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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): January 28, 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 January 28, 1998, CONNECT, Inc., a Delaware corporation (the "Company")
announced its earnings for the quarter ended December 31, 1997, and that it had
transferred, effective December 31, 1997, its legacy on-line services division
to a new company owned primarily by former employees of the Company. Further
details regarding this announcement are contained in the Company's press release
dated January 28, 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 January 28, 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: January 28, 1998 By: /s/ JOSEPH G. GIRATA
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JOSEPH G. GIRATA
VICE PRESIDENT OF FINANCE AND
ADMINISTRATION AND CHIEF FINANCIAL OFFICER
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EXHIBIT 99.1
PRESS RELEASE
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MOUNTAIN VIEW, CALIF., JANUARY 28, 1998 -- CONNECT, Inc. (NASDAQ: CNKT), a
leading provider of enterprise-class electronic-commerce application software,
today announced results for its fourth fiscal quarter ended December 31, 1997.
Fourth-quarter revenues were $2.3 million, compared with revenues of $3.2
million for the fourth quarter of 1996. Net loss for the fourth quarter of 1997
was $3.1 million, essentially identical to the net loss for the fourth quarter
of 1996.
For the twelve months ended December 31, 1997 revenues were $9.4 million
compared to revenues of $10.1 million for the twelve months ended December 31,
1996. Net loss for the twelve months ended December 31, 1997 was $14.6 million,
a decrease from the net loss of $16.1 million for the same period of the prior
year.
Commenting on the fourth quarter and full-year results and milestones, Gordon
Bridge, CONNECT chairman, president and CEO, said "We are disappointed with our
financial results for 1997. Going into the year, we had anticipated the market
for our products would mature much more quickly. Beginning in April of 1997, we
took quick expense-reduction actions and continued tight cost controls
throughout the year. As a result, despite a disappointing fourth quarter
revenue performance, we experienced our smallest operating loss of the past
eight quarters."
Continuing in his comments, Mr. Bridge said "Despite the disappointments of
1997, we remain optimistic about the future for our business because we have:
. lowered our expenses, thus reducing our break-even point and
conserving cash resources;
. successfully completed $10 million of additional financing
during the fourth quarter;
. announced general availability of our new MRO procurement
product, PurchaseStream, during the fourth quarter, which we
believe will offer significant new revenue opportunities;
. added Fortune-class, global companies to our growing list of
customers, such as Moore Document Solutions, Nortel (Northern
Telecom), MSX International, AT&T Wireless, Snap-on Tools, and
others;
. transferred, effective December 31, 1997, our legacy on-line
services division to a new company owned primarily by former
CONNECT employees, thus allowing the Company to focus entirely
on its eCommerce application software business. This on-line
services division contributed $1.7 million to our 1997 revenues
and has consistently operated at a loss;
. launched version 2.0 of OrderStream /TM/, CONNECT's business-to-
business order-capture application which now integrates with
back-end systems such as SAP and Oracle;
. launched Application Workbench /TM/, the first-ever suite of
development tools to easily design, develop, deploy and monitor
high-end, Web-based electronic-commerce applications;
. more than two years of experience helping customers deploy
successful electronic commerce sites.
"We believe we have the right products and the right people to deliver solutions
into a market that is expected to see significant growth. The actions we have
taken this year will better enable CONNECT, with our comprehensive and
complementary set of products, to take advantage of the opportunities available
in this market."
ABOUT CONNECT, INC.
CONNECT provides enterprise-class software for Internet-based electronic
commerce. CONNECT's award-winning OrderStream /TM/ and PurchaseStream /TM/
applications allow global companies to automate order capture, improve customer
service, and streamline distribution and demand chain processes. CONNECT's end-
to-end software solutions are designed to reduce the time and overall cost for
businesses to implement and maintain a secure sales, marketing, purchasing and
order
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capture capability on the World Wide Web. For more information, call 800-262-
2638 or access the CONNECT Web site at 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 1996 Annual Report on Form
10-K and quarterly reports on Form 10-Q for the quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997, and in particular the Company's ability to
implement its products, acceptance by the marketplace of the Company's products
and services and the Company's ability to develop new products and services.
# # #
OrderStream and PurchaseStream are trademarks of CONNECT, Inc. CONNECT is a
registered service mark of CONNECT, Inc.
Media/analyst/financial contact:
Joe Girata
CFO
CONNECT, Inc.
415/254-4000
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<CAPTION>
CONDENSED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
--------------------------------- ---------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
UNAUDITED
Revenue:
License $ 636 $ 1,956 $ 3,131 $ 4,694
Service 1,637 1,299 6,232 5,486
------- ------- -------- --------
Total revenue 2,273 3,255 9,363 10,180
Cost of Revenue:
License 208 287 753 791
Service 1,728 1,894 8,312 8,276
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Total cost of revenue 1,936 2,181 9,065 9,067
Operating Expenses:
Research & development 1,263 1,055 4,990 4,653
Sales & marketing 1,367 2,659 7,194 10,445
General & administrative 656 509 2,632 2,373
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Total operating expenses 3,286 4,223 14,816 17,471
Loss from operations (2,949) (3,149) (14,518) (16,358)
Other income (expense), net (119) 99 (66) 216
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Loss before income taxes (3,068) (3,050) (14,584) (16,142)
Benefit for income taxes -- -- -- --
------- ------- -------- --------
NET LOSS $(3,068) $(3,050) $(14,584) $(16,142)
======= ======= ======== ========
Basic & diluted net loss per share $ (0.16) $ (0.16) $ (0.77) $ (0.90)
Weighted Average shares used in 19,128 18,539 18,919 17,911
computing net loss per share
</TABLE>
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<TABLE>
<CAPTION>
CONDENSED BALANCE SHEETS
(in thousands)
December 31, December 31,
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1997 1996
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UNAUDITED
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 9,644 $ 12,214
Accounts receivable, net 2,299 2,533
Prepaids and other current assets 895 606
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Total current assets 12,838 15,353
Property and equipment, net 2,442 3,647
Other assets 84 154
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TOTAL ASSETS $ 15,364 $ 19,154
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Current Liabilities:
Accounts payable & accrued expenses $ 3,476 $ 3,950
Current portion of long-term obligations 1,246 870
Deferred revenue 681 189
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Total current liabilities 5,403 5,009
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Long-term obligations 10,593 790
Stockholders' Equity:
Common stock & additional paid in capital 61,021 60,467
Deferred compensation (96) (139)
Accumulated deficit (61,557) (46,973)
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Total liabilities and stockholders' equity $ 15,364 $ 19,154
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