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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to _________
Commission File Number 000-20873
CONNECTINC.COM, Co. (Exact name of Registrant as specified in its charter)
Delaware 77-0431045 (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
515 Ellis Street
Mountain View, California 94043-2242
(Address of principal executive offices) (Zip code)
(650) 254-4000
(Registrant's telephone number, including area code)
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 reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
As of October 31, 1999 there were 14,853,215 shares of the Registrant's Common Stock outstanding.
CONNECTINC.COM, Co.
FORM 10-Q
For the Quarterly Period Ended September 30, 1999
Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Condensed Balance Sheets as of September 30, 1999 and December 31, 1998
Condensed Statements of Operations for the three and nine months ended September 30, 1999 and 1998
Condensed Statements of Cash Flows for the nine months ended September 30, 1999 and 1998
Notes to Condensed Financial Statements
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
ITEM 2 Changes in Securities and Use of Proceeds
ITEM 3 Defaults Upon Senior Securities
ITEM 4. Submission of Matters to Vote of Security Holders
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I
ITEM 1. FINANCIAL STATEMENTS
CONNECTINC.COM, Co.
BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
September 30, December 31,
1999 1998
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents.......................... $5,086 $3,965
Accounts receivable, less allowances for doubtful
accounts of $99 at September 30, 1999 and
$162 at December 31, 1998........................ 1,172 613
Prepaid expenses and other current assets.......... 358 212
------------ ------------
Total current assets................................. 6,616 4,790
Property and equipment, net.......................... 444 609
Deposits and other assets............................ 50 54
------------ ------------
Total assets................................. $7,110 $5,453
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable...................................... $381 $834
Accounts payable................................... 448 707
Accrued payroll and related expenses............... 173 167
Other accrued liabilities.......................... 630 857
Deferred revenue................................... 355 415
Current portion of extended vendor liabilities..... 118 282
------------ ------------
Total current liabilities............................ 2,105 3,262
Notes payable........................................ 111 245
Commitments and contingencies
Stockholders' equity (deficit):
Preferred Stock:
Authorized shares--35,000,000. Issued and
outstanding shares--none......................... -- --
Common Stock: $.001 par value. Authorized
shares--60,000,000. Issued and outstanding
shares--14,853,215 at September 30, 1999
and 13,213,801 at December 31, 1998.............. 15 13
Additional paid-in capital......................... 75,468 71,454
Deferred compensation.............................. (28) (60)
Accumulated deficit................................ (70,561) (69,461)
------------ ------------
Total stockholders' equity........................... 4,894 1,946
------------ ------------
Total liabilities and stockholders' equity........... $7,110 $5,453
============ ============
See accompanying notes.
CONNECTINC.COM, Co.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except loss per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Revenue:
License............................. $754 $123 $1,989 $1,608
Service............................. 853 978 2,873 3,433
--------- --------- --------- ---------
Total revenue..................... 1,607 1,101 4,862 5,041
--------- --------- --------- ---------
Cost of revenue:
License............................. 143 121 343 415
Service............................. 454 963 1,752 3,428
--------- --------- --------- ---------
Total cost of revenue............. 597 1,084 2,095 3,843
--------- --------- --------- ---------
Gross profit...................... 1,010 17 2,767 1,198
--------- --------- --------- ---------
Operating expenses:
Research and development............ 578 853 1,363 3,153
Sales and marketing................. 390 742 742 3,050
General and administrative.......... 770 411 1,949 1,761
Nonrecurring charges................ -- 1,098 -- 1,098
--------- --------- --------- ---------
Total operating expenses.......... 1,738 3,104 4,054 9,062
--------- --------- --------- ---------
Loss from operations.................. (728) (3,087) (1,287) (7,864)
Interest expense...................... (16) (27) (73) (274)
Interest income and other income, net. 99 50 260 196
--------- --------- --------- ---------
Loss before income taxes.............. (645) (3,064) (1,100) (7,942)
Provision (benefit) for income taxes.. -- -- -- --
--------- --------- --------- ---------
Net loss.............................. ($645) ($3,064) ($1,100) ($7,942)
========= ========= ========= =========
Basic and diluted net
loss per share..................... ($0.04) ($0.24) ($0.07) ($0.80)
========= ========= ========= =========
Weighted average common shares
outstanding........................ 14,754 12,890 14,674 9,909
========= ========= ========= =========
See accompanying notes.
