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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Commission File Number 0-24559
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MULTEX.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 22-3253344
(State of incorporation) (I.R.S. Employer Identification Number)
100 WILLIAM STREET, 7th FLOOR
NEW YORK, NEW YORK 10038
(212) 607-2400
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Securities registered pursuant to section 12(b) of the act:
None
Securities registered pursuant to section 12(g) of the act:
Common Stock, par value $0.01 per share
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.
|X| Yes |_| No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 21, 2001 was $438,523,000 (based on the last reported
sale price on the Nasdaq National Market on that date). The number of shares
outstanding of the registrant's common stock as of March 21, 2001 was
31,884,122.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents (or parts thereof) are incorporated by reference into
the following parts of this Form 10-K:
Certain information required in Part III of this Form 10-K is incorporated by
reference to the registrant's Proxy Statement for its 2001 Annual Meeting of
Stockholders.
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MULTEX.COM, INC.
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ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2000
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TABLE OF CONTENTS
Page
PART I .................................................................................................2
ITEM 1. BUSINESS.........................................................................................2
ITEM 2. PROPERTIES......................................................................................13
ITEM 3. LEGAL PROCEEDINGS...............................................................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................14
PART II ................................................................................................14
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...........................14
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA............................................................15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................25
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................................31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE............52
PART III ................................................................................................53
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............................................53
ITEM 11. EXECUTIVE COMPENSATION..........................................................................53
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..................................53
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................................................53
PART IV ................................................................................................54
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.................................54
SIGNATURES......................................................................................55
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THIS ANNUAL REPORT ON FORM 10-K INCLUDES FORWARD-LOOKING STATEMENTS MADE UNDER
THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES,"
"SEEKS," "ESTIMATES," AND SIMILAR EXPRESSIONS IDENTIFY SUCH FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE EXPRESSED HEREIN. SUCH RISKS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SECTION ENTITLED "RISK
FACTORS THAT MAY AFFECT FUTURE RESULTS" ON PAGES 26 THROUGH 30 OF THIS FORM
10-K. UNLESS REQUIRED BY LAW, MULTEX UNDERTAKES NO OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS. READERS SHOULD ALSO CAREFULLY REVIEW THE RISK
FACTORS SET FORTH IN OTHER REPORTS AND DOCUMENTS MULTEX FILES FROM TIME TO TIME
WITH THE SECURITIES AND EXCHANGE COMMISSION.
PART I
ITEM 1. BUSINESS
Multex.com, Inc. (www.multex.com) is a global provider of investment information
and technology solutions for the financial services industry, including
brokerage firms, professional money management firms, hedge funds, venture
capital firms, mutual funds, investment banks, corporations, and individual
investors. Our services enable timely online access to over 3,000,000 research
reports on more than 28,000 companies. These reports are published by over 750
investment banks, brokerage firms and third-party research providers worldwide.
We offer research reports from all the top Institutional Investor-ranked US,
European, Asian and Latin American brokerage firms, including Merrill Lynch,
Morgan Stanley Dean Witter, Goldman Sachs, and Salomon Smith Barney. We also
provide access to global real-time earnings and revenue estimates on over 17,000
companies, and corporate and financial information on more than 15,000
companies. Through our own Web sites and a number of strategic distribution
relationships, more than 4,000,000 users, including institutional investors and
financial professionals, such as mutual funds managers, portfolio managers,
brokers and their clients, and individual investors, are able to use our
services. In providing investment information, Multex's technology expertise is
a key differentiator, and Multex has become a leading provider of
private-labeled Internet and intranet information delivery solutions for its
target markets. Multex has built complex, highly effective browser-based client
solutions that aggregate and integrate information from multiple sources. These
solutions also provide searching capabilities, and disseminate information to
internal and/or external audiences based on client-defined access and
authentication rules in a highly secure environment. Multex offers a full range
of hosting solutions for these private-labeled solutions, including 24-hour
support and maintenance.
Industry Overview
In recent years, there has been substantial worldwide growth in the ownership of
equity and fixed-income securities. Growth in financial assets resulted from a
number of factors, including households allocating more of their assets to
equity investments, sustained high returns in the equity markets over a number
of years, lower trading costs as a result of regulatory changes and improved
technologies, and an increase in the number of mutual funds. Multex believes
that weakness in the stock market in late 2000 and early 2001 has resulted in a
greater awareness of, and an enhanced demand for, authoritative, accurate and
timely investment information.
Multex believes that institutional investors are increasingly demanding
"real-time" or near "real-time" access to global investment research and
accurate market information, including detailed issuer fundamentals, SEC
filings, business and financial news, stock quotes, stock price graphs and
annual reports. Traditionally, investment research was mailed to these
investors, which resulted in delays in the receipt of the research and
significant printing, duplicating and mailing costs. To distribute research
reports on a more timely basis, some analysts use facsimile transmission.
However, conventional distribution methods do not allow investment banks or
brokerage firms to control which investors access and view their research.
Moreover, large institutional investors often receive hundreds of paper reports,
totaling thousands of pages, each week. Paper-based reports must be manually
sorted, distributed, stored, reviewed and prioritized, which can be time
consuming and expensive. Similarly, large users of investment research and other
financial information also include investment banks and brokerage firms, which
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utilize their proprietary research and other corporate documents, as well as
research purchased from other sources, to support their own banking, sales,
trading and marketing functions. These firms seek to quickly and efficiently
distribute research and other documents to their investment bankers, brokers and
traders in geographically dispersed locations.
Investment research is one of the primary tools institutional and individual
investors use to assist them in deciding whether to invest in a company or
industry and when to buy and sell a particular security. Investment banks and
brokerage firms, as the primary providers of investment research, have invested
billions of dollars developing their research capabilities, which they use to
build their brand name recognition, enhance customer loyalty and generate
investment banking and trading revenues. Many of these firms are expanding the
breadth and scope of their research, increasing the number of companies and
industries covered by their research efforts and providing research on
international markets. The ability to offer investment research to investors who
traditionally have not had timely access to it is increasingly becoming a
competitive advantage and a key distinguishing feature for brokerage firms. As
the industry becomes more competitive, investment banks and brokerage firms want
to distribute their research in the fastest and most efficient manner possible
to meet increasing investor demand for better and quicker access to investment
research and market information.
In response to the shortcomings of the traditional research distribution
methods, investment banks and brokerage firms have tried new distribution
methods, including e-mail and distribution through their Web sites, with varying
degrees of success. Distribution by e-mail is inefficient because it not only
requires the recipient to open and view each e-mail message, but it also lacks
easily distinguishable characteristics that would allow the recipient to
differentiate one message from another. Also, e-mail messages cannot be easily
retrieved by non-recipients. Web-site distribution by investment banks and
brokerage firms requires the investor to visit and search numerous Web sites
that provide research, which is time-consuming and inefficient.
The Multex Solution
Our investment research and financial information services provide users online
access to a wide range of research and other investment information from
corporations, leading investment banks, brokerage firms and other third-party
research providers worldwide. Our Internet-based technology solutions ensure
timely receipt of information for critical investment decisions and enable
research providers to target their research more efficiently. At the same time,
recipients of the information can use our proprietary search tools to locate and
retrieve the desired information, saving the time and expense of manually
searching through printed reports. Online availability also eliminates costs
otherwise incurred in printing, mailing, sorting and filing printed reports.
Finally, we enable research and information providers to market more
efficiently, not only by reaching their target customers more effectively, but
also by providing feedback regarding their access and usage patterns. Our
services provide the following key benefits:
Extensive Databases of Research and Financial Information. We provide investors
with access to extensive online databases of research reports, consensus revenue
and earnings estimates, fundamental financial data and other investment
information on over 28,000 companies. We typically add reports to our database
at the rate of more than 20,000 new reports each week. The research reports in
our database include all text, charts, graphs, tables, color and document
formatting contained in the original report. We continually update and maintain
our database of detailed financial and corporate data on almost every
publicly-traded US corporation. For some of our customers, we also provide
access to stock quotes and real-time SEC filings as part of our services. Our
consensus revenue and earnings estimates provide investors with analysts'
detailed earnings and revenue forecasts for the companies they follow, and
include forecast figures, analyst and broker names, initial and revised
estimates and revision dates. Company fundamental information offered to clients
through our Market Guide products includes a comprehensive view of a given
company, complete with business description, management information,
quarterly and annual financial data, institutional ownership information, and
other vital operational information.
Efficient, Cost-Effective Research Distribution. We enable investment banks,
brokerage firms and third-party research providers to electronically distribute
their research reports to customers, brokers, bankers and traders via the
Internet or their intranets on a real-time basis. Our services permit research
to be distributed to multiple locations simultaneously. By using our services,
research providers can target investors worldwide, monitor investor requests for
research reports and determine who has accessed their reports. Because our
services are distributed over the
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Internet and/or our customers' intranets, research providers save printing and
mailing costs and can more easily target their research to their customers. Our
services are password protected and research included in our database can be
accessed only by authorized users.
Comprehensive Search Capabilities. We have incorporated extensive search
capabilities into our services, thereby enabling users to rapidly and easily
locate relevant research from hundreds of sources, and to reduce the costs of
indexing, organizing and distributing research reports. Users can search for a
particular research report by a number of criteria, including company name,
industry, ticker symbol or analyst. Additionally, users can search on a full
text basis for words or phrases. We also enable users to create searchable,
customized research profiles and portfolios to further facilitate finding and
retrieving documents.
Ease and Efficiency of Use. Our services are designed to facilitate the
electronic contribution and online distribution of investment research, as well
the efficient dissemination of financial and corporate data over the Internet.
Our proprietary software allows sell-side research departments and third-party
information providers to easily contribute research reports, financial models,
graphic presentations and other documents directly to our databases in
real-time. Research providers can use existing word processing and desktop
publishing software, including Microsoft Word, Excel and PowerPoint, as well as
WordPerfect, HTML and multimedia creation software, and are not required to
modify their method of document creation. For users accessing research, our
proprietary technology incorporates a graphical user interface and provides
access through leading Internet browsers to simplify finding, retrieving,
viewing and printing research reports.
Private-labeled solutions. Multex recognizes its clients' need for global,
national and internal brand-building and offers its information, tools and
services to help create and host private-label solutions for information access
and delivery. These solutions can aggregate information of any type or format,
integrate data from multiple sources, including a client's own data and data
from third-party sources, and disseminate information both internally within the
client and externally to prospects or customers. Clients use these private-label
solutions to create a rich environment to better service their internal and/or
external audience and to differentiate themselves from their competitors. These
private-labeled solutions are fully designed and developed by Multex, and hosted
in Multex's state-of-the-art data centers complete with back-up and contingency
systems, and offer global round-the-clock support and help desk functionality.
Through these solutions, Multex helps its clients focus on their core
competencies, leaving Multex to provide supporting technological capabilities.
Strategy
Our objective is to be the leading global provider of online investment
research, financial information and related technology services for the
institutional investment community. The following are the key elements of our
strategy:
Provide Extensive Investment Research and Financial Information. We intend to
continue to leverage our success as an investment research and financial
information source for institutional and individual investors. We continuously
target leading investment banks and brokerage firms in an effort to add their
research to our research database. By establishing relationships with other
third-party providers of investment and financial information, including
Morningstar, Standard & Poor's, Value Line, Quote.com and others, we can offer
extensive third-party investment research and information. Through our 1999
acquisition of Market Guide we are able to provide accurate, timely and
objective financial, descriptive and other information on publicly-traded
corporations. We recently purchased the non-US earnings estimates business from
BARRA, Inc. to augment our existing US earnings estimates offerings. Through our
Multex Global Estimates division, we are able to provide proprietary earnings
and revenue estimates. We believe that by continually incorporating additional
sources of investment and financial information into our databases, we will be
well positioned to become the premier source of high-value investment
information.
Expand Distribution Channels. We employ a broad array of distribution channels
for our services and are continuously identifying and developing new channels.
For distribution of investment research into the institutional investor market,
we have agreements with leading third-party distributors, including FactSet,
Advent, Bloomberg, Dow Jones and Reuters. Through our Market Guide brand, we
distribute detailed corporate and financial information to over 150 Web sites
and information vendors servicing individual investors, including, Yahoo!,
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AOL Time Warner, Ameritrade, Charles Schwab, E*Trade, the Motley Fool, and
professional vendors that service the institutional marketplace including
FactSet, Reuters, OneSource and Siebel.
Increase Awareness of the Multex Family of Brands. We believe that increasing
the brand name awareness of Multex and our services in the financial community
will contribute to our future success. We have successfully built a brand name
among institutional investors, research providers and the consumers of financial
information and are targeting our marketing efforts to expand the global
recognition of our brand names through advertising, direct mail, trade shows,
seminars and conferences as well as joint marketing initiatives with information
providers and distributors. We seek to incorporate our branded logo on each Web
site that utilizes our information or technology to increase the client and
prospective client awareness of the Multex family of brands.
Support Marketing Activities of Our Retail Brokerage Clients. Through our Multex
Investor web sites, we are targeting the individual investor market to provide
lead generation capabilities for our retail brokerage clients while providing
unique investment research information to individual investors. We intend to
expand our related sales and marketing efforts in order to increase traffic on
Multex Investor and expand our member base. In addition, to address the
individual investor market, we attempt to capitalize on our arrangements with
leading Internet portals and personal finance Web sites, including America
Online, The Wall Street Journal Interactive, CNNfn, Yahoo!, and Intuit. We are
also seeking to expand the scope of research available to individual investors
on Multex Investor from leading investment banks and brokerage firms. For retail
brokerage firms, Multex Investor provides an opportunity to establish a
relationship with individual investors on the Internet.
Extend Global Presence. To provide U.S. and foreign investors with access to
financial information and investment research obtained directly from issuers or
prepared by leading investment banks and brokerage firms throughout the world,
we target international companies, contributors and subscribers from our
headquarters in New York, and from offices in London, San Francisco, Edinburgh
and Hong Kong. We intend to open offices in other leading financial centers. We
believe that institutional investors in Europe, the Pacific Rim and the numerous
emerging markets require access to high quality online investment research and
information. Many investment banks and brokerage firms in U.S. and foreign
markets are seeking to distribute their research worldwide. For the global
individual investor and retail brokerage markets, Multex has formed joint
ventures with Reuters to offer research and investment information to
individuals outside of U.S. In this respect, Multex Investor Europe serves the
individual investor and retail brokerage markets in United Kingdom, Germany, and
France, with sites that are now fully operational. Multex Investor Japan is
expected to serve the Japanese market. Multex Investor Japan is expected to
begin operation in mid-2001.
Maintain Technology Leadership. We intend to continuously develop new
technologies to enhance our services. We intend to maintain our leadership
position by continuing to improve our technology through investment in research
and development activities, use of new Internet, intranet and extranet
technologies and integration of each of our services. In particular, we are
extending our available document formats to support XML tagging, spreadsheets,
presentation applications, HTML-based pages, URL references, and audio and video
files. We continue to enhance our intelligent categorization tool, which
provides our clients context and "learning" from the publishing habits of over
35,000 analysts.
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Services
The following table sets forth summary information concerning our principal
products and service offerings:
Multex Service Offerings
Name of Service Description Target Market
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MultexNET Access to real-time, commingled Buyside and sellside
broker research, global revenue and earnings institutions and corporations
estimates, company fundamental information
MultexEXPRESS Development, hosting and real-time Sellside investment banks and
distribution of research and other brokerage firms, buyside
information on customized Web sites institutions, and other
for institutional clients financial services companies
MultexNet On-Demand Access to commingled, pay-per-view Corporations, financial
research on a delayed basis institutions and advisors,
professional service firms
and libraries
Multex Investor Financial destination Web site with Retail brokerage firms and
access to free and pay-per-view Individual investors
research on a delayed basis, as
well as other financial data for the individual
investors
Market Guide Financial and corporate information Financial institutions,
and reports on over 15,000 publicly institutional investors,
traded companies, and estimate corporations, and financial
information on 17,000 companies web sites
worldwide
MultexNET
MultexNET enables subscribers to access, on a real-time basis over the Internet,
commingled full-text investment research reports supplied by leading investment
banks, brokerage firms and third-party research providers. In addition to
brokerage research, MultexNet also provides earnings and revenue estimates and
company fundamental data. Over 11,000 mutual fund managers, portfolio managers
and other institutional investors, as well as research analysts and other
financial services professionals, to use MultexNET, which offers timely online
access to over 3,000,000 research reports and other investment information from
approximately 750 information providers. Subscribers to MultexNET are offered
advanced searching and filtering capabilities, and the ability to view and
retrieve the information over the Internet. Our proprietary software enables us
to distribute a particular research or other financial report only to those
users who have been authorized or entitled to access the report by the firm that
authored the report. MultexNET enables research and other information providers
to monitor requests for their research reports and determine who has accessed
and viewed the reports. Subscribers who are entitled to access particular
embargoed research and third-party research information are able to access these
reports through MultexNET On-Demand on a pay-per-view basis after the typical
embargo period has ended.
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Content features of MultexNET include real-time access to high-quality
multimedia and rich text research reports, earnings and revenue estimates,
company fundamental information, events calendar, stock screening tools, delayed
stock quotes and SEC filings. The searching functionality of MultexNET includes
the ability to utilize advanced searching features -- which permit searches by
company name, ticker symbol, brokerage firm, analyst, industry/subject codes and
date, and report subject and type. Profiles and Alerts offer the ability to
create and modify customized profiles in order to ensure the delivery of updated
research information about those companies in a particular user's portfolio or
profile. MultexNET also offers easy-to-use document viewing, printing, faxing
and e-mail options. In addition, subscribers may arrange for automated fax
and/or e- mail distribution of research reports to the subscriber's end-users.
