|
|
|
(301,455 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
(5,392,872 |
) |
|
(695,151 |
) |
|
(1,274,957 |
) |
|
(7,362,980 |
) |
Deemed dividend on
Series E Preferred
Stock |
|
(1,848,473 |
) |
|
— |
|
|
|
|
|
(1,848,473 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
attributable to common
stockholders |
|
$(7,241,345 |
) |
|
$(695,151 |
) |
|
$(1,274,957 |
) |
|
$(9,211,453 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
net loss
per share (C, D) |
|
$
(0.68 |
) |
|
|
|
|
|
|
|
$
(0.83 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing basic and diluted
net loss per share |
|
10,664,025 |
|
|
|
|
|
401,860 |
|
|
11,065,884 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
Notes
A.
|
The results for
TalkPoint reflect the nine months ended September 30, 1999, as the
remainder of the year are included in CCBN.COM’s results.
|
B.
|
Completed
technology, trademarks and goodwill were a result of the acquisition in
1999, which are amortized over a two-year and three-year period.
Additional amortization expense of approximately $1,274,957 for 1999 would
have been recorded if this acquisition had occurred at the beginning of
such period. Total amounts that would have been recorded as completed
technology, trademarks and goodwill was $4,199,514 at January 1,
1999.
|
C.
|
The pro forma
combined per share amounts in the unaudited pro forma combined statement
of operations is based upon the aggregate of (1) the historical weighted
average number of shares of CCBN.COM Series A common stock outstanding
during the year ended December 31, 1999 and (2) the shares of CCBN.COM
Series A common stock issued in connection with the acquisition of
TalkPoint.
|
D.
|
Had pro forma loss
per share been computed assuming the conversion of CCBN.COM’s
convertible preferred stock into Series A common stock as of the later of
January 1, 1999 or their date of issuance, net loss would have been $0.61
per share.
|
INSIDE BACK COVER
ARTWORK:
The background of this page
is a list of CCBN.com’s clients. The words “CCBN’s
comprehensive service offering includes:” appear at the top of the
page. Below this text, six rectangular boxes representing screenshots
appear, two of which are positioned from left to right near the top of the
page, two of which are positioned from left to right across the middle of
the page, and two of which are positioned from left to right across the
bottom of the page. Between the two screenshots near the top of the page,
the words “E-mail List Management” appear. Below the screenshot
positioned in the upper right corner of the page the words “Access to
investor portal sites” appear. On the left side of the page, centered
between the top and bottom of the page, the words “Company Fundamentals
” appear. On the right side of the page, the words “Virtual Slide
Presentations with Audio” appear. Centered between the two screenshots
at the bottom of the page the words “Access To Institutional Investors
” appear. The background color of the page is a deep purple/blue that
fades into a lighter shade of purple/blue gradually from the top to bottom
of the page. At the bottom of the page are the words “Where companies
and investors come together.” The legend “All corporate names
referenced above are the property of their respective owners” appears
beneath the artwork.
4,200,000
Shares
[CCBN.COM LOGO
APPEARS HERE]
Series A Common
Stock
PROSPECTUS
SG
COWEN
DAIN RAUSCHER
WESSELS
U.S. BANCORP PIPER
JAFFRAY
WILLIAM BLAIR
& COMPANY
, 2000
PART
II
INFORMATION NOT
REQUIRED IN PROSPECTUS
Item 13.
Other Expenses of Issuance and Distribution
The following table sets
forth the various expenses, all of which will be borne by us, in connection
with the sale and distribution of the securities being registered, other
than the underwriting discounts and commissions. All amounts shown are
estimates except for the Securities and Exchange Commission registration fee
and the NASD filing fee.
| SEC registration
fee |
|
$
16,577 |
| NASD filing
fee |
|
6,779 |
| Nasdaq National
Market listing fee |
|
95,000 |
| Blue Sky fees and
expenses |
|
5,000 |
| Transfer Agent and
Registrar fees |
|
15,000 |
| Accounting fees and
expenses |
|
425,000 |
| Legal fees and
expenses |
|
425,000 |
| Director and
Officer liability insurance |
|
200,000 |
| Printing and
mailing expenses |
|
150,000 |
| Miscellaneous |
|
26,644 |
| |
|
|
|
Total |
|
$1,365,000 |
| |
|
|
Item 14.
