<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
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 0-26123
ONLINE RESOURCES & COMMUNICATIONS CORPORATION
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 52-1623052
-------- ----------
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
7600 COLSHIRE DRIVE, McLEAN, VIRGINIA 22102
------------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(703) 394-5100
--------------
(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 such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
-------- ----------
As of April 12, 2000 there were 11,860,704 shares of the issuer's common
stock outstanding.
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ONLINE RESOURCES & COMMUNICATIONS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------------
<S> <C> <C>
ASSETS (UNAUDITED)
Current assets:
Cash and cash equivalents $ 2,828,958 $ 1,588,187
Investments 14,352,662 19,905,929
Accounts receivable (net of allowance of approximately $165,000 and
$152,000 at March 31, 2000, and December 31, 1999, respectively) 1,984,545 1,875,707
Prepaid expenses and other current assets 865,626 946,207
---------------- ----------------
Total current assets 20,031,791 24,316,030
Property and equipment, net 4,949,142 4,616,672
Other assets 259,744 284,473
---------------- ----------------
Total assets $ 25,240,677 $ 29,217,175
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 575,477 $ 812,082
Accrued expenses and other current liabilities 830,221 565,384
Accrued wages 371,518 537,553
Accrued vacation 268,640 378,640
Deferred revenues 374,116 417,926
Current portion of capital lease obligations 535,564 709,076
---------------- ----------------
Total current liabilities 2,955,536 3,420,661
Capital lease obligation, less current maturities 329,160 329,480
---------------- ----------------
Total Liabilities 3,284,696 3,750,141
Commitments
Redeemable convertible Preferred Stock, $0.01 par value:
Series B redeemable convertible preferred stock;
100,000 shares designated, no shares issued and outstanding. - -
Series C redeemable convertible preferred stock; 287,000 shares
designated, no shares issued and outstanding. - -
---------------- ----------------
Total redeemable convertible Preferred Stock - -
Stockholders' equity
Series A convertible preferred stock, $0.01 par value; 1,000,000 shares
authorized, no shares issued and outstanding. - -
Common stock, $.0001 par value; 35,000,000 shares authorized, 11,515,463, and
11,050,456 issued and outstanding at March 31,2000 and December 31,
1999, respectively. 1,152 1,105
Additional capital 84,264,131 83,035,825
Deferred stock compensation (243,839) (267,949)
Accumulated deficit (61,687,366) (56,651,707)
Receivable from the sale of common stock (335,604) (650,240)
Unrealized loss on available for sale securities (42,493) -
----------------- ----------------
Total stockholders' equity 21,955,981 25,467,034
---------------- ----------------
Total liabilities and stockholders' equity $ 25,240,677 $ 29,217,175
================ ================
</TABLE>
See accompanying notes to unaudited interim financial statements.
2
<PAGE> 3
ONLINE RESOURCES & COMMUNICATIONS CORPORATION
UNAUDITED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
---- ----
<S> <C> <C>
Revenues:
Service fees $ 2,316,815 $ 1,145,628
Implementation and other revenues 829,859 358,068
--------------- ---------------
Total revenues 3,146,674 1,503,696
Expenses:
Cost of revenues 3,098,553 1,905,916
--------------- ---------------
48,121 (402,220)
General & administrative 1,662,317 795,174
Selling and marketing 2,266,814 983,281
Systems and development 1,426,953 904,355
--------------- ---------------
5,356,084 2,682,810
--------------- ---------------
Loss from operations (5,307,963) (3,085,030)
Other income (expense):
Interest Income 301,004 41,709
Interest expense (28,700) (441,701)
---------------- ----------------
Total other income (expense) 272,304 (399,992)
--------------- ---------------
Net loss (5,035,659) (3,485,022)
Preferred stock accretion - (1,266,184)
Beneficial return on preferred shares - (2,668,109)
--------------- ----------------
Net loss available to common
stockholders $ (5,035,659) $ (7,419,315)
=============== ================
Basic and diluted loss per share $ (0.45) $ (1.81)
=============== ================
Pro forma basic and diluted loss per share $ (0.47)
================
Shares used in calculation of loss per share:
Basic and diluted 11,135,193 4,106,277
Pro forma basic and diluted 7,361,962
</TABLE>
See accompanying notes to interim unaudited financial statements.
