Dated: May 13, 1999
You should carefully consider the following risks, as well as those
described in our most recent Form 10-K, Form 10-Q and Form 8-K filings, before
making an investment decision. The risks described below are not the only risks
we face. Additional risks may also impair our business operations. If any of the
following risks occur, our business, results of operations or financial
condition could be materially adversely affected. If that happens, the trading
price of our common stock could decline, and you may lose all or part of your
investment. In the risk factors below, when we use the word "web," we are
referring to the portion of the Internet commonly referred to as the "world wide
web."
We have a history of losses and we anticipate that our losses will continue in
the future. As of March 31, 1999, we had an accumulated deficit of $23.2
million. In the past ten years, the only calendar year we were profitable was
1995. We expect to continue to incur net losses in 1999 and in subsequent fiscal
periods. We expect to continue to incur significant operating expenses and, as a
result, will need to generate significant revenues to achieve profitability,
which may not occur. Even if we do achieve profitability, we may be unable to
sustain or increase profitability on a quarterly or annual basis in the future.
We will need to raise additional capital in the future. Based on our current
business plan, we believe that our working capital and investments will be
sufficient to fund our operations and capital requirements through 1999. Due to
unforeseen events and circumstances that may arise as discussed in the other
risks identified in this Exhibit 99 and in the accompanying report, our working
capital and investments in fact might not be sufficient to fund our operations
and capital requirements through 1999. In any event, we believe we will need to
raise additional capital in order to sustain our operations after 1999 unless we
generate revenues beyond the amounts we currently anticipate. Such additional
financing may not be available to us, or, if available, the terms upon which it
may be obtained may be unfavorable to us and may result in dilution of an
investor's equity investment in us. Our failure to obtain additional financing
on favorable terms, or at all, would have a substantial adverse effect on our
future ability to conduct operations.
Our online services business has a limited operating history. We commenced our
online services operations in May 1997. Accordingly, we have only a limited
operating history upon which you can evaluate this business segment and its
prospects. An investor in our common stock must consider the risks, expenses and
difficulties frequently encountered by early stage businesses in new and rapidly
evolving markets, including web-based financial news and information companies.
The market value of our common stock may not appreciate as much as the stock of
Internet companies because we have two business segments. Our company has two
distinct segments. One is print publications and the other is online services
operations. We believe these business activities are complementary and each will
benefit the other. However, the stock prices of many companies whose only
business Internet-related recently have gone up much more than the stock prices
of companies that have multiple lines of business that are not all
Internet-related. Because our company is not a pure Internet company - and in
fact the large majority of our total revenues are from our print publications -
our common stock may not be valued by investors in the stock market as highly as
the common stock of pure Internet companies.
Our quarterly financial results are subject to significant fluctuations. Our
quarterly operating results may fluctuate significantly in the future as a
result of a variety of factors, many of which are outside our control. For
example, in our print publications business, our revenues tend to reflect
seasonal patterns, with certain calendar quarters tending to be stronger than
others. Similar seasonal patterns may develop in the online services business as
well.
We believe that quarter-to-quarter comparisons of our operating results
may not be a good indication of our future performance, nor would our operating
results for any particular quarter be indicative of future operating results. In
some future quarters our operating results may be below the expectations of
public market analysts and investors. If that happens, the price of our common
stock may fall, perhaps dramatically.
We face intense competition in both of our businesses. An increasing number of
financial news and information sources compete for consumers' and advertisers'
attention and spending. We expect this competition to continue and to increase.
We compete for advertisers, readers, staff and outside contributors with many
types of companies. These competitors include:
- -- online services or web sites focused on business, finance and investing,
such as CBS MarketWatch.com; The Wall Street Journal Interactive Edition;
TheStreet.com; The Motley Fool; Yahoo! Finance; Silicon Investor; Microsoft
Investor; SmartMoney.com; Money.com and Multex.com;
- -- publishers and distributors of traditional print media, such as The Wall
Street Journal; Barron's; Investors Business Daily; Business Week; Fortune;
Forbes; Money; Kiplinger's; Smart Money; Worth; Registered Representative;
Institutional Investor; Research and On Wall Street;
- -- publishers and distributors of radio and television programs focused on
business, finance and investing, such as Bloomberg Business Radio and CNBC;
- -- web "portal" companies, such as Yahoo!; Excite; Lycos; Snap!; Go Network;
and America Online; and
- -- online brokerage firms, many of which provide financial and investment news
and information, such as Charles Schwab and E*TRADE.