Indemnification of Directors and Officers
Article EIGHTH of our
amended and restated certificate of incorporation to be effective upon the
closing of this offering provides that none of our directors shall be
personally liable for any monetary damages for any breach of fiduciary duty
as a director, except to the extent that the Delaware General Corporation
Law prohibits the elimination or limitation of liability of directors for
breach of fiduciary duty.
Article NINTH of our amended
and restated certificate of incorporation provides that our directors and
officers (a) shall be indemnified by us against all expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement
incurred in connection with any litigation or other legal proceeding (other
than an action by or in our right) brought against him by virtue of his
position as our director or officer if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, our best
interests, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by us against all expenses (including attorneys’ fees) and
amounts paid in settlement incurred in connection with any action by or in
our right brought against him by virtue of his position as our director or
officer if he acted in good faith and in a manner he reasonably believed to
be in, or not opposed to, our best interests, except that no indemnification
shall be made with respect to any matter as to which such person shall have
been adjudged to be liable to us, unless a court determines that, despite
such adjudication but in view of all of the circumstances, he is entitled to
indemnification of such expenses. Notwithstanding the foregoing, to the
extent that a director or officer has been successful, on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, he is required to be indemnified by us against all expenses
(including attorneys’ fees) incurred in connection therewith. Expenses
shall be advanced to a director or officer at his request, provided that he
undertakes to repay the amount advanced if it is ultimately determined that
he is not entitled to indemnification for such expenses.
Indemnification is
required to be made unless we determine that the applicable standard of
conduct required for indemnification has not been met. In the event of a
determination by us that the director or officer did not meet the applicable
standard of conduct required for indemnification, or if we fail to make an
indemnification payment within 60 days after such payment is claimed by such
person, such person is permitted to petition the court to make an
independent determination as to whether such person is entitled to
indemnification. As a condition precedent to the right of indemnification,
the director or officer must give us notice of the action for which
indemnity is sought and we have the right to participate in such action or
assume the defense thereof.
Article NINTH of our amended
and restated certificate of incorporation further provides that the
indemnification provided therein is not exclusive, and provides that in the
event that the Delaware General Corporation Law is amended to expand the
indemnification permitted to directors or officers we must indemnify those
persons to the fullest extent permitted by such law as so
amended.
Section 145 of the Delaware
General Corporation Law provides that a corporation has the power to
indemnify a director, officer, employee or agent of the corporation and
certain other persons serving at the request of the corporation in related
capacities against amounts paid and expenses incurred in connection with an
action or proceeding to which he is or is threatened to be made a party by
reason of such position, if such person shall have acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such
person had no reasonable cause to believe his conduct was unlawful; provided
that, in the case of actions brought by or in the right of the corporation,
no indemnification shall be made with respect to any matter as to which such
person shall have been adjudged to be liable to the corporation unless and
only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
Under section 7 of the
underwriting agreement between us and the underwriters, the underwriters are
obligated, under certain circumstances, to indemnify our directors and
officers against certain liabilities, including liabilities under the
Securities Act.
Item 15.
Recent Sales of Unregistered Securities
Set forth in chronological
order is information regarding securities issued by us since August 1997.
Further included is the consideration, if any, received by us for such
securities and information relating to the section of the Securities Act or
rule of the Securities and Exchange Commission under which exemption from
registration was claimed. For purposes of Item 15(a), common units and
shares of our common stock issued prior to October 10, 1999 do not reflect
the three-for-one split effected on March 22, 2000.