CONNECTINC.COM, Co.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended
September 30,
--------------------
1999 1998
--------- ---------
Operating activities:
Net income (loss)........................................ ($1,100) ($7,942)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization......................... 364 1,081
Amortization of deferred compensation................. 32 32
Changes in operating assets and liabilities:
Accounts receivable................................. (559) 1,517
Prepaid expenses and other current assets........... (146) 471
Other assets........................................ 4 30
Accounts payable, accrued payroll and related
expenses, other accrued liabilities, and
extended vendor liabilities........................ (644) (1,081)
Deferred revenue.................................... (60) (306)
--------- ---------
Net cash used in operating activities................. (2,109) (6,198)
--------- ---------
Investing activities:
Purchases of property and equipment...................... (199) (208)
--------- ---------
Net cash used in investing activities................. (199) (208)
--------- ---------
Financing activities:
Proceeds from issuance of common stock and other......... 4,016 --
Proceeds from issuance of notes payable.................. -- 311
Repayment of principal on notes payable.................. (587) (775)
Repayment of principal under capital lease obligations... -- --
--------- ---------
Net cash provided (used) by financing activities...... 3,429 (464)
--------- ---------
Net increase (decrease) in cash and cash equivalents..... 1,121 (6,870)
Cash and cash equivalents at beginning of period......... 3,965 9,644
--------- ---------
Cash and cash equivalents at end of period............ $5,086 $2,774
========= =========
Supplemental disclosure of cash flow information
Cash paid for interest................................... $72 $274
Cash paid for income taxes............................... -- --
Supplemental noncash financing information
Conversion of convertible notes into preferred
stock and common stock.................................. -- $9,654
========= =========
See accompanying notes.
CONNECTINC.COM, Co. 1) THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. The financial information should be read in conjunction with
the financial statements and notes thereto included in
CONNECTINC.COM, Co.'s (formally "Connect, Inc.") Annual Report on Form
10-K for the fiscal year ended December 31, 1998, as amended (the
"Annual Report"). The results of operations for the three months and
nine months ended September 30, 1999 are not necessarily indicative of
the results that may be expected for the full fiscal year or for any
future periods.
2) NET LOSS PER SHARE Basic and diluted net earnings per share is based on the weighted
average number of shares of common stock outstanding during the period
presented, in accordance with Statement of Financial Accounting
Standards No. 128 (earnings per share).
3) PRIVATE PLACEMENT On January 22, 1999, the Company completed a private placement of
1,538,462 shares of common stock at $2.60 per share. The Company
received net proceeds of approximately $4.0 million.
4) RECLASSIFICATION Certain previously reported amounts have been reclassified to conform
to the current presentation format with no impact on net loss. All
financial information has been restated to conform to this
presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains, in addition to historical information, forward-
looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, that involve risks and uncertainties. The
Company's actual results could differ materially from the results
discussed in the forward-looking statements. Factors that could cause
or contribute to such differences include, but are not limited to,
those discussed under the caption "Risk Factors" in the Annual Report,
as well as the risks discussed elsewhere in this Quarterly Report. In
particular, such factors include: the Company's ability to implement
and execute its revised business model focused on software products;
acceptance by the marketplace of the Company's products; the Company's
ability to implement its revised business model with its existing cash
resources; the Company's ability to obtain additional capital on terms
favorable to the Company, or at all; the Company's ability to offer new
products to meet market demand or that incorporate evolving industry
standards; the Company's ability to compete effectively; acceptance of
the Internet as a medium for electronic commerce and order management;
the Company's dependence on the Internet infrastructure; and the
Company's dependence on certain third party software and services
vendors. Readers are cautioned not to place undue reliance on these
forward-looking statements, which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Readers should carefully review the risk factors
described in other documents the Company files from time to time with
the Securities and Exchange Commission, including, the Annual Report on
Form 10-K, the Quarterly Reports on Form 10-Q, and any Current Reports
on Form 8-K filed by the Company.
