ARTISTdirect Inc. Files SEC Form 10-Q Relating to First-Quarter Results.Business Editors LOS ANGELES--(BUSINESS WIRE)--May 15, 2000 ARTISTdirect Inc. (Nasdaq:ARTD) today filed a Form 10-Q Form 10-Q See 10-Q. with the Securities and Exchange Commission for the quarter ended March 31, 2000. As part of that filing, the company revised its previously announced financial results to reflect a one-time, non-cash effective dividend in connection with the adjustable conversion of the company's Series C Redeemable Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. upon completion of its initial public offering ("IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. ") on March 31, 2000. Net loss from operations was not affected by the non-recurring, non-cash effective dividend. Net loss attributable to common shareholders and loss per share includes the impact of the effective dividend, in accordance with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . As a result, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss per share of $0.39, as previously announced, was revised to a pro forma net loss per share of $1.25. Results of future periods will not be affected as all of the company's redeemable preferred stock was converted to common stock in connection with the IPO. About ARTISTdirect Inc. The ARTISTdirect Network is an online music network that connects music artists and fans. The integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. of Web sites offers multimedia entertainment content, music news and information, community around shared music interests and music-related commerce. The ARTISTdirect Network consists of ARTISTdirect.com (www.artistdirect.com), home of the official channels that the company operates on behalf of artists; UBL (Universal Business Language) A format for exchanging data from one XML business language to another. Based on ebXML Core Components, UBL is designed to provide a common language that acts as an intermediate vocabulary so that one XML vocabulary can interoperate with .com (www.ubl.com), a music search engine on the Web; iMusic (www.imusic.com), an online community site where fans exchange music interests and commentary; DOWNLOADSdirect (www.downloadsdirect.com), a feature that enables users to download music from the ARTISTdirect Network and to upload their music and other information, Artist TV the Network's hub for broadband programming, and the ARTISTdirect Superstore, a retail site offering a wide selection of recorded music recorded music n → música grabada and artist merchandise. Additionally, ARTISTdirect operates the ARTISTdirect Talent Agency and manages Kneeling Elephant Records. The company has offices in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden and London. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: This release may contain projections or other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding future events or the future financial performance of ARTISTdirect that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future events or results. Potential risks and uncertainties that may affect future events and results include, among others, ARTISTdirect's unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy business model, increased competition in its industry, ARTISTdirect's ability to increase revenue from online product sales, advertising and other revenue streams, ability to increase visits to ARTISTdirect's site, ability to attract and retain artists, ability to offer compelling content, ability to fulfill online music and merchandise orders in a timely manner, ability to build brand recognition, ability to integrate acquisitions of technology and other businesses, ability to protect and/or obtain intellectual property rights, and ability to manage growth. More information about potential factors that could affect the company's business and financial results is included in the documents filed by ARTISTdirect with the SEC, including its Registration Statement on Form S-1 and all amendments thereto.
ARTISTdirect INC.
Consolidated Statements of Operation
(amounts in thousands, except for share data)
(Unaudited)
Three months ended March 31,
2000 1999
Net revenue:
Online product sales $ 2,029 $ 1,016
Advertising and other 1,797 381
Agency commissions 545 130
Record label 126 171
Total net revenue 4,497 1,698
Cost of revenue:
Direct cost of product sales 1,921 901
Other cost of revenue 1,633 395
Stock-based compensation 2,793 --
Total cost of revenue 6,347 1,296
Gross profit (loss) (1,850) 402
Operating expenses:
Product development 807 191
Sales and marketing 5,117 777
General and administrative 3,660 1,308
Amortization of stock-based
compensation (366) 802
Depreciation and amortization 1,174 88
Loss from operations (12,242) (2,764)
Income from equity investment -- 33
Interest income, net 1,055 12
Net loss $(11,187) $(2,719)
Dividends on redeemable
preferred securities 963 121
Beneficial conversion feature
on redeemable preferred stock 24,375 --
Net loss attributable to
common shareholders $(36,525) $(2,840)
Basic and diluted loss per share $(2.45) N/A
Weighted average common shares
outstanding 14,901,505 N/A
Pro forma loss per share $(1.25) $ (0.16)
Pro forma weighted average
common shares outstanding 28,489,648 16,649,626
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