SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
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 ____________
MONSTERDAATA.COM, INC.
(Exact name of small business issuer as specified in its charter)
(Formerly known as D-Vine, Ltd.)
Delaware 22-2732163
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
115 Stevens Avenue
Valhalla, NY 10595
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 747-9100
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. |X| Yes |_| No
As of March 31, 2000, 7,776,010 shares of the Registrant's common stock, par
value $.01 per share, were outstanding.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format: |_| Yes |X| No
MONSTERDAATA.COM, INC.
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET -- As of March 31, 2000
(Unaudited) .............................................. Page 3
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) --
For the Three Months Ended March 31, 1999 and
March 31, 2000 ........................................... Page 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) --
For the Three Months Ended March 31, 1999 and
March 31, 2000 ........................................... Page 6
NOTES TO FINANCIAL STATEMENTS .............................. Page 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................ Page 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings .......................................... Page 13
Item 2. Changes in Securities ...................................... Page 13
Item 6. Exhibits ................................................... Page 14
Signatures ......................................................... Page 14
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MONSTERDAATA.COM, INC
BALANCE SHEETS
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 175,608
Accounts Receivable Exclusive 150,071
Prepaid expenses and other current assets 15,000
----------
Total Current Assets 340,679
PROPERTY AND EQUIPMENT, Net 367,889
Security Deposits 16,588
----------
TOTAL ASSETS 725,156
==========
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses 1,609,310
Deferred revenue - current 426,941
Notes Payable - Stockholder 298,702
Current maturities of capital lease obligation 34,484
----------
Total Current Liabilities 2,369,437
----------
OTHER LIABILITIES
Capital lease obligations, less current maturities 3,983
Deferred revenue - noncurrent 72,919
----------
Total Other Liabilities 76,902
----------
TOTAL LIABILITIES 2,446,339
----------
STOCKHOLDERS' DEFICIENCY
Preferred Stock - $0.01 par value; 10,000,000 shares authorized:
Series A cumulative convertible preferred stock - $0.01 par value;
$1,000 stated value; 2,000 shares authorized, 1,567.32 shares
issued and outstanding 1,567,320
Series B cumulative convertible preferred stock - $0.01 par value;
$1,000 stated value; 2,000 shares authorized, 425 shares subscribed 425,000
3
Common stock - $0.01 par value; 50,000,000 shares authorized,
7,766,010 issued and outstanding 77,660
Additional paid in capital 3,201,561
Subscription Receivable - Series B Cumulative Convertible Preferred Stock (200,000)
Options and warrants 307,471
Notes Receivable Stockholder (97,389)
Accumulated deficit (7,002,806)
----------
TOTAL STOCKHOLDERS' DEFICIENCY (1,721,183)
----------
TOTAL LIABILITIES AND STOCKHOLDERS - DEFICIENCY 725,156
==========
4
MONSTERDAATA.COM, INC.
STATEMENT OF OPERATIONS
(Unaudited)
For the three For the three
Months ended Months ended
March 31, 1999 March 31, 2000
-------------- --------------
SALES $ 643,255 $ 392,386
COST OF SALES 373,771 $ 119,528
----------- -----------
GROSS PROFIT 269,484 272,858
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Product development costs -- 446,645
Selling, general and administrative expenses 267,049 1,060,664
----------- -----------
TOTAL SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 267,049 1,507,309
----------- -----------
OPERATING INCOME (LOSS) 2,435 (1,234,451)
Interest (expense) net of income $ (12,950) $ (20,902)
----------- -----------
NET INCOME (LOSS) BEFORE INCOME TAXES (10,515) (1,255,353)
INCOME TAXES -- --
----------- -----------
NET (LOSS) $ (10,515) $(1,255,353)
=========== ===========
Weighted Average Number of Shares Outstanding 6,024,773 7,775,840
=========== ===========
Net Loss Per Share, Basic and Diluted $ (0.002) $ (0.161)
=========== ===========
See accompanying notes to financial statements
5
MONSTERDAATA.COM, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the three For the three
Months ended Months ended
March 31, 1999 March 31, 2000
-----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (10,515) (1,255,353)
-----------------------------------
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation 27,909 13,317
Accrued interest receivable -- (1,439)
Accrued interest payable 597 --
Stock issued for services 248,821 --
Decrease in accounts receivable 166,610 147,445
Decrease in prepaid expenses and other current assets -- 22,534
Loss on disposal of fixed asset -- 11,825
Increase in accounts payable and accrued expenses 57,175 534,847
Decrease in deferred revenue (498,175) (21,201)
-----------------------------------
TOTAL ADJUSTMENTS 2,937 707,328
-----------------------------------
NET CASH FLOWSFROM OPERATING ACTIVITIES (7,578) (548,025)
-----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (9,080) (12,321)
-----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 75
Net proceeds from subscribed series B preferred stock 143,824
Proceeds from exercise of options 5,000
Principal repayments of capital lease obligations (15,252) (32,416)
-----------------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES (15,177) 116,408
-----------------------------------
NET DECREASE IN CASH (31,835) (443,938)
6
CASH - Beginning 55,592 619,546
----------------------------------
CASH - Ending 23,757 175,608
==================================
NON CASH ACTIVITIES
Conversion of Series A Cumulative Convertible Preferred Stock into common stock -- 24,440
Issuance of Series A Cumulative Convertible Preferred Stock -- 10,000
Series B Cumulative Convertible Preferred Stock subscription receivable -- 200,000
Exercise of warrants on a cashless basis -- 113,714
Exercise of options on a cashless basis -- 114,275
Conversions of accounts payable into common stock 131,350 --
7
MONSTERDAATA.COM, INC.
