Fatbrain.com Announces Record Financial Results For Second Quarter Fiscal 2000.SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--Aug. 25, 1999-- Online Sales Grow 2.3 Times, Company Achieves Significant Growth In Customers and Print On-Demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front Services Fatbrain.com, Inc. (Nasdaq: FATB FATB Florida Association of Ticket Brokers ), the Internet's most comprehensive professional bookstore, today announced financial results for the second quarter and first six months of fiscal 2000, ended July July: see month. 31, 1999. The Company announced record online sales of $5.8 million for the quarter, an increase of more than 2.3 times online sales of $2.5 million for the prior year period. Total Company sales (which also include sales generated by physical retail stores, trade shows and book fairs) for the quarter were $7.4 million, a 53 percent increase over total sales of $4.8 million for the same period last year. The Company reported a second quarter net loss of $5.9 million compared to a net loss of $2.0 million in the prior year period. Net loss per share for the second quarter of fiscal 2000 was $0.52 compared to 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 $0.27 for the same period last year. Per share calculations for the current quarter are based on weighted average shares outstanding at July 31, 1999 of approximately 11,300,000. Pro forma per share calculations for the quarter ended July 31, 1998 are based on pro forma weighted average shares outstanding of approximately 7,413,000, which assumes conversion of all outstanding shares of 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. immediately upon issuance. For the first six months of fiscal 2000, online sales totaled $10.3 million, compared to $4.2 million for the same period of fiscal 1999. Total sales for the first half of fiscal 2000 were $13.5 million, an increase of 47% from total sales of $9.2 million for the first half of fiscal 1999. The Company reported a net loss of $11.1 million, or $0.99 per share, for the six month period ended July 31, 1999. This compares to a net loss of $3.6 million, or a pro forma net loss per share of $0.51, for the same period of last year. The Company augmented its customer base by more than 35,000 during the quarter, bringing the total number of customers to over 138,000. Online customer accounts continued to show signs of rapid growth during the quarter, increasing 34.6 percent, while repeat customer orders represented more than 54 percent of orders placed. "Fatbrain.com was recently named by the San Jose San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. Business Journal as one of the fastest growing companies in Silicon Valley, second only to eBay (eBay, Inc., San Jose, CA, www.ebay.com) The major auction service on the Web. eBay popularized the concept of buying and selling online, and both individuals and commercial enterprises list items for sale. ," stated Chris CHRIS Chemical Hazards Response Information System (US DoD) CHRIS California Historical Resources Information System CHRIS Computerized Human Resources Information System CHRIS Command Human Resources Intelligence System MacAskill, president and chief executive officer. "We are extremely proud of this accomplishment and of our progress in working to sustain this growth. During the quarter we experienced significant growth in online traffic and revenues, added more than 800 new corporate accounts including key accounts to our FindItnow program, completed several strategic initiatives to build out our corporate infrastructure and significantly expanded the product offerings available in our new professional categories." Operating Highlights Branding Campaign Boosts Awareness Four months into its name change and branding campaign, Fatbrain.com has experienced a three-fold increase in brand awareness, as revealed by a recently conducted awareness study. These results precede the launch of the test phase of the Company's radio and outdoor advertising campaign in Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , Colorado Colorado, state, United States Colorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. . Preliminary results have been positive, and the Company will consider plans to launch the campaign in additional "wired" metropolitan areas throughout the U.S. based on final results. New Opportunities in Print On-Demand During the quarter the Company inked exclusive deals to deliver documentation on-demand through custom online stores for Novell (Novell Inc., Provo, UT, www.novell.com) Novell was founded as Novell Data Systems in 1981 by Jack Davis and George Canova and initially manufactured terminals for IBM mainframes. In 1983, Ray Noorda became CEO and president of a restructured Novell, Inc. , Inc. (Nasdaq:NOVL NOVL Novell, Inc. (stock abbreviation, AMEX) ), SGI (SGI, Sunnyvale, CA, www.sgi.com) A manufacturer of workstations and servers, founded in 1982 by Jim Clark. The company was founded as Silicon Graphics, Inc., but changed to its acronym in 1999. (NYSE NYSE See: New York Stock Exchange :SGI) and ZiLOG (Zilog, Inc., San Jose, CA, www.zilog.com) A semiconductor manufacturer that was founded in 1974. It was a subsidiary of Exxon from 1980 to 1989 and became a public company in 1991. Zilog's Z80 chip was the CPU in CP/M machines, which helped to create the personal computer industry. , Inc. Fatbrain.com's documentation on-demand business uses unique print-on-demand capabilities to provide user, prospect and developer communities of corporate customers with hard-copy sets of the most current documentation and reference tools supporting their products. "Print on-demand is growing as a key area of focus for our business," commented Chris MacAskill. "We are very pleased with our corporate wins in this segment to date and believe that exciting opportunities exist for the Company to expand its expertise in this area to include a variety of innovative documentation on-demand applications in the near future." Strong Growth in Business-to-Business  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. Partnerships Fatbrain.com added over 