Preference settings offer users the ability to customize the usage experience by
fine-tuning all key aspects of the MultexNET.
Research reports and other financial information available through MultexNET are
stored on our servers and made available to subscribers who have an Internet
connection, or a connection to an extranet maintained by us, Microsoft Internet
Explorer or Netscape Navigator Web browsers, and the Adobe Acrobat viewer
installed on their workstation, desktop or laptop computer. Through the recent
introduction of Multex's second-generation wireless offering, information can
also be retrieved via any hand-held device that handles micro-browser
technology. Pricing for MultexNET is based on number of users accessing the
service.
MultexEXPRESS
MultexEXPRESS is our application service provider business ("ASP") that enables
investment banks, brokerage firms and other financial institutions to distribute
their own proprietary financial research, as well as corporate documents, forms,
news and other proprietary content, over the Internet or through intranets and
other private networks. Using MultexEXPRESS, investment banks, brokerage firms
and other financial institutions are able to reduce the cost of printing and
distributing research reports and other internal information and can disseminate
more timely information to their employees and customers. Similar to MultexNET,
MultexEXPRESS offers the contributing firm the ability to identify which users
actually access research through the usage reporting system incorporated into
MultexEXPRESS. MultexEXPRESS can be implemented as a unique Internet site or
seamlessly integrated into a firm's existing online presence to target
information to employees and key clients on a real-time basis. MultexEXPRESS is
built on the same technology platform and provides users with the same core
functionality found in MultexNET. MultexEXPRESS also offers additional features
and integration options targeted to the internal distribution needs of
investment banks, brokerage firms and other financial institutions.
MultexEXPRESS also offers BuzzPower workgroup collaboration solutions, through
the recent acquisition of Buzz Company. The BuzzPower technology allows regional
and global research analysts, departments, and offices to collaborate during the
research making process to improve the research quality by leveraging
cross-company knowledge. For the buyside, the collaboration tools provide
solutions for portfolio managers to work together and share knowledge during the
investment research and asset allocation processes to enhance the quality of
investment decision-making process. The MultexEXPRESS solution-set also provides
lead management solutions -- lead generation, delivery, and feedback - for the
buy and sellsides to better acquire and manage leads. MultexEXPRESS is generally
contracted for a one- to three-year period at a fixed rate dependent upon the
scale of the enterprise-wide solution offered to the customer.
MultexNet On-Demand
MultexNet On-Demand gives corporations, financial institutions and advisors,
institutional investors, other professional service firms and libraries, the
ability to access more than 1 million research reports and other information
from 480 MultexNET research providers. Each report can be purchased on a
pay-per-view basis after an embargo period during which the research providers
make the report available on a proprietary basis only to their own employees and
customers. This service is available either on a stand- alone basis, through
strategic distribution channels or as a part of MultexNET, MultexEXPRESS or
Multex Investor. Over the last year Multex Net On-Demand has successfully added
foreign equities and investment information, as well as research from
third-party and independent market research companies such as Gartner Group and
Forrester to its growing roster of leading information providers
Multex Net On-Demand customers can purchase and download the research reports to
their own computer using advanced searching and filtering technology that
locates documents by symbol, industry, brokerage firm, full-text
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words and phrases, or user-defined portfolios and profiles. Users can receive
e-mail alerts throughout the day, which may be keyed to their portfolios or
other user- provided criteria. The financial research reports available to
Multex Net On-Demand customers include both those relating to a particular
company and those relating to an industry as a whole. Research from independent
research providers, including Gartner Group, Standard & Poor's, Disclosure and
Value Line Mutual Fund Survey, is also available for purchase, as well reports
from the Market Guide database. An online purchase history provides a specific
list of all of the reports purchased by an individual user.
Prices per document available through Multex Net On-Demand generally range from
$5 and up based on the length and type of document. We share the pay-per-view
fees generated from the sale of documents with the investment bank, brokerage
firm or third-party research provider that authored the original research
report, and the distributor through which the purchase was initiated. There is
no registration or subscription fee for use of this service. Some of our users
have purchased an annual subscription that enables them to purchase individual
research reports at a discounted price. We are also adding analysis from leading
third-party advisory services.
Multex Investor
Multex Investor is an investment information destination site and an interactive
community targeting the rapidly growing individual investor market. Visitors to
Multex Investor can join as a "member" at no cost. Members of Multex Investor
can download, view and print at no cost a wide range of investment research
reports and investment content from sponsoring brokerage firms, investment
banks, and member-generated content, as well as our proprietary content. Members
also have access to over 750,000 premium "pay-per-view" investment and brokerage
research reports from over 350 brokerage firms, investment banks and third-party
information providers. Multex Investor also offers individual investors access
to Wall Street analysts, who serve as "analysts-in-residence" on a weekly
rotation basis and answer user-posted questions on specific subject or company.
For retail brokerage firms, Multex Investor acts as an intermediary between the
brokerage firms that share their institutional quality equity and fixed income
research with individual investors at no costs, and assists with them with their
efforts to establish a relationship with individual investors to provide trade
execution and advice services. We have established a number of strategic
distribution relationships to promote Multex Investor, including a strategic
distribution relationship with America Online to serve as the anchor tenant
for brokerage research on the AOL Personal Finance channel. In addition, we
have established distribution relationships for Multex Investor with other
Internet portals and financial sites, including The Wall Street Journal
Interactive, CNNfn, Intuit and Quote.com.
We generate revenue from Multex Investor through the sale of sponsorships to
investment banks and brokerage firms, the sale of banner advertisements that
allow interested users to link directly to the advertisers' own Web sites, and
pay-per-view sales of investment research and other financial reports.
Through the Sage acquisition, Multex Investor has added live events capability
to the website. Sage is the leading provider of live events and discussions on
stocks and mutual funds on AOL. The award-winning events and discussion offered
by Sage are now also available to individual investors on the Internet through
Multex Investor and Sage branded websites.
Market Guide
Market Guide acquires, integrates, condenses and publishes accurate, timely and
objective financial, descriptive and other information on publicly-traded
corporations. Market Guide maintains one of the largest U.S. public company
databases with over 15,000 companies traded on the major U.S. and Canadian
markets. Market Guide has also created widely used and well-regarded proprietary
industry and sector groupings and assigns companies to these industries and
sectors. Market Guide then adds value by computing ratios, peer group
comparisons, growth rates and other statistics, which are presented as fielded
information in various time tested report formats that follow a recommended
analytic process and are supported by extensive educational content. Market
Guide also has a historical database of daily pricing and other information
going back to 1983. Other product offerings include business description,
officer and director information and business and geographical segment
information.
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Market Guide adds value and distinguishes itself from competition by the
following:
o A flexible database design which presents financial statements in the same
detail as issued by each corporation. This gives users important insights
not available in competitive databases, thereby enabling them to make
better informed investment decisions;
o Mapping the financials into standardized formats to allow consistent
calculations and cross company comparisons;
o Including auxiliary information such as earnings estimates, price
performance, relative price performance, summary insider and institutional
ownership statistics, bond ratings, corporate profile information and
short interest statistics, giving users a complete perspective on each
company;
o Calculating of over 500 popular financial ratios, growth rates and
averages computed for the users' convenience; and
o Carefully planned, market tested display formats, including company to
industry and sector comparisons, that allow users to quickly and
efficiently make considered investment decisions.
The targeted markets for Market Guide's data and related products include
investment managers, investment research departments, financial planners,
investment counselors, investment bankers, banks, stockbrokers and brokerage
firms, individual investors, financial Web sites and other Internet sites.
Market Guide also maintains earnings and revenue estimate databases and
generates related, proprietary financial reports, which are resold through
various distributors. Marketed under the Multex Global Estimates brand, the
estimates reports and data feed are available through MultexNet, Multex Net
On-Demand, Multex Investor, and also offered through professional information
vendors and financial web sites.
Strategic Distribution Relationships
Multex has established a number of strategic distribution relationships to
provide marketing and additional distribution for its services, to build traffic
on our Web sites, and to increase investor awareness of our services and the
Multex brand name. These strategic relationships target both institutional
investors and individual investors.
We have entered into agreements and strategic relationships with Bloomberg,
Bridge, Disclosure, Dow Jones, FactSet and Reuters to assist us in marketing our
services to institutional investors. In each case, we share in revenues
generated from sales to end-users through the strategic partners' distribution
networks. The principal services distributed by these strategic partners are
MultexNET, which is made available as a service through the partners'
distribution network on similar terms to those available to subscribers to
MultexNET over the Internet, and Multex Research-On-Demand. On January 1, 1999
we renewed our strategic relationship with Reuters for a five-year term.
In order to enhance the distribution of investment research to the individual
investor market, we have entered into an agreement with America Online. This
agreement is for an initial two-year term and is automatically renewable unless
either party gives advance notice of its intention not to renew. Under our
agreement with AOL, we have secured a position as an anchor tenant for brokerage
research on the AOL Personal Finance channel as well as integrated links on
other screens within the AOL service, with links from those locations back to
Multex Investor.
In addition to the strategic relationships described above, we have entered into
agreements with numerous other distributors, including Yahoo!, Big Charts,
CNNfn, Intuit, Bloomberg, SmartMoney.com and Ziff Davis Interactive Investor, as
well as 300 affiliates, to further attract traffic to Multex Investor and our
other Web sites.
9
Sales and Marketing
Multex's sales organization is organized into geographic and product teams
focused on sales of all Multex product lines. Currently, our sales personnel are
located in our offices in New York, London, Hong Kong, San Francisco, and
Edinburgh. Our plans include expanding sales personnel into Tokyo.
In addition to our direct sales efforts, Multex's services continue to be sold
over a growing number of third-party channels, including Reuters, Bloomberg, and
Factset, collectively reaching individual and institutional investors around the
world. We believe that our presence on these channels also serves as a
significant and continuous source of marketing for our services and the Multex
brand name.
The sales force is supported by our marketing organization, which leverages its
skills to provide corporate marketing, strategic and tactical product marketing,
public relations, advertising, and design and creative services to the sales
organization worldwide.
Research and Development
Our future success will depend upon our ability to maintain and develop
competitive technologies, to continue to enhance our current services and to
develop and introduce new services in a timely and cost-effective manner that
meets changing conditions, including evolving customer needs, new competitive
service offerings, emerging industry standards and rapidly changing technology.
We have a dedicated research and development organization that develops new
features and functionality for our existing services, as well as the software
that supports new services. The research and development team has expertise in
network implementation and maintenance, Internet and intranet protocols,
software development, database architecture maintenance and development and a
variety of programming tools and languages and operating systems.
Customer Service and Network Support
Multex is committed to providing a high level of service and support to its
customers. Because our services are available to users 24 hours-a-day, seven
days-a-week, our Help Desk and Operations Support services are likewise
continuously available.
System Architecture and Technology
We believe that our system architecture and proprietary technology provide us
with an important competitive advantage. We use only open standard components,
including Microsoft Windows NT and Windows 2000, Microsoft Internet Information
Server, Microsoft SQL Server versions 7.0 and SQL2000 and Fulcrum Server. The
infrastructure of our production site is built to provide highly available
services to both contributors and users over Internet and intranet channels.
Back-ups of the specific core components of our system are in place and are
fully operational, which allows continuous service in case of unexpected
component failure, maintenance and upgrades. Our infrastructure is scalable,
allowing us to quickly adjust to our expanding client and research information
database.
Our operations are dependent on our ability to maintain our computer and
telecommunications systems in effective working order, and our ability to
protect our systems against damage from fire, natural disaster, power loss,
telecommunications failure or similar events. We operate two data centers in
downtown Manhattan, a new center at 75 Park Place and a second center at 100
William Street. In addition, at the end of 2000, we were also operating a data
center at 33 Maiden Lane in downtown Manhattan. By the end of April 2001, we
expect to vacate our 33 Maiden Lane data center. The two production data centers
are designed to provide highly available service and resiliency for major
operating components, with 75 Park Place equipped to operate independently on
diesel generator power in the event of a major power disaster. However, these
measures will not eliminate the significant risk to our operations from a
natural disaster. In addition, any failure or delay in the timely transmission
or receipt of feeds and computer downloads from our information providers, due
to system failure of the information providers, the public network or other
failures, could disrupt our operations.
10
Competition
The market for the aggregation and distribution of investment information and
related services is intensely competitive and this competition is expected to
continue to increase. We believe that our ability to compete will depend upon
many factors both within and beyond our control, including continuing
relationships with leading providers of investment research, the timing and
market acceptance of new services and enhancements to existing services
developed by us and our competitors, ease of use, performance, price,
reliability, customer service and support, and sales and marketing efforts. Our
competitors vary in size and in the scope and breadth of services offered.
Further, we encounter direct and indirect competition from a number of sources,
including traditional media, companies that provide investment research,
including investment banks and brokerage firms, many of whom have their own Web
sites, investment newsletters, personal financial magazines and other Internet
providers of either free or subscription research services. In addition,
extensive company-specific information, as well as general investment research
relating to particular industries, may be obtained, frequently without charge,
from widely-available sources, including annual reports, Standard & Poor's
company reports, Value Line investment research reports, Media General Financial
Services and Disclosure, all of which are available from public libraries, on
the Internet and from the companies to which these reports relate, and industry
research appearing in financial periodicals.
We believe that the principal competitive factors in attracting and retaining
information providers include the ability to provide full-text,
publication-quality research reports electronically on a real-time basis,
relationships with institutional investors interested in receiving this research
and the flexibility of open architecture systems which enable any computer user
with access to a browser to receive research reports regardless of which
operating system controls the information provider's computer. We believe that
the principal competitive factors in attracting and retaining subscribers
include price of the service, the depth, breadth and timeliness of content, the
full- text search features available and the ease of use. We believe that the
principal competitive factors in attracting advertisers will include the number
of subscribers, the demographics of these subscribers and the "pre-
qualification" features that can be offered to investment banks and brokerage
firms. There can be no assurance that we will be able to compete favorably with
respect to these or any other competitive factors.
Our MultexNET and Multex Research-On-Demand services compete with large and
well-established distributors of financial information, including First Call,
Investext and I/B/E/S. Our MultexEXPRESS service competes with services provided
by in-house information services personnel and independent systems integrators.
Our Multex Investor service competes with Web sites that offer personal finance
information, including Microsoft Investor and Yahoo! Finance, and Web sites
hosted by investment banks and brokerage firms, such as CSFB Direct and
Prudential Securities, that offer a particular firm's research reports online
either exclusively to their customers or more generally to the public. Numerous
other competitors, including Standard & Poor's, Mergent and others, offer
similar investment research-based services that compete, or may in the future
compete, directly and indirectly with our services. Our Market Guide line of
company information products, and Multex Global Estimates, compete with
offerings from S&P Compustat, Media General, First Call, I/B/E/S, and Zacks.
Many of our existing and prospective competitors have longer operating
histories, greater name recognition, larger customer bases and significantly
greater financial, technical and marketing resources than we do. As a result,
they may be able to respond more quickly to new or emerging technologies and
changes in investor requirements, or devote greater resources to the
development, promotion and sale of their services than we can. These
competitors may be able to undertake more extensive marketing campaigns,
adopt more aggressive pricing policies and make more attractive offers to
potential employees, subscribers, strategic partners and providers of
investment research information.
Intellectual Property
Our future success will depend, in significant part, on our intellectual
property, and we rely upon copyright, patent, trade secret and trademark laws in
the United States and other jurisdictions to protect our proprietary rights. We
own copyrights and trade secrets in the computer software and online materials
that we have developed or acquired, and currently hold limited licenses to use
and distribute software in which third parties own copyrights and trade secrets,
including software for electronic document and database management. We have also
entered into limited license agreements with the investment banks, brokerage
firms and other third-party research providers that own the copyrights in
research reports that we distribute electronically. There can be no assurance
that we will be able to
11
maintain our licenses for research content or of third-party software, that we
will be able to obtain these licenses in the future on commercially reasonable
terms, if at all, or that our competitors will not be able to independently
develop competing software or on-line materials that avoid infringing our
proprietary rights. Also, because none of our licenses of third-party software
and research content are exclusive, this software and content is and will be
available to our current and future competitors. Failure on our part to protect
or secure ownership of, or to maintain licensed rights to use and distribute
software and content of others, and the ability of our competitors to obtain
rights to distribute the same research reports that we distribute, could have a
material and adverse effect on our business, results of operations and financial
condition.
We have been issued U.S. and foreign patents that claim certain aspects of an
information delivery and authentication system that provides entitlement and
electronic distribution of research documents over the Internet. These patents
expire in 2016, 2017 and 2018. We have filed applications for additional U.S.
and foreign patents covering various aspects of our core technology. We have
also filed U.S. and various foreign patent applications for technology
associated with our proprietary "intelligent categorization" methods. There can
be no assurance that any of our pending patent applications will be allowed,
that any patents will be issued to us even if the respective applications have
been or will be allowed, or that any patents that are issued to us will not be
successfully challenged by others or invalidated through agreements with
employees, representatives, advisors and others. We also rely on trade secrets
and proprietary know-how for certain unpatented aspects of our business
information and technology. To protect such information, we generally require
all employees, consultants and licensees to enter into confidentiality
agreements limiting the disclosure and use of such information. There can be no
assurance that these agreements provide meaningful protection or that they will
not be breached, that we will have adequate remedies for any such breach, or
that our trade secrets, proprietary know-how, and technological advances will
not otherwise become known to others. In addition, there can be no assurance
that, despite precautions we have taken, others have not obtained or will not
obtain access to our proprietary technology. Further, there can be no assurance
that third parties will not independently develop substantially equivalent or
better technology or acquire equivalent business information.