(a)
Issuances of Capital Stock
We have issued and sold LLC
common units and shares of common stock to our employees and directors. The
issuances of common units to common members and issuances of common stock
described below were made in reliance upon the exemption from registration
set forth in either Section 4(2) of the Securities Act or Rule 701 under the
Securities Act.
The issuances of common
units to preferred members and issuances of convertible preferred stock
described below were made in reliance upon the exemption from registration
set forth in Section 4(2) of the Securities Act of 1933 relating to sales by
an issuer not involving a public offering.
The issuance of common
stock and preferred stock in exchange for common units was made in reliance
upon the exemption from registration set forth in Section 3(a)(9) of the
Securities Act of 1933.
None of the transactions
described below involved a distribution or public offering. No underwriters
were engaged in connection with the issuances described below, and no
underwriting commissions or discounts were paid.
On August 1, 1997, we issued
and sold 1,252,600 common units to common member founders and employees for
an aggregate price of $1,253. The issuance of units to these members was
made pursuant to a private offering of securities to sophisticated,
accredited investors and in reliance upon the exemption from registration
set forth in Section 4(2) of the Securities Act of 1933 relating to sales by
an issuer not involving a public offering and, with respect to employees,
Rule 701 under the Securities Act of 1933.
On October 5, 1997, we
issued and sold 187,500 common units to preferred members in a private
financing for an aggregate price of $1,500,000. The issuance of units to
these members was made pursuant to a private offering of securities to
sophisticated, accredited investors and in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act of 1933
relating to sales by an issuer not involving a public offering.
On November 5, 1997, we
issued and sold 25,100 common units to common member employees for an
aggregate price of $25.10. The issuance of units to these members was made
pursuant to written compensation arrangements with employees and in reliance
upon the exemption from registration set forth in Rule 701 under the
Securities Act of 1933.
On March 13, 1998, we issued
and sold 114,681 common units to preferred members in a private financing
for an aggregate price of $1,146,810. The issuance of units to these members
was made pursuant to a private offering of securities to sophisticated,
accredited investors and in reliance upon the exemption from registration
set forth in Section 4(2) of the Securities Act of 1933 relating to sales by
an issuer not involving a public offering.
On May 4, 1998, we issued
and sold 47,450 common units to common member employees for an aggregate
price of $47.45. The issuance of units to these members pursuant to written
compensation arrangements with employees and was made in reliance upon the
exemption from registration set forth in Rule 701 under the Securities Act
of 1933.
On August 15, 1998, we
issued and sold 34,600 common units to common member employees for an
aggregate price of $34.60. The issuance of units to these members was made
pursuant to written compensation arrangements with employees and in reliance
upon the exemption from registration set forth in Rule 701 under the
Securities Act of 1933.
On October 28, 1998, we
issued and sold 73,050 common units to common member employees for an
aggregate price of $73.05. The issuance of units to these members was made
pursuant to written compensation arrangements with employees and in reliance
upon the exemption from registration set forth in Rule 701 under the
Securities Act of 1933.
On October 28, 1998, we
issued and sold 13,848 common units to preferred members in a private
financing for an aggregate price of $208,274. The issuance of units to these
members was made pursuant to a private offering of securities to
sophisticated, accredited investors and in reliance
upon the exemption from registration set forth in Section 4(2) of the
Securities Act of 1933 relating to sales by an issuer not involving a public
offering.
On January 2, 1999, we
issued and sold 10,500 common units to common member employees for an
aggregate price of $10.50. The issuance of units to these members was made
pursuant to written compensation arrangements with employees and in reliance
upon the exemption from registration set forth in Rule 701 under the
Securities Act of 1933.
On March 31, 1999, we issued
32,912 common units to a preferred member as satisfaction in full of certain
demand promissory notes having an aggregate value of $850,000. The issuance
of units to these members was made pursuant to a private offering of
securities to sophisticated, accredited investors and in reliance upon the
exemption from registration set forth in Section 4(2) of the Securities Act
of 1933 relating to sales by an issuer not involving a public
offering.
