<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2000
Commission File Number 0-16530
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FINANCIAL PERFORMANCE CORPORATION
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(Exact name of Registrant as specified in its charter)
New York 13-3236325
--------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 Third Avenue, New York, New York 10017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 446-0246
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 26, 2000
--------------------------------- -------------------------------
Common Stock 11,458,140 Shares
Transactional Small Business Disclosure Format (check one): YES [ ] NO [X]
<PAGE> 2
Financial Performance Corporation
Report on Form 10-QSB for the Three Months ended September 30, 2000 (Unaudited)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Part I Page
----
<S> <C>
Item 1. Financial Statements (Unaudited) .............................. 1
Consolidated Balance Sheets
September 30, 2000 and
December 31, 1999 .......................................... 2
Consolidated Statements of Operations
For the Nine Months and Three Months Ended
September 30, 2000 and September 30, 1999 ................... 3
Consolidated Statements of Changes in Stockholders' Equity
for the Nine Months Ended September 30,2000 ................. 4
Consolidated Statements of Cash Flows
for the Nine Months Ended
September 30, 2000 and September 30, 1999 ................... 5
Notes to Consolidated Financial Statements .................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation ..... 9
Part II
Item 5. Other Information ............................................. 16
Item 6. Exhibits and Reports on Form 8-K .............................. 16
</TABLE>
-ii-
<PAGE> 3
PART I
Item 1. Financial Statements
The financial statements of Financial Performance Corporation (the
"Company") begin on page 2.
<PAGE> 4
FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 3,559,069 $ 4,179,179
Restricted cash -- 500,000
Short-term investments 289,000 485,000
Marketable securities 150,000 --
Accounts receivable 1,274,676 24,843
Prepaid expenses and other current assets 236,885 321,003
------------ ------------
Total current assets 5,509,630 5,510,025
Property and equipment, net of accumulated 484,466 219,571
depreciation
Goodwill, net of accumulated amortization 12,332,203 --
Other assets 285,374 280,779
------------ ------------
$ 18,611,673 $ 6,010,375
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 1,603,378 $ 988,287
Other current liabilities 535,969 --
Secured promissory note due stockholder -- 500,000
------------ ------------
Total current liabilities 2,139,347 1,488,287
------------ ------------
Minority interest in consolidated subsidiary 1,124,046 1,029,046
------------ ------------
Stockholders' equity
Common stock - authorized 50,000,000
shares of $.01 par value per share:
issued and outstanding 11,458,140 as of
September 30, 2000 and 9,928,034 as of
December 31, 1999 114,581 99,280
Additional paid in capital 21,404,128 7,945,696
Accumulated (deficit) (6,170,429) (4,551,934)
------------ ------------
Total stockholders' equity 15,348,280 3,493,042
------------ ------------
$ 18,611,673 $ 6,010,375
============ ============
</TABLE>
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 10,962,633 $ 11,294,200 $ 2,306,214 $ 3,210,987
------------ ------------ ------------ ------------
Costs and expenses
Cost of revenues 7,428,188 8,282,916 1,672,430 2,312,723
Salaries and related expenses 1,546,332 928,127 415,994 275,662
Selling, general and administrative 2,737,462 1,063,254 784,996 391,652
Depreciation and amortization 840,866 92,043 331,223 31,247
------------ ------------ ------------ ------------
12,552,848 10,366,340 3,204,643 3,011,284
------------ ------------ ------------ ------------
Operating income (loss) (1,590,215) 927,860 (898,429) 199,703
------------ ------------ ------------ ------------
Other income (expenses)
Investment income 126,085 73,095 37,083 28,703
Loss from FPC Information Corp. -- (166,000) -- (50,000)
Minority interest in earnings
of subsidiary (95,000) (173,000) (4,000) (49,000)
------------ ------------ ------------ ------------
31,085 (265,905) 33,083 (70,297)
------------ ------------ ------------ ------------
Income (loss) before income taxes (1,559,130) 661,955 (865,346) 129,406
Income taxes 59,365 106,814 2,562 30,675
------------ ------------ ------------ ------------
Net income (loss) $ (1,618,495) $ 555,141 $ (867,908) $ 98,731
============ ============ ============ ============
Basic income (loss) per share $ (0.15) $ 0.06 $ (0.08) $ 0.01
Diluted income (loss) per share (0.15) 0.06 (0.08) 0.01
</TABLE>
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
--------------------- Paid In
Shares Par Value Capital Deficit Total
------ --------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 2000 9,928,034 $ 99,280 $ 7,945,696 $ (4,551,934) $ 3,493,042
Issuance of shares for
acquisition of
iMapdata.com, Inc. 1,000,000 10,000 12,990,000 -- 13,000,000
Issuance of shares upon
exercise of warrants 505,000 5,050 399,950 -- 405,000
Issuance of shares for
services rendered 25,106 251 68,482 -- 68,733
Net loss -- -- -- (1,618,495) (1,618,495)
---------- ------------ ------------ ------------ ------------
Balance, September 30, 2000 11,458,140 $ 114,581 $ 21,404,128 $ (6,170,429) $ 15,348,280
========= ============ ============ ============ ============
</TABLE>
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,618,495) $ 555,141
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 840,866 92,043