We rely upon and seek to protect the trademarks and service marks that we
currently use, and those that we intend to use in the future, through
registration in the United States and other jurisdictions. We have been granted
United States federal and various foreign registrations for Multex, MultexNET,
MultexEXPRESS and Multex Investor, as well as certain associated logos, as
trademarks and service marks, and have applied for registration of the same
marks in various other foreign jurisdictions. We also use the following
trademarks and service marks: Multex.com, the Multex.com logo, Multex
Research-On-Demand, Market Guide and Multex Global Estimates. United States and
various foreign applications are pending for the other marks. There can be no
assurance that our use of and interest in these trademarks and service marks
will be subject to any legal protection in any of the jurisdictions in which we
now do business or might do business in the future, nor that they, or any of the
registrations that have already been granted to us, will not be successfully
challenged by others and invalidated through administrative process or
litigation. As our business is dependent on brand recognition in the
marketplace, any failure to maintain and protect our trademarks and service
marks could have a material and adverse effect on our business, results of
operations and financial condition.
We have licensed and expect to license some of our proprietary technology to
third parties, including joint ventures with third parties, in connection with
the establishment of our international business operations, which may be
controlled by these third parties. While we will attempt to ensure that our
proprietary rights will be protected by our business partners, no assurances can
be given that these partners will not take actions that could materially and
adversely affect the value of our proprietary rights or the reputation of our
services and technologies. We currently license some aspects of our text search
functionality and relational database technologies from third parties. Our
failure to maintain these licenses, or to find a replacement for these
technologies in a timely and cost-effective manner, could have a material
adverse effect on our business, results of operations and financial condition.
Legal standards relating to the validity, enforceability and scope of protection
of proprietary rights in Internet-related businesses are still evolving, and no
assurance can be given as to the future viability or value of any of our
proprietary rights.
12
Government Regulation
We are subject, both directly and indirectly, to various laws and governmental
regulations relating to our business. There are currently few laws or
regulations directly applicable to commercial online services or the Internet.
However, due to the increasing popularity and use of commercial online services
and the Internet, it is possible that a number of laws and regulations may be
adopted with respect to commercial online services and the Internet. These laws
and regulations may cover issues including, for example, user privacy, pricing
and characteristics and quality of products and services. Moreover, the
applicability to commercial online services and the Internet of existing laws
governing issues including, for example, property ownership, libel and personal
privacy is uncertain and could expose us to substantial liability. Any new
legislation or regulation or the application of existing laws and regulations to
the Internet could have a material and adverse effect on our business, results
of operations and financial condition.
As our services are available over the Internet anywhere in the world, and as we
intend to offer services specifically aimed at jurisdictions outside the United
States, multiple jurisdictions may claim that we are required to qualify to do
business as a foreign corporation in each of those jurisdictions. Failure by us
to qualify as a foreign corporation in a jurisdiction where we are required to
do so could subject us to taxes and penalties for the failure to qualify. It is
possible that state and foreign governments might also attempt to regulate our
transmissions of content on our Web sites or prosecute us for violations of
their laws. There can be no assurance that violations of local laws will not be
alleged or charged by state or foreign governments, that we might not
unintentionally violate these laws or that these laws will not be modified, or
new laws enacted, in the future.
Employees
At December 31, 2000, we employed 561 persons, compared to 336 persons at
December 31, 1999. Our future success will depend in substantial part upon our
ability to attract and retain highly qualified employees. Competition for
personnel, in particular information technology professionals, is intense, and
there can be no assurance that we will be able to retain our senior management
or other key employees, or that we will be able to attract and retain additional
qualified personnel in the future. Our employees are not represented by any
collective bargaining organization and we consider our relations with our
employees to be good.
ITEM 2. PROPERTIES
Our corporate headquarters are located in New York, New York, where we occupy
approximately 40,000 square feet under a lease that expires in 2010. This space
accommodates our corporate headquarters and one of our data centers. We also
lease 15,000 square feet of space in New York City, which accommodates another
of our data centers and related staff. This lease expires in 2012. We currently
have approximately 20,000 square feet leased in a third location in New York
City that we expect to vacate by April 15, 2001. We have a fourth location
located in New York City where we lease approximately 36,000 square feet of
space under a lease that expires in 2005. We also have approximately 19,000
square feet of space located in Lake Success, New York under a lease that
expires in 2005.
We currently lease approximately 6,000 square feet of office space in San
Francisco, California under a lease that expires in 2004. In Philadelphia, we
are currently leasing approximately 1,000 square feet under a lease that expires
in 2002. We lease approximately 8,500 square feet of office space in London.
This lease expires in 2010 with an option to terminate the lease in 2005. In
Hong Kong, we are leasing approximately 3,000 square feet under a lease that
terminates in 2004. In Scotland, we are leasing approximately 13,000 square
feet under a lease that terminates in 2008.
We are not currently seeking additional facilities, but believe that we will be
able to obtain additional space as needed on commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any material legal proceedings.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders through the solicitation of
proxies or otherwise during the fourth quarter of the fiscal year ending
December 31, 2000.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
Multex.com's common stock has been quoted on the Nasdaq National Market under
the symbol "MLTX" since March 17, 1999. The following table sets forth the range
of high and low bid information (in dollars per share) as quoted on the Nasdaq
National Market for Multex.com common stock for the periods indicated.
Calendar Year 1999: High Low
------ ------
First Quarter $66.38 $25.63
(Commencing March 17, 1999)
Second Quarter 71.50 22.13
Third Quarter 28.63 12.75
Fourth Quarter 39.44 12.56
Calendar Year 2000: High Low
------ ------
First Quarter $38.00 $23.50
Second Quarter 35.50 12.50
Third Quarter 29.50 16.88
Fourth Quarter 19.00 7.88
HOLDERS
As of March 29, 2001, there were approximately 330 holders of record of our
common stock.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock since
inception. We intend to retain any future earnings to finance the operation and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future. Consequently, stockholders will need to sell shares of
common stock in order to realize a return on their investment, if any.
14
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated historical financial data is qualified by
reference to, and should be read in conjunction with, the historical financial
statements of Multex.com and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.
Year Ended December 31,
-----------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(in thousands, except share and per share data)
Statement of Operations Data:
Revenues ................................. $ 85,942 $ 40,850 $ 22,021 $ 12,616 $ 7,423
Cost of revenues ......................... 17,839 10,569 5,083 2,720 2,659
------------ ------------ ------------ ------------ ------------
Gross profit ............................. 68,103 30,281 16,938 9,896 4,764
Operating expenses:
Sales and marketing ..................... 26,017 26,379 8,667 4,568 2,444
Research and development ................ 10,149 6,301 3,167 2,873 2,560
General and administrative .............. 36,163 18,414 12,550 10,426 6,752
------------ ------------ ------------ ------------ ------------
Total operating expenses ............... 72,329 51,094 24,384 17,867 11,756
Loss from operations ..................... (4,226) (20,813) (7,446) (7,971) (6,992)
Net interest income (expense) ............ 3,126 2,245 (186) 60 16
Other income (expense) ................... -- (5,713) (716) -- --
------------ ------------ ------------ ------------ ------------
Loss from continuing operations
before income taxes ..................... (1,100) (24,281) (8,348) (7,911) (6,976)
Income tax expense ....................... 95 1,030 276 7 (2)
------------ ------------ ------------ ------------ ------------
Loss from continuing operations .......... (1,195) (25,311) (8,624) (7,918) (6,974)
Discontinued operations .................. -- 332 (214) (1,087) (115)
------------ ------------ ------------ ------------ ------------
Net loss ................................. $ (1,195) $ (24,979) $ (8,838) $ (9,005) $ (7,089)
============ ============ ============ ============ ============
Basic and diluted loss from continuing
operations per share .................... $ (0.04) $ (1.17) $ (1.49) $ (1.46) $ (1.33)
============ ============ ============ ============ ============
Basic and diluted net loss per share ..... $ (0.04) $ (1.15) $ (1.51) $ (1.62) $ (1.35)
============ ============ ============ ============ ============
Shares used in calculating net loss
per share -- basic and diluted .......... 30,260,000 22,688,000 7,610,000 6,892,000 6,272,000
============ ============ ============ ============ ============
Year Ended December 31,
-----------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(in thousands)
Balance Sheet Data:
Cash, cash equivalents and marketable
securities............................... $ 45,730 $ 39,117 $ 24,171 $ 11,007 $ 9,961
Working capital ............................. 54,579 37,519 21,958 8,882 8,697
Total assets ................................ 174,521 65,600 33,183 18,542 15,885
Deferred revenues ........................... 10,533 5,691 3,376 2,003 1,334
Long-term debt .............................. 84 193 403 762 1,948
Convertible preferred stock ................. -- -- 59,860 37,234 25,066
Total stockholders' equity (deficit) ........ 146,125 47,200 (34,123) (25,111) (14,033)
15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
MULTEX SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS
AND THE NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE HEREIN. THIS DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES AND ARE
MADE UNDER THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS,"
"BELIEVES," "SEEKS," "ESTIMATES," AND SIMILAR EXPRESSIONS IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. MULTEX.COM'S ACTUAL RESULTS AND TIMING OF CERTAIN
EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING, BUT NOT LIMITED TO, THOSE
SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE HEREIN. UNLESS REQUIRED BY LAW,
MULTEX UNDERTAKES NO OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS. READERS
SHOULD ALSO CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS AND
DOCUMENTS MULTEX FILES FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Overview
Multex.com is a global provider of investment information and technology
solutions for the financial services industry, including brokerage firms,
professional money management firms, hedge funds, venture capital firms, mutual
funds, investment banks, corporations and individual investors. We offer four
main products, as follows:
o MultexNET, launched in June 1996, provides access to real-time, commingled
equity and fixed income research, global earnings and revenue estimates
and company fundamental information to buyside investors, sellside
institutions, public and private corporations and libraries of
professional service firms;
o MultexEXPRESS, launched in January 1997, offers the development, hosting
and real-time distribution of research and other investment information on
customized web sites to buyside investments firms, sellside institutions
and other financial services companies;
o Multex Investor, launched in November 1998, is the Company's financial
destination web site that provides financial data and access to free and
pay-per-view research on an embargoed basis.
o Market Guide database, acquired in September 1999, provides investment
information products to financial institutions and web sites,
institutional investors, corporations and professional vendors.
MultexNET is offered either as a one- to three-year subscription or on a
transactional basis. The product allows entitled institutional investors,
corporations, financial institutions and advisors to access full-text investment
research reports on a real-time basis from investment banks, brokerage firms and
other third- party research providers over the Internet or through other
distribution channels.
MultexEXPRESS is also provided pursuant to one- to three-year subscriptions,
generating revenue from professional service and license fees. MultexEXPRESS
enables financial institutions to distribute their proprietary financial
research, as well as other corporate documents, over the Internet, through
intranets and other private networks.
Multex Investor provides individual investors who register as members access to
a range of financial reports and services online from a majority of the
contributors to MultexNET. These reports are available either free of charge, or
for a fee determined by the research provider. Multex Investor generates
revenues from sales transactions, email and banner advertising, and contractual,
lead-generating sponsorships. Sponsors to Multex Investor include full-service
brokerage firms and other financial institutions interested in attracting
individual investors to their products, services and brands.
16
Market Guide acquires, integrates, condenses and publishes accurate, timely and
objective financial, descriptive and other information on public corporations.
Market Guide generates revenue primarily by licensing its database in single or
multi-year contracts.
Recent Developments
o In March 2000, we acquired Sage Online, Inc., a leading interactive
community and online provider of live events in the personal finance
arena. Sage Online's services, including mutual fund and equity content,
live events, chat rooms, forums and message boards provide multiple new
opportunities for our professional financial services clients to reach a
highly sought-after individual investor base, while providing Multex with
multiple new revenue streams through high value, paid sponsorship
programs, email marketing and targeted advertising.
o In May, with the acquisition of BuzzCompany.com, Inc., a provider of
collaboration solutions, we deepened our commitment to optimizing
interaction among financial services providers and clients. Renamed
BuzzPower(TM), the division has introduced software based on an advanced
collaboration and interaction engine that seamlessly provides solutions to
help the buyside and sell sides improve research, sales and marketing
productivity. BuzzPower will be bundled into MultexNET and MultexExpress
products and also offered as a stand-alone product.
o In December, we acquired BARRA Global Estimates, Inc., one of only two
databases available worldwide that provide consensus and detailed
estimates of financial performance metrics on more than 11,000 companies
in more than 60 countries. The acquisition complements our current
earnings estimate product, which provides real-time consensus and detailed
estimates for more than 6,000 U.S. and Canadian companies.
o In September, we signed a multi-year, multi-million dollar agreement to
provide technology and hosting for TheMarkets.com, a portal for
institutional investors established by eight investment banks -- Goldman
Sachs, Merrill Lynch, Morgan Stanley Dean Witter, Salomon Smith Barney,
Credit Suisse First Boston, Deutsche Banc, Lehman Brothers and UBS
Warburg. The portal offers proprietary commingled equity research, new
issue information, news and market data to the consortium's institutional
clients. Multex.com will also supply real-time consensus earnings
estimates and Market Guide company fundamental information to The
Markets.com users.
o Throughout 2000, we continued to build on our multi-year global
relationship with Merrill Lynch, our largest client. In December, we
signed an agreement to provide investment research and apply our
Application Service Provider technology to host Merrill Lynch HSBC's $1
billion venture for self-directed online investors.
o We developed two new initiatives with Reuters Group PLC. Late in 2000, we
entered into a 50/50 joint venture to form Multex Investor Japan, a new
company for retail investors in Japan. The company will offer registered
members a range of software applications, Japanese language news and
financial information and is important as we seek to broaden our presence
in Asia. In February 2000, we developed a similar European venture with
Reuters, Multex Investor Europe, through which we now operate retail
investor sites in the UK, France and Germany.
General
In September 1999, Multex.com acquired Market Guide Inc. in a transaction
accounted for as a pooling of interests. The consolidated statement of
operations for the year ended December 31, 1999 includes the calendar results of
operations for Multex.com and Market Guide for the year ended December 31, 1999.
The consolidated statement of operations for the year ended December 31, 1998
includes the calendar results of operations for Multex.com and the fiscal year
end results of operations for Market Guide for the year ended February 28, 1999.
17
Results of Operations
The following table shows the percentage of total revenues represented by the
items in our consolidated statements of operations.
YEARS ENDED DECEMBER 31,
2000 1999 1998
------ ------ ------
Revenues 100% 100% 100%
Cost of Revenues -20.8% -25.9% -23.1%
------ ------ ------
Gross profit 79.2% 74.1% 76.9%
Operating expenses:
Sales and marketing 30.3% 64.6% 39.4%
Research and development 11.8% 15.4% 14.4%
General and administrative 42.0% 45.1% 56.9%
------ ------ ------
Total operating expenses 84.1% 125.1% 110.7%
Loss from operations -4.9% -51.0% -33.8%
Other income (expense):
Gain on sale of equipment -- -- 0.5%
Offering expenses -- -- -3.8%
Acquisition expenses -- -14.0% --
Interest expense -0.1% -0.3% -2.6%
Interest income 3.7% 5.7% 1.8%
------ ------ ------
Loss from continuing operations before income taxes -1.3% -59.5% -37.9%
Income tax expense 0.1% 2.5% 1.3%
Loss from continuing operations -1.4% -62.0% -39.2%
Income (loss) from discontinued operations, net of taxes -- 0.3% -1.9%
Gain on sale of discontinued operations, net of taxes -- 0.6% 1.0%
Net loss -1.4% -61.1% -40.1%
Redeemable preferred stock dividends -- -2.9% -12.2%
Net loss attributable to common shareholders -1.4% -64.0% -52.3%
Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
Revenues
Revenue from MultexNET subscriptions are recognized in equal installments over
the term of the subscription. Revenue from transactions on MultexNET and Multex
Investor are recognized upon sale. Some of the transactional users of MultexNET
pay a flat annual fee for the service, which entitles them to receive research
and other reports at a discounted rate. Revenues from these users are recognized
in equal installments over the term of the subscription. Revenue from
sponsorships to Multex Investor are recognized in equal installments over the
term of the sponsorship. Revenue from professional service fees related to
Multex EXPRESS are recognized upon completion of service, whereas the license
fees are recognized over the term of the agreement. Market Guide license fees
are recognized over the term of the agreement.
Multex.com's revenues consist of subscription fees for MultexNET, subscription,
development and hosting fees for MultexEXPRESS, sales of investment research on
a pay-per-view basis through Multex Research-On-Demand, license and
redistribution fees for the Market Guide database, and sales of sponsorships,
advertising and investment research through the Multex Investor and Market Guide
Web sites. We also provide professional services to select MultexEXPRESS
clients, including software development, customization and integration services.
On occasion, as a service to our clients, we have acquired equipment for resale.
Revenues increased 110% to $85.9 million for the year ended December 31, 2000
from $40.9 million for the year ended December 31, 1999. The increase in
revenues was attributable to a number of factors: a significant increase in the
number of institutions and individuals using our pay-per-view service, an
increase in companies subscribing to MultexNET, an increase in the number of
installations utilizing MultexEXPRESS to distribute their proprietary research
to their employees and customers, an increase in the number of vendors
distributing the Market Guide database, and increased advertising and
sponsorship revenues from the Multex Investor and Market Guide Web sites.
Additionally, revenue reflects the inclusion of approximately nine months of
sales from Sage Online, approximately seven months of sales from Buzz Company,
and less than one month of revenue from the BARRA estimates business.