800 new corporate accounts during the second quarter. Significant new partners integrated into the Company's FindITnow program include Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. (NYSE: BAC BAC abbr. blood alcohol concentration ), Lucent Technologies (NYSE: LU), Network Associates (Nasdaq: NETA NETA New Electricity Trading Arrangements NETA Network Associates, Inc. (stock abbreviation, AMEX) NETA National Educational Telecommunications Association NETA International Electrical Testing Association NETA Norethisterone Acetate ) and Nortel Networks (Nortel Networks Limited, Brampton, Ontario, www.nortelnetworks.com) A world leader in telecommunications products, which includes switching, wireless and broadband systems for service providers and carriers, telephones and systems for residential and business users, computer telephony (NYSE: NT). The Company's custom designed online bookstores now reach a potential audience in excess of one million individuals at customer organizations. Fatbrain.com was recently acknowledged for delivering outstanding business value through its FindITnow program as the recipient of CIO CIO: see American Federation of Labor and Congress of Industrial Organizations. (Chief Information Officer) The executive officer in charge of information processing in an organization. Magazine's Web Business 50/50 award in the Intranet category. Fatbrain.com's innovative business-to-business e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. solutions led to several significant corporate account wins and strategic partnerships in the second quarter, including: -0-
-- A custom online bookstore for Bank of America. The new bookstore
resides on Bank of America's corporate Intranet and serves
approximately 170,000 Bank of America associates worldwide.
-- A multi-year agreement with Lucent Technologies to provide
technical and business books for Lucent's more than 140,000
employees worldwide.
-- The addition of Network Associates to the FindITnow program.
Fatbrain.com has custom-designed an intranet-based online
bookstore which provides Network Associates' employees worldwide
with quick, easy access to a world-class selection of books,
training materials and documentation for business and technology
professionals.
-- Fatbrain.com as a preferred provider of technical and business
books for Nortel Networks' more than 75,000 employees worldwide.
-- A new online bookstore partnership with Microsoft Certified
Professional Magazine, a monthly publication devoted to Windows
NT(R) experts and IT professionals seeking Microsoft
certification. The new MCP Magazine bookstore is designed to
serve the specific technical needs of the publication's
readership of 100,000 network managers and 240,000 monthly Web
site visitors.
-0-
Rapid Growth Drives Corporate Expansion To support its rapid growth, Fatbrain.com has completed a series of expansion moves to further build out its corporate infrastructure. The Company has increased its product offerings with the addition of tens of thousands of titles in new professional categories, and now serves more than 1200 categories in total. In addition, the Company opened a new headquarters in Santa Clara, California Santa Clara, California (IPA: /ˌsæntəˈklærə/) , founded in 1777 and incorporated in 1852, is a city in Santa Clara County, in the U.S. state of California. , relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. its distribution operation to a new, centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. warehouse in Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. and added key personnel in strategic growth areas of the business. About Fatbrain.com Fatbrain.com is the Internet's most comprehensive professional bookstore. The Company offers a world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. selection of books, training materials and documentation for experts in business and finance, technology and other industries. A leader in business-to-business e-commerce, Fatbrain.com specializes in creating custom corporate intranet bookstores that work seamlessly with existing infrastructure. The company first built a loyal following among programmers This is a list of programmers notable for their contributions to software, either as original author or architect, or for later additions. See also: Game programmer, List of computer scientists and IT professionals for its unique specialty in resources for technology professionals. Fatbrain.com offers discounts of up to 40 percent, and all in-stock orders placed by 4 PM PT ship the same business day. Visit Fatbrain.com on the Web at http://www.fatbrain.com. This announcement may contain 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. that involve risks and uncertainties including, among others, Fatbrain.com's limited operating history, anticipated losses, the unpredictability of its future revenues, competition, risks associated with system development and operation risks, management of potential growth, and risks of new business areas, international expansion, business combinations, and strategic alliances. Actual results could differ materially from those discussed. More information about factors that potentially could affect Fatbrain.com's financial results is included in the Company's filings with the Securities and Exchange Commission, including its Registration Statement filed under its original name, Computer Literacy Understanding computers and related systems. It includes a working vocabulary of computer and information system components, the fundamental principles of computer processing and a perspective for how non-technical people interact with technical people. , Inc., on Form SB-2 on November November: see month. 19, 1998, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. . All forward looking statements are based on information available to the Company on the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company assumes no obligation to update such statements. Fatbrain.com is a trademark of Fatbrain.com, Inc. All company and product names may be trademarks of the respective companies with which they are associated. -0-
Fatbrain.com, Inc.