Non-cash compensation 68,733 --
Minority interest in earnings of consolidated
subsidiary 95,000 173,000
Loss from FPC Information Corp. -- 166,000
Increase (decrease) in cash flows from
operating activities resulting from changes in:
Accounts receivable (938,853) (1,838,141)
Prepaid expenses and other current assets (159,146) (42,034)
Other assets (22,852) (3,667)
Accounts payable and accrued expenses 608,791 (900,196)
Other current liabilities 417,778 --
----------- -----------
Net cash used in operating activities (708,178) (1,797,854)
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (285,736) (84,486)
Investment in subsidiary -- (271,890)
Restricted cash 500,000 --
Short-term investments 196,000 --
Purchase of marketable securities (150,000) --
Closing costs incurred in acquisition of
iMapData.com, Inc. (77,196) --
----------- -----------
Net cash provided by (used in) investing
activities 183,068 (356,376)
----------- -----------
Cash flows from financing activities:
Repayment of secured promissory note (500,000) --
Proceeds from exercise of warrants 405,000 --
----------- -----------
Net cash used in financing activities (95,000) --
----------- -----------
Net increase (decrease) in cash (620,110) (2,154,230)
Cash and cash equivalents, beginning of period 4,179,179 6,287,148
----------- -----------
Cash and cash equivalents, end of period $ 3,559,069 $ 4,132,918
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 55,000 $ 26,000
=========== ===========
</TABLE>
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - NATURE OF BUSINESS
In the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments (all of which were normal recurring
adjustments) necessary to present fairly the consolidated financial position of
Financial Performance Corporation (the "Company") at September 30, 2000, and the
results of its operations and its cash flows for the nine months ended September
30, 2000 and 1999. The results of operations for the interim periods ended
September 30, 2000 are not necessarily indicative of the results to be expected
for the full year.
The Company operates in two segments through its subsidiaries. Michaelson
Kelbick Partners Inc. ("MKP"), markets merger communication services to the
financial services industry and iMapData.com, Inc. ("iMapData"), which was
acquired by the Company on March 3, 2000 (see Note C), and is headquartered in
Washington D.C., provides companies, governmental agencies and trade
organizations with access through digital computer software to competitive
marketing, economic and other data on a secure proprietary web site.
The consolidated financial statements include the accounts of Financial
Performance Corporation, its 80%-owned subsidiary, MKP, and its wholly-owned
subsidiary, iMapData, from the date of acquisition. All significant intercompany
accounts and transactions have been eliminated.
NOTE B - UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for financial statements.
For further information, refer to the audited financial statements and notes
thereto for the year ended December 31, 1999, included in the Company's report
on Form 10-KSB filed with the Securities and Exchange Commission on March 29,
2000.
NOTE C - ACQUISITION OF IMAPDATA
On March 3, 2000, the Company acquired the stock of iMapData for $13,077,196,
including closing costs of $77,196. The transaction was accounted for as a
purchase business combination.
The acquisition was made with the issuance of 1 million shares of the
Company's common stock (valued at $13 million based upon the closing price of
the Company's common stock at March 3, 2000).
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<PAGE> 9
FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)
NOTE C - ACQUISITION OF IMAPDATA (continued)
The following table provides an analysis of the purchase of iMapData. The
excess of the purchase price over the book value of the net assets acquired has
been allocated to goodwill calculated as follows:
<TABLE>
<S> <C>
Total purchase cost, including closing costs $ 13,077,196
Fair value of net assets acquired 245,692
------------
Purchase price in excess of estimated fair value
of net assets acquired allocated to goodwill $ 12,831,504
============
</TABLE>
Goodwill is being amortized on a straight line basis over a fifteen year period.
NOTE D - SEGMENT INFORMATION
Condensed financial information of MKP, excluding intercompany eliminations,
as of September 30, 2000 and 1999 and for the nine months then ended, is as
follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Revenues $9,258,000 $11,294,000
Operating income 415,000 899,000
Total assets 5,625,000 5,893,000
Total liabilities 888,000 1,673,000
</TABLE>
Condensed financial information of iMapData as of September 30, 2000 and for
the period March 3, 2000 (date of acquisition) to September 30, 2000 is as
follows:
<TABLE>
<S> <C>
Revenues $1,704,000
Operating income 81,000
Total assets 847,000
Total liabilities 514,000
</TABLE>
NOTE E - SIGNIFICANT CUSTOMERS
For the nine months ended September 30, 2000, two customers of MKP accounted
for approximately 80% of its revenues and four customers of iMapData accounted
for approximately 81% of its revenues.
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued)
NOTE F - WARRANTS AND OPTIONS TO PURCHASE COMMON STOCK
On April 26, 2000 the Company issued to the Executive Vice President five
year options to purchase, in the aggregate, 400,000 shares of the Company's
common stock at $6.38 per share. The options are exercisable as follows: 100,000
immediately, 150,000 on April 26, 2001 and 150,000 on April 26, 2002.