Our ability to compete depends on many factors, including the
originality, timeliness, comprehensiveness and trustworthiness of our content
and that of our competitors, the ease of use of services developed either by us
or our competitors and the effectiveness of our sales and marketing efforts.
Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than we do. This may allow them to devote greater resources than we
can to the development and promotion of their services and products. These
competitors may also engage in more extensive research and development,
undertake more far-reaching marketing campaigns, adopt more aggressive pricing
policies to attract advertisers and make more attractive offers to existing and
potential employees, outside contributors, strategic partners and advertisers.
Our competitors may develop content that is equal or superior to ours or that
achieves greater market acceptance than ours. It is also possible that new
competitors may emerge and rapidly acquire significant market share. We may not
be able to compete successfully for advertisers, readers, staff or outside
contributors. Increased competition could result in price reductions, reduced
margins or loss of our market share. Any of these could materially adversely
affect our business, results of operations and financial condition.
Because our editorial is focused on the financial markets, a prolonged "bear
market" may cause our businesses to suffer. Our editorial is highly focused on
the financial markets. If the markets suffer a prolonged downturn or "bear
market," it is possible that our businesses might suffer materially for two
reasons. First, during a bear market, people may become less interested in
buying and selling securities, and thus less interested in our research and
analysis of securities. Less people might be interested in subscribing to our
print publications, and less people might be interested in using our online
services. Second, advertisers - particularly the financial services advertisers
that are our most important source of advertising revenue - might decide to
reduce their advertising budgets. Either of these developments could cause our
operations to suffer materially.
Because our editorial is focused on research and analysis of specific stocks,
our businesses could suffer if our recommendations are poor. Our editorial is
focused on research and analysis of specific stocks. We frequently state that a
particular company's stock is undervalued or overvalued at the current prices.
We believe that our research and analysis is of a high quality, and we are proud
to take a stand and be held accountable for our opinions. We believe our readers
appreciate this editorial courage, and find it to be of greater value than
stories on such topics as "the best cities in which to live" and the like. But
because we give these specific opinions, the wisdom of our conclusions can be
measured: did the stocks we say were undervalued go up, and did the stocks we
say were undervalued go down. If our opinions turn out to be incorrect - and
some of our opinions certainly will be - people may become less interested in
learning these opinions. They may be less interested in subscribing to our print
publications and less interested in using our online services. If interest in
our opinions declines, our operations could suffer materially.
Our company may not be able to attract and retain qualified employees for our
print publications business. Many of our competitors in the print publications
business are larger than we are, and have a number of print titles (we only have
two magazines and one newsletter). There is a general perception in the
employment market that larger publishers are more prestigious or offer more
varied career opportunities (for instance, the ability to move from one title to
another). Although we believe our company offers an attractive work environment
and employment opportunity in our print publications business, we may be
perceived by many people as a less attractive employer than a larger publisher.
If we are unable to attract and retain qualified employees for our print
publications business, that business could suffer materially.
Our company may not be able to attract and retain qualified employees for our
online service business. There is a general perception in the employment market
that pure Internet companies offer a more attractive work environment for a
youthful workforce. This is based on the belief that the Internet is a new and
growing industry that offers a great future. In addition, employees in the
Internet industry seek and often receive significant portions of their
compensation through stock options. The stock prices of many pure Internet
companies recently have increased dramatically. Although we believe our company
offers an attractive work environment and employment opportunity in our online
services business, we may be perceived by many people as a less attractive
employer than a pure Internet company. If we are unable to attract and retain
qualified employees for our online services business, that business could suffer
materially.
We depend on our editorial staff and outside contributors. Our success depends
substantially upon the efforts of our editorial staff and outside contributors
to produce original, timely, comprehensive and trustworthy content. Our writers
are not bound by employment agreements. Competition for financial journalists is
intense, and we may not be able to retain existing or attract additional
qualified writers in the future. If we lose the services of a significant number
of our editorial staff and outside contributors or are unable to attract
additional writers with appropriate qualifications, our business, results of
operations and financial condition could be materially adversely affected.
