<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 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)
<TABLE>
<S> <C>
New York 13-3236325
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
335 Madison 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) 557-0401
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.
<TABLE>
<S> <C>
Class Outstanding at July 31, 2000
---------------------------------------- ----------------------------------------------
Common Stock 11,458,140 Shares
</TABLE>
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 June 30, 2000 (Unaudited)
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Part I. Page
----
Item 1. Financial Statements (Unaudited)................................................1
Consolidated Balance Sheets
June 30, 2000 and June 30, 1999........................................2
Consolidated Statements of Operations
For the Six Months Ended
June 30, 2000 and June 30, 1999........................................3
Consolidated Statements of Operations
For the Three Months Ended
June 30, 2000 and June 30, 1999........................................4
Consolidated Statements of Changes in Stockholders' Equity
for the Six Months Ended
June 30,2000 and June 30, 1999.........................................5
Consolidated Statements of Cash Flows
for the Six Months Ended
June 30, 2000 and June 30, 1999........................................6
Notes to Consolidated Financial Statements......................................7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.........................................................10
Part II
Item 5. Other Information..............................................................17
Item 6. Exhibits and Reports on Form 8-K...............................................17
</TABLE>
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<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
JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
ASSETS
2000 1999
-------------- --------------
(Unaudited)
(Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $4,401,078 $ 4,305,387
Short-term investments 676,000 -
Marketable securities 150,000 -
Accounts receivable 1,360,477 2,755,203
Prepaid expenses and other current assets 191,728 84,260
------------- ------------
Total current assets 6,779,283 7,144,850
Property and equipment, net of accumulated depreciation 343,773 209,375
Equity investment (FPC Information Corp.) - 739,928
Goodwill, net of accumulated amortization 12,546,203 -
Other assets 294,045 301,862
------------- ------------
$19,963,304 $ 8,396,015
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $2,273,293 $ 2,805,733
Other current liabilities 359,970 -
------------- ------------
Total current liabilities 2,633,263 2,805,733
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Minority interest in consolidated subsidiary 1,120,046 972,046
------------- ------------
Stockholders' equity
Common stock - authorized 50,000,000 shares of $.01 par
value; 11,456,914 and 9,471,534 shares issued and
outstanding at June 30, 2000 and 1999, respectively 114,569 94,715
Additional paid in capital 21,397,947 7,756,261
Accumulated (deficit) (5,302,521) (3,232,740)
------------- ------------
Total stockholders' equity 16,209,995 4,618,236
------------- ------------
$19,963,304 $ 8,396,015
============= ============
</TABLE>
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues $8,656,419 $ 8,083,213
---------- -----------
Costs and expenses
Cost of revenues 5,755,758 5,970,193
Salaries and related expenses 1,130,338 652,465
Selling, general and administrative 1,952,466 671,602
Depreciation and amortization 509,643 60,796
---------- -----------
9,348,205 7,355,056
---------- -----------
Operating income (loss) (691,786) 728,157
---------- -----------
Other income (expense)
Investment income 89,002 44,392
Loss from FPC Information Corp. - (116,000)
Minority interest in earnings of subsidiary (91,000) (124,000)
(1,998) (195,608)
---------- -----------
Income (loss) before income taxes (693,784) 532,549
Income taxes 56,803 76,139
---------- -----------
Net income (loss) $ (750,587) $ 456,410
========== ===========
Basic income (loss) per share $ (.07) $ .05
Diluted income (loss) per share $ (.07) $ .05
</TABLE>
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<PAGE> 6
FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C>
Revenues $4,320,818 $ 4,692,824
---------- -----------
Costs and expenses
Cost of revenues 2,802,148 3,712,839
Salaries and related expenses 543,284 301,877
Selling, general and administrative 1,309,804 344,043
Depreciation and amortization 333,578 32,810
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4,988,814 4,391,569
---------- -----------
Operating income (loss) (667,996) 301,255
---------- -----------
Other income (expense)
Investment income 53,779 18,878
Loss from FPC Information Corp. - (49,000)
Minority interest in earnings of subsidiary (37,000) (53,000)
---------- -----------
16,779 (83,122)
---------- -----------
Income (loss) before income taxes (651,217) 218,133
Income taxes 23,243 34,355
---------- -----------
Net income (loss) $(674,460) $ 183,778
========== ===========
Basic income (loss) per share $ (.06) $ .02
Diluted income (loss) per share $ (.06) $ .02