NOTE G - EARNINGS (LOSS) PER SHARE INFORMATION
The calculation of basic and diluted earnings (loss) per share for the nine
months and three months ended September 30, 2000 and 1999 is based upon the
following:
<TABLE>
<CAPTION>
Nine Months Ended September, 30
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net income (loss) available to common shares
owners $ (1,618,495) $ 555,141
============ ============
Average shares outstanding (a) 11,056,120 9,471,534
Dilutive securities
Stock options and warrants (c) -- 451,286
------------ ------------
Average shares outstanding assuming dilution (b) 11,056,120 9,922,820
============ ============
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net income (loss) available to common share
owners $ (867,908) $ 98,731
============ ============
Average shares outstanding (a) 11,458,040 9,471,534
Dilutive securities
Stock options and warrants (c) -- 451,286
------------ ------------
Average shares outstanding assuming dilution (b) 11,458,040 9,922,820
============ ============
</TABLE>
(a) Used to compute basic earnings (loss) per share.
(b) Used to compute diluted earnings per share.
(c) Excluded for 2000 computation were 5,483,500 warrants and options which
would antidilutive.
-8-
<PAGE> 11
Item 2. Management's Discussion and Analysis or Plan of Operation
OVERVIEW
Financial Performance Corporation (which we may also refer to as the
"Company" or "FPC") is a holding company we operate through our subsidiaries.
Through Michaelson Kelbick Partners Inc. (which we may also refer to as "MKP"),
we provide communications consulting services to the financial services
industry, particularly with respect to communications concerning mergers and
other business combinations. MKP also provides marketing services, planning and
communications strategies, sales promotion and direct mail services.
Through iMapData.com, Inc. (which we may also refer to as "iMapData"), we
provide companies, governmental agencies and trade organizations with access
through digital computer software to competitive marketing, economic and other
data on a secure proprietary website. iMapData employs a vast array of
information to produce its analyses, mining and merging the data to create
multi-colored, multi-layered geoeconomic analytical maps and charts. iMapData's
customized databases enable clients to view submarkets unique to their industry,
display information relating to competitors, customers and suppliers in a given
industry, and overlay and correlate this information in simple and meaningful
ways -- all in real time.
From time to time, we may seek acquisitions or business combinations
within or outside the financial services industry that we believe are strategic
and will provide growth opportunities for the Company. We may fund such
acquisitions through the issuance of stock or with cash, or a combination. If we
identify an appropriate acquisition candidate, we may need to seek additional
financing. We cannot assure you that we will be able to successfully finance or
integrate any new acquisition.
In November 1999, in connection with the purchase of the Company's common
stock from Robert Trump by Jeffrey Silverman and Ronald Nash, we named Messrs.
Silverman and Nash as directors of the Company. On January 12, 2000, Mr.
Silverman was named our Chairman and Chief Executive Officer and Mr. Nash was
named our President. On August 11, 2000, J. William Grimes, Jonathan F. Foster
and Nathan Gantcher were elected to the Company's Board of Directors, and on
September 30, 2000, the date of expiration of William Finley's employment
agreement with the Company, Mr. Finley resigned as an officer and director of
the Company.
Revenues. During the three most recent fiscal years ended December 31,
1997, December 31, 1998 and December 31, 1999, MKP accounted for all of our
consolidated revenues. Our revenues historically have been derived from a
limited number of customers in the banking industry. For the nine months ended
September 30, 2000, two customers of MKP accounted for approximately 80% of
MKP's revenues and approximately 68% of the Company's consolidated revenues.
During the same nine month period ended September 30, 2000, four customers of
iMapData accounted for approximately 81% of the revenues of iMapData and
approximately 13% of the Company's consolidated revenues. Accordingly, during
the nine months ended September 30, 2000, six customers accounted for
approximately 81% of the Company's consolidated revenues. We anticipate that a
substantial amount of our consolidated revenues will continue to be concentrated
from a limited number of customers. As a result, our sales and operating results
are subject to substantial variations in any given year and from quarter to
quarter. Our sales and net income (if any) in a particular quarter may be lower
than the sales and net income (if any) for the comparable quarter in the prior
year. In addition, sales and net income (if any) in any particular quarter may
not necessarily reflect our results of operations for the full year. The loss
of, or reduction in services to, one or more significant customers is likely to
materially harm our business, financial condition and results of operations.
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<PAGE> 12
Subsidiaries. Our consolidated financial statements include FPC and our
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. During the nine month period ended September 30, 1999, MKP accounted
for 100% of our consolidated revenues. During the nine month period ended
September 30, 2000, MKP accounted for approximately 84% of our consolidated
revenues and iMapData accounted for approximately 16% of our consolidated
revenues.