We depend on key management personnel. Our future success depends upon the
continued service of key management personnel. The loss of one or more of our
key management personnel could materially adversely affect our business, results
of operations and financial condition. Moreover, the costs that may arise in
connection with executive departures and replacements can be significant, as
they were during 1998.
We depend on certain advertisers and on independent advertising agents, to
generate revenue. In 1998, and continuing through the first quarter of 1999, the
majority of our print publications advertising revenue came from financial
services companies, followed by consumer advertisers and others. We were not
dependent upon any particular advertiser for our print publications revenues. In
1998, and continuing through the first quarter of 1999, approximately two-thirds
of the online services advertising revenue came from six brokerage firms
offering online trading. We expect that the majority of advertising revenues
derived from our online services operations will come from online brokerage
firms. In the event that online brokerage firms choose to scale back on their
advertising (on the Internet in general or on our web sites in particular), our
online services business, results of operations and financial condition could be
materially adversely affected.
If we do not continue to increase our revenue from financial services
advertisers or attract advertisers from non-financial industries, our business,
results of operations and financial condition could be materially adversely
affected. With respect to our online services in particular, advertising rates
are frequently measured on a "cost per thousand" clicks, or "CPM," basis. CPM
rates have fluctuated in the past and we expect CPM rates to continue to
fluctuate. CPM rates may experience industry-wide declines in the future, as the
supply of desirable online advertising space may be increasing at a rate greater
than the demand for that space by advertisers. We believe that we charge
advertising rates that are among the highest of financial web sites. However, we
cannot guarantee that we will be able to command premium rates in the future.
In selling print advertising, we depend both on our internal advertising
sales department and on outside sales representatives to maintain and increase
our advertising sales. In selling online advertising, we depend primarily upon
our outside sales agent. The success of our advertising sales efforts is subject
to a number of risks, including the competition we face from other companies in
hiring and retaining sales personnel and effective outside sales
representatives, and the length of time it takes new sales personnel to become
productive. Our business, results of operations and financial condition could be
materially adversely affected if we do not maintain an effective advertising
sales department.
Additional risks associated with online advertising. No standards have been
widely accepted to measure the effectiveness of web advertising. If standards do
not develop, existing advertisers may not continue or increase their levels of
web advertising. If standards develop and we are unable to meet those standards,
advertisers may not continue advertising on our site. Furthermore, advertisers
that have traditionally relied upon other advertising media may be reluctant to
advertise on the web. If advertisers perceive the Internet or our web site to be
a limited or an ineffective advertising medium, they may be reluctant to devote
a portion of their advertising budget to Internet advertising or to advertising
on our web site. Our business, results of operations and financial condition
could be materially adversely affected if the market for web advertising
declines or develops more slowly than expected.
Different pricing models are used to sell advertising on the web. It is
difficult to predict which, if any, will emerge as the industry standard. This
uncertainty makes it difficult to project our future advertising rates and
revenues. We cannot assure you that we will be successful under alternative
pricing models that may emerge. Moreover, "filter" software programs that limit
or prevent advertising from being delivered to a web user's computer are
available. Widespread adoption of this software could materially adversely
affect the commercial viability of web advertising, which could materially
adversely affect our advertising revenues.
Risks associated with our list rental revenue. The ability to earn revenue from
list rental depends in large degree upon three factors: first, the number of
subscribers on this list; second, the demographic characteristics of the
subscribers on the list (such as age, income and wealth); and third, the degree
to which previous rentals of the list have produced favorable results for the
renter. This last factor is affected by the manner in which the subscribers have
been added. For example, new subscribers from direct-to-publisher sources (such
as direct mail and insert cards in the magazine) typically are more valuable
than subscribers obtained from subscription agencies by means of reduced
introductory rates or use airline frequent flyer miles. Our list rental revenue
has declined in the recent past, and we cannot assure you that our list rental
revenue will not decline in the future.
We use an independent party, Rickard List Marketing, to promote the
rental of our subscriber lists. The revenue we earn from list rentals thus also
depends in part upon the efforts our agent makes.
