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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 12, 1998
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CONNECT, Inc.
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(Exact name of registrant as specified in charter)
Delaware
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(State or other jurisdiction of incorporation)
000-20873 943036611
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(Commission File Number) (IRS Employer Identification No.)
515 Ellis Street, Mountain View, California 94043
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 254-4000
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N/A
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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On October 12, 1998, CONNECT, Inc., a Delaware corporation (the "Company")
announced its results for the quarter ended September 30, 1998, as well as
certain other matters. Further details regarding this announcement are
contained in the Company's press release dated October 12, 1998 attached as an
exhibit hereto and incorporated by reference herein.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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Exhibit 99.1 CONNECT, Inc. Press Release dated October 12, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CONNECT, Inc.
(Registrant)
Dated: October 13, 1998 By: /s/ GREIGORY PARK
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Greigory Park
Vice President of Finance
and Chief Financial Officer
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EXHIBIT 99.1
PRESS RELEASE
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MOUNTAIN VIEW, Calif., Oct. 12 /PRNewswire/ -- CONNECT, Inc. (Nasdaq: CNKT -
news) today announced Company results for its third quarter ending September 30,
1998. Net loss for the third quarter was $3,064,000, or $.24 per share, on
revenues of $1,101,000 compared to a net loss of $3,155,000, or $.83 per share,
on revenues of $2,023,000 for the comparable quarter in 1997. Net loss for the
nine months ended September 30, 1998 was $7,942,000, or $.80 per share, on
revenue of $5,041,000 compared to a net loss of $11,516,000, or $3.05 per share,
on revenue of $7,090,000 for the comparable period in 1997. The net loss for the
third quarter of 1998 includes approximately $1.1 million in one-time charges
and write-offs resulting from the Company's decision to focus its business on
providing Internet systems integration. The nature of these one-time charges
includes a write down of discontinuing operations and staff reductions.
Craig Norris, CONNECT's president and CEO, said "As the Internet business
market evolves, we see a significant opportunity to enhance shareholder value by
continuing to build on our core competency in creating e-business solutions. The
majority of our revenue has historically come from our solutions team, and we
see the rapidly expanding market for e-business consulting and services as a
growth opportunity. In recent months, CONNECT has taken steps to integrate new
technologies and industry standards into our solutions offerings. This strategy
enables us to craft customized solutions to meet our customer's
industry-specific requirements. The continued skilled implementation of
CONNECT's current technology assets as well as those of other companies places
CONNECT on the forefront of Internet systems integration partners."
Norris continued, "We have developed a business and financial plan which
indicates our current level of assets will be adequate to fund a dynamic and
growing Internet integration business based on technologies from both CONNECT
and industry partners. We will be making the necessary adjustments to overall
operating expenses, including staff, in areas of the company not essential to
support this direction, while growing resources in areas directly related to our
service offerings. In addition, we will continue to support the unique e-
business needs of our existing customers as their solutions grow and evolve to
meet their changing business needs. We are confident we will continue to provide
them with exceptional levels of service and support, custom tailored to their
needs, while aggressively pursuing integration opportunities with new partners
and customers."
Mr. Norris went on to state, "With this announcement, our formal effort to
identify investment partners working with Alliant Partners is ending. In the
past few months, feedback from potential strategic partners and existing
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customers has highlighted the extraordinary competency our team has developed in
the consultation and delivery of fast moving, e-business solutions. This leads
us to recognize that our best strategy for long term growth is to develop new
sources of revenue which capitalize and expand on our well- developed
integration expertise."
About CONNECT, Inc.
CONNECT provides integration solutions to enable Internet-based electronic
commerce and build the "Connected Corporation" from any link in the emerging
network supply chain. CONNECT's Web time-driven professional services enable
Connected Corporations to build open, multi-vendor e-business solutions that
allow them to compete effectively in the digital economy using best-of-breed
technologies. For more information, telephone 1-800-262-2638 or access the
CONNECT World Wide Web site at http://www.connectinc.com.
Except for the historical information contained herein, the matters discussed in
this news release are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those in
such forward-looking statements. Potential risks and uncertainties include,
without limitation, those mentioned in the Company's 1997 Annual Report on Form
10-K and the quarterly reports on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998, and in particular the Company's ability to implement its
revised business model focused on software services, acceptance by the
marketplace of the Company's services and the Company's ability to implement its
revised business model with its existing cash resources.
Condensed Statement of Operations
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
Unaudited
<S> <C> <C> <C> <C>
Revenue:
License $ 123 $ 613 $ 1,608 $ 2,495
Service 978 1,410 3,433 4,595
Total revenue 1,101 2,023 5,041 7,090
Cost of Revenue:
License 121 151 415 545
Service 963 1,788 3,428 6,584
Total cost of revenue 1,084 1,939 3,843 7,129
Operating Expenses:
Research & development 853 1,105 3,153 3,727
Sales & marketing 742 1,473 3,050 5,827
General & administrative 1,509 634 2,859 1,976
Total operating
expenses 3,104 3,212 9,062 11,530
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Loss from operations (3,087) (3,128) (7,864) (11,569)
Other income (expense),
net 23 (27) ( 78) 53
Loss before income taxes (3,064) (3,155) (7,942) (11,516)
Benefit for income taxes -- -- -- --
Net Loss ($3,064) ($3,155) ($7,942) ($11,516)
Basic and Diluted net
loss per share $(0.24) $(0.83) $(0.80) $(3.05)
Weighted common shares
outstanding 12,890 3,807 9,909 3,770
</TABLE>
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<TABLE>
<CAPTION>
Condensed Balance Sheets
(in thousands)
September 30, December 31,
1998 1997
Unaudited
<S> <C> <C>
Current assets:
Cash and cash equivalents $3,812 $ 9,644
Accounts receivable, net 781 2,298
Prepaid and other current
assets 241 895
Total current assets 4,834 12,837
Property and equipment, net 714 2,442
Other assets 55 85
Total Assets $5,603 $15,364
Current Liabilities:
Accounts payable & accrued
expenses $2,581 $ 3,476
Current portion of
long-term obligations 1,140 1,246
Deferred revenue 375 681
Total current liabilities 4,096 5,403
Long-term obligations 444 10,593
Stockholders' Equity (Deficit) 1,063 (632)
Total liabilities and
stockholders' equity $5,603 $15,364
</TABLE>
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