On April 1, 1999, we merged
CCBN.COM, LLC, a Massachusetts limited liability company with and into
CCBN.COM, Inc., a Delaware corporation. At the time of merger, in exchange
for an aggregate of 1,781,741 common units of the LLC, we issued an
aggregate of 4,298,400 shares of our common stock and 1,040,133 shares of
our convertible preferred stock of the corporation in the following
manner:
|
Ÿ
|
we issued a total
of 3,757,800 shares of Series A common stock in exchange for a total of
1,252,600 common units held by common members;
|
|
Ÿ
|
we issued a total
of 75,300 shares of Series B common stock in exchange for a total of
25,100 common units held by common members;
|
|
Ÿ
|
we issued a total
of 142,350 shares of Series C common stock in exchange for a total of
47,450 common units held by common members;
|
|
Ÿ
|
we issued a total
of 103,800 shares of Series D common stock in exchange for a total of
34,600 common units held by common members;
|
|
Ÿ
|
we issued a total
of 219,150 shares of Series E common stock in exchange for a total of
73,050 common units held by common members;
|
|
Ÿ
|
we issued a total
of 562,500 shares of Series A convertible preferred stock in exchange for
a total of 187,500 common units held by preferred members;
|
|
Ÿ
|
we issued a total
of 344,043 shares of Series B convertible preferred stock in exchange for
a total of 114,681 common units held by preferred members;
|
|
Ÿ
|
we issued a total
of 41,544 shares of Series C convertible preferred stock in exchange for a
total of 13,848 common units held by preferred members; and
|
|
Ÿ
|
we issued a total
of 92,096 shares of Series D convertible preferred stock in exchange for a
total of 32,912 common units held by preferred members.
|
The issuance of
common stock and preferred stock in exchange for common units was made
pursuant to a written exchange arrangement between the issuer and existing
security holders and in reliance upon the exemption from registration set
forth in Section 3(a)(9) of the Securities Act of 1933.
On June 9, 1999, we issued
and sold 617,924 shares of Series D convertible preferred stock in a private
financing for an aggregate purchase price of $5,818,996. The issuance of
shares to these members was made pursuant to a private offering of
securities to sophisticated, accredited investors
and in reliance upon the exemption from registration set forth in Section 4(2)
of the Securities Act of 1933 relating to sales by an issuer not involving a
public offering.
On October 10, 1999, in
connection with the acquisition of TalkPoint Communications, Inc., we issued
520,137 shares of Series A common stock to the stockholders of TalkPoint
Communications, Inc. The issuances of shares to these stockholders was made
pursuant to a private offering of securities to sophisticated, accredited
investors and in reliance upon the exemption from registration set forth in
section 4(2) of the Securities Act of 1933.
On December 29, 1999, we
issued and sold 207,980 shares of Series E convertible preferred stock in a
private financing for an aggregate purchase price of $3,348,478. The
issuance of shares to these stockholders was made pursuant to a private
offering of securities to sophisticated, accredited investors and in
reliance upon the exemption from registration set forth in Section 4(2) of
the Securities Act of 1933 relating to sales by an issuer not involving a
public offering.
On January 12, 2000 we
issued and sold 149,067 shares of Series A common stock to our Chief
Operating Officer, at a price of $5.37 per share. The purchaser has paid
$200,000 in cash and the balance through a loan from us in the principal
amount of $600,000. These securities were issued pursuant to a written
compensation arrangement in reliance upon the exemption from registration
set forth in Rule 701 under the Securities Act of 1933.
On March 14, 2000 we issued
and sold 374,067 shares of our Series A common stock to our Executive Vice
President, Chief Financial Officer and Treasurer at a price of $5.37 per
share. The purchaser has paid $1,408,700 in cash and the balance through a
loan from us in the principal amount of $600,000. These securities were
issued pursuant to a written compensation arrangement in reliance upon the
exemption from registration set forth in Rule 701 under the Securities Act
of 1933.
