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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________
COMMISSION FILE NUMBER: 0-24559
MULTEX.COM, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 22-3253344
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(State of Incorporation) (I.R.S. Employer
Identification Number)
100 WILLIAM STREET, 7TH FLOOR
NEW YORK, NEW YORK 10038
(212) 607-2400
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
As of August 7, 2002 there were 32,198,720 shares of the registrant's common
stock outstanding.
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QUARTERLY REPORT ON FORM 10-Q
MULTEX.COM, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
NUMBER
PART I. FINANCIAL INFORMATION.................................................................................3
ITEM 1. FINANCIAL STATEMENTS (Unaudited):............................................................3
Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001..............3
Condensed Consolidated Statements of Operations for the three months and six months
ended June 30, 2002 and 2001.................................................................4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002
and 2001.....................................................................................5
Notes to Condensed Consolidated Financial Statements ........................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS........9
PART II. OTHER INFORMATION...................................................................................19
ITEM 1. LEGAL PROCEEDINGS...........................................................................19
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...................................................19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.............................................................19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........................................19
ITEM 5. OTHER INFORMATION...........................................................................19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................................19
ITEM 7. SIGNATURES..................................................................................20
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MULTEX.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
JUNE 30, DECEMBER 31,
2002 2001
---- ----
(UNAUDITED) (AUDITED)
---------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 36,266 $ 40,771
Marketable securities 7,052 1,027
Accounts receivable, net 19,452 18,268
Other current assets 5,289 4,208
-------- --------
Total current assets 68,059 64,274
Property and equipment, net 35,139 38,236
Goodwill, net 6,468 6,100
Intangibles, net 15,183 15,795
Investments 4,236 4,236
Other 6,266 6,245
-------- --------
Total assets $135,351 $134,886
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,949 $ 2,341
Accrued expenses 6,324 5,970
Deferred revenues 12,244 9,058
-------- --------
Total current liabilities 20,517 17,369
Long term liabilities:
Deferred rent 3,071 3,251
Deferred revenues 2,641 --
-------- --------
Total long term liabilities 5,712 3,251
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
32,686,000 shares at June 30, 2002
and 32,525,000 at December 31, 2001 327 325
Additional paid-in capital 225,015 227,108
Accumulated deficit (108,123) (104,071)
Deferred equity consideration (6,813) (8,920)
Accumulated other comprehensive income (loss) 793 (176)
-------- --------
111,199 114,266
Less cost of treasury stock: 530,000 shares at June 30, 2002 and
none at December 31, 2001 (2,077) --
-------- --------
Total stockholders' equity 109,122 114,266
-------- --------
Total liabilities and stockholders' equity $135,351 $134,886
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
3
MULTEX.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED; IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2002 2001 2002 2001
---- ---- ---- ----
Gross revenues $ 22,803 $ 23,522 $ 45,371 $ 53,026
Performance-based warrants -- (1,075) -- (1,075)
-------- -------- -------- --------
Net revenues 22,803 22,447 45,371 51,951
Cost of revenues 5,943 7,187 11,770 12,900
-------- -------- -------- --------
Gross profit 16,860 15,260 33,601 39,051
Operating expenses:
Sales and marketing 5,499 7,738 11,031 14,454
Research and development 1,538 1,961 3,024 4,567
General and administrative 7,200 8,779 14,393 16,957
Depreciation and amortization 4,798 4,912 9,334 8,664
Impairment charge -- 25,641 -- 25,641
-------- -------- -------- --------
Total operating expenses 19,035 49,031 37,782 70,283
Loss from operations (2,175) (33,771) (4,181) (31,232)
Other income (expense):
Interest income 245 497 505 1,078
Interest expense (15) (3) (28) (18)
Equity in loss from unconsolidated business (186) -- (372) --
Other 200 (173) 204 (173)
-------- -------- -------- --------
Loss before income taxes (1,931) (33,450) (3,872) (30,345)
Income tax expense 90 290 180 380
-------- -------- -------- --------
Net loss $ (2,021) $(33,740) $ (4,052) $(30,725)
======== ======== ======== ========
Basic and diluted net loss per share $ (0.06) $ (1.05) $ (0.12) $ (0.96)
======== ======== ======== ========
Number of shares used in:
Basic and diluted loss per share 32,580 31,994 32,567 31,905
======== ======== ======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
4
MULTEX.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED; IN THOUSANDS)
SIX MONTHS ENDED
---------------------------------
JUNE 30, 2002 JUNE 30, 2001
------------- -------------
OPERATING ACTIVITIES
Net loss .................................................... $ (4,052) $(30,725)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization of equity consideration .................. 2,107 2,071
Depreciation and amortization of property and
equipment ............................................ 6,683 4,859
Amortization of goodwill and intangibles .............. 1,523 2,714
Loss on disposal of assets ............................ 145 --