OVERVIEW The Company provides integration solutions to enable its customers to
engage in Internet-based electronic commerce and extend their
businesses through the emerging network supply chain. The Company's
MarketStream software applications and Web time-driven professional
services are designed to enable corporations to build open, multi-
vendor e-business solutions that help them to compete effectively in
the digital economy using best-of-breed technologies. The Company
utilizes innovative methodologies and advanced technical expertise to
conceptualize, design, develop and deploy e-business solutions. This
process is facilitated by the use of emerging Internet technologies.
This business strategy allows the Company to leverage its core
competencies and deliver to its customers effective applications and
consulting services solutions.
The Company historically designed, developed, marketed and supported
application software for Internet-based interactive commerce. In
October 1998, the Company announced a shift in business direction and
focus, to providing Internet software and systems integration services
based on technologies from both the Company and industry partners.
These combined applications, services and intellectual property
strategy are the Company's approach to providing solutions for e-
business.
During the second half of 1998 the Company executed a number of
strategic initiatives consistent with its new business direction and
focus. These initiatives included reductions in headcount, and other
cost reduction measures, directed at more appropriately aligning
expenses with revenues. Because of these actions, and expectations
from the marketplace, the Company has begun to expand its operations.
This expansion included an increase in headcount during the first nine
months of 1999. Further expansion is anticipated, including growth in
the Company's investment in the sales and marketing functions, as well
as the continued growth of our technology center in the Chicago area.
The Company's flagship product, MarketStream 2.0, was developed
during the fourth quarter 1998 and first quarter 1999. MarketStream 2.0
was developed on schedule and has re-directed the Company as an
application software company.
The Company's prospects are dependent upon the successful acceptance
of its product offerings by the market. In addition, the Company's
markets are new and rapidly evolving, which heightens these risks and
uncertainties. To address these risks, the Company must, among other
things, successfully implement its marketing strategy, respond to
competitive developments, and integrate new technologies and industry
standards into its software offerings. There can be no assurance that
the Company will succeed in addressing any or all of these risks. See
"Risk Factors" in the Annual Report, as well as the risks discussed
elsewhere in this Quarterly Report.
RESULTS OF OPERATIONS Revenue
Total revenue was $1,607,000 for the three months ended September 30,
1999, compared to $1,101,000 for the comparable period in 1998. Total
revenue was $4,862,000 for the nine months ended September 30, 1999,
compared to $5,041,000 for the comparable period in 1998. For the three
months ended September 30, 1999, five customers represented
approximately 16%, 16%, 16%, 13% and 12% of total revenue respectively.
For the nine months ended September 30, 1999, one customer represented
approximately 11% of total revenue.
License Revenue. License revenue was $754,000 or 47% of total revenue
for the three months ended September 30, 1999, compared to $123,000, or
11% of total revenue, for the comparable period in 1998. The increase
in license revenue was due to the fact that the Company was shipping
MarketStream 2.0 during this period as compared to 1998 when the
company was shipping products that are now discontinued. License
revenue was $1,989,000 or 41% of total revenue for the nine months
ended Septmeber 30, 1999, compared to $1,608,000 or 32% of total
revenue for the comparable period in 1998.
Service Revenue. Service revenue was $853,000, or 53% of total
revenue for the three months ended September 30, 1999, compared to
$978,000, or 89% of total revenue, for the comparable period in 1998.
Service revenue was $2,873,000 or 59% of total revenue for the nine
months ended September 30, 1999, compared to $3,433,000 or 68% of total
revenue for the comparable period in 1998. The decline in services
revenue during these periods was caused, in part, by the emphasis on
selling licensed products.
Cost of Revenue
Cost of License Revenue. Cost of license revenue consists of sub-
license fees. Cost of license revenue was $143,000, or 19% of license
revenue, for the three months ended September 30, 1999, compared to
$121,000, or 98% of license revenue for the comparable period in 1998.
The decrease in cost of license revenue for the three months ended
September 30, 1999 was due to lower cost from third party license fees.