On March 28, 2000 we issued
and sold 265,327 shares of our Series A common stock for an aggregate
purchase price of $1,256,055 pursuant to an existing stockholder upon
exercise of a right granted in March 1999 to a sophisticated, accredited
investor. The issuance of shares to this stockholder was made in reliance
upon the exemption from registration set forth in Section 4(2) of the
Securities Act of 1933 relating to sales by an issuer not involving a public
offering.
(b) Certain
Grants and Exercises of Stock Options. As of
March 28, 2000, options to purchase 3,873,654 shares of Series A common
stock were outstanding under our 1999 Incentive and Non-Statutory Stock
Option Plan. As of March 28, 2000 options to purchase 82,772 shares of
Series A common stock had been exercised under the 1999 plan. These
securities were issued (i) pursuant to written compensation arrangements
with employees and in reliance upon the exemption from registration set
forth in Rule 701 under the Securities Act of 1933 and (ii) in reliance upon
the exemption from registration set forth in Section 4(2) of the Securities
Act of 1933 relating to sales by an issuer not involving a public
offering.
Item 16.
Exhibits and Financial Statement Schedules
(a)
Exhibits
Exhibit
No.
|
|
Description
|
|
1.1** |
|
Form of
Underwriting Agreement |
|
3.1** |
|
Second Amended and
Restated Certificate of Incorporation of CCBN.COM, Inc., as
currently in effect |
|
3.2** |
|
By-laws of
CCBN.COM, Inc., as currently in effect |
|
3.3 |
|
Third Amended and
Restated Certificate of Incorporation of CCBN.COM, Inc., to be
effective upon the closing of this offering |
Exhibit
No.
|
|
Description
|
|
3.4 |
|
Amended and
Restated By-Laws of CCBN.COM, Inc., to be effective upon the closing
of this offering |
|
4.1** |
|
Specimen
certificate for shares of Series A common stock of CCBN.COM,
Inc. |
|
5.1** |
|
Opinion of Hale and
Dorr LLP |
| 10.1** |
|
1999 Incentive and
Non-Statutory Stock Option Plan, as amended |
| 10.2** |
|
1999 Incentive and
Non-Statutory Stock Option Plan Form of Notice of Grant of Non-
Statutory Stock Option |
| 10.3** |
|
1999 Incentive and
Non-Statutory Stock Option Plan Form of Notice of Grant of
Incentive Stock Option |
| 10.4** |
|
Stock Purchase
Agreement, dated June 9, 1999, by and among CCBN.COM, Inc. and
certain stockholders |
| 10.5
†** |
|
Interactive
Services Agreement between CCBN.COM, Inc. and America Online, Inc.,
dated December 23, 1999 |
| 10.6** |
|
Stock Purchase
Agreement, dated December 23, 1999, by and among CCBN.COM, Inc.,
Thomson Information Services, Inc. and America Online, Inc. |
| 10.7** |
|
Amended and
Restated Registration Rights Agreement, dated December 23, 1999, by
and among CCBN.COM, Inc., Thomson Information Services, Inc. and AOL and
certain
other stockholders |
| 10.8
†** |
|
Stock Subscription
Warrant issued to America Online, Inc., dated December 23, 1999 |
| 10.9** |
|
Assignment of
Leasehold Estate by Invention Machine Corporation in favor of
CCBN.COM, Inc., dated August 13, 1999 |
| 10.10** |
|
2000 Outside
Director Stock Option Plan |
| 10.11** |
|
2000 Employee Stock
Purchase Plan |
| 10.12** |
|
First Call
—CCBN Terms of Alliance, dated July 30, 1999 |
| 10.13** |
|
Service
Distribution Agreement by and between ILX Systems and CCBN.COM, Inc.,
dated December 10, 1999 |
| 10.14** |
|
Employment
Agreement by and between Roland C. Beaulieu and CCBN.COM, Inc.