Deferred rent ......................................... (180) 131
Performance based warrant charges ..................... -- 1,075
Bad debt expense ...................................... 675 1,346
Impairment charges .................................... -- 25,641
Changes in operating assets and liabilities:
Accounts receivable ............................... (1,727) 5,326
Other current assets .............................. (1,081) (425)
Other assets ...................................... (565) 1,392
Accounts payable .................................. (501) (2,756)
Accrued expenses .................................. 354 (4,876)
Deferred revenues ................................. 1,425 (417)
-------- ---------
Net cash provided by operating activities ................... 4,806 5,356
INVESTING ACTIVITIES
Purchases of marketable securities .......................... (6,033) (24,569)
Proceeds from sale or maturities of marketable securities ... -- 43,050
Proceeds from sale of equipment ............................. 127 --
Purchases of property and equipment ......................... (3,451) (8,639)
-------- ---------
Net cash (used) provided by in investing activities ......... (9,357) 9,842
FINANCING ACTIVITIES
Proceeds from issuances of common stock, net ............... 235 2,313
Repayment of long-term debt and capital leases .............. -- (70)
-------- ---------
Net cash provided by financing activities ................... 235 2,243
Effect of exchange rate changes on cash ..................... (189) 56
-------- ---------
Increase (decrease) in cash and cash equivalents ............ (4,505) 17,497
Cash and cash equivalents, beginning of period .............. 40,771 20,237
-------- ---------
Cash and cash equivalents, end of period .................... $ 36,266 $ 37,734
======== =========
SUPPLEMENTAL DISCLOSURES OF FINANCIAL INFORMATION
NONCASH INVESTING AND FINANCING ACTIVITY:
Surrender of common stock and warrants ............... $ 4,401 $ --
======== ========
Accrued purchase of fixed assets ..................... $ 105 $ 260
======== ========
Unrealized loss on marketable securities ............. $ (9) $ (280)
======== ========
Issuance of restricted stock, net .................... $ -- $ 4,005
======== ========
Fair market value of warrants issued ................. $ -- $ 1,075
======== ========
Taxes paid ........................................... $ 140 $ 101
======== ========
Interest paid ........................................ $ -- $ 18
======== ========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2002
NOTE 1 -- THE COMPANY AND BASIS OF PRESENTATION
Multex.com, Inc. (the "Company" or "Multex") 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
Lake Success (New York), San Francisco, London, Edinburgh and Hong Kong.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States and in accordance with the instructions to Form 10-Q and Article
10 of Regulation S-X for interim financial information. Accordingly, they do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended June 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. The disclosure of segment information was not required
as the Company operates in only one business segment.
The condensed consolidated balance sheet at December 31, 2001 has been
derived from audited financial statements but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements.
The interim financial information contained herein should be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended December 31, 2001 included in the Company's Annual Report on Form
10-K.
In order to conform to the current period presentation, certain
reclassifications were made to the 2001 financial statements.
NOTE 2 -- 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.
The Company's significant estimates include the useful lives and valuations of
fixed assets and certain intangible assets, the accounts receivable allowance
for doubtful accounts and the income tax valuation allowance.
6
NOTE 3 -- STOCKHOLDERS' EQUITY
During the three months ended June 30, 2002 the Company issued
approximately 11,000 shares of its common stock in connection with the exercise
of stock options and issued approximately 104,000 shares of its common stock in
connection with the Company's employee stock purchase plan. Total proceeds
received were approximately $408,000.
In June 2002, the Company received 530,000 shares of its common stock from
Merrill Lynch in accordance with an amendment to its existing agreement. The
Company recorded the stock as treasury stock totaling approximately $2,077,000.
During the three months ended March 31, 2002, the Company issued
approximately 5,000 shares of its common stock in connection with the exercise
of stock options to employees and approximately 41,000 shares of its common
stock in connection with grants of restricted stock.
NOTE 4 -- EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated (in thousands, except per share
data):
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- ----------------------------
JUNE 30, JUNE 30,
2002 2001 2002 2001
------------ ---------- ----------- ----------
Numerator:
Numerator for basic and diluted loss per share
- net loss available for common stockholders $ (2,021) $ (33,740) $ (4,052) $ (30,725)
=========== ========== =========== ==========
Denominator:
Denominator for basic net loss per share -
weighted average shares $ 32,580 31,994 32,567 31,905
Basic and diluted net loss per share $ (0.06) $ (1.05) $ (0.12) $ (0.96)
=========== ========== =========== ==========
NOTE 5 -- COMPREHENSIVE INCOME (LOSS)
Total comprehensive loss was $0.7 million and $33.7 million for the three
months ended June 30, 2002 and June 30, 2001, respectively. Total comprehensive
loss was $3.1 million and $30.9 million for the six months ended June 30, 2002
and June 30, 2001, respectively. The difference between net loss and
comprehensive net loss is primarily attributable to foreign currency translation
adjustments related to the Company's foreign subsidiaries.