3
<PAGE> 4
ONLINE RESOURCES & COMMUNICATIONS CORPORATION
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
----------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (5,035,659) $ (3,485,022)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 404,501 237,111
Amortization - 100,576
Compensation expense related to
Issuance of common stock 109,035 115,204
Provision for losses on accounts receivable 13,000 -
Changes in assets and liabilities:
Accounts receivable (121,838) (68,230)
Prepaid expenses and other
current assets 80,581 (111,113)
Escrow deposit - 255,000
Other assets 24,729 (8,881)
Accounts payable (236,605) (413,683)
Accrued expenses (11,198) (147,879)
Deferred revenues (43,810) 24,821
----------------- ---------------
Net cash used in operating activities (4,817,264) (3,502,096)
INVESTING ACTIVITIES
Investments in available for sale securities (13,214,935) -
Sale of available for sale securities 18,725,709 -
Purchase of property and equipment (736,971) (30,695)
----------------- ----------------
Net cash provided by (used in) investing activities 4,773,803 (30,695)
FINANCING ACTIVITIES
Proceeds from issuance of common
stock 1,143,428 96,132
Repayment of stock subscription receivable 314,636 -
Net proceeds from issuance of Series C
redeemable convertible preferred stock - 5,349,000
Repayment of capital lease
obligations (173,832) (131,578)
Repayment of long-term debt - (246,194)
---------------- ----------------
Net cash provided by financing activities 1,284,232 5,067,360
---------------- ---------------
Net increase in cash and
cash equivalents 1,240,771 1,534,569
Cash and cash equivalents at
beginning of period 1,588,187 3,471,620
---------------- ---------------
Cash and cash equivalents at end of period $ 2,828,958 $ 5,006,189
================ ===============
</TABLE>
See accompanying notes to unaudited interim financial statements.
4
<PAGE> 5
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Online Resources & Communications Corporation (the "Company") is a leading
Internet banking, bill payment and e-finance application service provider to
financial institutions. We provide our clients, primarily regional and community
banks, thrifts and credit unions, with an end-to-end outsourced service, which
is branded in their name. This enables cost-effective delivery of Internet-based
financial services to the consumer, small business and other retail customers of
our clients. By packaging our transaction services with our call center,
database and support services, we offer an integrated financial hub and a single
point of accountability for our clients and their retail customers.
INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements have been prepared in
conformity with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed, or omitted, pursuant to the rules
and regulations of the Securities and Exchange Commission. In our opinion, the
statements include all adjustments necessary (which are of a normal and
recurring nature) for the fair presentation of the results of the interim
periods presented. These financial statements should be read in conjunction
with our audited financial statements for the year ended December 31, 1999,
included in the Annual Report on Form 10-K filed by the Company with the
Securities and Exchange Commission on March 30, 2000. Our results of operations
for any interim period are not necessarily indicative of the results of
operations for any other interim period or for a full fiscal year.
2. INITIAL PUBLIC OFFERING
On June 4, 1999, the Company completed an initial public offering of
3,100,000 shares of its common stock. The offered shares generated proceeds, net
of underwriting commissions, to the Company of approximately $40 million and
this was further reduced by an additional $1 million of other related offering
costs. Concurrent with the offering, all 1,071,779 outstanding shares of our
convertible preferred stock automatically converted into 3,571,559 shares of
common stock.