Included in 1998 was a write-down of prepaid royalty costs from
discontinued vendors. Cost of license revenue was $343,000 or 17% of
license revenue, for the nine months ended September 30, 1999, compared
to $415,000, or 26% of license revenue for the comparable period in
1998. The decrease in cost of license revenue for the nine months ended
September 30, 1999 was primarily due to lower costs from third party
license fees.
Cost of Service Revenue. Cost of service revenue consists of cost of
implementation services, including fees for third-party contract
developers, Company personnel costs, training and customer support
costs. Cost of service revenue was $454,000 or 53% of service revenue
for the three months ended September 30, 1999, compared to $963,000, or
98% of service revenue, for the comparable period in 1998. For the nine
months ended September 30, 1999, cost of service revenue was $1,752,000
or 61% of service revenue, compared to $3,428,000 or 100% of service
revenue, for the comparable period in 1998. The improved margins in
1999 are due to cost reductions in the Company's services business, and
the more effective use of fixed price contracts as the primary delivery
vehicle for the Company's services business.
Operating Expenses
Research and Development. Research and development expenses consist
primarily of personnel and equipment costs. Research and development
expenses for the three months ended September 30, 1999 were $578,000,
or 36% of total revenue, compared with $853,000, or 77% of total
revenue for the comparable period in 1998. Research and development
expenses for the nine months ended September 30, 1999 were $1,363,000
or 28% of total revenue, compared with $3,153,000 or 63% of total
revenue for the comparable period in 1998. The decline in total
research and development expenses was primarily the result of staff
reductions and other cost reduction measures taken in late fiscal 1998.
The Company now has in place a continuous product improvement process
built around its newly developed component-based architecture. The
Company believes that this approach will make it easier to upgrade and
release new application functionality and improvements than it has in
the past. For the balance of 1999 the Company expects research and
development costs to increase in total.
Sales and Marketing. Sales and marketing expenses consist primarily
of salaries, benefits, travel, and marketing and promotional expenses.
Sales and marketing expenses were $390,000, or 24% of total revenue for
the three months ended September 30, 1999, compared with $742,000, or
67% of total revenue for the comparable period in 1998. Sales and
marketing expenses were $742,000 or 15% of total revenue for the nine
months ended September 30, 1999, compared with $3,050,000 or 61% of
total revenue for the comparable period in 1998. The decline in total
sales and marketing expenses was attributable to decreased staffing and
reductions in marketing expenditures initiated in 1998. With the
introduction of MarketStream 2.0, the Company expects to allocate more
resources for sales and marketing. In addition, the Company believes
that using the Internet as a significant vehicle for marketing and
sales activity is a more cost effective mechanism than traditional
direct sales used in the past. The Company intends to increase its
marketing and sales staffing through the remainder of 1999, and will
seek additional strategic business partnerships.
General and Administrative. General and administrative expenses
consist primarily of salaries of financial, administrative and
management personnel and related travel expenses, as well as legal and
accounting expenses. General and administrative expenses were
$770,000, or 48% of total revenue for the three months ended September
30, 1999, compared with $411,000, or 37% of total revenue for the
comparable period in 1998. The increase in General and administrative
expenses was attributed to increases in outside accounting, public
reporting, and bad debt expense. General and administrative expenses
were $1,949,000 or 40% of total revenue, compared to $1,761,000 or 35%
of total revenue for the comparable period in 1998. The Company expects
general and administrative expenses to increase for the remainder of
1999.
Interest Expense. Interest expense, which results principally from
interest incurred under notes payable and capital lease obligations,
was $16,000, or 1% of total revenue for the three months ended
September 30, 1999, compared with $27,000, or 2% of total revenue for
the comparable period in 1998. Interest expense was $73,000 or 2% of
total revenue for the nine months ended September 30, 1999, compared
with $274,000 or 5% of total revenue for the comparable period in 1998.
Interest expense decreased in 1999 from 1998 due to the termination of
interest payments associated with the February 1998 exchange of
convertible notes.
Interest and Other Income. Interest and other income consisting
primarily of interest income and rental income was $99,000, or 6% of
total revenue for the three months ended September 30, 1999, compared
with $50,000, or 5% of total revenue for the comparable period in 1998.
This increase was primarily due to higher cash balances in 1999.