NOTE 6 -- ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets
("FAS 142"), effective for fiscal years beginning after December 15, 2001. Under
the new rules, goodwill (and intangible assets deemed to have indefinite lives)
will no longer be amortized but will be subject to annual impairment tests in
accordance with the Statement. Other intangible assets will continue to be
amortized over their useful lives.
The Company adopted the FAS 142 rules of accounting for goodwill and
other intangible assets in the first quarter of 2002. Application of the
non-amortization provisions of FAS No. 142 decreased amortization expense in the
second quarter of 2002 by approximately $170,000 compared to the second quarter
of 2001 and is expected to result in an annual decrease in amortization expense
of approximately $680,000 ($0.02 per share) for the year 2002 compared to the
year 2001. During the second quarter of 2002, the Company performed the required
tests of goodwill and other intangible assets and determined that there was no
impairment.
7
The following pro forma information is presented to reflect net loss and
net loss per share to exclude amortization of goodwill for the three and six
month periods ended June 30, 2001, as if FAS 142 was implemented effective
January 1, 2001 (in thousands, except per share data):
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 2001 JUNE 30, 2001
------------- -------------
Net loss:
Reported net loss $ (33, 740) $ (30,725)
Goodwill amortization 170 340
------------ -----------
Adjusted net loss $ (33,570) $ (30,385)
============ ===========
Net loss per share:
Reported net loss per share $ (1.05) $ (0.96)
Goodwill amortization - .01
------------- ------------
Adjusted net loss per share $ (1.05) $ (0.95)
============= ============
NOTE 7 -- MERRILL LYNCH
On June 20, 2002, the Company amended its agreement with Merrill Lynch.
Pursuant to the amendment, in exchange for the elimination of certain cash
license fees to be received by the Company through December 2004, Merrill Lynch
surrendered 530,000 of the Company's common stock and warrants to purchase an
aggregate of 1,250,000 shares of the Company's common stock. The Company valued
the common stock at $2,077,000, which represents the number of shares exchanged,
multiplied by the average closing sale price over the period commencing three
days prior to, and ending three days after, the date of the amendment, but
excluding the date of the transaction. The surrendered shares have been recorded
as treasury stock. The warrants surrendered by Merrill Lynch were valued at
$2,325,000 using the Black Scholes valuation model and recorded as a reduction
in additional paid-in capital. The value of the securities received will be
amortized to revenue on a straight-line basis over the remaining life of the
contract.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. STATEMENTS CONTAINED HEREIN THAT ARE NOT
STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS.
WITHOUT LIMITING THE FOREGOING, THE WORDS "BELIEVES", "ANTICIPATES", "PLANS",
"EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THE COMPANY'S ACTUAL RESULTS AND THE 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 THAT MAY AFFECT FUTURE RESULTS."
OVERVIEW
Multex.com, Inc. 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 on 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 offered pursuant to one to three year subscriptions, generating
revenue from professional services, license fees, hosting and maintenance 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 Multex or the research provider. Multex Investor
generates revenues from sales transactions, email and banner advertising, and
contractual, lead-generating sponsorships.
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.
9
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 2002 COMPARED TO QUARTER ENDED JUNE 30, 2001
Revenues
Multex's gross revenues consist of subscription fees for MultexNET, sales of
investment research on a pay-per-view basis through Multex OnDemand,
subscription, development, hosting and license fees for MultexEXPRESS, license
and redistribution fees for the Market Guide database, and sales of
sponsorships, advertising and investment research through the Multex Investor
Web site. We also provide professional services to select MultexEXPRESS clients,
including software development, customization and integration services.
Gross revenues decreased 3.1% to $22.8 million for the quarter ended June 30,
2002 from $23.5 million for the quarter ended June 30, 2001. The decrease in
revenues reflects a decrease in Market Guide and Multex Investor revenues,
offset in part by an increase in MultexEXPRESS and MultexNET revenues. All of
the Company's product lines were adversely affected by continued weakness in the
global financial markets.
MultexEXPRESS revenues increased 2.1% to $9.1 million for the quarter ended June
30, 2002 from $9.0 million for the quarter ended June 30, 2001. The increase in
revenue reflected a nonrecurring termination fee received during the quarter,
offset in part by a net decrease in development and recurring revenues from
existing MultexEXPRESS customers. On a sequential basis, MultexExpress revenues
increased 5.3% compared to the first quarter of 2002.