We depend on independent parties to publish our print publications. We depend
upon an independent party, Quebecor, to print our print publications and to
deliver the printed copies to the United States Post Office for mailing to our
subscribers. If our printer's business is disrupted for any reason, such as fire
or other natural disaster, labor strife, supply shortages, or machinery
problems, we might not be able to distribute our publications in a timely
manner. Since magazines typically are printed only shortly before the time they
are to be mailed to subscribers, any disruption at our printer could prevent our
magazines from being distributed in a timely manner. If we don't distribute our
magazines on time, our subscribers may become dissatisfied and cancel their
subscriptions. If a disruption at our printer delays our ability to distribute
Individual Investor magazine to newsstands, we may lose newsstand sales. In the
event of a disruption, our insurance may not cover all of our losses. Any of
these developments may cause our operating results to suffer materially.
We depend on independent parties to distribute Individual Investor magazine to
newsstands. We depend upon an independent parties (the largest of which is
International Circulation Distributors, a subsidiary of The Hearst Corporation)
to distribute Individual Investor magazine to newsstands. If the business of our
distributors is disrupted for any reason, such as labor strife or natural
disaster, we might not be able to distribute Individual Investor magazine to
newsstands in a timely manner. Since our distributors typically pick up
Individual Investor magazine for newsstand distribution only shortly before the
time the magazine is to be delivered, any disruption at our distributors could
prevent the magazine from being distributed to newsstands in a timely manner. If
a disruption at our distributors delays our ability to deliver Individual
Investor magazine to newsstands, we may lose newsstand sales. Any of these
developments may cause our operating results to suffer materially.
We depend on independent parties to obtain the majority of the subscribers to
Individual Investor magazine. We depend upon independent parties to obtain the
majority of the subscribers to Individual Investor magazine. These agencies
include American Family Publishers, Publishers Clearing House and NewSub
services. These agencies obtain subscribers primarily through use of direct mail
campaigns. If the positive response to the promotion of Individual Investor
magazine by these agencies is not great enough, or if the agencies believe that
we may fail to fulfill a subscription, they may stop promoting our magazine.
This could cause our subscriber base to shrink, which would lower our
subscription revenue and reduce our advertising rate base, which would lead to
lower advertising revenue. Also, many publications compete for services of
subscription agencies, and one or more of these subscription agencies may choose
not to continue to market Individual Investor in order to better serve a one of
our competitors. Any of those developments could cause our operating results to
suffer materially.
We may incorrectly forecast our success in obtaining and renewing subscriptions.
We attempt to accurately forecast the number of subscribers to our print
publications. We run the risk that our forecasts will be incorrect, either too
high or too low. Our forecast could be too high if the number of new subscribers
that we obtain is less than the amount we projected. Our forecast also could be
too high if we get less renewal orders from existing subscribers. If our
subscriber base is less than our projections, we will earn less subscription
revenue and our advertising rate base will be lower, which would lead to lower
advertising revenue. This could cause our operating results to suffer
materially.
Our forecast could be too low if we obtain more new subscribers than
projected, or if we receive more renewal orders than projected from existing
subscribers. If our subscriber base is higher than we projected, we would earn
more subscription revenue than projected, but have higher than expected
production and distribution costs. We might not be able to increase our
advertising rate base immediately. This could lead to our operating results
being worse than projected.
We depend on independent parties to manage our subscriber files. We depend upon
an independent party to manage our subscriber files. This party receives
subscription orders and payments for our print publications, sends renewal and
invoice notices to subscribers and generates subscribers' labels and circulation
reports for us. If the business of this party is disrupted, we may become unable
to process subscription requests, or send out renewal notices or invoices, or
deliver our print publications. If this were to happen, our insurance might not
cover all of our losses. Any of those developments could cause our operating
results to suffer materially.
We need to manage our growth. Although our print publications business has not
experienced rapid growth in the recent past, our online services, which
commenced in May 1997, have experienced rapid growth. This growth has placed a
strain on our managerial, operational and financial resources. We expect this
strain to increase with anticipated future growth in both print publications and
online services. To manage our growth, we must continue to implement and improve
our managerial controls and procedures and our operational and financial
systems. In addition, our future success will depend on our ability to expand,
train and manage our workforce, in particular our editorial, advertising sales
and business development staff. We cannot assure you that we have made adequate
allowances for the costs and risks associated with this expansion, that our
systems, procedures or controls will be adequate to support our operations, or
that our management will be able to successfully offer and expand our services.