18
Cost of Revenues
Cost of revenues consists primarily of fees payable to distributors of MultexNet
and Multex Research-On-Demand, royalties payable to the authors of investment
research and content offered through Multex Research-On-Demand, Multex Investor
and marketguide.com, internal and external development costs incurred for
MultexEXPRESS customers, research department costs related to the collection and
processing of financial data and earnings estimates, purchases of equipment for
resale and data communications costs.
Cost of revenues increased 68.8% to $17.8 million in the year ended December 31,
2000 from $10.6 million for the year ended December 31, 1999. As a percentage of
revenues, cost of revenues decreased to 20.8% for the year ended December 31,
2000 from 25.9% for the year ended December 31, 1999. The increase in cost of
revenues in dollar terms was primarily due to royalty and distribution fee
payments as a result of increased sales of Multex Research-On-Demand, increased
data collection costs related to the maintenance and enhancement of the Market
Guide database, growth in web site traffic resulting in increased royalty
payments to content providers, increased Web site development costs resulting
from the increased number of MultexEXPRESS installations, and additional data
communications charges resulting from increased sales of subscriptions for
MultexNET and installations of MultexEXPRESS.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of salaries,
commissions, advertising, public relations, tradeshow expenses and costs of
marketing materials. Sales and marketing expenses decreased 1.4% to $26.0
million for the year ended December 31, 2000 from $26.4 million for the year
ended December 31, 1999. As a percentage of revenues, sales and marketing
expenses decreased to 30.3% for the year ended December 31, 2000 from 64.6% for
the year ended December 31, 1999. The decrease in sales and marketing expenses
reflect a sharp reduction in advertising expense combined with a favorable
adjustment to the accounting for sales commission expense due to a change in
facts and circumstances.
Research and Development. Research and development expenses consist primarily of
salaries and benefits. Research and development expenses increased 61.1% to
$10.1 million for the year ended December 31, 2000 from $6.3 million for the
year ended December 31, 1999. As a percentage of revenues, research and
development expenses decreased to 11.8% for the year ended December 31, 2000
from 15.4% for the year ended December 31, 1999. The increase in research and
development expenses in dollar terms was primarily due to an increase in the
number of developers employed by us, salary increases, and costs related to
creating and developing new products and enhancements.
General and Administrative. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services and facility
expenses, including depreciation of assets. General and administrative expenses
increased 96.4% to $36.2 million for the year ended December 31, 2000 from $18.4
million for the year ended December 31, 1999. As a percentage of revenues,
general and administrative expenses decreased to 42.1% for the year ended
December 31, 2000 from 45.1% for the year ended December 31, 1999. The increase
in general and administrative expenses in dollar terms in each period was
primarily due to increased personnel, professional service fees and facility
expenses necessary to support our domestic and international growth.
Additionally, general and administrative expenses for the year ended December
31, 2000 include $2.1 million in expenses related to the amortization of
warrants and $2.9 million in amortization of intangibles related to the
acquisitions of Sage Online, BuzzCompany and Barra Global Estimates. There was
no comparable amortization in 1999.
Loss from Operations
As a result of increased sales coupled with tighter cost control measures, loss
from operations decreased 79.7% to $4.2 million for the year ended December 31,
2000 from $20.8 million for the year ended December 31, 1999. As a percentage of
revenues, loss from operations was 4.9% for the year ended December 31, 2000
compared to 51.0% for the year ended December 31, 1999.
19
Other Income (expense)
Net interest income increased 39.2% to $3.1 million for the year ended December
31, 2000 from $2.2 million for the year ended December 31, 1999. The increase
relates to additional cash from the sale of common stock.
For the year ended December 31, 1999, Multex.com recorded $5.7 million in
expenses related to the September 1999 acquisition of Market Guide Inc. The
majority of these expenses related to fees for investment bankers, outside
counsel, accountants, proxy solicitors, document preparation and other costs
related to consummating the acquisition. There was no comparable transaction
during the year ended December 31, 2000.
Income Taxes
At December 31, 2000, Multex.com had net operating loss carryforwards of
approximately $50.0 million and research and development credits of
approximately $1.5 million for income tax purposes that expire in 2009 through
2020. The utilization with regard to timing and amount of the Company's net
operating loss carryfowards may be limited due to changes in the Company's
ownership pursuant to Section 382 of the Internal Revenue Code.
Income tax expense decreased 90.8% to $95,000 for the year ended December 31,
2000 from $1.0 million for the year ended December 31, 1999. The majority of
income tax expense recognized for the year ended December 31, 1999 relates to
Market Guide's operations prior to the September 1999 acquisition.
Loss from continuing operations
Loss from continuing operations decreased 95.3% to $1.2 million for the year
ended December 31, 2000 from $25.3 million for the year ended December 31, 1999.
The decrease in loss from continuing operations was due to higher revenues,
reflecting an increased customer base and tighter cost control measures.
Discontinued operations
Income from discontinued operations and gain from sale of discontinued
operations totaled $332,000 in the year ended December 31, 1999, reflecting
Market Guide's sale of CreditRisk Monitor to New Generation Foods in January
1999. There was no comparable transaction in the year ended December 31, 2000.
Net loss attributable to common stockholders
As a result of increased sales coupled with tighter cost control measures, net
loss decreased 95.4% to $1.2 million for the year ended December 31, 2000 from
$26.2 million for the year ended December 31, 1999.
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
Revenues
Multex.com's revenues consist of subscription fees for MultexNET, subscription,
development and hosting fees for MultexEXPRESS, sales of investment research on
a pay-per-view basis through Multex Research-On-Demand, license and
redistribution fees for the Market Guide database, and sales of sponsorships,
advertising and investment research through the Multex Investor and Market Guide
Web sites. We also provide professional services to select MultexEXPRESS
clients, including software development, customization and integration services.
On occasion, as a service to our clients, we have acquired equipment for resale.
Revenues increased 85.5% to $40.9 million for the year ended December 31, 1999,
from $22.0 million for the year ended December 31, 1998. The increase in
revenues was attributable to a number of factors: a significant increase in the
number of institutions and individuals using our pay-per-view service, greater
acceptance of Multex Research-On-Demand, an increase in the number of
installations utilizing MultexEXPRESS to distribute their proprietary research
to their employees and customers, an increase in the number of vendors
distributing the Market Guide database, and increased advertising and
sponsorship revenues from the Multex Investor and Market Guide Web sites.
20
Cost of Revenues
Cost of revenues consists primarily of fees payable to distributors of MultexNet
and Multex Research-On-Demand, royalties payable to the authors of investment
research and content offered through Multex Research-On-Demand, Multex Investor
and marketguide.com, external development costs incurred for MultexEXPRESS
customers, research department costs related to the collection and processing of
financial data and earnings estimates, purchases of equipment for resale and
data communications costs.
Cost of revenues increased 107.9% to $10.6 million in the year ended December
31, 1999 from $5.1 million for the year ended December 31, 1998. As a percentage
of revenues, cost of revenues increased to 25.9% for the year ended December 31,
1999 from 23.1% for the year ended December 31, 1998. The increase in cost of
revenues in dollar terms was primarily due to royalty and distribution fee
payments as a result of increased sales of Multex Research-On-Demand, the
increased cost of equipment purchased for resale, increased data collection
costs related to the maintenance and enhancement of the Market Guide database,
growth in web site traffic resulting in increased royalty payments to content
providers, increased Web site development costs resulting from the increased
number of MultexEXPRESS installations, and additional data communications
charges resulting from increased sales of subscriptions for MultexNET and
installations of MultexEXPRESS.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of salaries,
commissions, advertising, public relations, tradeshow expenses and costs of
marketing materials. Sales and marketing expenses increased 204.3% to $26.4
million for the year ended December 31, 1999 from $8.7 million for the year
ended December 31, 1998. As a percentage of revenues, sales and marketing
expenses increased to 64.6% for the year ended December 31, 1999 from 39.4% for
the year ended December 31, 1998. The increase in sales and marketing expenses
was due to an expansion of our sales force both domestically and
internationally, increased marketing activities, additional costs resulting from
expanding our international marketing efforts, and a significant advertising
campaign undertaken in 1999 to increase awareness and visibility of Multex
Investor and prominence of the Multex.com family of brands.
Research and Development. Research and development expenses consist primarily of
salaries and benefits. Research and development expenses increased 99.0% to $6.3
million for the year ended December 31, 1999 from $3.2 million for the year
ended December 31, 1998. As a percentage of revenues, research and development
expenses increased to 15.4% for the year ended December 31, 1999 from 14.4% for
the year ended December 31, 1998. The increase in research and development
expenses in dollar terms was primarily due to an increase in the number of
developers employed by us, salary increases and costs related to creating and
developing new products and enhancements to the Market Guide database. We
believe that continued investment in product development is critical to
attaining our strategic objectives and, as a result, expect research and
development expenses to increase in dollar terms in future periods.
General and Administrative. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services and facility
expenses, including depreciation of assets. General and administrative expenses
increased 46.7% to $18.4 million for the year ended December 31, 1999 from $12.5
million for the year ended December 31, 1998. As a percentage of revenues,
general and administrative expenses decreased to 45.1% for the year ended
December 31, 1999 from 57.0% for the year ended December 31, 1998. The increase
in general and administrative expenses in dollar terms in each period was
primarily due to increased personnel, professional service fees and facility
expenses necessary to support our domestic and international growth, including
costs associated with our London and Multex Data Group offices. We expect that
general and administrative expenses will increase in dollar terms in future
periods as we hire additional personnel and incur additional costs related to
the growth of our business and our operations as a public company.
21
Loss from Operations
We invested heavily in establishing a brand name for our services, expanding
internationally, continuing to develop enhanced services, maintaining our
technological advantage and increasing the number of our employees and offices
as we seek to increase our market share. For the foregoing reasons, loss from
operations increased 179.5% to $20.8 million for the year ended December 31,
1999 from $7.4 million for the year ended December 31, 1998. As a percentage of
revenues, loss from operations was 50.9% for the year ended December 31, 1999
compared to 33.8% for the year ended December 31, 1998.
Other Income (Expense)
Net interest income was $2.2 million for the year ended December 31, 1999 as
compared to net interest expense of $186,000 for the year ended December 31,
1998. The changes in net interest income/expense are attributable to the changes
in cash available for investing and fluctuations in borrowings. In particular,
1999 interest income reflects interest earned on proceeds from the March 1999
initial public offering.
For the year ended December 31, 1998, Multex.com recognized a gain of $125,000
from the sale of leased equipment. There was no comparable transaction during
the year ended December 31, 1999.
For the year ended December 31, 1999, Multex.com recorded $5.7 million in
expenses related to the September 1999 acquisition of Market Guide Inc. The
majority of these expenses related to fees for investment bankers, outside
counsel, accountants, proxy solicitors, document preparation and other costs
related to consummating the acquisition.
Income Taxes
At December 31, 1999, Multex.com had net operating loss carryforwards of
approximately $50.0 million and research and development credits of
approximately $1.0 million for income tax purposes that expire in 2009 through
2019. The utilization of approximately $15.6 million and $400,000 of these loss
carryforwards and credits, respectively, are subject to annual limitations of
approximately $1.9 million, pursuant to Section 382 of the Internal Revenue Code
of 1986.
The majority of income tax expense recognized for the years ended December 31,
1999 and 1998 relates to Market Guide's operations prior to the September 1999
acquisition. Such operations cannot be included in Multex.com's consolidated tax
returns, and accordingly cannot be offset by Multex.com's net operating loss.
Loss from continuing operations
Loss from continuing operations increased 193.5% to $25.3 million for the year
ended December 31, 1999 from $8.6 million for the year ended December 31, 1998.
The increase in loss from continuing operations was due to Multex.com's large
investment in establishing a brand name for its services, expanding
internationally, continuing to develop new services, increasing the number of
employees, and $5.7 million in expenses related to the Market Guide acquisition.
Discontinued operations
Income from discontinued operations totaled $106,000 for the year ended December
31, 1999 compared to a loss from discontinued operations of $440,000 for the
year ended December 31, 1998. Multex.com recognized a gain of $226,000, net of
$163,000 in income taxes, related to the receipt of $1.2 million upon completion
of the sale of CreditRisk Monitor to New Generation Foods in January 1999.
22
Net loss attributable to common stockholders
Net loss increased 127.2% to $26.2 million for the year ended December 31, 1999
from $11.5 million for the year ended December 31, 1998. The net loss includes
redeemable preferred stock dividends of $1.2 million for the year ended December
31, 1999 and $2.7 million for the year ended December 31, 1998. All preferred
stock was converted into common stock upon the completion of the March 1999
initial public offering.
Selected Unaudited Quarterly Results of Operations
The following table sets forth unaudited quarterly statement of operations data
for each of the eight quarters ended December 31, 2000. In the opinion of
management, the unaudited financial results include all adjustments, consisting
only of normal recurring adjustments, necessary for the fair presentation of our
consolidated results of operations for those periods. The consolidated quarterly
data should be read in conjunction with the audited Consolidated Financial
Statements and the Notes thereto appearing elsewhere in this report. The results
of operations for any quarter are not necessarily indicative of the results of
operations for any future period.
In the following table, the quarters ended March 31, June 30, September 30 and
December 31, 1999 include the calendar quarter results for Multex.com and the
estimated results for Market Guide on a calendar quarter basis.
Three Months Ended
--------------------------------------------------------------------------------------------
Mar. June Sept. Dec. Mar. June Sept. Dec.
31, 30, 30, 31, 31, 30, 30, 31,
1999 1999 1999 1999 2000 2000 2000 2000
-------- -------- -------- -------- -------- -------- -------- --------
(in thousands)
Revenues ...................... $ 7,606 $ 8,841 $ 10,929 $ 13,474 $ 16,083 $ 19,167 $ 22,823 $ 27,869
Cost of revenues .............. 2,006 2,293 2,671 3,599 3,968 3,936 4,162 5,773
-------- -------- -------- -------- -------- -------- -------- --------
Gross profit .................. 5,600 6,548 8,258 9,875 12,115 15,231 18,661 22,096
Operating expenses:
Sales and marketing ........ 4,031 4,912 6,619 10,817 6,240 5,917 6,568 7,292
Research and
development .............. 1,065 1,122 2,039 2,075 2,255 2,767 2,773 2,354
General and
administrative ........... 3,737 4,087 4,776 5,814 6,347 8,288 10,001 11,527
-------- -------- -------- -------- -------- -------- -------- --------
Total operating
expenses ............... 8,833 10,121 13,434 18,706 14,842 16,972 19,342 21,173
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations ................. (3,233) (3,573) (5,176) (8,831) (2,727) (1,741) (681) 923
Net interest income ........... 263 711 685 586 697 616 883 930
Other income (expenses) ....... -- -- (5,606) (106) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations ...... --
before income tax .......... (2,970) (2,862) (10,097) (8,351) (2,030) (1,125) 202 1,853
Income tax expense ............ 446 226 234 124 47 48 (8) 8
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations ...... (3,416) (3,088) (10,331) (8,475) (2,077) (1,173) 210 1,845
Discontinued operations ....... 331 -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) ............. $ (3,085) $ (3,088) $(10,331) $ (8,475) $ (2,077) $ (1,173) $ 210 $ 1,845
======== ======== ======== ======== ======== ======== ======== ========
Basic and diluted income
(loss) from continuing
operations - per
share ...................... $ (0.45) $ (0.12) $ (0.39) $ (0.31) $ (0.07) $ (0.04) $ 0.01 $ 0.06
======== ======== ======== ======== ======== ======== ======== ========
Basic and diluted income
(loss) - per
share ...................... $ (0.42) $ (0.12) $ (0.39) $ (0.31) $ (0.07) $ (0.04) $ 0.01 $ 0.06
======== ======== ======== ======== ======== ======== ======== ========
23
Three Months Ended
---------------------------------------------------------------------------
Mar. June Sept. Dec. Mar. June Sept. Dec.
31, 30, 30, 31, 31, 30, 30, 31,
1999 1999 1999 1999 2000 2000 2000 2000
----- ----- ----- ----- ----- ----- ----- -----
Percentage of Total Revenues
---------------------------------------------------------------------------
Revenues ................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues ......................... 26.4 25.9 24.4 26.7 24.7 20.5 18.2 20.7
----- ----- ----- ----- ----- ----- ----- -----
Gross profit ............................. 73.6 74.1 75.6 73.3 75.3 79.5 81.8 79.3
Operating expenses:
Sales and marketing ................... 53.0 55.6 60.6 80.2 38.8 30.9 28.8 26.2
Research and development .............. 14.0 12.7 18.7 15.4 14.0 14.4 12.2 8.4
General and
administrative ...................... 49.1 46.2 43.7 43.2 39.5 43.2 43.8 41.4
----- ----- ----- ----- ----- ----- ----- -----
Total operating
expenses .......................... 116.1 114.5 123.0 138.8 92.3 88.5 84.8 76.0
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from
operations ............................ (42.5) (40.4) (47.4) (65.5) (17.0) (9.0) (3.0) 3.3
Net interest income
(expense) ............................. 3.5 8.0 6.0 4.1 4.4 3.2 3.9 3.3
Other income (expenses)................... -- -- (51.1) (0.6) -- -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Income (loss) from
continuing operations
before income tax ..................... (39.0) (32.4) (92.5) (62.0) (12.6) (5.8) 0.9 6.6
Income tax expense ....................... (5.9) (2.5) (2.0) (0.9) (0.3) (0.3) (0.0) (0.0)
Income (loss) from
continuing operations ................. (44.9) (34.9) (94.5) (62.9) (12.9) (6.1) 0.9 6.6
Discontinued operations .................. 4.4 -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- -----
Net income (loss) ........................ (40.5)% (34.9)% (94.5)% (62.9)% (12.9)% (6.1)% 0.9% 6.6%
===== ===== ===== ===== ===== ===== ===== =====
Our revenues have increased in all quarters presented as a result of increased
acceptance of MultexNET, which was launched in June 1996, MultexEXPRESS, which
was launched in January 1997, Multex Investor, which was launched in November
1998, increased purchases of the Multex Research-On-Demand service, which was
launched in April 1997, and the continued growth in the number of companies
licensing the Market Guide database. Operating expenses have increased in dollar
terms during the quarters presented. Sales and marketing expenses have decreased
in dollar terms in the fiscal year ended 2000 as a result of a sharp reduction
in advertising and a favorable adjustment to the accounting for sales commission
expense due to a change in facts and circumstances. Research and development
expenses increased in dollar terms as a result of expanded technological
development efforts to support the launch of new services and to enhance the
features and functionality of its services. General and administrative expenses
increased in dollar terms as a result of an increase in personnel, additional
facilities, sharply higher amortization expense resulting from three
acquisitions and expenses related to the issuance of warrants.