MultexNET revenues increased 2.9% to $6.7 million for the quarter ended June 30,
2002 from $6.5 million for the quarter ended June 30, 2001. The increase in
revenues was primarily attributable to an increase in MultexNET subscriptions,
offset in part by a decline in Multex OnDemand report sales. The increase in
MultexNET subscription revenues reflected the introduction of our MultexIR
product in October 2001 and continued acceptance of new enhancements added to
the MultexNET product lines such as NetScreen Pro, Earnings Estimates and Street
Events. The decrease in OnDemand revenue was due to a decline in investment
banking activity and general uncertainty in the global financial markets. On a
sequential basis, MultexNET revenues increased 7.6% compared to the first
quarter of 2002.
Multex Investor revenues declined 13.8% to $2.5 million for the quarter ended
June 30, 2002 from $2.8 million for the quarter ended June 30, 2001. This
decline reflects lower advertising and sponsorship revenues, offset in part by
an increase in pay-per-view revenues resulting from a new distribution agreement
with a major Internet services company. On a sequential basis, Multex Investor
revenues decreased 14.6% compared to the first quarter of 2002.
Market Guide revenues decreased 13.6% to $4.5 million for the quarter ended June
30, 2002 from $5.2 million for the quarter ended June 30, 2001. Market Guide
revenues were negatively impacted by a decline in the number of distributors
carrying the Market Guide database. On a sequential basis, Market Guide revenues
decreased 6.0% compared to the first quarter of 2002.
For the quarter ended June 30, 2002, the Company did not record any
performance-based warrant charges against revenue. The Company recorded
performance-based warrant charges of $1.1 million in the quarter ended June 30,
2001. Such performance-based warrant charges were recorded in the period that
certain warrants were actually earned by Merrill Lynch. The Merrill Lynch
amendment in June 2002 eliminated the Company's obligation to issue
performance-based warrants. As a result, the Company will no longer recognize
future warrant charges against revenue.
Cost of Revenues
Cost of revenues consist primarily of fees payable to distributors of MultexNET
and Multex OnDemand, royalties payable to the authors of investment research and
content offered through Multex OnDemand, and the Multex Investor web site,
internal and external development costs incurred for MultexEXPRESS customers,
research department costs related to the collection and processing of financial
data and global earnings estimates, and data communications costs.
Cost of revenues decreased 17.3% to $5.9 million for the quarter ended June 30,
2002 from $7.2 million for the quarter ended June 30, 2001. As a percentage of
10
gross revenues, cost of revenues decreased to 26.1% for the quarter ended June
30, 2002 from 30.6% for the quarter ended June 30, 2001. The decrease in cost of
revenues was primarily due to a decrease in external development costs incurred
for MultexExpress customers offset in part by an increase in data feed costs
resulting from additional data feeds used in the Company's products.
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 28.9% to $5.5
million for the quarter ended June 30, 2002 from $7.7 million for the quarter
ended June 30, 2001. As a percentage of gross revenues, sales and marketing
expenses decreased to 24.1% for the quarter ended June 30, 2002 from 32.9% for
the quarter ended June 31, 2001. The decrease in sales and marketing expenses
was primarily due to lower advertising and marketing expenditures and a decrease
in compensation expenses.
RESEARCH AND DEVELOPMENT. Research and development expenses consist primarily of
salaries and benefits. Research and development expenses decreased 21.6% to $1.5
million for the quarter ended June 30, 2002 from $2.0 million for the quarter
ended June 30, 2001. As a percentage of gross revenues, research and development
expenses decreased to 6.7% for the quarter ended June 30, 2002 from 8.3% for the
quarter ended June 30, 2001. The decrease in research and development expenses
was primarily attributable to a decrease in compensation costs due to a decline
in the number of developers on staff.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services and
consultants, facility expenses, overhead, and office supplies and expenses.
General and administrative expenses decreased 18.0% to $7.2 million for the
quarter ended June 30, 2002 from $8.8 million for the quarter ended June 30,
2001. As a percentage of gross revenues, general and administrative expenses
decreased to 31.6% for the quarter ended June 30, 2002 from 37.3% for the
quarter ended June 30, 2001. The decrease in general and administrative expenses
was primarily due to a decrease in compensation costs, professional fees and
office expenses.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses consist
primarily of depreciation related to fixed assets, computer equipment and
software, and leasehold improvements, and amortization related to acquired
companies and the cost of warrants issued to Merrill Lynch & Co., Inc.
Depreciation and amortization for the quarter ended June 30, 2002 decreased 2.3%
to $4.8 million, compared to $4.9 million for the quarter ended June 30, 2001.