Interest and other income was $260,000 or 5% of total revenue for the
nine months ended September 30, 1999, compared with $196,000 or 4% of
total revenue for the comparable period in 1998, primarily due to
higher cash balances.
The Company has a tax loss carry forward and is currently incurring
losses for tax purposes. Accordingly, there is no provision for income
taxes.
FACTORS AFFECTING QUARTERLY OPERATING RESULTS The Company has experienced and expects to continue to experience
significant fluctuations in quarterly operating results that may be
caused by many factors including, among others, the Company's ability
to implement and execute its business strategy, acceptance of
MarketStream 2.0, rapid changes in the marketplace, risks related to
the management of growth, the Company's ability to attract, train and
retain qualified personnel, the Company's ability to build its sales
and marketing resources, development and promotional expenses related
to the introduction of its new software releases, changes in technology
and industry standards, changes in the market for the Company's
services, the rate of acceptance of the Company's services, dependence
of the Company's business on the Internet, increased competition,
changing of pricing policies by the Company or its competitors, the
timing of receipt and orders from major customers, dependence on key
personnel, proprietary technology and the inherent difficulties in
protecting intellectual property, dependence on third-party technology,
and exposure for product and professional services liability.
Further, the Company's expense levels are based, in significant part,
on the Company's expectations as to future revenue and are therefore
relatively fixed in the short term. If revenue levels fall below
expectations, net loss is likely to be disproportionately adversely
affected because a proportionately smaller amount of the Company's
expenses varies with its revenue. There can be no assurance that the
Company will be able to achieve profitability on a quarterly or annual
basis in the future. Due to all the foregoing factors, the Company's
future operating results may be below the expectations of securities
analysts and investors. In such event, the price of the Company's
common stock would likely be materially adversely affected. See, in
particular, "Risk Factors - Our Net Revenues and Operating Results may
Fluctuate" in the Company's Annual Report.
YEAR 2000 COMPLIANCE The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year, thus
rendering them incapable of properly managing and manipulating data
that includes both 20th and 21st century dates. The ability to properly
manage and manipulate such data is referred to herein as "Year 2000
Compliant". In connection with a normal plan
of upgrading its computer resources, the Company has installed or
upgraded Information Technology ("IT") and Non-IT internal systems in
connection with operating its business. The vendors of these systems
generally have represented that their systems are Year 2000 Compliant.
While the Company currently expects that the Year 2000 issue will not
pose significant internal operational problems, delays in the
implementation of new information systems, or a failure to fully
identify all Year 2000 dependencies in the Company's systems, could
have a material adverse effect on the Company's business or results of
operations. The Company has completed all changes required to make its
IT and Non-IT internal systems Year 2000 Compliant.
The Company believes that the most current releases of its software
products are Year 2000 Compliant. The Company has contacted its
customers directly by mail and by posting information on the Company's
web site advising that non-current product releases cannot be certified
as Year 2000 Compliant. The inability of the Company's previously
released products to properly manage and manipulate data in the Year
2000 could result in increased costs and customer satisfaction issues
that could have a material adverse effect on the Company's business,
results of operations or financial condition.
The Company is in the process of developing contingency plan. This plan is
expected to be in place in the fourth quarter of 1999. The inability of the
Company to develop and implement a contingency plan could result in a
material adverse impact on the Company. The Company has had
discussions with its suppliers and financial institutions to ensure
that those parties have appropriate plans to remediate Year 2000 issues
where their systems interface with the Company's systems or otherwise
impact its operations. The Company has requested that all significant
vendors give assurance that their programs are Year 2000 Compliant.
The Company has completed upgrading all internal programs and system
interfaces with significant vendors and financial institutions to be
Year 2000 Compliant. The Company believes that no additional Year 2000
costs will be incurred to address the Year 2000 Compliance of the
Company's products, internal IT and Non-IT systems and third party
system interfaces. This belief however, is subject to change based on
any additional testing that may be done or information received during
the remainder of 1999. Additionally, there can be no assurance that a
third party's failure to ensure Year 2000 Compliance would not have an
adverse effect on the Company's operations.
The Company currently believes that total Year 2000 Compliance costs
will not be material. Accordingly, the Company believes it has
sufficient resources for the Year 2000 project from currently available
cash reserves. The cost estimate is based on the current assessment of
the Company's Year 2000 readiness needs and is subject to change.
LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations to date primarily through the
private and public sale of debt and equity securities and the use of
capitalized leases for equipment financing. The Company had working
capital of $4.5 million at September 30, 1999.
During the nine months ended September 30, 1999 and 1998, net cash
used in operating activities was $2.1 million and $5.1 million,
respectively. This was primarily due to a significant increase in
accounts receivable and reduction of accounts payable and other accrued
liabilities in 1999 and net losses incurred by the Company in both
years.
During the nine months ended September 30, 1999 and 1998, the Company
used $199,000 and $208,000, respectively, in investing activities for
the purchase of property and equipment. Net cash provided by financing
activities for the nine months ended September 30, 1999 was $3,429,000,
primarily from the sale of common stock. Net cash used by financing
activities for the nine months ended September 30, 1998 was $464,000,
from the repayment of notes payable and other.
The Company has incurred net losses and experienced significant
negative cash flow from operations since its inception. As of September
30, 1999, the Company had an accumulated deficit of $70.6 million.
Based upon its current operating plan, the Company believes it has
adequate cash balances to fund its operations through December 31,
1999. There can be no assurance, however, that the Company's actual
cash requirements will not exceed anticipated levels, or that the
Company will generate sufficient revenue to fund its operations in the
absence of additional funding sources. If additional funds are raised
through the issuance of equity securities, stockholders of the Company
may experience additional dilution, or the securities may have rights,
preferences or privileges senior to those of the Company's common
stock. There can be no assurance that such additional financing will
be available on acceptable terms, if at all. If adequate funds are not
available or are not available on acceptable terms, the Company may be
unable to continue operations, develop or enhance its products, take
advantage of future opportunities or respond to competitive pressures
or other requirements, any of which could have a material adverse
effect on the Company's business, operating results and financial
condition. There have been no material changes in the Company's market
risk during the nine months ended September 30, 1999. For additional
information, refer to page 21 of the Company's Annual Report.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Stockholders on
August 12, 1999 at the Company's offices in Mountain View,
California, where the following matters were submitted to a
vote of the stockholders, with the results as noted below. ITEM 5. OTHER INFORMATION Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
10.40 Change of Control Agreement dated as of September 10, 1999,
between the
Company and David J. Wippich.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
three months ended September 30, 1999.
CONNECTINC.COM, Co.
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 12, 1999
Dated: November 12, 1999
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Election of three (3) Class I directors to serve until
the 2001 Annual Meeting of Stockholders or until their
respective successors are elected and qualified.
Broker
Favor Opposed Abstain Non
Votes
Radha R.Basu 13,032,366 -- 250,654 --
Gordon J.Bridge 13,038,576 -- 544,444 --
Craig D.Norris 13,033,785 -- 249,235 --
2. Election of two (2) Class II directors to serve until
the 2000 Annual Meeting of Stockholders or until their
respective successors are elected and qualified.
Broker
Favor Opposed Abstain Non
Votes
Richard H.Lussier 13,037,416 -- 245,604 --
Rory T.O'Driscoll 13,034,115 -- 248,905 --
3. Approval of amendment to the Company's Second Amended
and Restated Certificate of Incorporation to change
the Company's name to ConnectInc.com, Co.
Broker
Non
Favor Opposed Abstain Votes
13,160,362 59,300 63,358 --
4. Approval of adoption of the Company's 1999 Stock
Option Plan for Non-Employee Directors and Advisors
and the reservation of 500,000 shares of the Company's
common stock for issuance thereunder.
Broker
Non
Favor Opposed Abstain Votes
' 12,708,363 436,39 138,259 --
5. Ratification of the appointment of Ernst & Young LLP
as independent auditors of the Company for the fiscal
year ending December 31, 1999.
Broker
Non
Favor Opposed Abstain Votes
13,127,400 86,043 69,577 --
CONNECTINC.COM, Co.
(Registrant)
By:
/s/ Craig D. Norris
Craig D. Norris
President and Chief
Executive Officer
(Principal Executive Officer)
By:
/s/ Kevin J. Berry
Kevin J. Berry
Vice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
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