dated January 10, 2000 |
| 10.15** |
|
Pledge Agreement by
and between Roland C. Beaulieu and CCBN. COM, Inc. |
| 10.16** |
|
Secured Promissory
Note of Roland C. Beaulieu |
| 10.17** |
|
Letter Agreement by
and between Lawrence P. Begley and CCBN.COM, Inc., dated as
of March 6, 2000 |
| 10.18** |
|
Pledge Agreement by
and between Lawrence P. Begley and CCBN.COM, Inc. |
| 10.19** |
|
Secured Promissory
Note of Lawrence P. Begley |
| 10.20 |
|
First Amendment to
Amended and Restated 1999 Incentive and Non-Statutory Stock
Option Plan |
| 21** |
|
Subsidiaries of
CCBN.COM, Inc. |
| 23.1 |
|
Consent of
PricewaterhouseCoopers LLP |
| 23.2 |
|
Consent of
PricewaterhouseCoopers LLP |
| 23.3** |
|
Consent of Hale and
Dorr LLP (included in Exhibit 5.1) |
| 24.1** |
|
Powers of Attorney
(included on the signature page of the registration statement) |
| 27.1** |
|
Financial Data
Schedule |
*
|
To be filed by
amendment.
|
†
|
Confidential
treatment requested as to certain portions, which portions are omitted and
filed separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.
|
(b)
Financial Statement Schedules
Schedules have been omitted
because they are not required or because the required information is
provided in our Financial Statements or Notes thereto.
Item 17.
Undertakings
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to
directors, officers and persons who control us pursuant to the provisions of
our amended and restated certificate of incorporation and the laws of the
State of Delaware, or otherwise, we have been advised that, in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a
claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person of us
in the successful defense of any action, suit or proceeding) is asserted by
a director, officer or person who controls us in connection with the
securities being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
We hereby undertake to
provide to the underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the underwriters to permit prompt delivery to each
purchaser.
We hereby undertake
that:
|
(1)
|
For purposes of
determining any liability under the Securities Act, the information
omitted form the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by us pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective.
|
|
(2)
|
For the purpose of
determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
|
SIGNATURES
Pursuant to the
requirements of the Securities Act of 1933, the Registrant has duly caused
this Amendment No. 4 Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in Boston, Massachusetts, on
this 7th day of April, 2000.
|
By:
/S
/ JEFFREY
P. PARKER
|
|
Chairman and Chief
Executive Officer
|
Pursuant to the requirements
of the Securities Act of 1933, this Registration Statement has been signed
by the following persons in the capacities and on the dates
indicated.
Signature
|
|
Title
|
|
Date
|
| |
|
| /S
/ JEFFREY
P. PARKER
|
|
Chairman of the
Board of Directors and |
|
April 7,
2000 |
|
|
|
|
|
| Jeffrey P.
Parker |
|
Chief Executive
Officer |
|
|
| |
|
| * |
|
President and
Director |
|
April 7,
2000 |
|
|
|
|
|
| Robert I.
Adler |
|
|
|
|
| |
|
| * |
|
Executive Vice
President and |
|
April 7,
2000 |
|
|
|
|
|
| Lawrence P.
Begley |
|
Chief Financial
Officer |
|
|
| |
|
| * |
|
Director |
|
April 7,
2000 |
|
|
|
|
|
| Keith B.
Jarrett |
|
|
|
|
| |
|
| * |
|
Director |
|
April 7,
2000 |
|
|
|
|
|
| Robert C.
McCormack |
|
|
|
|
| |
|
| * |
|
Director |
|
April 7,
2000 |
|
|
|
|
|
| Richard E.