</TABLE>
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<PAGE> 7
FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Additional
----------------------- Paid In Accumulated
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 23,880 239 62,301 - 62,540
Net loss - - - (750,587) (750,587)
---------- --------- ------------ --------------- ------------
Balance, June 30, 2000 11,456,914 $114,569 $21,397,947 $(5,302,521) $16,209,995
========== ======== =========== =========== ===========
Balance, January 1, 1999 9,471,534 $94,715 $7,756,261 $(3,689,150) $4,161,826
Net income - - - 456,410 456,410
---------- -------- ------------ ----------- ------------
Balance, June 30, 1999 9,471,534 $94,715 $7,756,261 $(3,232,740) $4,618,236
========== ======== =========== =========== ===========
</TABLE>
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FINANCIAL PERFORMANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) $ (750,587) $ 456,410
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization 509,643 60,796
Non-cash compensation 62,540 -
Minority interest in earnings of consolidated subsidiaries 91,000 124,000
Loss from FPC Information Corp. - 116,000
Increase (decrease) in cash flows from operating activities
resulting from changes in:
Accounts receivable (1,335,634) (2,412,420)
Prepaid expenses and other current assets (34,925) (52,985)
Other assets (28,898) 224
Accounts payable and accrued expenses 1,285,006 (35,455)
Other current liabilities 359,970 -
-------------- ---------------
Net cash provided by (used in) operating activities 158,115 (1,743,430)
-------------- ---------------
Cash flows from investing activities:
Acquisition of equipment (114,020) (48,441)
Investment in subsidiary - (189,890)
Restricted cash 500,000 -
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 158,784 (238,331)
-------------- ---------------
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 221,899 (1,981,761)
Cash and cash equivalents, beginning of period 4,179,179 6,287,148
-------------- ---------------
Cash and cash equivalents, end of period $ 4,401,078 $ 4,305,387
============= ==============
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 55,000 $ 26,000
============= ==============
</TABLE>
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<PAGE> 9
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 June 30, 2000 and 1999, and
the results of its operations and its cash flows for the six months then ended.
The results of operations for the interim periods ended June 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 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> 10
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 the iMapData
acquisition. The excess of the purchase price over the book value of the net
assets acquired has been allocated to goodwill calculated as follows:
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<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 June 30, 2000 and 1999 and for the six months then ended, is
as follows:
<TABLE>
<CAPTION>
2000 1999
----------- ------------
<S> <C> <C>
Revenues $ 7,371,000 $ 8,083,000
Operating income 430,000 650,000
Total assets 6,250,000 6,506,000
Total liabilities 1,533,000 2,531,000
</TABLE>
Condensed financial information of iMapData as of June 30, 2000 and for
the period March 3, 2000 (date of acquisition) to June 30, 2000 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Revenues $ 1,285,000
Operating income 186,000
Total assets 875,000
Total liabilities 437,000
</TABLE>
NOTE E - SIGNIFICANT CUSTOMERS
For the six months ended June 30, 2000, one customer of MKP accounted for
approximately 83% of its revenues and two customers of iMapData accounted for
approximately 51% and 21% of its revenues, respectively.
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<PAGE> 11
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
six months and three months ended June 30, 2000 and 1999 is based upon the
following:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Net income (loss) available to common share owners $(750,587) $ 456,410
========== =========
Average shares outstanding (a) 10,855,161 9,471,534
Dilutive securities
Stock options and warrants (c) - 676,930
---------- ----------
Average shares outstanding assuming dilution (b) 10,855,161 10,148,464
========== ==========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30,
2000 1999
--------------- ---------
<S> <C> <C>
Net income (loss) available to common share owners $(674,460) $ 183,778
========== =========
Average shares outstanding (a) 11,448,954 9,471,534
Dilutive securities
Stock options and warrants (c) - 450,546
---------- ---------
Average shares outstanding assuming dilution (b) 11,448,954 9,922,080
========== =========
</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 be antidilutive.
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<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
Financial Performance Corporation (which we may also refer to as the
"Company" or "FPC") is a holding company that operates 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, the company announced that J. William
Grimes, Jonathan F. Foster and Nathan Gantcher had been elected to the Company's
Board of Directors.