If we are unable to manage our growth effectively, our business, results of
operations and financial condition could be materially adversely affected.
We need to establish and maintain relationships with other web sites to
promote the growth of our online services business. For us to maintain and
increase the traffic to our web sites, it is also important for us to establish
and maintain content distribution relationships with high-traffic web sites
operated by other companies. There is intense competition for relationships with
these sites. Although we have not paid any material sum with respect to our
relationships to date, it is possible that, in the future, we might be required
to pay fees in order to establish or maintain relationships with these sites.
(It is also possible, however, that we may be able to charge fees in connection
with these relationships in the future.) Additionally, many of these sites
compete with our web sites as providers of financial information,and these sites
may become less willing to establish or maintain strategic relationships with us
in the future. We may be unable to enter into relationships with these sites on
commercially reasonable terms or at all. Even if we enter into such
relationships, they may not attract significant numbers of viewers to our web
sites.
Increased traffic to our web sites may strain our systems and impair our online
services business. On occasion, we have experienced significant spikes in
traffic on our web site. In addition, the number of our readers has continued to
increase over time and we are seeking to increase our reader base further.
Accordingly, our web site must accommodate a high volume of traffic, often at
unexpected times. Our web site has in the past, and may in the future,
experience slower response times than usual or other problems for a variety of
reasons. These occurrences could cause our readers to perceive our web site as
not functioning properly and, therefore, cause them to use other methods to
obtain their financial news and information. In such a case, our business,
results of operations and financial condition could be materially adversely
affected.
We face a risk of system failure for our online services business. Our ability
to provide timely information and continuous news updates depends on the
efficient and uninterrupted operation of our computer and communications
hardware and software systems. Similarly, our ability to track, measure and
report the delivery of advertisements on our site depends on the efficient and
uninterrupted operation of a third-party system maintained by DoubleClick. These
systems and operations are vulnerable to damage or interruption from human
error, natural disasters, telecommunication failures, break-ins, sabotage,
computer viruses, intentional acts of vandalism and similar events. We do not
have a formal disaster recovery plan for the event of such damage or
interruption. Any system failure that causes an interruption in our service or a
decrease in responsiveness of our web site could result in reduced traffic,
reduced revenue and harm to our reputation, brand and our relations with our
advertisers. Our insurance policies may not adequately compensate us for any
losses that we may incur because of any failures in our system or interruptions
in our delivery of content. Our business, results of operations and financial
condition could be materially adversely affected by any event, damage or failure
that interrupts or delays our operations.
We may not successfully develop new and enhanced services and features for our
online services to the satisfaction of our customers. We intend to introduce
additional and enhanced services in order to retain the current users of our
online services and to attract new users. If we introduce a service that is not
favorably received, our current users may choose a competitive service over
ours. We may also experience difficulties that could delay or prevent us from
introducing new services. Furthermore, the new services we may introduce could
contain errors that are discovered after the services are introduced. If that
happens, we may need to significantly modify the design or implementation of the
services on our web sites to correct these errors. Our business, results of
operations and financial condition could be materially adversely affected if we
experience difficulties in introducing new services or if these new services are
not accepted by our users.
We depend on the continued growth in use and efficient operation of the web. The
web-based information market is new and rapidly evolving. Our business would be
materially adversely affected if web usage does not continue to grow or grows
slowly. Web usage may be inhibited for a number of reasons, such as:
-- inadequate network infrastructure;
-- security concerns;
-- inconsistent quality of service; and
-- unavailability of cost-effective, high-speed access to the Internet.
The users of our online services depend on Internet service providers,
online service providers and other web site operators for access to our web
site. Many of these services have experienced significant service outages in the
past and could experience service outages, delays and other difficulties due to
system failures unrelated to our systems. These occurrences could cause our
readers to perceive the web in general or our web site in particular as an
unreliable medium and, therefore, cause them to use other media to obtain their
financial news and information. We also depend on certain information providers
to deliver information and data feeds to us on a timely basis. Our web site
could experience disruptions or interruptions in service due to the failure or
delay in the transmission or receipt of this information, which could have a
material adverse effect on our business, results of operations and financial
condition.