Condensed financial information concerning MKP, excluding intercompany
eliminations, as of September 30, 2000 and 1999, and for the nine months then
ended, is as follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
2000 1999
---- ----
<S> <C> <C>
Revenues $9,258,000 $11,294,000
Operating Income $ 415,000 $ 899,000
Total Assets $5,625,000 $5,893,000
Total Liabilities $ 888,000 $1,673,000
</TABLE>
Condensed financial information concerning iMapData as of September 30,
2000 and for the period commencing March 3, 2000 (the date of the Company's
acquisition of iMapData) through September 30, 2000, is as follows:
<TABLE>
<S> <C>
Revenues $1,704,000
Operating Income $ 81,000
Total Assets $ 847,000
Total Liabilities $ 514,000
</TABLE>
The following analysis of the financial condition and results of
operations of the Company should be read in conjunction with our consolidated
financial statements appearing elsewhere in this report.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999
Revenues. Total revenues decreased by $904,773 or approximately 28.2% to
$2,306,214 for the three months ended September 30, 2000 from $3,210,987 for the
three months ended September 30, 1999. This decrease was primarily attributable
to the decrease in services provided by MKP during the three months ended
September 30, 2000, which served to offset the inclusion of the revenues
generated by iMapData in the Company's consolidated revenues for such period.
The decrease in MKP's services during the three months ended September 30, 2000
was primarily attributable to the decreased scope of merger and other projects
for which MKP was engaged during this period and to variations arising from the
nature of MKP's business, based upon the different stages of merger
communications projects for which MKP was engaged during this period.
Cost of Revenues. Cost of revenues decreased by $640,293 or approximately
27.7% to $1,672,430 for the three months ended September 30, 2000 from
$2,312,723 for the three months ended September 30, 1999. This decrease was
primarily attributable to decreased costs arising out of the decreased level of
services provided by MKP during the three months ended September 30, 2000, which
served to offset the inclusion of the cost of revenues of iMapData for the three
months ended September 30, 2000 in the Company's consolidated results of
operations for such period.
Salaries and Related Expenses. Payroll expenses increased by $140,332 or
approximately 50.9% to $415,994 for the three months ended September 30, 2000
from $275,662 for the three months ended September 30, 1999. This increase was
attributable primarily to the recognition by the Company of additional payroll
expenses for employees of the Company's fifty-percent owned subsidiary, FPC
Information Corp., resulting from the Company's write-off of its investment in
such subsidiary during the three month period ended December 31, 1999, and to
the inclusion of the payroll expenses of iMapData for the three month period
ended September 30, 2000 in the Company's consolidated results of operations for
such period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $393,344 or approximately 100.4% to
$784,996 for the three months ended September 30, 2000 from $391,652 for the
three months ended September 30, 1999. This increase was attributable
principally to the inclusion of the selling, general and administrative expenses
of iMapData for the three month period ended September 30, 2000 in the Company's
consolidated results of operations for such period and an increase in general
overhead expenses incurred by the Company during this period, including office
lease expenses, professional fees, insurance costs and other administrative
expenses.
Depreciation and Amortization. Depreciation and amortization increased by
$299,976 or approximately 960.0% to $331,223 for the three months ended
September 30, 2000 from $31,247 for the three months ended September 30, 1999.
This increase was attributable to amortization of goodwill arising from the
Company's acquisition of iMapData in March 2000.
Other Income (Expenses). Other income increased by $103,380 to $33,083 for
the three months ended September 30, 2000 from other expenses of $70,297 for the
three months ended September 30, 1999. This increase was attributable to the
elimination of continuing losses from the Company's subsidiary, FPC Information
Corp., as a result of the Company's write-off of the Company's investment in
such subsidiary during the three-month period ended December 31,
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<PAGE> 14
1999, as well as an increase in investment income earned by the Company and a
decrease in the deduction attributable to the minority interest in MKP's
earnings during the three-month period ended September 30, 2000.
Operating Income (Loss). Operating income decreased by $1,098,132 or
approximately 549.9% to an operating loss of $898,429 for the three months ended
September 30, 2000 compared to operating income of $199,703 for the three months
ended September 30, 1999. The decrease in operating income was attributable to
the factors referred to above.
Net Income (Loss). Net income decreased by $966,639 or approximately
979.1% to a net loss of $867,908 for the three months ended September 30, 2000
compared to net income of $98,731 for the three months ended September 30, 1999.
The decrease in net income was attributable to the factors referred to above.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1999
Revenues. Total revenues decreased by $331,567 or approximately 2.9% to
$10,962,633 for the nine months ended September 30, 2000 from $11,294,200 for
the nine months ended September 30, 1999. This decrease was attributable to the
decrease in MKP's revenues for this period, which served to offset the inclusion
of the revenues of iMapData for the period commencing March 3, 2000 through
September 30, 2000 in the Company's consolidated revenues for the nine months
ended September 30, 2000. The decrease in MKP's revenues during the nine months
ended September 30, 2000 was primarily attributable to the decrease in services
provided by MKP during this period, which in turn was primarily attributable to
the decreased scope of merger and other projects for which MKP was engaged
during this period and to variations arising from the nature of MKP's business,
based upon the different stages of merger communications projects for which MKP
was engaged during this period.