3. NET LOSS PER COMMON SHARE
Basic and diluted net loss per common share is calculated by
dividing the net loss by the weighted average number of common shares
outstanding. Pro forma net loss per share is computed using the weighted average
number of shares used for basic and diluted per share amounts and the weighted
average redeemable convertible preferred stock outstanding as if such shares
were converted to common stock at the time of issuance.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
2000 1999
---------------------------------------------
<S> <C> <C>
Net loss $ (5,035,659) $ (3,485,022)
Preferred stock accretion - (1,266,184)
Beneficial return on preferred
shares - (2,668,109)
--------------- ----------------
Net loss available for common
stockholders $ (5,035,659) $ (7,419,315)
=============== ================
Weighted average number of common
shares 11,135,193 4,106,277
Effect of dilutive securities:
Stock options - -
Warrants - -
Redeemable convertible preferred stock - -
--------------- ---------------
Adjusted weighted average shares and assumed
Conversions 11,135,193 4,106,277
=============== ===============
Pro forma adjustment for redeemable convertible
preferred stock 3,255,685
Pro forma weighted average shares 7,361,962
Loss per share:
Basic and diluted $ (0.45) $ (1.81)
================ ===============
Pro forma basic and diluted $ (0.47)
===============
</TABLE>
Due to their antidulitive effects, outstanding shares of preferred stock, stock
options and warrants to purchase shares of common stock were excluded from the
computation of diluted earnings per share for all periods presented.
4. EQUITY
Effective May 2, 1999, the Board of Directors of the Company approved a 1
for 2.8056787 reverse stock split of the Company's $0.0001 par value common
stock. All references in the accompanying financial statements to the number of
shares of common stock and per share amounts have been restated to reflect this
split.
During the fiscal quarter ended March 31, 2000, individuals exercised options
and warrants to purchase 465,007 shares of common stock with net proceeds to the
Company of approximately $1.1 million.
5. COMPONENTS OF COMPREHENSIVE INCOME
Comprehensive income includes the Company's net loss adjusted for changes, net
of tax, of unrealized losses on investments in marketable securities.
Comprehensive income for the three months ended March 31, 2000 and 1999 is as
follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
2000 1999
---- ----
<S> <C> <C>
Comprehensive income:
Net loss $(5,035,659) $(3,485,022)
Unrealized loss on investments in
marketable securities (42,493) -
----------- -----------
Total comprehensive income: $(5,078,152) $(3,485,022)
=========== ===========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CAUTIONARY NOTE
This Quarterly Report on Form 10-Q may contain "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, including, but
not limited to:
- Forecasts of growth in business-to-business electronic commerce, and
growth in the number of consumers using online banking and billpaying
services;
- Statements regarding trends in Online Resources' revenues, expense
levels, and liquidity and capital resources;
- Statements about the sufficiency of the proceeds from Online Resources'
IPO and cash balances to meet currently planned working capital and
capital expenditure requirements; and
- Other statements identified or qualified by words such as "likely",
"will", "suggest", "may", "would", "could", "should", "expects",
"anticipates", "estimates", "plans", "projects", "believes", "seek",
"intend" and other similar words that signify forward-looking statements.
5
<PAGE> 6
These forward-looking statements represent the best judgment of Online Resources
as of the date of the Quarterly Report on Form 10-Q, and Online Resources
cautions readers not to place undue reliance on such statements. Actual
performance and results of operations may differ materially from those projected
or suggested in the forward-looking statements due to certain risks and
uncertainties, including but not limited to, the risks and uncertainties
described or discussed in the section "Risk Factors" in the 10-K filed March 31,
2000 of Online Resources. These risks include, among others, the following:
- our history of losses and anticipation of future losses;
- our dependence on the marketing efforts of third parties;
- the potential fluctuations in our operating results;
- our potential need for additional capital;
- our potential inability to expand our services and related products in the
event of substantial increases in demand for these services and related
products;
- our competition;
- our ability to attract and retain skilled personnel;
- our reliance on our patents and other intellectual property;
- the early stage of market adoption of the services we offer;
- consolidation of the banking and financial services industry;
- our failure to successfully implement a system upgrade or conversion may
adversely affect our business;
- our co-marketing efforts may not be successful;
- government regulation could interfere with our business;
- security breaches or system failures could disrupt our business; and
- if we lose a material client our business may be adversely impacted
OVERVIEW
We derive revenue from long-term service contracts with our financial
institution clients, who pay us recurring fees based primarily on the number of
their retail customers enrolled and transaction volumes, as well as upfront
implementation fees.