Notes to the Financial Statements
March 31, 2000
NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION
The Company
MonsterDaata.com, Inc. was incorporated in Delaware on July 22, 1985 under the
corporate name "Trans West, Inc." For eight years prior to September 27, 1995,
we were an inactive corporation. On September 27, 1995, we revived our corporate
charter in Delaware and were reactivated, although we had no material assets or
capital, and no operations or income. On February 13, 1996, we changed our
corporate name to "D-Vine, Ltd."
On April 2, 1999, we acquired 99.2% of the outstanding capital stock of Taconic
Data Corp. ("Taconic"), a provider of database development and management
services to the real estate industry. Taconic was incorporated in New York in
1992. In connection with this acquisition, Taconic became our majority-owned
subsidiary and Taconic directors and officers replaced all of our directors and
officers. The stockholders of Taconic were issued 6,000,000 shares of our common
stock in exchange for their shares, or approximately 85% of our total
outstanding common shares after giving effect to the acquisition (and the
exercise of certain warrants). Accordingly, a change in control of our company
occurred in connection with the acquisition, and the acquisition was deemed a
"reverse acquisition" for accounting purposes.
Our accompanying unaudited financial statements represent a consolidation of our
business with that of Taconic, and the consolidation has been prepared assuming
that we owned 100% of Taconic after the acquisition. Subsequent to the
acquisition, we changed our fiscal year end from September 30 to December 31 to
correspond with the fiscal year end of Taconic. On April 5, 1999, we changed our
corporate name to "MonsterDaata.com, Inc."
Minority Interest
The minority interest referred to above is held by an entity, which owns 0.8% of
Taconic. This entity's interest in the net assets of Taconic has been reduced to
zero on the Consolidated Balance Sheet portion of our accompanying unaudited
financial statements. Therefore, in accordance with Generally Accepted
Accounting Principles, the entity's minority interest in the losses for the
three month period ended March 31, 2000 and 1999 has not been recorded on our
accompanying unaudited financial statements. This minority interest in losses
will remain unrecognized in our future financial statements unless and until
they are fully offset, in the aggregate, by the entity's minority interest in
future profits of Taconic. We are pursuing legal actions to recover the shares
issued to the entity.
Basis of Presentation
Our accompanying unaudited financial statements reflect all adjustments, which
are, in the opinion of management, necessary to a fair statement of the results
of the interim periods presented. All such adjustments are of a normal recurring
nature. The financial statements should be read in conjunction with the notes to
the financial statements and in conjunction with our audited financial
statements contained in our Form 10-KSB (filed on March 30, 2000).
8
NOTE 2 - STOCK HOLDERS' EQUITY
Series A Cumulative Convertible Preferred Stock
On January 6, 2000, we issued 20.53 shares of our Series A Cumulative
Convertible Preferred Stock (the "Series A Preferred") to an investor, resulting
in cash proceeds of $20,000, which was received by us on December 9, 1999. In
connection therewith, we issued to the investor warrants for the purchase of
3,080 shares of our common stock at an exercise price of $3.75 per share.
In February 2000, we issued 10 additional shares of our Series A Preferred to an
investor as an adjustment to the 123.33 shares issued to the investor on
November 1, 1999.