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 six months ended
June 30, 1999, one customer of MKP accounted for approximately 86% of the
Company's total revenues. For the six months ended June 30, 2000, one customer
of MKP accounted for approximately 83% of MKP's revenues and approximately 71%
of the Company's consolidated revenues. During the same six month period ended
June 30, 2000, two customers of iMapData accounted for approximately 51% and
21%, respectively, of the revenues of iMapData and approximately 11% of the
Company's consolidated revenues. Accordingly, during the six months ended June
30, 2000, three customers accounted for approximately 82% 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)
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<PAGE> 13
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.
Subsidiaries. Our consolidated financial statements include FPC and our
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. During the six month period ended June 30, 1999, MKP accounted for
100% of our consolidated revenues. During the six month period ended June 30,
2000, MKP accounted for approximately 85% of our consolidated revenues and
iMapData accounted for approximately 15% of our consolidated revenues.
Condensed financial information concerning MKP, excluding intercompany
eliminations, as of June 30, 2000 and 1999, and for the six months then ended,
is as follows:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-----------------------------------
2000 1999
---- ----
<S> <C> <C>
Revenues $7,371,000 $8,083,000
Operating Income 430,000 650,000
Total Assets 6,250,000 6,506,000
Total Liabilities 1,533,000 2,531,000
</TABLE>
Condensed financial information concerning iMapData as of June 30, 2000
and for the period commencing March 3, 2000 (the date of the Company's
acquisition of iMapData) through June 30, 2000, is as follows:
<TABLE>
<S> <C>
Revenues $1,285,000
Operating Income $ 186,000
Total Assets $ 875,000
Total Liabilities $ 437,000
</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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<PAGE> 14
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Revenues. Total revenues decreased by $372,006 or approximately 7.9% to
$4,320,818 for the three months ended June 30, 2000 from $4,692,824 for the
three months ended June 30, 1999. This decrease was primarily attributable to
the decrease in services provided by MKP during the three months ended June 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 June 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 $910,691 or approximately
24.5% to $2,802,148 for the three months ended June 30, 2000 from $3,712,839 for
the three months ended June 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 June 30, 2000, which served to offset the
inclusion of the cost of revenues of iMapData for the three months ended June
30, 2000 in the Company's consolidated results of operations for such period.
Salaries and Related Expenses. Payroll expenses increased by $241,407 or
approximately 80.0% to $543,284 for the three months ended June 30, 2000 from
$301,877 for the three months ended June 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 one-time 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 June 30, 2000 in the Company's consolidated results of
operations such period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $965,861 or approximately 281% to
$1,309,804 for the three months ended June 30, 2000 from $343,943 for the three
months ended June 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 June 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
$300,668 to $333,578 for the three months ended June 30, 2000 from $32,910 for
the three months ended June 30, 1999. This increase was attributable to the
Company's acquisition of iMapData in March 2000.
Other Income (Expenses). Other income increased by $99,901 to $16,779 for
the three months ended June 30, 2000 from other expenses of $83,122 for the
three months ended June 30, 1999. This increase was primarily 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 of MKP's
earnings during the three-month period ended June 30, 2000.
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<PAGE> 15
Operating Income (Loss). Operating income decreased by $969,251 or
approximately 321.7% to an operating loss of $667,996 for the three months ended
June 30, 2000 compared to operating income of $301,255 for the three months
ended June 30, 1999. The decrease in operating income was attributable to the
factors referred to above.
Net Income (Loss). Net income decreased by $858,238 or approximately
467.0% to a net loss of $674,460 for the three months ended June 30, 2000
compared to net income of $183,778 for the three months ended June 30, 1999. The
decrease in net income was attributable to the factors referred to above.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Revenues. Total revenues increased by $573,206 or approximately 7.1% to
$8,656,419 for the six months ended June 30, 2000 from $8,083,213 for the six
months ended June 30, 1999. This increase was attributable to the inclusion of
the revenues of iMapData for the period commencing March 3, 2000 through June
30, 2000 in the Company's consolidated revenues for the six months ended June
30, 2000, which served to offset the decrease in MKP's revenues for this period.