Our quarterly revenues, margins and results of operations have fluctuated
significantly in the past and are expected to continue to fluctuate
significantly in the future. Causes of these fluctuations have included and may
include, among other factors, demand for our services, the size and timing of
both new and renewal subscriptions, the number, timing and significance of new
services introduced by us and our competitors, our ability to develop, market
and introduce new and enhanced services on a timely basis, the level of service
and price competition, changes in operating expenses, changes in the mix of
services offered, changes in our sales incentive strategy, sharp declines in the
volume or price levels of securities transactions and general economic factors.
Any one or more of these factors could have a material and adverse effect on our
business, results of operation and financial condition, and makes the prediction
of results of operations on a quarterly basis unreliable.
Liquidity and Capital Resources
At December 31, 2000, we had $45.7 million of cash, cash equivalents and
marketable securities. Our principal commitments consist of capital lease
obligations of $194,000.
Net cash used in operating activities from continuing operations was $4.3
million in the year ended December 31, 2000, and $22.3 million in the equivalent
period in 1999. The principal use of cash for all periods was to fund our losses
from operations.
Net cash used in investing activities was $37.4 million in the year ended
December 31, 2000, and $21.7 million in
24
the equivalent period in 1999. Cash used in investing activities was primarily
related to purchases of marketable securities, the acquisition of property and
equipment, the build-out of the Company's news data center, and the acquisition
of three companies in 2000.
Net cash provided by financing activities was $56.0 million in the year ended
December 31, 2000, and $45.6 million for the equivalent period in 1999. Net cash
provided by financing activities primarily consisted of net proceeds from the
sale of equity securities and proceeds from the exercise of employee stock
options.
Net cash provided by discontinued activities was $331,000 in the year ended
December 31, 1999. There was no comparable transaction in the year ended
December 31, 2000. Net cash provided by discontinued operating activities
reflects proceeds from the gain on sale of Market Guide's CreditRisk Monitor
division in January 1999.
We believe that our existing cash, cash equivalents and marketable securities,
will be sufficient to meet our anticipated cash needs for working capital and
capital expenditures at least for the next twelve months.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
CURRENCY RATE FLUCTUATIONS
Our results of operations, financial position, and cash flows are not materially
affected by changes in the relative values of non-U.S. currencies to the U.S.
dollar. We do not use derivative financial instruments to limit our foreign
currency risk exposure.
INTEREST RATE FLUCTUATIONS
Our results of operations, financial position, and cash flows are not materially
affected by changes in market interest rates. We have no long-term debt
obligations. We had $45.7 million in cash, cash equivalents and marketable
securities as of December 31, 2000.
COLLECTION RISK
Our accounts receivable are subject, in the normal course of business, to
collection risks. We regularly assess these risks and have established policies
and business practices to protect against the adverse effects of collection
risks. As a result, we do not anticipate any material losses in this area.
25
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
Multex.com's business could be materially and adversely affected by a downturn
in the financial services industry
We are dependent upon the continued demand for the distribution of investment
research and other information over the Internet, making our business
susceptible to a downturn in the financial services industry. For example, a
decrease in the number of analysts that prepare investment research reports or
in the capital dedicated to the dissemination of this research could result in a
decrease in the number of research reports and other financial information
available for distribution and a concomitant decrease in demand by our
subscribers for these reports and other information. In addition, U.S. financial
institutions are continuing to consolidate, increasing the leverage of our
information providers to negotiate price and decreasing the overall potential
market for some of our services. Weakness in the financial services industry
could also adversely impact our subscription and Web site hosting renewal rates.
These factors, as well as other changes occurring in the financial services
industry, could have a material and adverse effect on our business, results of
operations and financial condition.
Multex.com's business would be materially and adversely affected if the market
for online investment research does not continue to grow
In order to be successful, we must increase our revenues from subscription fees
for MultexNET, from development, hosting and subscription fees for
MultexEXPRESS, generate additional sales of investment research on a
pay-per-view basis through MultexNET-On-Demand, attract more users to Multex
Investor and increase license fees from the Market Guide database. We must also
integrate and increase revenues from our newly acquired subsidiaries, Sage
Online and BuzzCompany.com. We face risks, among others, relating to our ability
to:
o anticipate and adapt to the changing Internet market;
o attract and retain more subscribers, research and data contributors, and
technology and business partners;
o implement our sales, marketing, and branding strategies, both domestically
and internationally
o attract, retain and motivate qualified personnel;
o respond to actions taken by our competitors;
o continue to build an infrastructure to effectively manage our growth and
handle any future increased usage; and
o integrate acquired businesses, technologies, products, and services.
If we are unsuccessful in addressing these risks or in executing our business
strategy, our business, results of operations, and financial condition would be
materially and adversely affected.
The markets for our products and services are rapidly changing
The market for the distribution of investment research and other information
over the Internet is rapidly evolving and is characterized by an increasing
number of market entrants who have introduced or developed electronic investment
research distribution services over public and private networks, online services
and the Internet. As is typical of a rapidly evolving market, demand and market
acceptance for new services are subject to a high level of uncertainty.
Because the market for our services is still relatively new and rapidly
evolving, it is difficult to predict with any degree of assurance the growth
rate, if any, and the ultimate size, of this market. We cannot assure you that
the market for our services will continue to grow or that our services will ever
achieve significant market acceptance. If the market for our services weakens,
grows or develops more slowly than expected, or becomes saturated with
competitors, if our services do not achieve increased market acceptance, or if
pricing becomes subject to significant competitive pressures, our business,
results of operations and financial condition would be materially and adversely
affected.
26
Multex.com's business could be materially and adversely affected by pressures of
competition
The market for the distribution of investment research and other information
over the Internet is intensely competitive. We expect competition to continue to
increase. Competition also may increase as a result of industry consolidation.
Increased competition could result in price reductions, reduced gross margins
and loss of market share, any of which could have a material and adverse effect
on our business, results of operations and financial condition. We currently
face direct and indirect competition for both providers of investment research
and other reports, and for subscribers, including with large and
well-established distributors of financial information, such as Thomson
Financial Services (through its subsidiaries First Call, Investext and I|B|E|S).
Some of our competitors enjoy exclusive distribution arrangements with major
financial institutions. We also compete with:
o companies that provide investment research, including investment banks and
brokerage firms, many of whom have their own Web sites and potentially
consortia of such firms;
o other providers of either free or subscription research services on the
Internet;
o services provided by some of our strategic distributors which are
competitive in one or more respects with our service offerings;
o numerous prospective competitors, including Standard & Poor's, Mergent,
and Zacks Investment Research, that offer investment research-based
services;
o various written publications, including traditional media, investment
newsletters, personal financial magazines and industry research appearing
in financial periodicals;
o services provided by in-house management information services personnel
and independent systems integrators;
o annual reports and other filings with the Securities and Exchange
Commission;
o Standard & Poor's company-specific reports; and
o Value Line investment research reports.
If we fail to successfully compete with these entities or information sources,
our business, results of operations, and financial condition may be materially
adversely affected. It is also possible that new competitors may emerge and
rapidly acquire significant market share. Increased competition is likely to
result in price reductions, reduced gross margins and loss of market share,
which could materially and adversely affect our business, results of operations
and financial condition.
Rapid growth in Multex.com's future operations could strain our managerial,
operational and financial resources
We have experienced rapid growth in our operations. This rapid growth has
placed, and our anticipated future growth will continue to place, a significant
strain on our managerial, operational and financial resources, that if not
properly managed, could materially adversely affect our business, results of
operations, and financial condition.
The loss of any of Multex.com's key personnel could have a material and adverse
effect
Our future success will depend, in substantial part, on the continued service of
our senior management, including Mr. Isaak Karaev, our Chairman, President and
Chief Executive Officer, and key technical and sales personnel, none of whom has
entered into an employment agreement with us other than a
non-competition/non-disclosure agreement. We maintain a key person life
insurance policy in the amount of $2.0 million on the life of Mr. Karaev. The
loss of the services of one or more of our key personnel could have a material
and adverse effect on our business, results of operations and financial
condition. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications.
Multex.com's international operations are still new and may not be successful.
We have only limited business experience outside of the United States
We have only recently commenced operations in a number of international markets
and a key component of our strategy is to continue to expand our international
operations. To date, we have only limited experience in developing and obtaining
research and other financial information relating to companies whose securities
are traded
27
on foreign markets and in marketing, selling and distributing our services
internationally. The failure to gain the necessary experience, hire appropriate
personnel, and enter into key business relationships in these markets could have
a material and adverse effect on our business, results of operations and
financial condition.
Doing business internationally subjects us to additional regulatory
requirements, tax liabilities and other risks
There are risks inherent in doing business in international markets, including
unexpected changes in regulatory requirements, potentially adverse tax
consequences, export restrictions and controls, tariffs and other trade
barriers, difficulties in staffing and managing foreign operations, political
instability, fluctuations in currency exchange rates, and seasonal reductions in
business activity during the summer months in Europe and various other parts of
the world, any of which could have a material and adverse effect on the success
of our international operations and, consequently, on our business, results of
operations and financial condition. Furthermore, we cannot assure you that
governmental regulatory agencies in one or more foreign countries will not
determine that the services provided by us constitute the provision of
investment advice, which could result in our having to register in these
countries as an investment advisor or in our having to cease selling our
services in these countries, either of which could have a material and adverse
effect on our business, results of operations and financial condition.
Because Multex.com's business is dependent upon network and computer systems
located in one area, we are susceptible to problems caused by natural disasters,
power failures, system failures, security breaches or other damage to our system
Our electronic distribution of investment research utilizes proprietary
technology that resides principally in New York City. The continued and
uninterrupted performance of our network and computer systems is critical to our
success. Any disaster, power outage or system failure that causes interruptions
in our ability to provide our services to our customers, including failures that
affect our ability to collect research from our information providers or provide
electronic investment research to our users, could reduce customer satisfaction
and, if sustained or repeated, would reduce the attractiveness of our services.
An increase in the volume of research reports handled by our systems, or in the
rate of requests for this research, could strain the capacity of our software or
hardware, which could lead to slower response times or system failures.
Furthermore, we face the risk of a security breach of our systems that could
disrupt the distribution of research and other reports and information. Our
business, results of operations and financial condition could be materially and
adversely affected if any of these problems occur.
Our operations are dependent on our ability to protect our network and computer
systems against damage from computer viruses, fire, power loss, data
communications failures, vandalism and other malicious acts, and similar
unexpected adverse events. In addition, a failure of our communications
providers to provide the data communications capacity in the time frame required
by us for any reason could cause interruptions in the delivery of our services.
Despite precautions we have taken, unanticipated problems affecting our systems
have from time to time in the past caused, and in the future could cause, delays
and interruptions in the delivery of our services. Although we carry general
liability insurance, our insurance may not cover any claims by dissatisfied
providers or subscribers or may not be adequate to indemnify us for any
liability that may be imposed in the event that a claim were brought against us.
Our business, results of operations and financial condition could be materially
and adversely affected by any system failure, security breach or other damage
that interrupts or delays our operations.
The market price of our shares may experience extreme price and volume
fluctuations
The stock market has, from time to time, experienced extreme price and volume
fluctuations. The market prices of the securities of Internet-related companies
have been especially volatile, including fluctuations that are often unrelated
to the operating performance of the affected companies. Broad market
fluctuations of this type may adversely affect the market price of our common
stock. The market price of our common stock could be subject to significant
fluctuations due to a variety of factors, including:
o public announcements concerning us or our competitors, or the Internet
industry;
o fluctuations in operating results;
o a downturn in the financial services industry generally or the market for
securities trading in particular;
o introductions of new products or services by us or our competitors;
28
o changes in analysts' earnings estimates; and
o announcements of technological innovations.
In the past, companies that have experienced volatility in the market price of
their stock have been the object of securities class action litigation. If we
were the object of securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources
and have a material adverse effect on our business, results of operation and
financial condition.
Our executive officers, directors and 5% or greater stockholders significantly
influence all matters requiring a stockholder vote
Our executive officers, directors and existing stockholders who each own greater
than 5% of the outstanding common stock and their affiliates, in the aggregate,
beneficially own approximately 50% of our outstanding common stock. As a result,
our executive officers, directors and 5% or greater stockholders will be able to
significantly influence the outcome of all matters requiring approval by our
stockholders, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may also have the effect
of delaying or preventing a change in control.
The future sale of shares of our common stock may negatively affect our stock
price
If our stockholders sell substantial amounts of our common stock, including
shares issuable upon the exercise of outstanding options and warrants in the
public market, the market price of our common stock could fall. These sales also
might make it more difficult for us to sell equity securities in the future at a
time and price that we deem appropriate.
Distribution and other fees to research providers and strategic partners
increase Multex.com's costs
Royalties and distribution fees payable to our information providers and
strategic partners to obtain distribution rights to research reports included in
MultexNET-On-Demand constitute a significant portion of our cost of revenues. If
we are required to increase the royalties or fees payable to these information
providers or strategic partners, these increased payments could have a material
and adverse effect on our business, results of operations and financial
condition.
The inadvertent distribution of research reports could result in a claim for
damages against Multex.com or harm our reputation
Under certain of our contracts we are required to restrict distribution of
financial information to those users who have been authorized or entitled to
access the report by the information provider. We might inadvertently distribute
a particular report to a user who is not so authorized or entitled, which could
subject us to a claim for damages by the information provider or which could
harm our reputation in the marketplace, either of which could have a material
and adverse effect on our business, results of operations and financial
condition.
Risks Related to the Internet Industry
If the Internet infrastructure is not adequately maintained, we may be unable to
provide investment research and information services in a timely manner
Our future success will depend, in substantial part, upon the maintenance of the
Internet infrastructure, including a reliable network backbone with the
necessary speed, data capacity and security, and the timely development of
enabling products for providing reliability and timely Internet access and
services. We cannot assure you that the Internet infrastructure will continue to
be able to support the demands placed on it or that the performance or
reliability of the Internet will not be adversely affected. Furthermore, the
Internet has experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure or otherwise, and these outages or
delays could adversely affect the Web sites of our contributors, subscribers or
distributors. In addition, the Internet could lose its viability as a form of
media due to delays in the development or adoption of new standards and
29
protocols that can handle increased levels of activity. We cannot assure you
that the infrastructure and complementary products and services necessary to
maintain the Internet as a viable commercial medium will be developed or
maintained.
We may be subject to legal claims in connection with the content we publish and
distribute on the Internet
As a publisher and distributor of online content, we face potential direct and
indirect liability for claims of defamation, negligence, copyright, patent or
trademark infringement, violation of the securities laws and other claims based
upon the reports and data that we publish. For example, by distributing a
negative investment research report, we may find ourselves subject to defamation
claims, regardless of the merits of these claims. Computer failures may also
result in incorrect data being published and distributed widely. In these and
other instances, we may be required to engage in protracted and expensive
litigation, which could have the effect of diverting management's attention and
require us to expend significant financial resources. Our general liability
insurance may not necessarily cover any of these claims or may not be adequate
to protect us against all liability that may be imposed. Any claims or resulting
litigation could have a material and adverse effect on our business, results of
operations and financial condition.
We may become subject to burdensome government regulation and legal
uncertainties
The laws governing the Internet remain unsettled, even in areas where there has
been legislative action. Legislation could dampen the growth in the use of the
Internet generally and decrease the acceptance of the Internet as a
communications and commercial medium, which could have a material and adverse
effect on our business, results of operations and financial condition. In
addition, due to the global nature of the Internet, it is possible that,
although transmissions relating to our services originate mainly in the State of
New York, governments of other states, the United States or foreign countries
might attempt to regulate our services or levy sales or other taxes on our
activities. We cannot assure you that violations of local or other laws will not
be alleged or charged by local, state, federal or foreign governments, that we
might not unintentionally violate these laws or that these laws will not be
modified, or new laws enacted, in the future. Any of these developments could
have a material and adverse effect on our business, results of operations and
financial condition.
30
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a)(1) Consolidated Financial Statements
MULTEX.COM, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Auditors.............................................................................. 32
Consolidated Balance Sheets as of December 31, 2000 and 1999................................................ 33
Consolidated Statements of Operations for the years ended December 31, 2000, 1999 and 1998.................. 34
Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2000, 1999 and
1998..................................................................................................... 35
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.................. 36
Notes to Consolidated Financial Statements.................................................................. 38
Schedule II - Valuation and Qualifying Accounts............................................................. 52
(a)(2) Supplementary Data
Not Applicable.
31
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of
Multex.com, Inc.