Cost of Revenues. Cost of revenues decreased by $854,728 or approximately
10.3% to $7,428,188 for the nine months ended September 30, 2000 from $8,282,916
for the nine months ended September 30, 1999. This decrease was primarily
attributable to decreased costs arising out of the decreased level of services
provided by MKP during the nine months ended September 30, 2000, which served to
offset the inclusion of the cost of revenues of iMapData for the period
commencing March 3, 2000 through September 30, 2000 in the Company's
consolidated results of operations for the nine months ended September 30, 2000.
Salaries and Related Expenses. Payroll expenses increased by $618,205 or
approximately 66.6% to $1,546,332 for the nine months ended September 30, 2000
from $928,127 for the nine months ended September 30, 1999. This increase was
attributable primarily to the recognition by the Company of additional payroll
expenses for employees of the Company's fifty-percent owned subsidiary, FPC
Information Corp., resulting from the Company's write-off of its investment in
such subsidiary during the three month period ended December 31, 1999, and to
the inclusion of the payroll expenses of iMapData for the period commencing
March 3, 2000 through September 30, 2000 in the Company's consolidated results
of operations for the nine months ended September 30, 2000.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1,674,208 or approximately 157.5% to
$2,737,462 for the nine months ended September 30, 2000 from $1,063,254 for the
nine months ended September 30, 1999. This
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<PAGE> 15
increase was attributable principally to the inclusion of the selling, general
and administrative expenses of iMapData for the period commencing March 3, 2000
through September 30, 2000 in the Company's consolidated results of operations
for the nine months ended September 30, 2000 and an increase in general overhead
expenses incurred by the Company during this period, including office lease
expenses, professional fees, insurance costs and other administrative expenses.
Depreciation and Amortization. Depreciation and amortization increased by
$748,823 or approximately 813.6%, to $840,866 for the nine months ended
September 30, 2000 from $92,043 for the nine months ended September 30, 1999.
This increase was attributable to amortization of goodwill arising from the
Company's acquisition of iMapData in March 2000.
Other Income (Expenses). Other income increased by $296,990 to $31,085 for
the nine months ended September 30, 2000 from other expenses of $265,905 for the
nine months ended September 30, 1999. This increase was attributable to the
elimination of continuing losses from the Company's subsidiary, FPC Information
Corp., as a result of the Company's write-off of the Company's investment in
such subsidiary during the three-month period ended December 31, 1999, as well
as an increase in investment income earned by the Company and a decrease in the
deduction attributable to the minority interest in MKP's earnings during the
nine month period ended September 30, 2000.
Operating Income (Loss). Operating income decreased by $2,518,075 or
approximately 271.4% to an operating loss of $1,590,215 for the nine months
ended September 30, 2000 compared to operating income of $927,860 for the nine
months ended September 30, 1999. The decrease in operating income was
attributable to the factors referred to above.
Net Income (Loss). Net income decreased by $2,173,636 or approximately
391.5% to a net loss of $1,618,495 for the nine months ended September 30, 2000
compared to net income of $555,141 for the nine months ended September 30, 1999.
The decrease in net income was attributable to the factors referred to above.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, we had working capital (current assets less
current liabilities) of $3,370,283, stockholders' equity of $15,348,280 and a
working capital ratio (current assets to current liabilities) of approximately
2.6:1, compared to working capital of $4,021,738, stockholders' equity of
$3,493,042 and a working capital ratio of approximately 3.7:1 as of December 31,
1999. As of September 30, 2000, we had cash and cash equivalents of $3,559,069,
compared to cash and cash equivalents of $4,179,179 as of December 31, 1999,
respectively. However, we conduct our operations through our subsidiaries and
rely on cash payments from our subsidiaries to meet our operating requirements.
For the nine months ended September 30, 2000, net cash used in our
operating activities was $708,178, compared to net cash used in our operating
activities of $1,797,854 for the nine months ended September 30, 1999 . During
the nine months ended September 30, 2000, cash provided by investing activities
was $183,068, compared to $356,376 of net cash used for investing activities
during the nine months ended September 30, 1999. For the nine months ended
September 30, 2000 and September 30, 1999, net cash used in the Company's
financing activities was $95,000 and $0, respectively.
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<PAGE> 16
As of September 30, 2000, we had no long-term debt. On December 12, 1999,
Robert S. Trump, our principal shareholder, loaned us $500,000 on a short-term
basis. The loan provided for interest at the rate of 10% per year and matured on
February 15, 2000. On February 15, 2000, we repaid the entire principal amount
of the $500,000 loan to Mr. Trump.
As of September 30, 2000, we had made no material capital commitments
other than those related to non-cancelable operating leases for office space and
equipment. For the years ended December 31, 2000, 2001, 2002, and 2003, our
minimum payments in connection with these leases are approximately $920,000,
$932,000, $1,066,000 and $1,066,000 per year, respectively. We expect to have
sublease rental income of approximately $200,000 in each such year.
Based on our current plan of operations, we anticipate that our existing
working capital and expected operating revenues will provide sufficient working
capital for the conduct of our business. However, there can be no assurance that
we will not require additional financing. Our capital requirements depend on,
among other things, whether we are successful in continuing to generate revenues
and income from our subsidiaries, whether we continue to identify appropriate
acquisition candidates, our marketing efforts, competition, and the cost and
availability of third-party financing.