6
<PAGE> 7
As a network-based service provider, we have made substantial up-front
investments in infrastructure. We believe our financial performance and
operating leverage will be based primarily on increasing retail customer
subscriptions and transaction volumes over a relatively fixed cost base.
Our current sources of revenue are from service fees, implementations and
selling related products. We expect that our primary source of revenue growth
will come from service fees as a result of continued growth of retail
customers.
Service fees: Our primary source of revenue is from providing services
which include banking, billpaying, customer service, web page hosting, consumer
marketing, information reporting, administrative services, and communications
services. We charge our financial institution clients a fixed monthly fee based
on the number of their retail customers who use our banking, billpaying and
customer support services. Fees for web page hosting, consumer marketing,
information reporting, administrative services, and communications services are
closely tied to the number of retail customers and are bundled as either fixed
price monthly charges, fixed price project fees, or hourly billings.
Implementation and other: We generate revenue from implementation of our
services to our financial institution clients. Implementation fees are paid on a
one time basis at signing and recognized as revenue using the percentage of
completion method. Additionally, we also derive revenue from sales of related
enabling products and software at fixed prices, including our PC software,
screen-based telephone and customer service software. These have not been a
significant source of revenue and continue to decline as retail customers
migrate to the web service.
Historically, the majority of our resources have been directed to creating
our proprietary Opus(SM) system. This system enables us to provide a broad range
of services to our financial institutional clients including online banking,
billpaying, and access to complementary financial services supported by our
customer call center, marketing services and other support services. While
investment to date has been significant, we believe the infrastructure we have
built will enable us to support our anticipated growth over the next several
years with only nominal incremental cost for additional retail customers.
FINANCIAL CONDITION
Since our founding, we have incurred high costs to create our
infrastructure, while generating low revenues. As a result, we have historically
experienced large operating losses and negative cash flow. At March 31, 2000, we
had accumulated deficits of $61.7 million and net property and equipment of $4.9
million. We have funded our operations primarily through the issuance of equity
and debt securities. Ongoing working capital requirements will primarily consist
of personnel costs related to enhancing and maintaining our Opus(SM) system. We
expect to continue to incur losses in the near future.
As of March 31, 2000 the Company had $2.8 million in cash and cash
equivalents and $14.4 million in investments as compared to $1.6 million in cash
and cash equivalents and $19.9 million in investments as of December 31, 1999.
The decrease in cash and investments results from cash used for operating
purposes. Total liabilities decreased from $3.8 million as of December 31, 1999
to $3.3 million as of March 31, 2000 primarily as a result of a decrease in
current capital lease obligations.
Our limited operating history makes it difficult to evaluate our prospects
for success and our revenue and profitability potential is unproven.
RESULTS OF OPERATIONS
The following table presents certain items derived from our statements of
operations expressed as a percentage of revenue.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
<S> <C> <C>
Statement of Operations Data:
Revenues:
Service fees 73.6% 76.1%
Implementation and other revenues 26.4 23.9
----- -----
Total revenues 100.0 100.0
Expenses:
Cost of revenues 98.5 126.7
----- -----
Gross margin (loss) 1.5 (26.7)
General and administrative 52.8 52.9
Sales and marketing 72.0 65.4
Systems and development 45.3 60.1
----- -----
Total expenses 170.1 178.4
----- -----
Loss from operations (168.6) (205.1)
Total other income (expense) 8.7 (26.6)
----- -----
Net loss (159.9)% (231.7)%
====== ======
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999.