As a percentage of gross revenues, depreciation and amortization expenses
increased to 21.0% for the quarter ended June 30, 2002 from 20.9% for the
quarter ended June 30, 2001. The decrease, in aggregate dollars, was primarily
due to a decrease in amortization expenses as a result of the application of
non-amortization provisions under FAS 142 effective January 1, 2002, offset in
part by an increase in depreciation and amortization expenses associated with
increased fixed assets and leasehold improvement balances in 2002 compared to
2001.
Loss from Operations
Loss from operations totaled $2.2 million for the quarter ended June 30, 2002
compared to $33.8 million for the quarter ended June 30, 2001. The decline in
loss from operations reflects a nonrecurring impairment charge of $25.6 million
recorded in June 2001, an increase in gross profit, and a reduction in operating
costs.
Interest Income (Expense)
Net interest income decreased 53.4% to $230,000 for the quarter ended June 30,
2002 from $494,000 for the quarter ended June 30, 2001. The decrease in net
interest income is primarily attributable to a decline in interest rates.
Equity in Loss from Unconsolidated Business
Equity in loss of unconsolidated business reflects a $186,000 loss the Company
recognized from its equity investment in TheMarkets.com LLC. This investment was
completed in the quarter ended September 30, 2001. There were no comparable
transactions in the quarter ended June 30, 2001.
11
Other
Other income of $200,000 for the quarter ended June 30, 2002 includes proceeds
from an insurance settlement of approximately $346,000, offset in part by a loss
on sale of furniture and fixtures of $146,000. For the quarter ended June 30,
2001, other expense of $173,000 represents a loss the Company recognized upon
disposition of an equity investment.
Income Taxes
Income tax expense totaled $90,000 for the second quarter ended June 30, 2002
compared to income taxes of $290,000 for the quarter ended June 30, 2001.
At December 31, 2001, Multex had net operating loss carryforwards of
approximately $63.2 million and research and development credits of
approximately $2.3 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. Substantially
all of the Company's deferred tax assets have been offset by a valuation
allowance.
Net loss
The Company recorded a net loss of $2.0 million, or a net loss per share of
$0.06, for the second quarter ended June 30, 2002 compared to a net loss of
$33.7 million, or a net loss per share of $1.05, for the quarter ended June 30,
2001.
SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO SIX MONTHS ENDED JUNE 30, 2001
Revenues
Multex's gross revenues consist of subscription fees for MultexNET, sales of
investment research on a pay-per-view basis through Multex OnDemand,
subscription, development, hosting and license fees for MultexEXPRESS, license
and redistribution fees for the Market Guide database, and sales of
sponsorships, advertising and investment research through the Multex Investor
Web site. We also provide professional services to select MultexEXPRESS clients,
including software development, customization and integration services.
Gross revenues decreased 14.4% to $45.4 million for the six months ended June
30, 2002 from $53.0 million for the six months ended June 30, 2001. Gross
revenues reflect lower sales in all four of the Company's product lines. For the
six months ended June 30, 2002, all of the Company's product lines were affected
by the continued weakness in the global financial markets.
MultexEXPRESS revenues decreased 12.6% to $17.8 million for the six months ended
June 30, 2002 from $20.4 million for the six months ended June 30, 2001. The
decrease in revenue is primarily a result of reduced technology spending by many
of the Company's customers.
MultexNET revenues decreased 3.1% to $12.9 million for the six months ended June
30, 2002 from $13.4 million for the six months ended June 30, 2001. The decrease
in MultexNET sales was primarily attributable to a decline in Multex OnDemand
report sales, partially offset by an increase in new MultexNET subscriptions.
The decrease in OnDemand revenue was due to a decline in investment banking
activity and general uncertainty in the global financial markets. The increase
in MultexNET subscription revenues reflected the introduction of MultexIR in
October 2001 and continued acceptance of new enhancements added to the MultexNET
product lines such as NetScreen Pro, Earnings Estimates and Street Events.
Multex Investor revenues decreased 32.2% to $5.4 million for the six months
ended June 30, 2002 from $7.8 million for the six months ended June 30, 2001.
The decrease is primarily due to a decline in advertising and sponsorship
revenues, offset in part by an increase in pay-per-view revenues.
Market Guide revenues decreased 18.8% to $9.3 million for the six months ended
June 30, 2002 from $11.5 for the six months ended June 30, 2001. Market Guide
revenues were negatively impacted by a decline in the number of re-distributors
carrying the Market Guide database.
12
For the six months ended June 30, 2002, the Company did not record any
performance-based warrant charges, compared to $1.1 million for the six months
ended June 30, 2001.
Cost of Revenues
Cost of revenues consist primarily of fees payable to distributors of MultexNET
and Multex OnDemand, royalties payable to the authors of investment research and
content offered through Multex OnDemand, and the Multex Investor and Market
Guide web sites, internal and external development costs incurred for
MultexEXPRESS customers, research department costs related to the collection and
processing of financial data and global earnings estimates, and data
communications costs.