We may also seek additional financing in connection with the acquisition
of one or more other entities or products (or rights related thereto) or the
consummation of other business combinations. If needed, we may raise financing
through additional equity offerings, joint ventures or other collaborative
relationships, borrowings and other transactions. We may seek additional funding
through any such transaction or a combination thereof. There can be no assurance
that additional financing will be available to us or, if available, that such
financing will be available on acceptable terms.
HOLDING COMPANY AND OPERATING SUBSIDIARIES
We conduct our operations through our subsidiaries. We have historically
relied on cash payments from MKP to, among other things, pay creditors, maintain
capital and meet our operating requirements. Under MKP's shareholders'
agreement, MKP is required to pay to FPC on a quarterly basis a management fee
equal to 30% of MKP's pre-tax earnings. In fiscal 1999 and 1998, MKP paid FPC
approximately $766,000 and $1,714,000, respectively. Regulations, legal
restrictions and contractual agreements could restrict any needed payments from
MKP, or in the future, other subsidiaries. If we are unable to receive cash
funds from MKP, from iMapData, or from any operating subsidiaries we may acquire
in the future, our operations and financial condition will be materially and
adversely affected.
STOCK PRICE FLUCTUATIONS
The market price of our common stock has fluctuated significantly and may
be affected by our operating results, changes in our business and management,
changes in the industries in which we conduct business, and general market and
economic conditions. In addition, the stock markets in general have recently
experienced extreme price and volume fluctuations. These fluctuations have
affected stock prices of many companies without regard to their specific
operating performance. The price of our common stock may fluctuate significantly
in the future.
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<PAGE> 17
INFLATION
In general, we believe that we will be able to offset any inflationary
pressures by increasing operating efficiency, monitoring and controlling
expenses and increasing prices to the extent permitted by competitive factors.
FORWARD-LOOKING STATEMENTS
Certain statements we make in this Report are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. You
can identify these forward-looking statements by our use of words such as
"believes," "anticipates," "may," "intends," "expects," "plans," "proposed" and
words of similar import. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause actual results,
performance or achievements or industry results to be materially different from
results, performance or achievements that we expressed or implied by our
forward-looking statements. These factors include:
- the continued services of Messrs. Silverman and Nash, Ms. Kelbick and
Ms. Michaelson of MKP and Messrs. Lilley and DeFranco of iMapData;
- our ability to identify appropriate acquisition candidates, complete
such acquisitions and successfully integrate acquired businesses;
- changes in our business strategies or development plans;
- competition;
- our anticipated growth within the banking and internet-related
industries;
- our ability to obtain sufficient financing to continue operations; and
- general economic and business conditions, both nationally and in the
regions in which we operate.
Certain of these factors are discussed in more detail in our Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1999, the Quarterly Report
on Form 10-QSB for the three months ended March 31, 2000, the Quarterly Report
on Form 10-QSB for the three months ended June 30, 2000 and our Registration
Statement on Form SB-2 dated July 16, 1999.
Given these uncertainties, you should not place undue reliance on our
forward-looking statements. We undertake no obligation to update these factors
or to publicly announce the result of any revisions to any of our
forward-looking statements contained in this Report to reflect events or
developments after the date hereof.
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<PAGE> 18
PART II
Item 1
through
Item 4. Not Applicable
Item 5. Other Information
None.
<TABLE>
Item 6. Exhibits and Reports on Form 8-K
<S> <C>
(a) Exhibits
3.1 Certificate of Incorporation dated August 9, 1984
(incorporated by reference to Exhibit 3.1 to Registration
Statement on Form S-8, No. 33-7778).
3.2 Amendment to Certificate of Incorporation dated August 29,
1984 (incorporated by reference to Exhibit (i) to the
Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1988).
3.3 Amendment to Certificate of Incorporation dated July 1,
1986 (incorporated by reference to Exhibit 3.3 to the
Company's Annual Report on Form 10-KSB for the period ended
September 30, 1996).
3.4 Amendment to Certificate of Incorporation dated March 4,
1988 (incorporated by reference to Exhibit 3.4 to the
Company's Annual Report on Form 10-KSB for the period ended
September 30, 1996).
3.5 Amendment to Certificate of Incorporation dated September
13, 1996 (incorporated by reference to Exhibit 3.5 to the
Company's Annual Report on Form 10-KSB for the period ended
September 30, 1996).
3.6 By-laws (incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-18, No. 33-7778).
3.7 Amendment to By-Laws dated July 1995 (incorporated by
reference to Exhibit 3.7 to the Company's Annual Report on
Form 10-KSB for the period ended September 30, 1996).
4.1 Specimen Certificate of Common Stock (incorporated by
reference to Exhibit 4.1 to the Company's Annual Report on
Form 10-KSB for the period ended September 30, 1996).
10.1 Form of Indemnification Agreement between the Company and
its Officers and Directors (incorporated by reference to
Exhibit 10.35 to Registration Statement on Form S-1, No.
33-20886).