Revenues: We derive revenues from service fees, implementations and from
selling other products. Revenues increased 109% to $3.1 million for the three
months ended March 31, 2000 as compared to $1.5 million for the three months
ended March 31, 1999. This increase was primarily attributable to a 102%
increase in service fees which were driven by having on average 168% more
retail customers for the three months ended March 31, 2000
7
<PAGE> 8
compared to the average number of retail customers for the three months ended
March 31, 1999. Additionally, implementation and other fees grew 132% as a
result of increases in clients launched onto our system and one-time fees
attributable to financial institutions ending their service prior to the
expiration of their contracts.
Cost of Revenues: Cost of revenues primarily includes telecommunications,
payment processing, system operations, customer service, implementation and
related products. Cost of revenues increased 63% to $3.1 million for the three
months ended March 31, 2000 as compared to $1.9 million for the three months
ended March 31, 1999. This increase was primarily attributable to a $511,000
increase in customer service costs and a $408,000 increase in payment processing
costs. These increases resulted from the increased number of retail customers
and an increase in staff to support the growth of our operations.
General and Administrative: General and administrative expenses primarily
consist of salaries for executives, administrative and financial control
personnel and facilities costs such as office leases, insurance, and
depreciation. General and administrative expenses increased 109% to $1.7 million
for the three months ended March 31, 2000 as compared to $795,000 for the three
months ended March 31, 1999. The increase in general and administrative expenses
results from a 38% increase in headcount, increased rent and depreciation
expenses associated with the expansion of corporate facilities.
Sales and Marketing: Sales and marketing expenses include salaries and
commissions paid to sales and marketing personnel, consumer marketing costs,
public relations costs, and other costs incurred in marketing our services and
products. As of May 15, 2000, we had 41 marketing partners who act as resellers
of our services. We have no obligation to these marketing partners other than to
provide services sold to financial institutions by the marketing partners and to
pay commissions to them on the sales. The marketing partners have no obligations
to us other than to re-sell our services. Sales and marketing expenses increased
131% to $2.3 million for the three months ended March 31, 2000 as compared to
$983,000 for the three months ended March 31, 1999. Increased personnel costs,
consumer marketing expenses, commissions, and travel costs contributed to the
escalation in sales and marketing expenses. The increases in consumer marketing
expenditures are attributable to promoting the adoption of our services by the
retail customers of the growing number of launched financial institution
clients.
Systems and Development: Systems and development expenses include salaries
of personnel in the systems and development department, consulting fees and all
other expenses incurred in supporting the development of new services and
products, and new technology to enhance existing products. System and
development expenses increased 58% to $1.4 million for the three months ended
March 31, 2000 as compared to $904,000 for the three months ended March 31,
1999. This was primarily attributable to costs associated with a technical staff
expansion and the use of third party consultants. The cost of third party
consultants is generally higher than the cost of internal resources.
Other Income and Expense: Interest income increased 622% to $301,000 for
the three months ended March 31, 2000 as compared to $42,000 for the three
months ended March 31, 1999. The increase was due to the investment of a portion
of the IPO proceeds in available for sale securities during the first quarter of
2000. Interest expense decreased 94% to $29,000 for the three months ended March
31, 2000 as compared to $442,000 for the three months ended March 31, 1999. The
decrease in interest expense is a result of the Company extinguishing $9.4
million of corporate debt on June 10, 1999.
For the three months ended March 31, 2000 and 1999 the basic and diluted
loss per share from operations was $(0.48) and $(1.81), respectively. The pro
forma loss per share from operations was $(0.47) for the three months ended
March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Since inception and until our initial public offering, we have primarily
financed our operations through private placements of our common and preferred
stock and the issuance of debt. We have also entered into various capital lease
financing agreements. In June 1999, we closed our initial public offering of
3.1 million shares of common stock at an initial public offering price of
$14.00 per share. Net of underwriting commissions, we received cash proceeds of
approximately $40 million in cash, which was reduced further by an additional
$1 million of other related offering costs. At March 31, 2000 we had $2.8
million in cash and cash equivalents and $14.4 million in investments in
available for sale securities.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999.