On March 9, 2000, and March 23, 2000, we converted 11.11 shares and 13.33
shares, respectively, of our Series A Preferred into 5,000 shares and 6,000
shares, respectively, of our common stock.
On March 9, 2000, March 10, 2000, and March 23, 2000, warrants to purchase 3,333
shares, 5,167 shares and 68,334 shares respectively, of common stock with an
adjusted exercise price of $0.50 per share were exercised, on a cashless basis,
when the market value was $6.00, $5.875, and $4.50 per share respectively.
Accordingly, 1,666, 3,848, and 63,087 shares respectively, of the common stock
were issued in connection with the exercise of such warrants.
Series B Cumulative Convertible Preferred Stock
On April 6, 2000, we issued 425 shares of our Series B Cumulative Convertible
Preferred Stock (the "Series B Preferred") to investors, resulting in cash
proceeds in the aggregate of $425,000 (including $225,000 which we received in
March 2000) less direct expenses of $81,176. In connection with the issuance, we
authorized the designation of 2,000 shares of Series B Preferred. Holders of the
Series B Preferred are entitled to a quarterly cumulative dividend equal to 1.5%
of the applicable liquidation preference as defined.
Each share of Series B Preferred is convertible into 267 shares of common stock,
at the option of the holder, subject to certain adjustments and conditions. The
Series B Preferred will automatically convert into shares of common stock upon
occurrence of special events, as defined.
We also issued warrants to purchase 56,738 shares of our common stock at an
exercise price of $4.25 per share (subject to adjustment) to the Series B
Preferred holders. These warrants to purchase a total of 56,738 shares of common
stock, with an estimated fair value of approximately $206,000 using the
Black-Scholes option-pricing model, expire in April 2004.
Exercise of Options
On March 9, 2000, options to purchase 24,000, and 20,000 shares of common stock
with exercise prices of $4.00 and $3.02, respectively, were exercised, on a
cashless basis, when the market value was $6.00 per share. Accordingly, 10,286
and 10,175 shares respectively, of the common stock were issued in connection
with the exercise of such options.
On March 9, 2000, options to purchase 5,000 shares of common stock were
exercised with an exercise price of $1.00, resulting in cash proceeds of $5,000.
9
NOTE 3 - GOING CONCERN UNCERTAINTY
As shown in the accompanying financial statements, we incurred a net loss of
$1,255,353 during the three months ended March 31, 2000, and, as of that date,
our current liabilities exceeded our current assets by $2,028,758, and our total
liabilities exceeded our total assets by $1,721,183. These factors, as well as
the uncertain conditions that we face relative to capital raising activities,
create an uncertainty as to our ability to continue as a going concern.
On May 2, 2000, we entered into an agreement with an investment bank in
connection with a proposed private offering of approximately $10 million to $15
million of convertible equity. In addition the bank has committed to provide
$1,000,000 of bridge financing to us, subject to certain approvals, as defined.
The financial statements do not include any adjustments that might be necessary
should we be unable to continue as a going concern.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The statements contained in this Report on Form 10-QSB that are not historical
facts are forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) that involve risks and uncertainties.
Such forward-looking statements may be identified by, among other things, the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy that involve risks and
uncertainties. From time to time, we or our representatives have made or may
make forward-looking statements, orally or in writing. Such forward-looking
statements may be included in our various filings with the Securities and
Exchange Commission (the "SEC"), or press releases or oral statements made by or
with the approval of our authorized executive officer.
These forward-looking statements, such as statements regarding anticipated
future revenues, capital expenditures and other statements regarding matters
that are not historical facts, involve predictions. Our actual results,
performance or achievements could differ materially from the results expressed
in, or implied by, these forward-looking statements. We do not undertake any
obligation to publicly release any revisions to these forward-looking statements
or to reflect the occurrence of unanticipated events. Many important factors
affect our ability to achieve our objectives, including, among other things,
technological and other developments in the Internet field, intense and evolving
competition, the lack of an "established trading market" for our shares, and our
ability to obtain additional financing, as well as other risks detailed from
time to time in our public disclosure filings with the SEC.
Overview of Operations
During the past 12 months, we have largely completed our transition from a
private to public company and from a traditional supplier of real estate related
information to an Internet-enabled information company with an initial focus on
real estate. As the next step in our transition, we are beginning to leverage
our expertise in the real estate information area to other Internet-based
information systems.