10.2 Form of Warrant dated as of September 15, 1995 between the
Company and William F. Finley (incorporated by reference to
Exhibit 10.65 to the Company's Report on Form 10-KSB for
fiscal year ended September 30, 1995).
</TABLE>
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<PAGE> 19
<TABLE>
<S> <C>
10.3 Form of Warrant Agreement for Warrants issued in September
1996 (incorporated by reference to Exhibit 10.69 to the
Company's Annual Report on Form 10-KSB for the period ended
September 30, 1996).
10.4 Executive Employment Agreement dated as of September 11,
1997 between the Company and William F. Finley
(incorporated by reference to Exhibit 10.71 to Report on
Form 10-KSB for fiscal year ended September 30, 1997).
10.5 Managing Director's Agreement dated as of September 11,
1997 between the Company's subsidiary, MKP, and Susan
Michaelson (incorporated by reference to Exhibit 10.72 to
the Company's Annual Report on Form 10-KSB for fiscal year
ended September 30, 1997).
10.6 Managing Director's Agreement dated as of September 11,
1997 between the Company's subsidiary, MKP, and Hillary
Kelbick (incorporated by reference to Exhibit 10.73 to the
Company's Annual Report on Form 10-KSB for fiscal year
ended September 30, 1997).
10.7 Form of Warrant dated as of December 29, 1997 issued to
Duncan Burke (incorporated by reference to Exhibit 10.74 to
the Company's Annual Report on Form 10-KSB for fiscal year
ended September 30, 1997).
10.8 Form of Warrant dated as of December 29, 1997 issued to
Richard Levy (incorporated by reference to Exhibit 10.75 to
the Company's Annual Report on Form 10-KSB for fiscal year
ended September 30, 1997).
10.9 First Amendment to Executive Employment Agreement by and
among the Company, FPC Information Corp. and William F.
Finley dated as of October 1, 1998 (incorporated by
reference to Exhibit 10.77 to the Company's Quarterly
Report on Form l0-QSB for the fiscal quarter ended
September 30, 1998).
10.10 First Amendment to Managing Director's Agreement between
MKP and Susan Michaelson dated as of October 1, 1998
(incorporated by reference to Exhibit 10.78 to the
Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended September 30, 1998).
10.11 First Amendment to Managing Director's Agreement between
MKP and Hillary Kelbick dated as of October 1, 1998
(incorporated by reference to Exhibit 10.79 to the
Company's Quarterly Report on Form l0-QSB for the fiscal
quarter ended September 30, 1998).
</TABLE>
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<PAGE> 20
<TABLE>
<S> <C>
10.12 Restated and Amended Shareholders Agreement dated as of
October 18, 1994 by and among MKP, Susan Michaelson,
Hillary Kelbick and the Company, effective as of October 1,
1998 (incorporated by reference to Exhibit 10.80 to the
Company's Annual Quarterly on Form 10-QSB for the fiscal
quarter ended September 30, 1998).
10.13 Form of Warrant dated as of October 21, 1998 between the
Company and Richard Levy (incorporated by reference to
Exhibit 10.81 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998).
10.14 Form of Warrant dated as of October 21, 1998 between the
Company and Duncan G. Burke (incorporated by reference to
Exhibit 10.82 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998).
10.15 Form of Warrant dated as of October 21, 1998 between the
Company and Ottavio Serena (incorporated by reference to
Exhibit 10.83 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998).
10.16 Form of Warrant dated as of October 21, 1998 between the
Company and Gary S. Friedman (incorporated by reference to
Exhibit 10.84 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998).
10.17 Form of Warrant dated as of October 21, 1998 between the
Company and Charlotte Tuck (incorporated by reference to
Exhibit 10.85 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1998).
10.18 Form of Warrant Agreement dated as of October 21, 1998
covering warrants issued to Richard Levy, Duncan G. Burke,
Ottavio Serena, Gary S. Friedman and Charlotte Tuck
(incorporated by reference to Exhibit 10.86 to the
Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998).
10.19 Restated and Amended Executive Employment Agreement between
the Company and William F. Finley (incorporated by
reference to Exhibit 10.87 to the Company's Quarterly
Report on Form 10-QSB for the fiscal quarter ended March
31, 1999).
10.20 Stock Purchase and Sale Agreement dated as of November 17,
1999 by and among the Company, Robert S. Trump and Jeffrey
Silverman (incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed November 30,
1999).
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C>
10.21 Stock Purchase and Sale Agreement dated as of November 17,
1999 by and among the Company, Robert S. Trump and Ronald
Nash (incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K filed November 30,
1999).
10.22 Stockholders Agreement dated as of November 17, 1999 by and
among the Company, Robert S. Trump, Jeffrey Silverman, and
Ronald Nash (incorporated by reference to Exhibit 10.3 to
the Company's Current Report on Form 8-K filed November 30,
1999).
10.23 Option Agreement dated November 17, 1999 between Robert S.
Trump and Jeffrey Silverman (incorporated by reference to
Exhibit 10.4 to the Company's Current Report on Form 8-K
filed November 30, 1999).