Net cash used in operating activities was $4.8 million for the three months
ended March 31, 2000 as compared to $3.5 million in the three months ended March
31, 1999. Cash used in operating activities in the three months ended March 31,
2000 resulted primarily from a net loss of $5.0 million. Cash used in operating
activities in the three months ended March 31, 1999 was primarily attributable
to a net loss of $3.5 million.
Net cash provided from investing activities in the three months ended March
31, 2000 was $4.8 million, which primarily resulted from the net reduction of
$5.5 million of investments in available for sale securities.
Net cash provided by financing activities was $1.3 million in the three
months ended March 31, 2000 as compared to $5.1 million in the three months
ended March 31, 1999. Cash provided by financing activities in the three months
ended March 31, 2000 resulted primarily from the issuance of $1.1 million of
common stock attributable to the exercise of stock options and warrants. During
the three months ended March 31, 1999 $5.3 million in cash provided by financing
activities was the result of the issuance of Series C redeemable convertible
preferred stock. At March 31, 2000 Online Resources had cash and cash
equivalents of $2.8 million, investments in available for sale securities of
$14.4 million, working capital of $17.1 million, long term obligations of
$329,000 and stockholder equity of $22.0 million.
Online Resources currently believes that cash balances will be sufficient
to meet anticipated cash requirements through at least 2000. However, there can
be no assurance that additional capital beyond the amounts currently forecasted
by Online Resources will not be required or that any such required additional
capital will be available on reasonable terms, if at all, at such time as
required.
In addition, until cash generated from operations is sufficient to satisfy
our future liquidity requirements, we believe that we will be required to seek
additional funds through issuance of additional equity or debt securities or
through credit facilities. The sale of additional equity will result in dilution
to our stockholders. Financing may not be available in the future in amounts or
on terms acceptable to us, if at all.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not have operations subject to risks of foreign currency
fluctuations, nor do we use derivative financial instruments in our operations
or investment portfolio. Our exposure to market risk related changes in interest
rates relates primarily to our investment portfolio. At March 31, 2000 our
investment portfolio consisted of $2.8 million of cash and cash equivalents
invested in demand deposit and overnight investment accounts and $14.4 million
invested in available for sale securities. The fair value of our investment
portfolio or related income would not be significantly impacted by either a 100
basis point increase or decrease in interest rates due mainly to the short-term
nature of the major portion of our investment portfolio. All of the potential
changes noted above are based on sensitivity analysis performed on our balances
as of March 31, 2000.
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any pending material litigation nor is it
aware of any pending or threatened litigation that would have a material adverse
effect on the Company or its business.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Proceeds to Online Resources, from its initial public offering in June,
1999, net of offering costs from the offering, totaled approximately $39
million. As of March 31, 2000, Online Resources had used $9.4 million of the
proceeds for the repayment of debt, $12.4 million for working capital and $17.2
million was held in cash and temporary investments.
During the fiscal quarter ended March 31, 2000, individuals exercised
options and warrants to purchase 465,007 shares of common stock with net
proceeds to the Company of approximately $1.1 million.
<PAGE> 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS
(A) Exhibits
(27) Financial Data Schedule
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.
ONLINE RESOURCES & COMMUNICATIONS
CORPORATION
Date: May 15, 2000 By: /s/ Matthew P. Lawlor
--------------------------- -------------------------
Matthew P. Lawlor
Chairman and Chief Executive
Officer (Principal Executive Officer)
Date: May 15, 2000 By: /s/ Carl D. Blandino
--------------------------- ------------------------
Carl D. Blandino
Chief Financial Officer, Executive
Vice President
(Principal Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED 3/31/00 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,828,958
<SECURITIES> 14,352,662
<RECEIVABLES> 2,149,545
<ALLOWANCES> (165,000)
<INVENTORY> 0
<CURRENT-ASSETS> 20,031,791
<PP&E> 8,752,700
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0
0
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