Government regulation and legal uncertainties relating to the web. Certain
existing laws or regulations specifically regulate communications or commerce on
the web. Further, laws and regulations that address issues such as user privacy,
pricing, online content regulation, taxation and the characteristics and quality
of online products and services are under consideration by federal, state, local
and foreign governments and agencies. Several telecommunications companies have
petitioned the Federal Communications Commission to regulate Internet service
providers and online services providers in a manner similar to the regulation of
long distance telephone carriers and to impose access fees on such companies.
That regulation, if imposed, could increase the cost of transmitting data over
the web. Moreover, it may take years to determine the extent to which existing
laws relating to issues such as intellectual property ownership and
infringement, libel, obscenity and personal privacy are applicable to the web.
The Federal Trade Commission and government agencies in certain states have been
investigating certain Internet companies regarding their use of personal
information. We could incur additional expenses if any new regulations regarding
the use of personal information are introduced or if these agencies chose to
investigate our privacy practices. Any new laws or regulations relating to the
web, or certain application or interpretation of existing laws, could decrease
the growth in the use of the web, decrease the demand for our web site or
otherwise materially adversely affect our business.
Web security concerns could hinder internet commerce. Concern about the
transmission of confidential information over the Internet has been a
significant barrier to electronic commerce and communications over the web. Any
well-publicized compromise of security could deter more people from using the
web or from using it to conduct transactions that involve the transmission of
confidential information, such as signing up for a paid subscription, executing
stock trades or purchasing goods or services. Because many of our advertisers
seek to advertise on our web site to encourage people to use the web to purchase
goods or services, our business, results of operations and financial condition
could be materially adversely affected if Internet users significantly reduce
their use of the web because of security concerns. We may also incur significant
costs to protect ourselves against the threat of security breaches or to
alleviate problems caused by such breaches.
Our efforts to build positive brand recognition may not be successful. We
believe that maintaining and growing awareness about our brands (including
Individual Investor, Individual Investor Online, Ticker and the INDI SmallCap
500) is an important aspect of our efforts to continue to attract subscribers
and readers. The importance of positive brand recognition will increase in the
future because of the growing number of providers of financial information. We
cannot assure you that our efforts to build positive brand recognition will be
successful.
In order to build positive brand recognition, it is very important that
we maintain our reputation as a trustworthy source of investment ideas,
research, analysis and news. The occurrence of certain events, including our
misreporting a news story or the non-disclosure of a financial interest by one
or more of our employees in a security that we write about, could harm our
reputation for trustworthiness. These events could result in a significant
reduction in the number of our readers, which could materially adversely affect
our business, results of operations and financial condition.
Control of the Company by Principal Stockholders. At the present time, Jonathan
Steinberg, Wise Partners, L.P. (a partnership controlled by Jonathan Steinberg),
Saul Steinberg (who is Jonathan's father) and Reliance Financial Services
Corporation (a substantial portion of the common stock of Reliance Financial
Services Corporation's parent, Reliance Group Holdings, Inc., is beneficially
owned by Saul Steinberg, members of his family and affiliated trust), own
approximately 44.4% of the outstanding shares of common stock of our Company. As
a result of their ownership of common stock, they will be able to significantly
influence all matters requiring approval by our stockholders, including the
election of our directors. Because it would be very difficult for another
company to acquire our company without the approval of the Steinbergs, other
companies might not view our company as an attractive takeover candidate. Our
stockholders therefore may have less of a chance to benefit from any possible
takeover of our company, than they would if the Steinbergs did not have as much
influence.
We rely on our intellectual property. To protect our rights to our intellectual
property, we rely on a combination of trademark and copyright law, trade secret
protection, confidentiality agreements and other contractual arrangements with
our employees, affiliates, clients, strategic partners and others. The
protective steps we have taken may be inadequate to deter misappropriation of
our proprietary information. We may be unable to detect the unauthorized use of,
or take appropriate steps to enforce, our intellectual property rights. We have
registered certain of our trademarks in the United States and we have pending
U.S. applications for other trademarks. Effective trademark, copyright and trade
secret protection may not be available in every country in which we offer or
intend to offer our services.