Cost of revenues decreased 8.8% to $11.8 million for the six months ended June
30, 2002 from $12.9 million for the six months ended June 30, 2001. As a
percentage of gross revenues, cost of revenues increased to 25.9% for the six
months ended June 30, 2002 from 24.3% for the six months ended June 30, 2001. In
terms of aggregate dollars, the decrease in cost of revenues was primarily due
to a decrease in external development costs incurred for MultexEXPRESS
customers, and a decrease in royalty expenses. These decreases were offset in
part by an increase in data feed costs.
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 23.7% to $11.0
million for the six months ended June 30, 2002 from $14.5 million for the six
months ended June 30, 2001. As a percentage of gross revenues, sales and
marketing expenses decreased to 24.3% for the month ended June 30, 2002 from
27.3% for the six months ended June 30, 2001. The decrease in sales and
marketing expenses was primarily due to lower advertising and marketing expenses
and a decrease in compensation costs.
RESEARCH AND DEVELOPMENT. Research and development expenses consist primarily of
salaries and benefits. Research and development expenses decreased 33.8% to $3.0
million for the six months ended June 30, 2002 from $4.6 million for the six
months ended June 30, 2001. As a percentage of gross revenues, research and
development expenses decreased to 6.7% for the six months ended June 30, 2002
from 8.6% for the six months ended June 30, 2001. The decrease in research and
development expenses in dollar terms was primarily attributable to a decrease in
compensation costs as a result of a decrease in the number of developers on
staff.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and benefits, fees for professional services and
consultants, facility expenses, overhead, and office supplies and expenses.
General and administrative expenses decreased 15.1% to $14.4 million for the six
months ended June 30, 2002 from $17.0 million for the six months ended June 30,
2001. As a percentage of gross revenues, general and administrative expenses
decreased to 31.7% for the six months ended June 30, 2002 from 32.0% for the six
months ended June 30, 2001. The decrease, in aggregate dollars, in general and
administrative expenses reflects lower compensation costs, professional fees and
office expenses.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses consist
primarily of depreciation related to fixed assets, computer equipment and
software, and leasehold improvements, and amortization related to acquired
companies and the cost of warrants issued to Merrill Lynch & Co., Inc.
Depreciation and amortization for the six months ended June 30, 2002 increased
7.7% to $9.3 million, compared to $8.7 million for the six months ended June 30,
2001. As a percentage of gross revenues, depreciation and amortization expenses
increased to 20.6% for the six months ended June 30, 2002 from 16.3% for the
quarter ended June 30, 2001. The increase reflects higher depreciation and
amortization expenses associated with increased fixed assets and leasehold
improvement balances in 2002 compared to 2001, offset in part by a reduction in
amortization of goodwill and intangible assets.
IMPAIRMENT CHARGE. In the second quarter ended June 30, 2001, the Company
recorded an impairment charge of $25.6 million reflecting the decision to exit
the Sage business and the Buzz product line.
13
Loss from Operations
Loss from operations totaled $4.2 million for the six months ended June 30, 2002
compared to $31.2 million for the six months ended June 30, 2001. The decline in
loss from operations reflects a reduction in operating expenses, the absence of
any impairment charges in the six months ended June 30, 2002, offset in part by
a decrease in net revenues.
Interest Income (Expense)
Net interest income decreased 55.0% to $477,000 for the six months ended June
30, 2002 from $1.1 million for the six months ended June 30, 2001. The decrease
in net interest income is primarily attributable to a decline in interest rates.
Equity in Loss from Unconsolidated Business
Equity in loss of unconsolidated business reflects a $372,000 loss the Company
recognized from its equity investment in TheMarkets.com LLC. This investment was
completed in the quarter ended September 30, 2001. There were no comparable
transactions in the six months ended June 30, 2001.
Other
Other income of $204,000 for the six months ended June 30, 2002 includes
proceeds from an insurance settlement, offset in part by a loss on sale of
equipment. For the quarter ended June 30, 2001 other expense of $173,000
represents a loss the Company recognized upon disposition of an equity
investment.
Income Taxes
Income tax expense totaled $180,000 for the six months ended June 30, 2002
compared to income taxes of $380,000 for the six months ended June 30, 2001.
At December 31, 2001, Multex had net operating loss carryforwards of
approximately $63.2 million and research and development credits of
approximately $2.3 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. Substantially
all of the Company's deferred tax assets have been offset by a valuation
allowance.
Net loss
The Company recorded a net loss of $4.1 million, or a net loss per share of
$0.12, for the six months ended June 30, 2002 compared to a net loss of $30.7
million, or a net loss per share of $0.96, for the six months ended June 30,
2001.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2002, cash, cash equivalents and marketable securities balance was
$43.3 million compared to $41.8 million at December 31, 2001.