Statements of Operations
(in thousands, except per share data)
Quarter ended Six months ended
July 31, July 31,
1999 1998 1999 1998
-------- -------- -------- --------
(unaudited) (unaudited)
Revenues:
Online $ 5,785 $ 2,464 $ 10,276 $ 4,225
Retail and other 1,577 2,351 3,229 4,984
-------- -------- -------- --------
Total revenues 7,362 4,815 13,505 9,209
Cost of revenues:
Online 4,529 1,965 8,172 3,291
Retail and other 1,033 1,538 2,104 3,226
-------- -------- -------- --------
Total cost of
revenues 5,562 3,503 10,276 6,517
-------- -------- -------- --------
Gross profit 1,800 1,312 3,229 2,692
Operating expenses:
Sales and marketing 5,266 2,070 9,936 4,056
Development and
engineering 1,299 594 2,419 1,148
General and
administrative 1,340 681 2,518 1,224
-------- -------- -------- --------
Total operating
expenses 7,905 3,345 14,873 6,428
-------- -------- -------- --------
Loss from operations (6,105) (2,033) (11,644) (3,736)
Interest, net 177 67 506 99
======== ======== ======== ========
Net loss $ (5,928) $ (1,966) $(11,138) $ (3,637)
======== ======== ======== ========
Pro forma basic and
diluted net loss
per share (1) $ (0.52) $ (0.27) $ (0.99) $ (0.51)
======== ======== ======== ========
Shares used in
calculating pro forma
basic and diluted net
loss per share 11,300 7,413 11,263 7,086
======== ======== ======== ========
Basic and diluted
net loss per share $ (0.52) $ (1.28) $ (0.99) $ (2.37)
======== ======== ======== ========
Shares used in
calculating basic
and diluted net loss
per share 11,300 1,539 11,263 1,533
======== ======== ======== ========
(1) Pro forma net loss per share assumes conversion of all
outstanding shares of preferred stock immediately upon issuance.
Fatbrain.com, Inc.
Balance Sheets
(in thousands, except per share data)
July 31, January 31,
1999 1999
(unaudited)
Assets
Current assets:
Cash and equivalents $ 3,121 $ 9,341
Short-term investments -- 5,344
Accounts receivable, net of
allowance of $300 and $161 1,752 1,268
Inventories 5,871 3,204
Prepaid expenses and other
current assets 1,514 1,068
-------- --------
Total current assets 12,258 20,225
Property and equipment, net 5,698 2,097
Investments 10,522 14,181
Goodwill, net 2,648 2,751
Other assets 371 360
======== ========
Total assets $ 31,497 $ 39,614
======== ========
Liabilities and Stockholders'
equity Current liabilities:
Accounts payable $ 4,456 $ 1,896
Accrued expenses 1,341 1,169
Current portion of capital
lease obligations 18 18
-------- --------
Total current liabilities 5,815 3,083
Capital lease obligations 27 35
-------- --------
Total liabilities 5,842 3,118
Stockholders' equity:
Preferred stock, $0.001 par
value, 5,000 authorized, none
issued and outstanding -- --
Common stock, $0.001 par value,
50,000 and 50,000 shares
authorized, 11,340 and 11,172
shares issued and outstanding
at July 31, 1999 and
January 31, 1119, respectively
Additional paid-in capital 50,584 50,270
Warrants 12 12
Unrealized loss on investments (64) (47)
Accumulated deficit (24,888) (13,750)
-------- --------
Total stockholders'
equity 25,655 36,496
======== ========
Total liabilities and
stockholders' equity $ 31,497 $ 39,614
======== ========
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