We have audited the accompanying consolidated balance sheets of
Multex.com, Inc. (the "Company") as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended December 31,
2000. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Multex.com, Inc. as of December 31, 2000 and 1999, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.
ERNST & YOUNG LLP
New York, New York
January 24, 2001
32
MULTEX.COM, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
------------
2000 1999
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents 20,237,000 $ 6,089,000
Marketable securities 25,493,000 33,028,000
Accounts receivable, less allowance of $1,240,000 in 2000 and $423,000 in 1999 27,497,000 10,954,000
Other current assets 6,542,000 3,193,000
------------- -------------
Total current assets 79,769,000 53,264,000
Property and equipment, net 37,909,000 10,862,000
Goodwill, net 33,704,000 --
Intangibles, net 17,649,000 --
Other 5,490,000 1,474,000
------------- -------------
Total assets $ 174,521,000 $ 65,600,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,805,000 $ 5,051,000
Accrued expenses 9,742,000 4,778,000
Current portion of capital lease obligations 110,000 225,000
Deferred revenues 10,533,000 5,691,000
------------- -------------
Total current liabilities 25,190,000 15,745,000
Long term liabilities:
Capital lease obligations 84,000 193,000
Deferred rent 3,119,000 2,431,000
Other 3,000 31,000
------------- -------------
Total long term liabilities 3,206,000 2,655,000
Stockholders' equity:
Preferred stock - $.01 par value:
Authorized - 5,000,000 shares; none issued and outstanding -- --
Common stock $.01 par value:
Authorized - 200,000,000 shares; issued and outstanding
31,741,000 shares in 2000 and 27,180,000 in 1999 317,000 272,000
Additional paid-in-capital 216,683,000 109,564,000
Accumulated deficit (61,336,000) (60,141,000)
Deferred equity consideration (9,671,000) (2,431,000)
Accumulated other comprehensive income (loss) 132,000 (64,000)
------------- -------------
Total stockholders' equity 146,125,000 47,200,000
------------- -------------
Total liabilities and stockholders' equity $ 174,521,000 $ 65,600,000
============= =============
See accompanying notes to consolidated financial statements.
33
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
------------------------
2000 1999 1998
--------- ------------ ------------
Revenues $ 85,942,000 $ 40,850,000 $ 22,021,000
Cost of revenues 17,839,000 10,569,000 5,083,000
------------ ------------ ------------
Gross profit 68,103,000 30,281,000 16,938,000
Operating expenses:
Sales and marketing 26,017,000 26,379,000 8,667,000
Research and development 10,149,000 6,301,000 3,167,000
General and administrative 36,163,000 18,414,000 12,550,000
------------ ------------ ------------
Total operating expenses 72,329,000 51,094,000 24,384,000
Loss from operations (4,226,000) (20,813,000) (7,446,000)
Other income (expense):
Gain on sale of equipment -- -- 125,000
Offering expenses -- -- (841,000)
Acquisition expenses -- (5,713,000) --
Interest expense (88,000) (114,000) (575,000)
Interest income 3,214,000 2,359,000 389,000
------------ ------------ ------------
Loss from continuing operations before income taxes (1,100,000) (24,281,000) (8,348,000)
Income tax expense 95,000 1,030,000 276,000
------------ ------------ ------------
Loss from continuing operations (1,195,000) (25,311,000) (8,624,000)
Discontinued operations:
Income (loss) from discontinued operations, net of taxes -- 106,000 (440,000)
Gain on sale of discontinued operations, net of taxes -- 226,000 226,000
------------ ------------ ------------
-- 332,000 (214,000)
Net loss (1,195,000) (24,979,000) (8,838,000)
Redeemable preferred stock dividends -- 1,188,000 2,680,000
------------ ------------ ------------
Net loss attributable to common stockholders $ (1,195,000) $(26,167,000) $(11,518,000)
============ ============ ============
Earnings (loss) per common share - basic and diluted:
Continuing operations, net of redeemable preferred
stock dividends $ (0.04) $ (1.17) $ (1.49)
Discontinued operations -- 0.01 (0.03)
------------ ------------ ------------
Net loss $ (0.04) $ (1.15) $ (1.51)
============ ============ ============
Number of shares used in computing basic and diluted
loss per share 30,260,000 22,688,000 7,610,000
============ ============ ============
See accompanying notes to consolidated financial statements.
34
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock Additional
------------ Paid-in Accumulated Deferred
Shares Amount Capital Deficit Compensation
--------- ------------- ------------- ------------- -------------
Balance at December 31, 1997 ........... 7,169,000 $ 72,000 $ 1,812,000 $ (25,928,000) $ (1,052,000)
Net loss ............................... -- -- -- (8,838,000) --
Translation adjustment ................. -- -- -- -- --
Comprehensive loss ..................... -- -- -- -- --
Redeemable preferred stock dividend .... -- -- (2,679,000) -- --
Stock issued for services .............. 10,000 -- 45,000 -- --
Issuance of common stock from the
employee stock purchase plan .......... 33,000 -- 185,000 -- --
Exercise of options .................... 631,000 6,000 219,000 225,000
Tax benefit from option exercises ...... -- -- 242,000 -- --
Amortization of deferred compensation
relating to stock options ............. -- -- -- -- 440,000
Cancellation of stock options .......... -- -- (25,000) -- 25,000
Deferred compensation related to stock
options ............................... -- -- 872,000 -- (873,000)
Sale of stock and issuance of options in
connection with the acquisition of
certain assets of Multex Data Group ... 75,000 1,000 644,000 -- --
Issuance of stock in connection with
the acquisition of Multex Data Group .. 125,000 1,000 624,000 -- --
Issuance of warrant in connection with
long-term debt ........................ -- -- 100,000 -- --
---------- ------------- ------------- ------------- -------------
Balance at December 31, 1998 ........... 8,043,000 80,000 2,039,000 (34,766,000) (1,460,000)
Net loss ............................... -- -- -- (24,979,000) --
Translation adjustment ................. -- -- -- -- --
Unrealized loss on marketable
securities ............................ -- -- -- -- --
Comprehensive loss ..................... -- -- -- -- --
Redeemable preferred stock dividend .... -- -- (1,188,000) -- --
Conversion of redeemable preferred
stock to common stock ................. 14,861,000 149,000 60,912,000 -- --
Issuance of common stock, net of
offering costs ........................ 3,284,000 33,000 41,604,000 -- --
Exercise of options .................... 945,000 9,000 3,508,000 -- --
Amortization of deferred compensation
relating to stock options ............. -- -- -- -- 480,000
Compensation related to acceleration
of option vesting ..................... -- -- 161,000 -- --
Issuance of common stock from the
employee stock purchase plan .......... 47,000 1,000 572,000 -- --
Issuance of warrants ................... -- -- 1,956,000 -- (1,456,000)
Amortization of warrants ............... -- -- -- -- 5,000
Accumulated deficit adjustment (Note 1) -- -- -- (396,000) --
---------- ------------- ------------- ------------- -------------
Balance at December 31, 1999 ........... 27,180,000 272,000 109,564,000 (60,141,000) (2,431,000)
Net loss ............................... -- -- -- (1,195,000) --
Translation adjustment ................. -- -- -- -- --
Unrealized gain on marketable
securities ............................ -- -- -- -- --
Comprehensive loss ..................... -- -- -- -- --
Issuance of common stock ............... 3,412,000 34,000 85,404,000 -- --
Exercise of options .................... 542,000 5,000 3,005,000 -- --
Amortization of deferred compensation
relating to stock options ............. -- -- -- -- 480,000
Issuance of common stock from the
employee stock purchase plan .......... 141,000 1,000 1,621,000 -- --
Exercise of warrants ................... 266,000 3,000 (3,000) -- --
Issuance of warrants ................... -- -- 9,810,000 -- (9,810,000)
Amortization of warrants ............... -- -- -- -- 2,090,000
Tax benefit from option exercises ...... -- -- 1,884,000 -- --
Purchase of software ................... 200,000 2,000 5,398,000 -- --
---------- ------------- ------------- ------------- -------------
Balance at December 31, 2000 ........... 31,741,000 $ 317,000 $ 216,683,000 $ (61,336,000) $ (9,671,000)
========== ============= ============= ============= =============
Accumulated
Other
Comprehensive
Income (Loss) Total
------------- -------------
Balance at December 31, 1997 ........... $ (14,000) $ (25,110,000)
-------------
Net loss ............................... -- (8,838,000)
Translation adjustment ................. (2,000) (2,000)
-------------
Comprehensive loss ..................... -- (8,840,000)
-------------
Redeemable preferred stock dividend .... -- (2,679,000)
Stock issued for services .............. -- 45,000
Issuance of common stock from the
employee stock purchase plan .......... -- 185,000
Exercise of options .................... 225,000
Tax benefit from option exercises ...... -- 242,000
Amortization of deferred compensation
relating to stock options ............. -- 440,000
Cancellation of stock options .......... -- --
Deferred compensation related to stock
options ............................... -- (1,000)
Sale of stock and issuance of options in
connection with the acquisition of
certain assets of Multex Data Group ... -- 645,000
Issuance of stock in connection with
the acquisition of Multex Data Group .. -- 625,000
Issuance of warrant in connection with
long-term debt ........................ -- 100,000
------------- -------------
Balance at December 31, 1998 ........... (16,000) (34,123,000)
-------------
Net loss ............................... -- (24,979,000)
Translation adjustment ................. 1,000 1,000
Unrealized loss on marketable
securities ............................ (49,000) (49,000)
-------------
Comprehensive loss ..................... -- (25,027,000)
-------------
Redeemable preferred stock dividend .... -- (1,188,000)
Conversion of redeemable preferred
stock to common stock ................. -- 61,061,000
Issuance of common stock, net of
offering costs ........................ -- 41,637,000
Exercise of options .................... -- 3,517,000
Amortization of deferred compensation
relating to stock options ............. -- 480,000
Compensation related to acceleration
of option vesting ..................... -- 161,000
Issuance of common stock from the
employee stock purchase plan .......... -- 573,000
Issuance of warrants ................... -- 500,000
Amortization of warrants ............... -- 5,000
Accumulated deficit adjustment (Note 1) -- (396,000)
------------- -------------
Balance at December 31, 1999 ........... (64,000) 47,200,000
Net loss ............................... -- (1,195,000)
Translation adjustment ................. (100,000) (100,000)
Unrealized gain on marketable
securities ............................ 296,000 296,000
-------------
Comprehensive loss ..................... -- (999,000)
-------------
Issuance of common stock ............... -- 85,438,000
Exercise of options .................... -- 3,010,000
Amortization of deferred compensation
relating to stock options ............. -- 480,000
Issuance of common stock from the
employee stock purchase plan .......... -- 1,622,000
Exercise of warrants ................... -- --
Issuance of warrants ................... -- --
Amortization of warrants ............... -- 2,090,000
Tax benefit from option exercises ...... -- 1,884,000
Purchase of software ................... -- 5,400,000
------------- -------------
Balance at December 31, 2000 ........... $ 132,000 $ 146,125,000
============= =============
See accompanying notes to consolidated financial statements.
35
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
------------------------
2000 1999 1998
------------ ------------ ------------
Operating activities
Net loss from continuing operations $ (1,195,000) $(25,311,000) $ (8,624,000)
Adjustments to reconcile net loss from continuing operations
to net cash used in operating activities:
Amortization of equity consideration 2,570,000 646,000 440,000
Gain of sale of equipment -- -- (125,000)
Depreciation and amortization of property and equipment 6,129,000 3,365,000 1,870,000
Amortization of goodwill and intangibles 2,924,000 -- --
Amortization of issuance and financing costs -- 13,000 147,000
Deferred income tax -- 191,000 (180,000)
Bad debt expense 1,057,000 901,000 148,000
Stock issued for services -- -- 45,000
Accumulated deficit adjustment -- (396,000) --
Changes in operating assets and liabilities:
Accounts receivable (16,653,000) (8,187,000) (1,175,000)
Other current assets (283,000) (2,700,000) 106,000
Other assets (3,820,000) (1,283,000) 178,000
Accounts payable (2,426,000) 2,977,000 539,000
Accrued expenses 3,293,000 3,179,000 508,000
Deferred revenues 3,442,000 2,315,000 1,374,000
Deferred rent 688,000 2,012,000 (11,000)
Other liabilities (50,000) (28,000) 59,000
------------ ------------ ------------
Net cash used in operating activities from continuing operations (4,324,000) (22,306,000) (4,701,000)
Investing activities
Purchases of marketable securities (101,595,000) (41,957,000) (21,283,000)
Deposits and other assets -- -- 12,000
Proceeds from sale or maturities of marketable securities 109,426,000 28,895,000 8,932,000
Proceeds from sale of division, net of related expenses -- -- 819,000
Proceeds from sale of equipment -- -- 201,000
Acquisition of companies, net of cash acquired (20,268,000) -- --
Purchases of property and equipment (24,999,000) (8,634,000) (1,874,000)
------------ ------------ ------------
Net cash used in investing activities (37,436,000) (21,696,000) (13,193,000)
Financing activities
Proceeds from issuances of stock 56,233,000 45,727,000 20,710,000
Preferred stock issuance costs -- -- (100,000)
Proceeds from long-term debt -- -- 1,850,000
Proceeds from issuance of warrants -- 500,000 --
Repayment of long-term debt and capital leases (224,000) (624,000) (3,177,000)
Other liabilities -- -- (313,000)
------------ ------------ ------------
Net cash provided by financing activities 56,009,000 45,603,000 18,970,000
Discontinued activities
Income (loss) from discontinued operations including gain on sale,
net of taxes -- 106,000 (214,000)
Adjustments to reconcile income (loss) from discontinued operations
to net cash used in discontinued operations:
Gain on sale of discontinued operations, net of taxes -- 225,000 (225,000)
Depreciation -- -- 101,000
Decrease in net assets of discontinued operations -- -- 77,000
------------ ------------ ------------
Net cash provided by discontinued operations -- 331,000 (261,000)
Effect of exchange rate changes on cash (101,000) 1,000 (2,000)
------------ ------------ ------------
Increase in cash and cash equivalents 14,148,000 1,933,000 813,000
Cash and cash equivalents, beginning of year 6,089,000 4,156,000 3,343,000
------------ ------------ ------------
Cash and cash equivalents, end of year $ 20,237,000 $ 6,089,000 $ 4,156,000
============ ============ ============
See accompanying notes to consolidated financial statements.
36
MULTEX.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31,
-----------------------
2000 1999 1998
----------- ----------- -----------
Supplemental disclosures of cash flow information
Noncash investing and financing activity:
Acquisition of fixed assets through capital leases $ -- $ 280,000 $ --
=========== =========== ===========
Accrued purchases of fixed assets $ 1,455,000 $ 844,000 $ 128,000
=========== =========== ===========
Fair market value of stock issued in connection with the
acquisition of Multex Data Group $ -- $ -- $ 970,000
=========== =========== ===========
Unrealized gain (loss) on marketable securities $ 296,000 $ (49,000) $ --
=========== =========== ===========
Stock issued for acquisition of Sage Online $11,037,000 $ -- $ --
=========== =========== ===========
Stock issued for acquisition of BuzzCompany $22,801,000 $ -- $ --
=========== =========== ===========
Stock issued for acquisition of software $ 5,400,000 $ -- $ --
=========== =========== ===========
Stock issued for exercise of warrants $ 3,000 $ -- $ --
=========== =========== ===========
Stock issued for services $ -- $ -- $ 45,000
=========== =========== ===========
Fair market value of warrants issued $ 9,810,000 $ 1,956,000 $ --
=========== =========== ===========
Taxes paid $ 227,000 $ 419,000 $ 13,000
=========== =========== ===========
Interest paid $ 88,000 $ 88,000 $ 415,000
=========== =========== ===========
See accompanying notes to consolidated financial statements.
37
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Organization
Multex.com, Inc. (the "Company" or "Multex.com") is a global provider of
investment information and technology solutions to the financial services
industry, including brokerage firms, professional money management firms, hedge
funds, venture capital firms, mutual funds, investment banks, corporations, and
individual investors. Headquartered in New York, the Company also has offices in
London, San Francisco, Edinburgh and Hong Kong.
Basis of Presentation
The Company's fiscal year ends on December 31. On September 23, 1999, the
Company completed the acquisition of Market Guide Inc. ("Market Guide"), which
was accounted for as a pooling of interests (See Note 5). The pooling of
interests method of accounting requires the restatement of all periods as if the
Company and Market Guide had always been combined. All prior year consolidated
financial statements have been restated to reflect the acquisition of Market
Guide.
In October, 1999, Market Guide changed its fiscal year end from
February 28 to December 31. The consolidated balance sheet at December 31, 1999,
combines the balance sheets of Multex.com and Market Guide as of December 31,
1999.
The consolidated statements of operations for the year ended December
31, 1999 combine the statements of operations of Multex.com and Market Guide for
the year ended December 31, 1999. The consolidated statements of operations for
the year ended December 31, 1998 combine the statements of operations of
Multex.com for the year ended December 31, 1998 and the statements of operations
of Market Guide for the year ended February 28, 1999, respectively.
The consolidated statements of operations for both of the years ended
December 31, 1999 and 1998 include the results of operations of Market Guide for
the two month period ended February 28, 1999. As a result, in both 1999 and
1998, accumulated deficit as of December 31, 1999 has been adjusted by $396,000
to reflect the effect of including results of operations of Market Guide for the
two month period ended February 28, 1999.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Multex.com, Inc. and its wholly-owned subsidiaries. Significant intercompany
account balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Segment Information
The Company discloses information regarding segments in accordance with
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information. SFAS No. 131 establishes
standards for reporting of financial information about operating segments in
annual financial statements
38
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
and requires reporting selected information about operating segments in interim
financial reports. The disclosure of segment information was not required as the
Company operates in only one business segment.