Cost of Revenues. Cost of revenues decreased by $214,435 or approximately
3.6% to $5,755,758 for the six months ended June 30, 2000 from $5,970,193 for
the six months ended June 30, 1999. This decrease was primarily attributable to
decreased costs arising out of the decreased level of services provided by MKP
during the six months ended June 30, 2000, which served to offset the inclusion
of the cost of revenues of iMapData for the period commencing March 3, 2000
through June 30, 2000 in the Company's consolidated results of operations for
the six months ended June 30, 2000.
Salaries and Related Expenses. Payroll expenses increased by $477,873 or
approximately 73.2% to $1,130,338 for the six months ended June 30, 2000 from
$652,465 for the six months ended June 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 one-time 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 June 30, 2000 in the Company's consolidated results of operations
for the six months ended June 30, 2000.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $1,280,854 or approximately 191% to
$1,962,466 for the six months ended June 30, 2000 from $671,602 for the six
months ended June 30, 1999. This increase was attributable principally to the
inclusion of the selling, general and administrative expenses of iMapData for
the period commencing March 3, 2000 through June 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
$448,847 to $509,643 for the six months ended June 30, 2000 from $60,796 for the
six months ended June 30, 1999. This increase was attributable to the Company's
acquisition of iMapData in March 2000.
Other Expenses. Other expenses decreased by $193,610 to $1,998 for the
six months ended June 30, 2000 from $195,608 for the six months ended June 30,
1999. This decrease was primarily 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
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<PAGE> 16
earned by the Company and a decrease in the deduction attributable to the
minority interest of MKP's earnings during the six month period ended June 30,
2000.
Operating Income (Loss). Operating income decreased by $1,419,943 or
approximately 195.0% to an operating loss of $691,786 for the six months ended
June 30, 2000 compared to operating income of $728,157 for the six months ended
June 30, 1999. The decrease in operating income was attributable to the factors
referred to above.
Net Income (Loss). Net income decreased by $1,206,997 or approximately
264.5% to a net loss of $750,587 for the six months ended June 30, 2000 compared
to net income of $456,410 for the six months ended June 30, 1999. The decrease
in net income was attributable to the factors referred to above.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, we had working capital (current assets less current
liabilities) of $4,146,020, stockholders' equity of $16,209,995 and a working
capital ratio (current assets to current liabilities) of approximately 2.6:1,
compared to working capital of $4,339,117, stockholders' equity of $4,618,236
and a working capital ratio of approximately 2.5:1 as of June 30, 1999. As of
June 30, 2000 and 1999, we had cash and cash equivalents of $4,401,078 and
$4,305,387, respectively. However, we conduct our operations through our
subsidiaries and rely on cash payments from our subsidiaries to meet our
operating requirements.
For the six months ended June 30, 2000 net cash provided by our operating
activities was $158,115, compared to net cash used in our operating activities
of $1,743,430 for the six months ended June 30, 1999 . During the six months
ended June 30, 2000, we generated $158,784 of net cash in investing activities,
compared to $238,331 of net cash used for investing activities during the six
months ended June 30, 1999. For the six months ended June 30, 2000 and June 30,
1999, net cash used in the Company's financing activities was $95,000 and $0,
respectively.
As of June 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 June 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.
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<PAGE> 17
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.
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;
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<PAGE> 18
- 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 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> 19
PART II
Item 1
through
Item 4. Not Applicable
Item 5. Other Information
On August 11, 2000, the Company announced that J. William
Grimes, Jonathan F. Foster and Nathan Gantcher had been
elected to the Comparny's Board of Directors.
Item 6. Exhibits and Reports on Form 8-K
(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).
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<PAGE> 20
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).
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).
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<PAGE> 21
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 Form10-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).
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
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<PAGE> 22
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).
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
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<PAGE> 23
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-K 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-K 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-K for the year ended December 31,
1999).
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-K for the year ended December 31,
1999).
10.40 Option Agreement dated as of January 12, 2000
between the
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<PAGE> 24
Company and Ronald Nash (incorporated by reference
to the Company's Annual Report on Form 10-K 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
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<PAGE> 25
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: August 14, 2000
FINANCIAL PERFORMANCE CORPORATION
By: /s/ Jeffrey S. Silverman
------------------------------
Jeffrey S. Silverman,
Chief Executive Officer
By: /s/ William F. Finley
------------------------------
William F. Finley,
Chief Financial Officer
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