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, 2005
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: 0-27168
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
95-4102687 (I.R.S. Employer Identification No.) |
498 Seventh Avenue, Suite 1810, New York, NY 10018
(Address of principal executive offices and zip code)
(212) 201-0800
(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 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)
Yes [X] No [ ]
As of April 27, 2005, 57,932,000 shares of $0.001 par value common stock were outstanding.
TABLE OF CONTENTS
|
|
|
|
Page |
|
|
|
PART I - FINANCIAL INFORMATION |
|
|
|
|
|
|
|
|
3 | ||
|
|
|
|
|
|
|
|
Consolidated Balance Sheets – March 31, 2005 |
3 |
|
|
|
Consolidated Statements of Operations – Three months |
4 |
|
|
|
Consolidated Statements of Cash Flows – Three months ended |
5 |
|
|
|
7 | |
|
|
|
|
|
|
|
Management’s Discussion and Analysis of Financial |
17 | |
|
|
|
|
|
|
|
35 | ||
|
|
|
|
|
|
|
35 | ||
|
|
|
|
|
|
|
|
PART II – OTHER INFORMATION |
|
|
|
|
|
|
|
|
36 | ||
|
|
|
|
|
|
|
|
37 |
2
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(Unaudited)
|
|
|
March 31, |
|
December 31, |
| ||
|
|
|
|
|
|
| ||
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
2,313 |
|
$ |
5,905 |
|
|
Marketable securities |
|
|
2,597 |
|
|
2,757 |
|
|
Accounts receivable, net of reserve of $592 and $430, respectively |
|
|
4,415 |
|
|
2,583 |
|
|
Related party accounts receivable |
|
|
26 |
|
|
26 |
|
|
Prepaid expenses and other current assets |
|
|
669 |
|
|
421 |
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
10,020 |
|
|
11,692 |
|
|
|
|
|
|
|
|
|
|
|
Restricted cash |
|
|
219 |
|
|
320 |
|
|
Property and equipment, net |
|
|
1,540 |
|
|
1,485 |
|
|
Goodwill, net |
|
|
33,377 |
|
|
31,276 |
|
|
Intangible assets, net |
|
|
5,231 |
|
|
230 |
|
|
Other assets, net |
|
|
230 |
|
|
270 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
50,617 |
|
$ |
45,273 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,127 |
|
$ |
1,218 |
|
|
Accrued expenses |
|
|
2,674 |
|
|
244 |
|
|
Deferred revenues |
|
|
531 |
|
|
431 |
|
|
Related party deferred revenues |
|
|
3,381 |
|
|
4,607 |
|
|
Current portion of notes payable |
|
|
2,613 |
|
|
– |
|
|
Accrued incentive compensation |
|
|
545 |
|
|
545 |
|
|
Current liabilities related to discontinued operations |
|
|
231 |
|
|
231 |
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
11,102 |
|
|
7,276 |
|
|
|
|
|
|
|
|
|
|
|
Deferred rent |
|
|
349 |
|
|
365 |
|
|
Warrants to purchase common stock |
|
|
1,104 |
|
|
1,286 |
|
|
Subordinated notes |
|
|
– |
|
|
2,388 |
|
|
Unicast notes |
|
|
1,729 |
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
14,284 |
|
|
11,315 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $.001 par value; 5,000 shares authorized - no shares issued and outstanding at March 31, 2005 and December 31, 2004 |
|
|
– |
|
|
– |
|
|
Common stock, $.001 par value; 100,000 shares authorized - 57,976 shares issued and 57,816 shares outstanding at March 31, 2005, and 56,704 shares issued and 56,544 shares outstanding at December 31, 2004 |
|
|
58 |
|
|
57 |
|
|
Paid-in capital |
|
|
293,386 |
|
|
290,260 |
|
|
Deferred compensation |
|
|
(4 |
) |
|
(5 |
) |
|
Treasury stock at cost; 160 at March 31, 2005 and December 31, 2004 |
|
|
(1,015 |
) |
|
(1,015 |
) |
|
Accumulated other comprehensive loss |
|
|
(68 |
) |
|
(60 |
) |
|
Accumulated deficit |
|
|
(256,024 |
) |
|
(255,279 |
) |
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity |
|
|
36,333 |
|
|
33,958 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
50,617 |
|
$ |
45,273 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
|
|
|
Three Months Ended |
| ||||
|
|
|
|
| ||||
|
|
|
2005 |
|
2004 |
| ||
|
|
|
|
|
|
| ||
|
Revenues: |
|
|
|
|
|
|
|
|
Search |
|
$ |
2,180 |
|
$ |
8 |
|
|
Advertising systems |
|
|
732 |
|
|
– |
|
|
Services |
|
|
1,243 |
|
|
1,523 |
|
|
Related party services |
|
|
395 |
|
|
914 |
|
|
Licenses |
|
|
155 |
|
|
240 |
|
|
Related party licenses |
|
|
873 |
|
|
907 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
5,578 |
|
|
3,592 |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
Search |
|
|
46 |
|
|
– |
|
|
Advertising systems |
|
|
518 |
|
|
||