Hanlon |
|
|
|
|
| |
|
| * |
|
Director |
|
April 7,
2000 |
|
|
|
|
|
| Robert C. Shenk,
Jr. |
|
|
|
|
*BY
: /S
/ JEFFREY
P. PARKER
EXHIBIT
INDEX
Exhibit
No.
|
|
Description
|
|
1.1** |
|
Form of
Underwriting Agreement |
|
3.1** |
|
Second Amended and
Restated Certificate of Incorporation of CCBN.COM, Inc., as
currently in effect |
|
3.2** |
|
By-laws of
CCBN.COM, Inc., as currently in effect |
|
3.3 |
|
Third Amended and
Restated Certificate of Incorporation of CCBN.COM, Inc., to be
effective upon the closing of this offering |
|
3.4 |
|
Amended and
Restated By-Laws of CCBN.COM, Inc., to be effective upon the closing
of this offering |
|
4.1** |
|
Specimen
Certificate for shares of Series A Common Stock of CCBN.COM,
Inc. |
|
5.1** |
|
Opinion of Hale and
Dorr LLP |
| 10.1** |
|
1999 Incentive and
Non-Statutory Stock Option Plan, as amended |
| 10.2** |
|
1999 Incentive and
Non-Statutory Stock Option Plan Form of Notice of Grant of Non-
Statutory Stock Option |
| 10.3** |
|
1999 Incentive and
Non-Statutory Stock Option Plan Form of Notice of Grant of
Incentive Stock Option |
| 10.4** |
|
Stock Purchase
Agreement, dated June 9, 1999, by and among CCBN.COM, Inc., and
certain stockholders |
| 10.5
†** |
|
Interactive
Services Agreement between CCBN.COM, Inc. and AOL, dated December 23,
1999 |
| 10.6** |
|
Stock Purchase
Agreement, dated December 23, 1999, by and among CCBN.COM, Inc.,
Thomson Information Services, Inc. and America Online, Inc. |
| 10.7** |
|
Amended and
Restated Registration Rights Agreement, dated December 23, 1999, by
and among CCBN.COM, Inc., Thomson Information Services, Inc. and AOL and
certain
other stockholders |
| 10.8
†** |
|
Stock Subscription
Warrant issued to AOL, dated December 23, 1999 |
| 10.9** |
|
Assignment of
Leasehold Estate by Invention Machine Corporation in favor of
CCBN.COM, Inc., dated August 13, 1999 |
| 10.10** |
|
2000 Outside
Director Stock Option Plan |
| 10.11** |
|
2000 Employee Stock
Purchase Plan |
| 10.12** |
|
First Call
—CCBN Terms of Alliance, dated July 30, 1999 |
| 10.13** |
|
Service
Distribution Agreement by and between ILX Systems and CCBN.COM, Inc.,
dated December 10, 1999 |
| 10.14** |
|
Employment
Agreement by and between Roland C. Beaulieu and CCBN.COM, Inc.
dated January 10, 2000 |
| 10.15** |
|
Pledge Agreement by
and between Roland C. Beaulieu and CCBN. COM, Inc. |
| 10.16** |
|
Secured Promissory
Note of Roland C. Beaulieu |
| 10.17** |
|
Letter Agreement by
and between Lawrence P. Begley and CCBN.COM, Inc., dated as
of March 6, 2000 |
| 10.18** |
|
Pledge Agreement by
and between Lawrence P. Begley and CCBN.COM, Inc. |
| 10.19** |
|
Secured Promissory
Note of Lawrence P. Begley |
| 10.20 |
|
First Amendment to
Amended and Restated 1999 Incentive and Non-Statutory Stock
Option Plan |
| 21** |
|
Subsidiaries of
CCBN.COM, Inc. |
| 23.1 |
|
Consent of
PricewaterhouseCoopers LLP |
| 23.2 |
|
Consent of
PricewaterhouseCoopers LLP |
| 23.3** |
|
Consent of Hale and
Dorr LLP (included in Exhibit 5.1) |
| 24.1** |
|
Powers of Attorney
(included on the signature page of the registration statement) |
| 27.1** |
|
Financial Data
Schedule |
*
|
To be filed by
amendment.
|
†
|
Confidential
treatment requested as to certain portions, which portions are omitted and
filed separately with the Securities and Exchange Commission pursuant to a
Confidential Treatment Request.
|