We are somewhat dependent upon the use of certain trademarks in our
operation, including the marks Individual Investor, Individual Investor Online,
Ticker and the INDI SmallCap 500. We have a perpetual license for use of the
trademark Individual Investor. To perfect our interests in the mark, however, we
filed suit in 1997 against the licensor and a third party whom we believed to be
infringing the mark. The litigation was resolved favorably to us, with an
agreement by the third party not to further infringe the mark. We commenced
negotiations with the licensor to obtain assignment of the mark, but did not
reach an agreement. Although we will continuously monitor and seek enforcement
against any perceived infringement of the mark, we cannot assure you that our
efforts will be successful.
Additionally, we are somewhat dependent upon the ability to protect our
proprietary content through the laws of copyright, unfair competition and other
law. We cannot assure you, however, that the laws will give us meaningful
protection.
We may be liable for information published in our print publications or on our
online services. We may be subject to claims for defamation, libel, copyright or
trademark infringement or based on other theories relating to the information we
publish in our print publications or through our online services. We could also
be subject to claims based upon the content that is accessible from our web site
through links to other web sites. Our insurance may not adequately protect us
against these claims.
Year 2000 risks. We have evaluated the potential impact of the situation
commonly referred to as the "Year 2000 Issue". The Year 2000 Issue concerns the
inability of information systems, whether due to computer hardware or software,
to properly recognize and process date sensitive information relating to the
year 2000 and beyond. To attempt to ensure that our computer systems will not be
disrupted by the Year 2000 Issue, we developed a plan to assess, and to fix
where necessary, any Year 2000 Issue with respect to our computer systems. We
have made significant progress toward determining whether our computer systems
will be disrupted by the Year 2000 Issue and currently expect to complete this
determination before June 1999. We are also fixing any Year 2000 Issue we find
in our systems and currently expect to complete our repair efforts before June
1999. We intend to test our systems before October 1999.
We currently believe that additional direct costs associated with
making our systems Year 2000 Ready should not exceed $30,000. We do not believe
that the diversion of employee resources required to address the Year 2000 Issue
will have a material effect on our operating results or financial condition. We
do not currently have in place a contingency plan of action in the event that we
are not able to make our computer systems Year 2000 Ready, but will consider on
an ongoing basis whether such a contingency plan should be developed.
The dates on which we believe we will complete our Year 2000 plan, and
the costs associated with the efforts, are based on our current best estimates.
However, we cannot guarantee that these estimates will be achieved, or that
there will not be a delay in, or increased costs associated with, making our
systems Year 2000 Ready. Specific factors that might cause differences between
the estimates and actual results include the following: the availability and
cost of personnel trained in these areas; the ability to locate and correct all
relevant computer code and hardware devices (such as microcontrollers); timely
responses to and corrections by third-parties and suppliers; the ability to
implement interfaces between the new systems and the systems not being replaced;
and similar uncertainties. Due to the general uncertainty inherent in the Year
2000 problem, resulting in part from the uncertainty of the Year 2000 readiness
of third parties and the interconnection of global businesses, we cannot
guarantee that will be able to resolve, in a timely or cost-effective fashion,
any problems associated with the Year 2000 Issue. If we fail to resolve, in a
timely and cost-effective fashion, any problems associated with the Year 2000
issue, our operations and business could be materially adversely affected. If
that happens, we also could incur liabilities to third parties.
We also face risks and uncertainties to the extent that the independent
suppliers of products, services and systems on which we rely do not have
business systems or products that are Year 2000 Ready. We have started
communicating with all of our significant suppliers and customers to determine
the extent to which our systems and products are vulnerable to those third
parties' failure to fix their own systems' Year 2000 Issues. The systems or
products of other companies on which we rely might not be made Year 2000 Ready
in time to prevent disruption. If the systems of any of those third parties are
disrupted, our operations and business could be materially adversely affected.
We are in the process of identifying what actions may be needed to reduce our
vulnerability to problems related to the companies with which we interact, but
we do not currently have in place a contingency plan of action in the event that
the failure by one or more third parties to make their computer systems Year
2000 Ready causes us to suffer material adverse effects. We will consider on an
ongoing basis whether such a contingency plan should be developed.