Stock-Based Compensation
The Company measures compensation expense related to the grant of stock
options and stock-based awards to employees in accordance with the provisions of
Accounting Principles Board ("APB") Opinion No. 25, under which compensation
expense, if any, is generally based on the difference between the exercise price
of an option, or the amount paid for the award and the market price or fair
value of the underlying common stock at the date of the award. Stock-based
compensation arrangements involving nonemployees are accounted for under SFAS
No. 123, Accounting for Stock-Based Compensation, under which such arrangements
are accounted for based on the fair value of the option or award. As required by
SFAS No. 123, the Company discloses pro forma net loss per share information
reflecting the effect of applying SFAS No. 123 fair value measurement to
employee and director arrangements.
In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB No. 25, which became effective beginning
July 1, 2000. The adoption of this new accounting standard did not have a
significant effect on the Company's financial position or results of operations.
Concentration of Credit Risk
At December 31, 2000, substantially all cash and cash equivalents were held
in nine financial institutions.
The Company's customers are concentrated among institutional investors and
financial professionals, including mutual fund managers, portfolio managers,
brokers and their clients, as well as through third party redistributors. The
Company derives most of its revenue from customers located within the United
States. The Company's non-US revenue and net loss totaled approximately $5.0
million and $1.4 million, respectively.
One customer accounted for approximately 13% of revenues for the year ended
December 31, 2000 and approximately 20% of accounts receivable at December 31,
2000. The same customer accounted for approximately 10% of revenues for the year
ended December 31, 1999 and approximately 21% of accounts receivable at December
31, 1999. Another customer accounted for approximately 11% of revenues for the
year ended December 31, 1998. The Company performs ongoing credit evaluations,
generally does not require collateral and establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of customers, historical
trends, and other information; to date, such losses have been within
management's expectations.
Derivatives and Hedging Activities
In 2000, the Company adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended. To date, the Company has not
made use of the financial instruments covered by this statement and therefore
there is no impact on its financial position or results of operations.
Foreign Currency Translation
The financial statements of foreign subsidiaries have been translated into
U.S. dollars in accordance with SFAS No. 52, Foreign Currency Translation. The
functional currency of the Company's foreign operating units is the local
currency in the country that the entity operates. All assets and liabilities
have been translated using the exchange rate in effect at the balance sheet
date. Statement of operations amounts have been
39
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
translated using the average exchange rate for the period. Adjustments resulting
from such translation have been reported separately as a component of other
comprehensive income in stockholders' equity.
Fair Value of Financial Instruments
The carrying amounts reported in the balance sheets for cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate their fair values.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of 90
days or less when purchased (other than commercial paper included in marketable
securities) to be cash equivalents.
Marketable Securities
Marketable securities are classified as available for sale. Marketable
securities consist of government securities, corporate notes and bonds,
certificates of deposit and commercial paper. Marketable securities are carried
at fair value, which approximates cost.
Property and Equipment
Property and equipment are stated at cost, and depreciation is computed
using the straight-line method over the estimated useful life of the asset or
the life of the lease, whichever is shorter, which ranges from two to five
years.
Goodwill and Intangibles
Goodwill is amortized using the straight-line method principally over 10
years. Acquired identifiable intangible assets consisting of customer lists,
database content and database software are amortized using the straight-line
method over estimated useful lives ranging from 3 to 10 years.
Impairment of Long-Lived Assets
The Company continually reviews amortization periods and the carrying value
of long-lived assets including furniture and fixtures, property and equipment,
goodwill and intangibles to determine whether there are any indications of
reduction in useful lives or impairment losses. With respect to goodwill and
intangibles, events that would cause the Company to conduct an impairment
assessment include significant losses of customers, operating results of
acquired businesses that continually failed to meet management's performance
expectations, diminished marketability of acquired databases, or diminished
utility of acquired technology. If, after conducting such assessment,
indications of impairment are present in long-lived assets, the estimated future
undiscounted cash flows associated with the corresponding assets would be
compared to its carrying amounts to determine if a change in useful life or a
write-down to fair value is necessary.
Deferred Revenue
Deferred revenue represents the unamortized portion of annual
subscriptions received in advance, and fees received from customers in advance
of performance of services.
40
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue Recognition
Pursuant to Staff Accounting Bulletin 101, the Company recognizes revenue
when a signed contract exists, the fee is fixed and determinable and collection
of the resulting receivable is probable. For contracts with multiple elements
(e.g., website development services, hosting services and computer equipment),
the Company allocates revenue to each element of the contract based on objective
evidence of the element's fair value.
Revenues from subscriptions are recognized in equal installments over the
term of the subscriptions. Non-subscription revenues from the Multex
Research-On-Demand service are recognized upon sale. Revenues from sponsorships
and advertising are recognized in equal installments over the term of the
contract. Revenues from database licensing fees are recognized over the term of
the contract. Revenues from professional services are recognized when the
services are accepted by the client. Such services are primarily customization
software services which allow the Company's services to interface and function
with the customers' existing software platforms.
Advertising
The Company expenses the costs of advertising as incurred. Advertising
expense for the years ended December 31, 2000, 1999, and 1998 was approximately
$6.4 million, $15.3 million, and $2.5 million, respectively.
Earnings (Loss) Per Share
The Company calculates earning per share in accordance with SFAS No. 128,
Earnings Per Share, and SEC Staff Accounting Bulletin No. 98. Accordingly, basic
earnings per share is computed using the weighted average number of common and
dilutive common equivalent shares outstanding during the period. Common
equivalent shares consist of shares issuable upon the exercise of stock options
(using the treasury stock method); common equivalent shares are excluded from
the calculation if their effect is anti-dilutive.
Comprehensive Income
The Company follows the requirements of SFAS No. 130, Reporting
Comprehensive Income, for the reporting and display of comprehensive income and
its components. SFAS No. 130 requires unrealized gains or losses on the
Company's available for sale securities and foreign currency translation
adjustments to be included in other comprehensive income (loss).
Offering Expenses
Offering expenses in 1998 represent costs incurred in connection with a
proposed but withdrawn financing.
41
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
2. MARKETABLE SECURITIES
The amortized cost, gross unrealized gains and losses and fair value of
the investment securities available for sale are as follows:
Gross Gross
Amortized Unrealized Unrealized
December 31, 2000 Cost Gains losses Fair Value
----------------- ----- ----- ------ ----------
U.S. government notes and bonds ........ $13,220,000 $ 214,000 $ -- $13,434,000
Corporate bonds and notes .............. 6,393,000 25,000 -- 6,418,000
Commercial paper ....................... 4,040,000 28,000 -- 4,068,000
Euro dollar bonds ...................... 559,000 -- -- 559,000
Mutual funds ........................... 1,034,000 -- (20,000) 1,014,000
----------- ----------- ----------- -----------
$25,246,000 $ 267,000 $ (20,000) $25,493,000
=========== =========== =========== ===========
Gross Gross
Amortized Unrealized Unrealized
December 31, 1999 Cost Gains losses Fair Value
----------------- ----- ----- ------ ----------
U.S. government notes and bonds ........ $ 2,535,000 $ -- $ -- $ 2,535,000
Corporate bonds and notes .............. 7,779,000 -- (31,000) 7,748,000
Commercial paper ....................... 19,341,000 3,000 (4,000) 19,340,000
Euro dollar bonds ...................... 2,518,000 -- (17,000) 2,501,000
Repurchase agreements .................. 904,000 -- -- 904,000
----------- ----------- ----------- -----------
$33,077,000 $ 3,000 $ (52,000) $33,028,000
=========== =========== =========== ===========
Realized gains upon redemption of marketable debt instruments are included
in interest income.
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
December 31,
------------
2000 1999
----------- -----------
Computer and telecommunications equipment and related software $37,104,000 $13,726,000
Furniture and fixtures ....................................... 3,149,000 1,462,000
Leasehold improvements ....................................... 12,616,000 4,505,000
----------- -----------
52,869,000 19,693,000
Less accumulated depreciation and amortization ............... 14,960,000 8,831,000
----------- -----------
$37,909,000 $10,862,000
=========== ===========
4. GOODWILL AND INTANGIBLES
The Company has allocated the purchase price of acquired companies to
identifiable tangible assets and liabilities and intangible assets based on the
nature and the terms of the various purchase agreements and evaluation of the
acquired businesses. Amounts not allocated to tangible assets and liabilities
and identifiable intangible assets have been recorded as goodwill.
42
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
4. GOODWILL AND INTANGIBLES (continued)
Goodwill and other identifiable intangible assets consist of the following:
December 31,
2000
------------
Goodwill ........................................... $ 35,808,000
Accumulated amortization ........................... (2,104,000)
------------
Goodwill, net ...................................... $ 33,704,000
============
Database technology ................................ $ 11,677,000
Database content ................................... 6,114,000
Customer lists ..................................... 678,000
Accumulated amortization ........................... (820,000)
------------
Other intangibles, net ............................. $ 17,649,000
============
Amortization expense totaled $2.9 million in 2000.
5. ACQUISITIONS
BARRA Global Estimates
On December 7, 2000 the Company acquired the BARRA Global Estimates
business from BARRA, Inc. for approximately $12.5 million in cash. The BARRA
Global Estimates business provides consensus and attributed estimates of
financial performance metrics from more than 400 non-U.S. brokers covering over
11,000 companies in more than 60 countries. The acquisition has been accounted
for by the purchase method of accounting and accordingly, the excess of the
purchase price over the fair market value of the net assets acquired has been
allocated to goodwill. This acquisition did not meet the criteria for pro forma
disclosure due to immateriality.
BuzzCompany, Inc.
On May 10, 2000 the Company acquired all of the outstanding shares of
BuzzCompany, Inc., a developer of next-generation e-community software and a
provider of web application development services. The Company issued 1,058,000
shares of common stock, with a fair market value of $21.55 per share. The
acquisition has been accounted for by the purchase method of accounting and
accordingly, the excess of the purchase price over the fair market value of the
net assets acquired has been allocated to goodwill.
Sage Online, Inc.
On March 20, 2000 the Company acquired all of the outstanding shares of
Sage Online, Inc., a provider of live events and interactive community for
personal finance, including mutual fund and equity content, chat rooms, forums
and message boards. The Company issued 354,000 shares of common stock, with a
fair market value of $31.16 per share, and paid $6 million in cash. The
acquisition has been accounted for by the purchase method of accounting and
accordingly, the excess of the purchase price over the fair market value of the
net assets acquired has been allocated to goodwill.
The table below reflects unaudited pro forma combined results of the
Company, Sage Online and BuzzCompany as if the acquisitions had taken place at
the beginning of fiscal 2000 and 1999:
2000 1999
---- ----
Revenues ....................... $ 87,357,000 $ 44,477,000
Net loss ....................... (4,544,000) (31,169,000)
Earnings per share ............. $ (0.15) $ (1.29)
The pro forma net loss in each year is significantly higher than the
actual net loss reported on the statement of operations principally due to
additional amortization of acquired intangibles and goodwill.
The allocation of purchase price for the acquisitions completed in 2000 as
reflected in the December 31, 2000
43
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
5. ACQUISITIONS (continued)
consolidated balance sheet is based on the Company's initial assessment of the
fair value of assets acquired and therefore is preliminary. The allocations may
be modified as the Company finalizes the purchase accounting for such
acquisitions.
Market Guide Inc.
On September 23, 1999, pursuant to an Agreement and Plan of Merger and
Reorganization, the Company acquired Market Guide Inc., an online provider of
financial information and data. The merger was accounted for as a pooling of
interests with each Market Guide shareholder receiving one share of the
Company's common stock for each outstanding share of Market Guide stock. The
Company issued 4,900,000 shares of its common stock and assumed stock options to
purchase 680,000 shares of the Company's common stock. In connection with the
merger, the Company incurred approximately $5.7 million in costs related to the
transaction.
Unaudited combined and separate results of the Company and Market Guide for
the period from January 1, 1999 to September 23, 1999 were:
Market Inter-
Multex.com Guide Company Combined
---------- ----- ------- --------
Revenues...................................................... $ 19,235,000 $ 8,319,000 $ (178,000) $ 27,376,000
Net income (loss)............................................. (14,883,000) (2,809,000) -- (17,692,000)
Adjustments to conform Market Guide's method of accounting for computer
software and database expansion costs with that of the Company increased
combined net loss for the year ended December 31, 1998 by approximately
$605,000.
6. ACCRUED EXPENSES
Accrued expenses consist of the following:
December 31,
------------
2000 1999
---- ----
Payroll and related costs .............. $ 970,000 $ 598,000
Accrued vacation ....................... 265,000 200,000
Accrued bonuses ........................ 3,668,000 1,245,000
Royalties .............................. 833,000 1,004,000
Professional fees ...................... 653,000 454,000
Due to BARRA, Inc. ..................... 1,124,000 --
Other .................................. 2,229,000 1,277,000
---------- ----------
$9,742,000 $4,778,000
========== ==========
7. COMMITMENTS
Operating Leases
The Company has various lease agreements for offices. Lease terms generally
range from five to ten years with options to renew at varying terms. The
approximate future minimum annual rental payments under these operating leases
are as follows:
2001................................................................ $4,214,000
2002................................................................ 4,523,000
2003................................................................ 4,583,000
2004................................................................ 4,580,000
2005................................................................ 4,541,000
Thereafter.......................................................... 12,492,000
-----------
$34,933,000
===========
44
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
7. COMMITMENTS (continued)
Total rental expense for the years ended December 31, 2000, 1999 and 1998
was approximately $3,632,000, $1,808,000 and $887,000, respectively.
Capital Leases
The Company has various capital lease agreements for furniture, fixtures
and equipment. Lease terms generally range from three to five years. The future
minimum payments for all capital leases and principal repayment are summarized
as follows:
2001 ........................................................... $121,000
2002 ........................................................... 81,000
2003 ........................................................... 7,000
--------
Total payments ................................................. 209,000
Less amount representing interest .............................. 15,000
--------
194,000
Less current portion of obligations under capital leases ....... 110,000
--------
Long term capital lease obligations ............................ $ 84,000
========
8. LONG-TERM DEBT
On June 30, 2000, the Company entered into a $10,000,000 Revolving Credit
Facility (the "Facility") which bears interest at an annual rate of prime plus
one-half percent or LIBOR plus two and one-half percent. The Facility expires on
July 1, 2002 and is secured by certain eligible accounts receivable. Under the
Facility, the Company is required to maintain certain levels of net worth and
other financial ratios.
The availability of borrowings has been reduced by certain outstanding
letters of credit. As of December 31, 2000, the Company had $8,529,000 available
under the Facility.
As of December 31, 2000, the Company had outstanding letters of credit
issued in the amount of $1,471,000.
9. REDEEMABLE PREFERRED STOCK
During 1998, the Company authorized 80,000 shares of $.01 par value Series
E convertible preferred stock ("Series E Stock") and issued 80,000 shares of the
Series E Stock for $20,000,000. In connection with the issuance of the Series E
Stock, the Company incurred issuance costs of approximately $100,000.
In March 1999, the series A, B, C, D and E redeemable preferred stock was
converted into 14,861,112 shares of the Company's common stock upon the
consummation of the initial public offering.
10. STOCKHOLDERS' EQUITY
Common Stock
In March 1999, the Company effected a 1-for-2 reverse stock split. All
common share information included in the accompanying financial statements has
been adjusted to reflect the one-for-two reverse stock split.
On March 17, 1999, the Company commenced its initial public offering of
common stock. The Company realized proceeds of approximately $41,637,000, net of
underwriting discounts and commission and related expenses from the initial
public offering of 3,450,000 shares of its common stock, of which 3,283,500
shares were issued and sold by the Company.
45
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
10. STOCKHOLDERS' EQUITY (continued)
During 1999, the Company issued 944,752 shares of its common stock for
approximately $3,518,000 in connection with the exercise of stock options and
issued 47,015 shares of its common stock for approximately $572,000 in
connection with the Company's employee stock purchase plan.
During 2000, the Company issued 541,665 shares of its common stock for
approximately $3,010,000 in connection with the exercise of stock options and
issued 141,023 shares of its common stock for approximately $1,622,000 in
connection with the Company's employee stock purchase plan.
In July 2000, the Company issued 1,000,000 shares of its common stock in a
private placement for approximately $30,000,000.
Common Stock Reserved for Issuance
At December 31, 2000, the Company has reserved approximately 11,083,000
shares of its common stock for issuance in connection with shares issuable under
the Company's stock option plan, employee stock purchase plan and warrant
commitments.
Preferred Stock
In March 1999, the Company authorized the issuance of 5,000,000 shares of
preferred stock, par value $0.01 per share.
11. EMPLOYEE STOCK PURCHASE PLAN
The Company maintains an Employee Stock Purchase Plan (the "Plan") which
allows eligible employees to purchase shares of common stock of the Company
through payroll deductions at 85% of the fair market value during specific
purchase periods, as defined. A total of 750,000 shares of common stock has been
authorized for issuance under this plan. As of December 31, 2000, 566,949 shares
are reserved for issuance under the Plan. For the years ended December 31, 2000,
1999 and 1998, 141,023, 47,015 and 33,244 shares of common stock, respectively
had been issued for total proceeds of $1,622,000, $573,000 and $185,000,
respectively.
12. STOCK OPTIONS
In June 2000, the stockholders approved amendments to the Company's 1999
Stock Option Plan to increase the number of shares of Common Stock available
under such Plan by an additional 3,500,000 shares and to increase the number of
shares by which the share reserve under the Plan will automatically increase on
the first trading day in each calendar year from three percent (3%) of the
shares of Common Stock outstanding on the last trading day of the immediately
preceding calendar year to five percent (5%) of such outstanding shares, subject
to a maximum annual increase of 900,000 shares.