10
During the next 12 months, we intend to expand our services to that of a
broad-based Internet information infrastructure company. We will provide
proprietary Web enabling applications, distribution technology and digital
content to our network affiliates that empowers them to tailor their display of
information and tool sets to create unique end-user experiences. Our proprietary
applications and technology consist of our ability to integrate disparate sets
of information and to distribute content and applications solutions in a highly
customizable, flexible manner. Our flexible and customizable technology will
help end users to automate, facilitate, evaluate, make informed decisions and
execute transactions.
Our current digital content includes text, visual, geographic, and interactive
tools sets. We maintain over 3.5 billion records of information for over 220,000
distinct geographically bounded areas in the United States alone. We currently
intend to distribute our products and services to the following sectors: Real
Estate (sales, appraisal services, new construction, relocation, rental, title
insurance); Financial Services (mortgage lending, insurance, portfolio
management); Local and Community; and Consumer. Our current licensees and
distribution affiliates include Homestore.com, move.com, iOwn, Mortgage.com,
Network Communications, Thomson Interactive Media, and AdOne, among others. We
currently employ 39 full-time officers, data managers, Web site developers,
salespeople and support personnel.
Through our network affiliates, a home buyer or seller can now input an address
or town, or point and click on a map, and learn about the crime, health, weather
and environmental risks, demographics, consumer spending habits, lifestyle
characteristics, school performance and curriculum, average commute time,
culture and economics of that neighborhood, as well as property sales,
financings, values, property characteristics, liens and judgments against
people, property, and businesses. The real estate professional can easily access
an enormous volume of content and applications to help facilitate and conduct
the real estate transaction, analyze their market, identify new customers, and
grow their businesses. National, regional and local product and service
companies seeking to communicate with prospective buyers and sellers of products
and services throughout the real estate lifecycle can identify prime prospects
through user profiling. Our content and applications are designed to provide
professionals and consumers with need-to-know information throughout the
research and decision-making process.
Our proprietary compilation of applications, data, toolsets and distribution
technology boosts the effectiveness of our affiliates' Web sites by increasing
the frequency, duration and revenue of each site visit. These businesses seek
content and application solutions that will lower their cost of doing business
without the high fixed expense of developing and maintaining their own
information infrastructure. We generate revenue through our partners' Web sites
from licensing of our content, e-reports and e-subscriptions, e-lead generation,
local and national advertising, and customized information solutions.
Our financial condition and results for periods prior to April 2, 1999 are
almost entirely attributable to the historical results of Taconic Data Corp.
("Taconic"), which was deemed the acquiror for accounting purposes in our
business combination with Taconic that was completed on April 2, 1999.
Results of operations for the three months ended March 31, 2000 as compared to
the three months ended March 31, 1999
Our total revenues for the three month period ended March 31, 2000, were
$392,386 compared to $643,255 for the three month period ended March 31, 1999.
This 39% decrease in revenue is largely attributable to the transition in our
revenue model from traditional Multiple Listing Service (MLS) revenue, where we
delivered data on a fixed-price basis to a limited number of members of MLSs, to
professional and consumer Internet-based revenue. Our focus in Internet-based
revenue is in capturing wide distribution of our products and services through
cobrands, partnerships and portal distribution. We receive revenues from
licensing fees, and sales of reports, subscriptions and services. We anticipate
that we will more than offset our MLS revenue loss through such Internet-related
sales over time.
11
Our cost of sales for the three month period ended March 31, 2000 was $119,528,
compared to $373,771 for the three month period ended March 30, 1999. This 68%
decrease is primarily the result of reassignment of many of our data collection
employees to Web site development functions as part of the transition of our
business to the Internet. We anticipate that our gross margins in future periods
could continue to improve, but at a more modest rate. This is based on our
belief that our total revenues will increase faster than our related cost of
sales. This could occur as we move the primary means of distributing our data
products to the Internet and we expand our revenue base to include new Internet
related sources. These revenues can be derived with minimal incremental expense
beyond the fixed Internet costs that we have already invested or have budgeted
for future periods. Our cost of goods sold includes referral and revenue sharing
payments that we will be required to make to third party Web site operators for
certain types of Internet related revenues under our agreements with such
operators. To date, these payments have not been significant, but we expect that
as our Internet related revenues grow these payments will also grow.
Selling, general and administrative expenses increased from $267,049 for the
three month period ended on March 31, 1999 to $1,507,309 for the three month
period ended March 31, 2000. This increase is largely attributable to
development of our Web site, product development costs, additional staffing in
our sales and technical departments, and the expansion of our New York City
sales and technical development office.