Net cash provided by operating activities was $4.8 million for the six months
ended June 30, 2002. This amount primarily consisted of the Company's net loss
of $4.1 million, reduced by noncash expenses of $11.1 million primarily relating
to depreciation and amortization, increases in deferred revenues and accrued
expenses of $1.8 million, offset in part by increases in accounts receivable of
$1.7 million, other current assets and other assets $1.7 million, and decreases
in accounts payable of $0.6 million.
Net cash used by investing activities was $9.4 million for the six months ended
June 30, 2002. This amount includes purchases of marketable securities of $6.0
million, purchases of property and equipment of $3.5 million reduced by proceeds
from sale of equipment of $0.1 million.
Net cash provided by financing activities was $0.2 million for the six months
ended June 30, 2002. This amount was primarily from net proceeds from issuance
of the Company's stock.
14
Our principal commitments consist of obligations outstanding under lease
agreements for offices. Future calendar year payments for these leases are as
follows: $5.2 million (2003), $5.3 million (2004), $5.2 million (2005), $3.7
million (2006), $3.3 million (2007), and $8.7 million, thereafter. Future
payments for the period July 2002 through December 2002 are approximately $2.3
million. In addition, under certain circumstances we may be required to provide
additional funding for an investment that we account for under the equity
method.
We believe that our existing cash, cash equivalents and marketable securities
balances will be sufficient to meet our anticipated cash needs for working
capital and capital expenditures for at least the next twelve months.
CRITICAL ACCOUNTING POLICIES
We consider accounting policies related to impairment of goodwill and intangible
assets to be critical due to the estimation process involved.
At June 30, 2002, goodwill and intangible assets totaled $21.7 million. With
regard to these assets, events that would cause us to conduct an impairment
assessment include significant losses of customers, operating results of
acquired businesses that continually failed to meet management's performance
expectations, and diminished utility of acquired technology. In assessing the
fair market value of goodwill and intangibles, we must make assumptions
regarding estimated future cash flows. 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. If these estimates or related assumptions
change, we may be required to record impairment charges for these assets.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
MULTEX'S BUSINESS COULD BE MATERIALLY AND ADVERSELY AFFECTED BY THE CURRENT (OR
ANY FUTURE) 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, which makes our business
susceptible to downturns in the financial services industry. Our current results
of operations reflect, in part, the effects of the current slowdown in our
markets. In addition, U.S. financial institutions are continuing to consolidate,
increasing the leverage of our information providers to negotiate prices and
decreasing the overall potential market for some of our services. Weakness in
the financial services industry has adversely impacted our subscription renewal
rates and may continue to do so. These effects may continue and may worsen if
our customers and clients do not recover or if additional events adverse to the
global economy or the financial services industry occur.
THE MARKETS FOR OUR PRODUCTS AND SERVICES CHANGE RAPIDLY
The market for the distribution of investment research and other information
over the Internet is rapidly evolving, and demand and market acceptance for
these services continue to be subject to a high level of uncertainty. The market
relating to retail investing has deteriorated considerably over the past 24
months, and all of our markets continue to face considerable uncertainty. It is
difficult to predict with any assurance the growth rate, if any, and the
ultimate size, of our markets. We cannot assure you that the markets for our
services will recover, will continue to develop, or that our services will ever
achieve broad market acceptance. If our customers are not able to recover from
the effects of the continued downturn in the global economy; if the market for
our services weakens further, develops more slowly than expected once recovery
begins, or becomes saturated with competitors; if our services do not achieve
broad market acceptance; or if pricing becomes subject to further competitive
pressures, our business, results of operations and financial condition would be
materially and adversely affected.
CUSTOMER CONCENTRATION
Historically, a significant portion of the Company's revenues in any particular
period has been attributable to a small number of customers. The composition of
the Company's largest customers has varied from year to year. Sales to the
Company's three largest customers accounted for approximately 20.4%, 21.5% and
22.1% of the Company's revenues during fiscal 1999, 2000 and 2001, respectively.
Moreover, sales by the Company to Merrill Lynch & Co. accounted for
15
approximately 10.2%, 13.5% and 11.1% of revenues in fiscal 1999, 2000 and 2001,
respectively. The loss of any significant customer, including Merrill Lynch &
Co., could have a material adverse affect on the Company's business, financial
condition and results of operations.