In March 1999, the Company established the 1999 Stock Option Plan (the
"Plan") which is the successor equity incentive program to the Company's 1993
Stock Incentive Plan which terminated upon the Company's initial public offering
of its common stock. All outstanding options under the 1993 Stock Incentive Plan
have been transferred into the Plan. A total of 11,250,000 options to purchase
shares of the Company's common stock were authorized for issuance under the
Plan.
46
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
12. STOCK OPTIONS (continued)
During the years ended December 31, 1998 and 1997, the difference between
the estimated fair market value of the Company's common stock and the options'
exercise price on the date of grant was determined to be approximately $873,000
and $1,077,000, respectively. This deferred compensation is being amortized for
financial reporting purposes over the vesting period of the options and the
amount recognized as expense during the years ended December 31, 2000, 1999 and
1998 amounted to approximately $480,000, $480,000 and $440,000, respectively.
For the years ended December 31, 2000 and 1999, all options were issued at the
fair market value of the Company's common stock on the date of grant.
The following transactions occurred with respect to stock options issued
for the years ended December 31, 2000, 1999 and 1998:
Weighted-
Average
Number of Exercise
Options Price
------ -----
Outstanding December 31, 1997 ................... 2,283,600 $ 0.64
Granted during the year ......................... 1,264,000 4.99
Cancelled during the year ....................... (76,950) 2.35
Exercised during the year ....................... (631,500) 0.36
---------
Outstanding December 31, 1998 ................... 2,839,150 2.59
Granted during the year ......................... 3,002,450 16.64
Cancelled during the year ....................... (237,000) 6.68
Exercised during the year ....................... (819,752) 3.51
---------
Outstanding December 31, 1999 ................... 4,784,848 11.04
Granted during the year ......................... 5,030,326 15.91
Cancelled during the year ....................... (691,056) 14.02
Exercised during the year ....................... (541,590) 5.56
---------
Outstanding December 31, 2000 ................... 8,582,528 8.27
=========
The following table summarizes information concerning outstanding options
at December 31, 2000:
Options Outstanding Options Exercisable
------------------- -------------------
Number of Weighted Average Number of
Options Weighted Average Remaining Options Weighted Average
Exercise Price Range Outstanding Exercise Price Contractual Life Exercisable Exercise Price
-------------------- ----------- -------------- ---------------- ----------- --------------
$ 0.01 - 0.01 6,176 $ 0.01 8.8 3,329 $ 0.01
0.02 - 0.02 43,250 0.02 4.3 43,250 0.02
0.10 - 0.10 2,613 0.10 8.7 985 0.10
0.50 - 0.55 808,738 0.52 6.4 660,611 0.53
0.77 - 1.15 19,518 0.95 9.1 1,891 0.83
3.00 - 3.00 26,250 3.00 7.1 26,250 3.00
4.80 - 6.00 497,825 5.16 7.6 410,325 5.15
7.50 - 10.44 1,336,189 8.98 9.2 122,560 7.94
12.00 - 17.88 4,913,619 16.10 9.2 488,331 14.12
18.94 - 27.56 395,250 23.34 8.8 159,187 23.64
28.56 - 34.56 533,100 30.49 9.0 78,150 29.70
--------- ---------
8,582,528 13.95 8.8 1,994,869 8.27
========= =========
Options outstanding under the Plan primarily vest in four equal annual
installments commencing on the day after the first anniversary of the grant and
expire ten years after the date of grant.
47
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
12. STOCK OPTIONS (continued)
Pro forma information regarding net loss and net loss per share is required
by SFAS 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement. The
weighted average fair value of options granted during the years ended December
31, 2000, 1999 and 1998 was $11.47, $12.87 and $3.02, respectively. The fair
value of the options was estimated at date of grant using a Black-Scholes option
pricing model with the following assumptions:
Assumptions 2000 1999 1998
------------ ----- ----- ----
Volatility factor of the expected market price of the Company's
common stock ............................................... 0.980 1.172 0.823
Average risk-free interest rate ............................... 6.35% 5.63% 4.96%
Dividend yield ................................................ 0.0% 0.0% 0.0%
Average life .................................................. 4 years 4 years 4 years
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its stock options.
The Company's pro forma information is as follows:
2000 1999 1998
-------------- -------------- -----------
Pro forma net loss available to common
Stockholders ........................................ $ (18,269,000) $ (33,414,000) $(12,535,00)
Pro forma basic and diluted loss per share ............. $ (0.60) $ (1.47) $ (1.65)
13. PENSION PLAN
The Company established a defined contribution plan (the "Plan") under
Section 401(k) of the Internal Revenue Code. All employees of the Company are
eligible to participate in the Plan upon hire. Participants may contribute up to
20% of their eligible earnings, as defined. The Company may decide to make an
additional contribution to the Plan on behalf of the Plan participants. No
additional contributions have been made by the Company for the years ended
December 31, 2000, 1998 and 1997.
14. INCOME TAXES
Under FASB Statement No. 109, "Accounting for Income Taxes," the liability
method is used in accounting for income taxes. Under this method, deferred
income tax assets and liabilities result from temporary differences between the
income tax basis of assets and liabilities and their reported amounts in the
financial statements that will result in taxable income and deductions in future
years.
48
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
14. INCOME TAXES (continued)
Significant components of the Company's deferred tax assets are as follows:
December 31,
------------
2000 1999
------------ ------------
Net operating loss carryforward ...... $ 23,047,000 $ 21,566,000
Research and development credits ..... 1,593,000 1,020,000
Depreciation and amortization ........ 1,894,000 789,000
Deferred revenue ..................... 4,740,000 2,352,000
Sales incentives ..................... 941,000 --
Deferred rent ........................ 1,403,000 --
Other ................................ 1,099,000 646,000
Acquired intangibles ................. (7,942,000) --
------------ ------------
26,775,000 26,373,000
Valuation allowance .................. (24,891,000) (26,373,000)
------------ ------------
$ 1,884,000 $ --
============ ============
In assessing the realization of deferred tax assets, management considers
whether it is more likely than not that such benefit will be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income. For the year ended December 31, 2000, management reversed
approximately $1,884,000 of the deferred tax asset valuation allowance due to
projected taxable income for the year ended December 31, 2001.
At December 31, 2000, the Company had net operating loss carryforwards of
approximately $50.0 million and research and development credits of
approximately $1.5 million for income tax purposes that expire in 2009 through
2020. The utilization with regard to timing and amount of the Company's net
operating loss carryforwards may be limited due to changes in the Company's
ownership pursuant to Section 382 of the Internal Revenue Code.
The provision for income taxes from continuing operations consists of the
following:
Year Ended December 31,
-----------------------
2000 1999 1998
----------- ----------- -----------
Current .......... $ 1,979,000 $ 839,000 $ 456,000
Deferred ......... (1,884,000) 191,000 (180,000)
----------- ----------- -----------
$ 95,000 $ 1,030,000 $ 276,000
=========== =========== ===========
The reconciliation of income taxes computed at the U.S. Federal statutory
rate to income tax expense is as follows:
Year Ended December 31,
-----------------------
2000 1999 1998
----------- ----------- -----------
Tax at U.S. statutory rate of 34% .................. $ (374,000) $(8,255,000) $(2,838,000)
U.S. losses without benefit ........................ -- 8,724,000 3,211,000
Foreign losses with no U.S. benefit ................ 479,000 -- --
Expenses not deductible for U.S. tax purposes ...... 771,000 -- --
Change in valuation allowance ...................... (1,425,000) -- --
State taxes ........................................ 734,000 370,000 83,000
Other .............................................. (90,000) 191,000 (180,000)
----------- ----------- -----------
$ 95,000 $ 1,030,000 $ 276,000
=========== =========== ===========
49
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
15. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
Year Ended December 31,
-----------------------
2000 1999 1998
---- ---- ----
Numerator:
Net loss ................................................... $ (1,195,000) $(24,979,000) $ (8,838,000)
Redeemable preferred stock dividends ............................ -- 1,188,000 2,680,000
------------ ------------ ------------
Numerator for basic and diluted loss per share--net
loss attributable to common stockholders ..................... $ (1,195,000) $(26,167,000) $(11,518,000)
============ ============ ============
Denominator:
Denominator for basic and dilutive loss per
share--weighted average shares .......................... 30,260,000 22,688,000 7,610,000
============ ============ ============
Basic and diluted loss per share ................................ $ (0.04) $ (1.15) $ (1.51)
============ ============ ============
The following securities have been excluded from the dilutive per share
computation as they are antidilutive:
At December 31,
---------------
2000 1999 1998
---- ---- ----
Redeemable preferred stock--Series A ................. -- -- 25,000
Redeemable preferred stock--Series B ................. -- -- 36,666
Redeemable preferred stock--Series C ................. -- -- 100,000
Redeemable preferred stock--Series D ................. -- -- 55,556
Redeemable preferred stock--Series E ................. -- -- 80,000
Stock options ........................................ 8,582,528 4,784,848 2,839,150
Warrants ............................................. 850,000 418,050 318,050
16. DISCONTINUED OPERATIONS
On January 15, 1999, Market Guide completed the sale of its CreditRisk
Monitor ("CRM") division for approximately $2,300,000, which consisted of
approximately $1,200,000 paid in cash and notes receivable of approximately
$1,100,000. The Company recorded a gain on the sale of approximately $226,000,
net of taxes of $163,000, relating to the cash portion of the proceeds received
in excess of the net assets of the division. Such gain was recorded during the
two month period described in note 1 and related to the Company's pooling of
interests with Market Guide and therefore is included in both 2000 and 1999. The
Company has deferred the gain relating to the notes receivable portion of the
sales price until such time as its payment is more fully assured. The notes
receivable are summarized as follows:
o $1,000,000 secured promissory note, bearing interest at 6.0% beginning on
July 1, 2001, payable in 24 equal monthly installments of principal and
interest in the amount of approximately $44,000 commencing July 31, 2001
through June 30, 2003. The present value of such promissory note was
approximately $792,000 at its origination.
o $98,000 secured expense promissory note, accruing interest beginning on
February 1, 1999, payable in 24 equal monthly installments of principal
and interest in the amount of approximately $5,000 commencing February 28,
2001 through January 31, 2003.
Results of operations for the CRM division have been classified as discontinued
operations for all periods presented.
50
MULTEX.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
16. DISCONTINUED OPERATIONS (continued)
Revenues and income from discontinued operations are as follows:
1999 1998
----- ----
Revenues ........................................................ $ -- $ 667,000
=========
Operating loss .................................................. -- (757,000)
Income tax benefit .............................................. 106,000 317,000
--------- ---------
Loss from discontinued operations ............................... $ 106,000 $(440,000)
========= =========
Gain on sale .................................................... $ 388,000 $ 388,000
Income tax expense .............................................. (162,000) (162,000)
--------- ---------
Gain on sale, net ............................................... $ 226,000 $ 226,000
========= =========
17. MERRILL LYNCH
On December 21, 1999, the Company announced a multi-year partnership
with Merrill Lynch to co-develop global research and information web sites for
clients of Merrill Lynch's institutional e-commerce portal. The companies will
jointly develop the next-generation platform for real-time delivery of Merrill
Lynch investment strategy and securities research for its institutional clients.
As part of this strategic partnership, the Company amended its Electronic
Distribution Services Agreement ("EDS Agreement") with Merrill Lynch to
incorporate the terms of this new development plan.
Also on December 21, 1999, the Company entered into an agreement with
Merrill Lynch, which closed on January 31, 2000, as part of its strategic
partnership with them, (i) issued 1 million shares of the Company's common stock
at $21.60 per share, (ii) issued warrants to purchase 100,000 shares of the
Company's common stock that vest immediately with an exercise price of $20 per
share, for $400,000 (iii) issued warrants to purchase 1.5 million shares of the
Company's common stock that vest based on certain performance and renewal
criteria, as defined, with an exercise price of $20 per share, for $100,000 and
(iv) issued vested warrants to purchase 750,000 shares of the Company's common
stock with an exercise price of $50 per share. In addition the Company purchased
software from Merrill Lynch for $500,000 and 200,000 shares of the Company's
common stock which represents the fair value of the software purchased. The
software was purchased on February 1, 2000.
The Company received the $400,000 for the warrants to purchase 100,000
shares of the Company's common stock with an exercise price of $20 per share on
December 22, 1999. These warrants vested immediately and were issued in
connection with the EDS Agreement. The Company has valued these warrants, using
the Black Scholes valuation model, at $1,856,000. The fair value of the warrants
less the $400,000 paid is being amortized over the term of the EDS agreement.
The Company received the $100,000 for the warrants to purchase 1.5
million shares of the Company's common stock at an exercise price of $20 per
share on December 22, 1999. These warrants vest based on certain performance and
renewal criteria, as defined in the agreement, and will be accounted for at
their fair market value on the date when the performance is complete, with
the cost amortized over the remaining life of the EDS agreement.
On February 1, 2000, the Company received $21.6 million of proceeds
from Merrill Lynch for the issuance of 1 million shares of common stock. The
sale of the common stock was accounted for at the fair market value on the
date of issuance.
In connection with the issuance of the warrants to purchase 750,000
shares of the Company's common stock at $50 per share, the Company has recorded
a deferred charge equal to the fair value of the warrants on the closing date,
February 1, 2000, which is being amortized over the term of the EDS agreement.
The Company has valued
51
these warrants, using the Black Scholes valuation model, at $9,810,000.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Balance at Charged to Charged to Balance
Beginning Costs and Other at End
of Period Expenses Accounts Deductions of Period
--------- -------- -------- ---------- ---------
For the Year Ended December 31, 2000
Allowance for doubtful accounts.............. $ 423,000 $1,057,000 -- $ (240,000) (a) $ 1,240,000
For the Year Ended December 31, 1999
Allowance for doubtful accounts.............. $ 172,000 $ 901,000 -- $ (650,000) (a) $ 423,000
For the Year Ended December 31, 1998
Allowance for doubtful accounts.............. $ 264,000 $ 148,000 -- $ (240,000) (a) $ 172,000
(a) Uncollectible accounts written off, net of recoveries.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
52
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company will furnish to the Securities and Exchange Commission a definitive
Proxy Statement (the "Proxy Statement") not later than 120 days after the end of
the fiscal year ended December 31, 2000. The information required by this item
is incorporated herein by reference to the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to the
Proxy Statement
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference to the
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference to the
Proxy Statement.
53
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Reference is made to the index of consolidated financial statements
included in Item 8 to this Report on Form 10-K.
2. Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts.
All other schedules are omitted because they are not required, not
applicable or the required information is contained elsewhere.
3. Exhibits
The Index to Exhibits in paragraph (c) below is incorporated herein
by reference.
(b) Reports on Form 8-K
None.
(c) Exhibits
Index to Exhibits
-----------------
2.1 Agreement and Plan of Reorganization dated as of March 13, 2000 by and
among the Registrant, Multex A Acquisition Corp., Sage Online, Inc., and
the shareholders of Sage Online, Inc. (incorporated by reference to
Exhibit 2.1 of our Current Report on Form 8-K filed on April 5, 2000).
2.2 Agreement and Plan of Merger dated as of May 10, 2000 by and among
Multex.com, Inc., Multex B Acquisition Corp., BuzzCompany.com Inc. and the
shareholders of BuzzCompany.com Inc. (incorporated by reference to Exhibit
2.1 of our Current Report on Form 8-K filed on May 24, 2000).
3.1 Amended and Restated Certificate of Incorporation.
3.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation.
3.3 Amended and Restated Bylaws.
4.1 Specimen common stock certificate (incorporated by reference to Exhibit
4.1 of our Registration Statement on Form S-1, as amended (Registration
No. 333-70693)).
4.2 See Exhibits 3.1, 3.2 and 3.3 for further provisions defining the rights
of holders of common stock of the Registrant.
10.1 Multex.com, Inc. 1999 Stock Option Plan, as amended and restated as of
June 29, 2000 (incorporated by reference to Exhibit 99.1 of our
Registration Statement on Form S-8 (Registration No. 333-45998)). (*)
10.2 Form of Written Compensation Agreement between Multex.com, Inc. and
Christopher Feeney (incorporated by reference to Exhibit 99.4 of our
Registration Statement on Form S-8 (Registration No. 333-45998)). (*)
21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP.
* Management contract or compensatory plan or arrangement
(d) Financial Statement Schedules
See Item 14(a) 2 above.
54
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Multex.com, Inc. has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on this 30th day of March, 2001.
MULTEX.COM, INC.
By: /s/ Isaak Karaev
------------------------------------------
Isaak Karaev
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of Multex.com,
Inc. and in the capacities indicated as of March 30, 2001.
By: /s/ Isaak Karaev
-----------------------------------------
Isaak Karaev
Chairman of the Board of Directors,
President and Chief Executive
Officer (Principal Executive Officer)
By: /s/ John J. McGovern
-----------------------------------------
John J. McGovern
Chief Financial Officer and Senior
Vice President (Principal Financial
and Accounting Officer)
By: /s/ Homi M. Byramji
-----------------------------------------
Homi M. Byramji
Senior Vice President and Director
By: /s/ I. Robert Greene
-----------------------------------------
I. Robert Greene
Director
By:
-----------------------------------------
Lennert J. Leader
Director
By: /s/ John Tugwell
-----------------------------------------
John Tugwell
Director
By: /s/ Devin N. Wenig
-----------------------------------------
Devin N. Wenig
Director