Our operating profit decreased from $2,435 for the three month period ended
March 31, 1999 to an operating loss of $1,234,451 for the three month period
ended March 31, 2000. This decrease is largely due to the increase in selling,
general and administative expenses referenced above.
Liquidity and capital resources
As of March 31, 2000, our cash balance was $175,608 and we had a working capital
deficit (excluding deferred revenue) of $1,601,817. For the three months ended
March 31, 2000, our net cash flows from operating activities was $548,025.
Total cash flows from financing activities increased from $15,177 for the three
month period ended on March 31, 1999 to $116,408 for the three month period
ended March 31, 2000.
Our working capital requirements depend upon numerous factors, including,
without limitation, levels of resources that we devote to the further
development of our Web site and marketing capabilities, technological advances,
status of competitors and our ability to establish collaborative arrangements
with other organizations. We are seeking to raise up to $15 million of
additional capital from private investors and institutional money managers
during the second quarter of 2000, but there can be no assurance that we will be
successful in doing so. If we are not successful in raising any of this
additional capital, our current cash resources are expected to be sufficient to
fund our current operations only into the second quarter of 2000. As described
in more detail above, during the month of April, 2000, we issued 425 shares of
Series B Preferred and related common stock purchase warrants for $425,000. We
intend to accelerate our development and infrastructure spending in the coming
calendar quarters if we have sufficient capital resources available to do so,
however, our ability to do so is highly uncertain at this time. Our independent
auditors have noted in their report on our 1999 financial statements that there
are existing uncertain conditions that we face relative to our capital raising
activities, and these conditions raise substantial doubt as to our ability to
continue as a going concern.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are a party to litigation arising in the ordinary course
of our business. We are not currently a party to any litigation that, if
determined adversely to us, we believe would have a material adverse effect on
us.
Item 2. Changes in Securities
On November 1, 1999, November 5, 1999 and November 30, 1999, we issued 781.12
shares, 240.66 shares and 539.45 shares, respectively, of our Series A Preferred
to investors, resulting in cash proceeds in the aggregate of $1,152,766, net of
direct expenses of $319,234. In connection with the issuance, we authorized the
designation of 2,000 shares of Series A Preferred. Holders of the Series A
Preferred are entitled to a quarterly cumulative dividend equal to 1.5% of the
then applicable liquidation preference, as defined. Each share of the Series A
Preferred is convertible into 300 shares of common stock, at the option of the
holder, subject to certain adjustments and conditions. The Series A Preferred
will automatically convert into shares of common stock upon occurrence of the
special events, as defined. In addition, we have filed a registration statement
with the SEC to register the common shares issuable upon conversion of the
Series A Preferred. As of February 28, 2000, we have not met certain conversion
conditions; accordingly, the conversation rate was changed from 1:300 to 1:450.
On January 6, 2000, we issued 20.53 shares of our Series A Preferred to an
investor, resulting in cash proceeds of $20,000, which was received by us on
December 9, 1999. In connection therewith, we issued to the investor warrants
for the purchase of 3,080 shares of our common stock at an exercise price of
$3.75 per share.
During the month of April, 2000, we issued 425 shares of Series B Preferred and
related warrants to purchase shares of our common stock at a warrant exercise
price of $4.25 per share, subject to adjustment, for an aggregate offering
amount of $425,000. These shares were issued in a transaction that did not
involve any public offering of our shares within the meaning of Section 4(2) of
the Securities Act and Rule 506 of Regulation D. Each share of our Series B
Preferred is currently convertible into 267 shares of common stock. We have
undertaken to file a registration statement with the SEC within the six months
following the first sale of Series B Preferred to make the common shares
issuable upon conversion of the Series B Preferred and upon exercise of the
warrants eligible for public resale.
We currently anticipate the sale of additional shares to institutional
purchasers at a price that is materially lower than the purchase price recently
paid by the purchasers of our Series A Preferred and Series B Preferred.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
13
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (for electronic filers).
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MONSTERDAATA.COM, INC.
(Registrant)
Date: May 12, 2000 /s/ Mitchell Deutsch
---------------------------------------------
Mitchell Deutsch
President and Chief Executive Officer
Date: May 12, 2000 /s/ James Garfinkel
---------------------------------------------
James Garfinkel
Treasurer, Secretary and Vice President
(Principal Financial and Accounting Officer)