MULTEX'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 currently face strong competition
in many of our markets. 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 contributors of
investment research and other reports, and for subscribers, from large and
well-established distributors of financial information, such as Thomson
Financial Services. Some of our competitors enjoy exclusive distribution
arrangements with major financial institutions. We also compete with, among
others:
o companies that provide investment research, including investment banks and
brokerage firms, many of whom have their own Web sites;
o other providers of either free or subscription research and data services
on the Internet;
o services provided by some of our strategic distributors that are
competitive in one or more respects with our service offerings;
o prospective competitors 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; and
o providers of reports filed under the Securities Exchange Act of 1934 and
other filings with the Securities and Exchange Commission;
Whether or not our competitors are successful, competition with these entities
or information sources may materially and adversely affect our business, results
of operations, and financial condition. It is also possible that new competitors
may emerge and rapidly acquire significant market share.
THE LOSS OF ANY OF MULTEX'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 team, none of whom has entered into an employment
agreement with us other than a non-competition/non-disclosure agreement. 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.
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.
16
BECAUSE MULTEX'S BUSINESS IS DEPENDENT UPON NETWORK AND COMPUTER SYSTEMS LOCATED
IN ONE AREA, WE ARE SUSCEPTIBLE TO PROBLEMS CAUSED BY NATURAL DISASTERS,
TERRORIST ATTACKS, 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. There can be no assurance that such solutions can be implemented in a
timely and cost-effective manner, or at all. Any natural disaster, attack, 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 or recur.
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, such as the September 11, 2001 terrorist attacks. In
addition, the failure of our communications providers to provide the data
communications capacity in the time frame required by us could cause
interruptions in the delivery of our services.
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 have adversely affected, and may continue to adversely
affect the market price of our common stock. The market price of our common
stock has been, and could continue to be, subject to significant fluctuations
due to a variety of factors, including:
o public announcements concerning us or our competitors, or the Internet
generally;
o fluctuations in operating results;
o downturns 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;
o future sales of shares of our common stock by major shareholders;
o future sales of shares issuable upon the exercise of outstanding options
and warrants in the public market;
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 target of securities class action litigation. We are
currently involved in securities class action litigation that could result in
substantial costs and a diversion of our management's attention and resources
and could have a material adverse effect on our business, results of operation
and financial condition. We may be subject to further suits in the future.
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.
17
DISTRIBUTION AND OTHER FEES TO RESEARCH PROVIDERS AND STRATEGIC PARTNERS
INCREASE MULTEX'S COSTS
Royalties and distribution fees payable to our information providers and
strategic partners to obtain distribution rights to research reports included in
MULTEX ONDEMAND constitute a significant portion of our cost of revenues. We
face from time to time considerable competitive pressure to increase these
royalties. Such increases have materially affected our results of operations as
described herein. If we are required to further increase the royalties or fees
payable to these information providers or strategic partners, these increased
payments could have additional material and adverse effects on our business,
results of operations and financial condition.
THE INADVERTENT DISTRIBUTION OF RESEARCH REPORTS COULD RESULT IN A CLAIM FOR
DAMAGES AGAINST MULTEX 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.
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 such claims. Computer failures or human
error may also result in incorrect data being published and distributed widely.
In these and other circumstances, we might 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 cover all 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.
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 reliable and timely Internet access and
services. There can be no assurance 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. 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.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION AND LEGAL
UNCERTAINTIES
The laws governing the Internet remain largely unsettled, even in areas where
there has been legislative action. Legislation and/or regulation 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.
18
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on June 11,
2002. The stockholders elected Isaak Karaev, Peter Job and John
Tugwell to the Board of Directors, each for a three-year term
expiring at the 2005 Annual Meeting. Directors continuing in
office were Lennert J. Leader, Devin N. Wenig, Maurice Miller and
Robert Greene.
The stockholders ratified the appointment of Ernst & Young LLP as
the Company's independent public accountants for the fiscal year
ending December 31, 2002.
The votes were cast as follows:
PROPOSAL FOR AGAINST ABSTENTIONS NON-VOTES
----------------------------------------------------------------------
Accountants 22,727,918 1,599,522 860,741 11,525
ELECTION OF DIRECTORS VOTES RECEIVED VOTES WITHHELD
-------------------------------------------------------------------
Isaak Karaev 22,076,290 3,123,416
Peter Job 23,076,806 2,122,900
John Tugwell 23,118,906 2,080,800
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10.1: Purchase and Sale Agreement between Multex.com, Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, and ML IBK Positions, Inc.
Exhibit 99.1: Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 99.2: Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K: NONE
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ITEM 7. SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MULTEX.COM, INC.
(Registrant)
Date: August 14, 2002 /s/ ISAAK KARAEV
----------------------------------------
Name: Isaak Karaev
Title: Chief Executive Officer
Date: August 14, 2002 /s/ JEFFREY S. GEISENHEIMER
----------------------------------------
Name: Jeffrey S. Geisenheimer
Title: Chief Financial Officer
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