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 March 31, 2003
OR
o
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 000-25269
VERTICALNET, INC.
(Exact name of Registrant as specified in its charter)
| Pennsylvania (State or other jurisdiction of incorporation or organization) |
23-2815834 (I.R.S. Employer Identification No.) |
400 Chester Field Parkway
Malvern, Pennsylvania 19355
(Address
of principal executive offices)
Registrant’s telephone number, including area code:
(610) 240-0600
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 o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Indicate the number of shares outstanding of each of the registrant’s class of common stock, as of the latest practicable date:
The number of shares outstanding of the registrant’s common stock as of May 1, 2003 was 13,652,286.
VERTICALNET, INC.
FORM 10-Q
For the Quarterly Period Ended March 31, 2003
TABLE OF CONTENTS
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| Part I. |
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FINANCIAL INFORMATION |
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Item 1. |
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1 | |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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28 | |
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| Part II. |
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OTHER INFORMATION |
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Item 1. |
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Item 2. |
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Item 3. |
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29 | |
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Item 4. |
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29 | |
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Item 5. |
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29 | |
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Item 6. |
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| 31 |
PART I. FINANCIAL INFORMATION
ITEM 1.
CONSOLIDATED FINANCIAL STATEMENTS
VERTICALNET, INC.
CONSOLIDATED BALANCE SHEETS
(in
thousands, except per share data)
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March 31, |
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December 31, |
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(Unaudited) |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
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$ |
6,090 |
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$ |
7,979 |
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| Accounts receivable, net of allowance for doubtful accounts of $0 at March 31, 2003 and $1,684 at December 31, 2002 |
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1,837 |
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1,586 |
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| Prepaid expenses and other current assets |
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3,818 |
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3,892 |
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| Total current assets |
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11,745 |
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13,457 |
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| Property and equipment, net |
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494 |
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912 |
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| Other investments |
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606 |
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606 |
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| Intangible assets, net of accumulated amortization (see Note 5) |
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1,575 |
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1,800 |
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| Other assets |
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630 |
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1,678 |
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| Total assets |
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$ |
15,050 |
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$ |
18,453 |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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| Current portion of long-term debt |
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$ |
30 |
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$ |
415 |
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| Accounts payable and accrued expenses |
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5,386 |
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7,652 |
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| Deferred revenues |
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728 |
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279 |
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| Other current liabilities |
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1,190 |
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1,172 |
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| Total current liabilities |
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7,334 |
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9,518 |
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| Long-term debt and convertible notes |
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7,155 |
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7,293 |
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| Total liabilities |
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14,489 |
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16,811 |
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| Commitments and contingencies (see Notes 8 and 9) |
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| Shareholders’ equity: |
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| Preferred stock $.01 par value, 10,000,000 shares authorized, None issued at March 31, 2003 and December 31, 2002 |
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— |
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— |
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| Common stock $.01 par value, 100,000,000 shares authorized, 13,717,922 shares issued at March 31, 2003 and 13,708,546 shares issued at December 31, 2002 |
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137 |
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137 |
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| Additional paid-in capital |
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1,170,805 |
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1,170,742 |
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| Deferred compensation |
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(210 |
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(239 |
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| Accumulated other comprehensive loss |
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(716 |
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(736 |
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| Accumulated deficit |
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(1,168,650 |
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(1,167,457 |
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| Treasury stock at cost, 65,636 shares at March 31, 2003 and December 31, 2002 |
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(805 |
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(805 |
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| Total shareholders’ equity |
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561 |
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1,642 |
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| Total liabilities and shareholders’ equity |
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$ |
15,050 |
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$ |
18,453 |
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See accompanying notes to consolidated financial statements.
1
VERTICALNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
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Three Months Ended |
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2003 |
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2002 |
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| Revenues: |
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| Software license |
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$ |
239 |
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$ |
6,258 |
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| Services and maintenance |
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3,192 |
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1,747 |
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| Total revenues |
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3,431 |
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8,005 |
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| Cost of revenues: |
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| Cost of software license |
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188 |
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426 |
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| Cost of services and maintenance |
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720 |
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1,463 |
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| Total cost of revenues |
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908 |
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1,889 |
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| Gross profit |
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2,523 |
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6,116 |
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| Research and development |
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1,119 |
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3,516 |
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| Sales and marketing |
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667 |
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1,749 |
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| General and administrative |
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1,552 |
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3,551 |
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| Restructuring and asset impairment charges |
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(6 |
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1,355 |
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| Amortization expense |
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— |
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1,056 |
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3,332 |
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11,227 |
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| Operating loss |
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(809 |
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(5,111 |
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| Interest and other expense, net |
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(384 |
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(652 |
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| Loss from continuing operations |
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(1,193 |
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(5,763 |
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| Discontinued operations: |
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| Income from operations of discontinued operations |
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— |
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7,481 |
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| Net income (loss) |
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(1,193 |
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1,718 |
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| Preferred stock dividends and accretion |
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— |
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(1,917 |
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| Loss attributable to common shareholders |
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$ |
(1,193 |
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$ |
(199 |
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| Basic and diluted loss per common share: |
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| Loss from continuing operations |
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$ |
(0.09 |
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$ |
(0.69 |
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| Income from discontinued operations |
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— |
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0.67 |
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| Loss per common share |
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$ |
(0.09) |
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(0.02 |
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| Weighted average common shares outstanding: |
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| Basic and diluted |
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13,400 |
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11,073 |
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See accompanying notes to consolidated financial statements.
2
VERTICALNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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Three Months Ended |
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2003 |
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2002 |
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| Cash flows from operating activities |
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| Net income (loss) |
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$ |
(1,193 |
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$ |
1,718 |
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| Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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| Depreciation and amortization |
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390 |
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3,222 |
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| Other non-cash charges |
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91 |
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(222 |
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| Loss (gain) on disposal of property and equipment |
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9 |
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(108 |
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| Realized loss (gain) on investments |
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(113 |
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10 |
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| Change in assets and liabilities: |
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| Accounts receivable |
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(251 |
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(1,636 |
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| Prepaid expenses and other assets |
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(564 |
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1,378 |
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| Accounts payable and accrued expenses |
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(2,788 |
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(8,877 |
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| Deferred revenues |
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449 |
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(9,970 |
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| Other current liabilities |
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— |
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791 |
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| Net cash used in operating activities |
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(3,970 |
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(13,694 |
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| Cash flows from investing activities | |||||||