10.24 Option Agreement dated November 17, 1999 between Robert S.
Trump and Jeffrey Silverman (incorporated by reference to
Exhibit 10.5 to the Company's Current Report on Form 8-K
filed November 30, 1999).
10.25 Option Agreement dated November 17, 1999 between Robert S.
Trump and Jeffrey Silverman (incorporated by reference to
Exhibit 10.6 to the Company's Current Report on Form 8-K
filed November 30, 1999).
10.26 Option Agreement dated November 17, 1999 between Robert S.
Trump and Ronald Nash (incorporated by reference to Exhibit
10.7 to the Company's Current Report on Form 8-K filed
November 30, 1999).
10.27 Option Agreement dated November 17, 1999 between Robert S.
Trump and Ronald Nash (incorporated by reference to Exhibit
10.8 to the Company's Current Report on Form 8-K filed
November 30, 1999).
10.28 Option Agreement dated November 17, 1999 between Robert S.
Trump and Ronald Nash (incorporated by reference to Exhibit
10.9 to the Company's Current Report on Form 8-K filed
November 30, 1999).
10.29 Option Agreement dated as of November 17, 1999 between the
Company and Jeffrey Silverman (incorporated by reference to
Exhibit 10.10 to the Company's Current Report on Form 8-K
filed November 30, 1999).
</TABLE>
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<PAGE> 22
<TABLE>
<S> <C>
10.30 Option Agreement dated as of November 17, 1999 between the
Company and Ronald Nash (incorporated by reference to
Exhibit 10.11 to the Company's Current Report on Form 8-K
filed November 30, 1999).
10.31 Registration Rights Agreement dated as of November 17, 1999
by and among the Company, Robert S. Trump, William F.
Finley, Jeffrey Silverman and Ronald Nash (incorporated by
reference to Exhibit 10.12 to the Company's Current Report
on Form 8-K filed November 30, 1999).
10.32 Amended and Restated Employment Agreement dated as of
November 17, 1999 between the Company and William F. Finley
(incorporated by reference to Exhibit 10.13 to the
Company's Current Report on Form 8-K filed November 30,
1999).
10.33 First Amendment to the Restated and Amended Shareholders
Agreement dated as of November 16, 1999 by and among
Michaelson Kelbick Partners, the Company, Susan Michaelson
and Hillary Kelbick (incorporated by reference to Exhibit
10.14 to the Company's Current Report on Form 8-K filed
November 30, 1999).
10.34 Restated and Amended Managing Director's Agreement dated as
of November 16, 1999 between Michaelson Kelbick Partners
Inc. and Susan Michaelson (incorporated by reference to
Exhibit 10.15 to the Company's Current Report on Form 8-K
filed November 30, 1999).
10.35 Restated and Amended Managing Director's Agreement dated as
of November 16, 1999 between Michaelson Kelbick Partners
Inc. and Hillary Kelbick (incorporated by reference to
Exhibit 10.16 to the Company's Current Report on Form 8-K
filed November 30, 1999).
10.36 Secured Promissory Note dated December 15, 1999, of the
Company in the principal amount of $500,000 in favor of
Robert S. Trump (incorporated by reference to the Company's
Annual Report on Form 10-KSB for the year ended December
31, 1999).
10.37 Security Agreement dated December 15, 1999 between the
Company and Robert S. Trump (incorporated by reference to
the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999).
10.38 Amendment dated as of January 10, 2000 to Executive
Employment Agreement of William F. Finley (incorporated by
reference to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1999).
</TABLE>
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<PAGE> 23
<TABLE>
<S> <C>
10.39 Option Agreement dated as of January 12, 2000 between the
Company and Jeffrey Silverman (incorporated by reference to
the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999).
10.40 Option Agreement dated as of January 12, 2000 between the
Company and Ronald Nash (incorporated by reference to the
Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999).
10.41 Agreement and Plan of Merger dated February 23, 2000
between the Company, FPC Acquisition Corp., iMapData.com,
Inc., William Lilley III and Laurence J. DeFranco
(incorporated by reference to Exhibit 10.17 to the
Company's Current Report on Form 8-K filed February 24,
2000).
10.42 Stock Option Agreement dated as of April 26, 2000 between
the Company and Edward T. Stolarski, covering 100,000
shares of common stock; Stock Option Agreement dated as of
April 26, 2000 between the Company and Edward T. Stolarski,
covering 300,000 shares of common stock; and Employment
Agreement dated April 25, 2000 between the Company and
Edward T. Stolarski (incorporated by reference to Exhibit
10.5 to the Company's Report on Form 10-QSB for the three
months ended March 31, 2000).
16.1 Letter from Goldstein and Morris addressed to the
Securities and Exchange Commission (incorporated by
reference to Exhibit 16.1 to the Company's Current Report
on Form 8-K filed January 24, 2000).
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
</TABLE>
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<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 2000
FINANCIAL PERFORMANCE CORPORATION
By: /s/ Jeffrey S. Silverman
-----------------------------
Jeffrey S. Silverman,
Chief Executive Officer
By: /s/ Edward T. Stolarski
-----------------------------
Edward T. Stolarski,
Chief Financial Officer
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