-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WDo65gxSyLCfC5V4jpX7ad2G1Q0qHCy2UOxl85y4ejwU6i4gms5E6RFxMMxjuc3e 6ktpEWDXHnsQS6mWsF4M7A== /in/edgar/work/0000950130-00-006013/0000950130-00-006013.txt : 20001114 0000950130-00-006013.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950130-00-006013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RAZORFISH INC CENTRAL INDEX KEY: 0001075088 STANDARD INDUSTRIAL CLASSIFICATION: [7373 ] IRS NUMBER: 133804503 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25847 FILM NUMBER: 762209 BUSINESS ADDRESS: STREET 1: 32 MERCER STREET CITY: NEW YORK STATE: NY ZIP: 10013 BUSINESS PHONE: 2129665960 MAIL ADDRESS: STREET 1: 32 MERCER STREET CITY: NEW YORK STATE: NY ZIP: 10013 10-Q 1 0001.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 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 000-25847 -------------- RAZORFISH, INC. -------------- (Exact Name of Registrant as Specified in its Charter) Delaware 13-3804503 -------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 32 Mercer Street, 3rd Floor, New York, New York, 10013 ------------------------------------------------------ (Address of Principal Executive Offices, Including Zip Code) (212) 966-5960 -------------- (Registrant's Telephone Number, Including Area Code) N/A -------------- (Former Name, Former Address And Former Fiscal Year, if Changed Since Last Report) Indicated 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 The number of shares outstanding of the Registrant's Class A Common Stock $.01 per value as of November 8, 2000 was 98,275,707. RAZORFISH, INC. QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS Page PART I. FINANCIAL INFORMATION Item 1. Unaudited Interim Consolidated Financial Statements Consolidated Balance Sheets as of December 31, 1999 (audited) and September 30, 2000 1 Consolidated Statements of Operations for the three and nine months ended September 30, 1999 and 2000 2 Consolidated Statements of Cash Flows for the nine months ended September 30, 1999 and 20000 3 Notes to Consolidated Interim Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Qualitative and Quantitative Disclosures about Market Risk 12 PART II. OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes in Securities and Use of Proceeds 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 16 RAZORFISH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
December 31, September 30, 1999 2000 ------------ ------------- (unaudited) ASSETS ------ CURRENT ASSETS: $ 98,798 $ 84,069 Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $1,416 and $2,046 at December 31, 1999 and September 30, 2000, respectively 30,420 45,926 Unbilled revenues 15,667 19,573 Prepaid expenses and other current assets 3,371 9,764 Deferred tax assets 1,225 2,246 Due from affiliate 1,273 1,513 ------------ ------------ Total current assets 151,114 163,091 PROPERTY AND EQUIPMENT, net of accumulated depreciation and 15,428 24,557 amortization of $6,914 and $12,020 at December 31, 1999 and September 30, 2000, respectively INTANGIBLES, net of accumulated amortization of $3,641 and $10,108 at December 31, 1999 and September 30, 2000, respectively 79,233 184,263 LOAN TO AFFILIATE 2,250 2,250 OTHER ASSETS 3,565 11,465 ------------ ------------ Total assets $ 251,590 $ 385,626 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Due to affiliate $ 97 $ - Accounts payable and accrued expenses 36,086 46,240 Income taxes payable 9,132 981 Deferred revenues 2,464 1,483 Deferred rent 604 - Other current liabilities - 3,597 Current portion of long-term obligations 682 111 ------------ ------------ Total current liabilities 49,065 52,412 LONG-TERM OBLIGATIONS 1,760 2,003 MINORITY INTEREST IN JOINT VENTURE - 1,356 DEFERRED TAX LIABILITY 191 2,030 OTHER LIABILITIES 2,221 327 ------------ ------------ Total liabilities 53,237 58,128 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock $.01 par valve; 10,000,000 shares authorized; none issued or outstanding $ - $ - Common Stock: Class A $.01 par value; 200,000,000 shares authorized: 88,811,621 and 98,906,443 issued at December 31, 1999 and September 30, 2000, respectively 888 976 Class B $.01 par value; 50 shares authorized, issued and outstanding at December 31, 1999 and September 30, 2000 - - Receivable from stockholder (533) (533) Additional paid-in-capital 200,297 320,834 Accumulated other comprehensive income 6 (650) Retained earnings (deficit) (1,717) 7,459 Treasury stock at costs; 73,584 shares at December 31, 1999 and September 30, 2000 (588) (588) ------------ ------------ Total stockholders' equity 198,353 327,498 ------------ ------------ Total liabilities and stockholders equity $ 251,590 $ 385,626 ============ ============
The accompanying notes are an integral part of these consolidated financial statements 1 RAZORFISH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands, except per share data)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, 1999 2000 1999 2000 ------------ ------------ ------------ ------------ Revenues $ 44,850 $ 77,078 $ 117,474 $ 217,754 Project personnel costs 21,251 41,634 56,505 107,888 ------------ ------------ ------------ ------------ Gross profit 23,599 35,444 60,969 109,866 Sales and marketing 3,631 6,236 8,581 15,187 General and administrative 12,938 28,504 32,770 73,243 Merger-related costs - - 3,445 - Non-cash compensation expense 108 - 162 - Amortization of intangibles 900 2,315 2,529 6,467 ------------ ------------ ------------ ------------ Income from operations 6,022 (1,611) 13,482 14,969 Other income, net 1,236 723 2,585 2,959 ------------ ------------ ------------ ------------ Income before income taxes 7,258 (888) 16,067 17,928 Provision for income taxes 3,648 (435) 7,586 8,753 ------------ ------------ ------------ ------------ Net income $ 3,610 $ (453) $ 8,481 $ 9,175 ============ ============ ============ ============ Earnings per share: Basic $ .04 $ .00 $ .10 $ .10 ============ ============ ============ ============ Diluted $ .04 $ .00 $ .10 $ .09 ============ ============ ============ ============ Weighted average common shares outstanding: Basic 85,348 95,356 80,787 92,622 Diluted 94,385 99,246 88,654 98,906
2 RAZORFISH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands)
Nine Months Ended September 30, 1999 2000 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income 8,481 9,175 Adjustments to reconcile net income to net cash used in by operating activities-- Allowance for doubtful accounts 687 1,251 Depreciation and amortization 5,354 11,901 Realized gain on sale of investments (166) - Non-cash capital contribution 55 - Non-cash common stock option compensation 162 - Tax benefit due to stock option exercise 1,200 4,911 Minority Interest 26 1,431 Changes in operating assets and liabilities, net of acquisitions: - - Accounts receivable (14,694) (16,757) Unbilled revenues (6,734) (3,906) Prepaid expenses and other current assets (1,090) (6,033) Due from affiliate 934 (240) Other assets (79) (1,530) Accounts payable and accrued expenses 5,881 10,155 Advanced Billings 2,316 - Deferred revenues 506 (981) Increase (decrease) in deferred tax assets (541) (1,021) Deferred tax liabilities 977 1,839 Income taxes payable 561 (8,151) Deferred rent 201 (493) Due to related party (500) (97) Other liabilities (497) 1,189 ------------ ------------ Net cash provided by operating activities 3,040 2,643 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (8,062) (14,236) Acquisition of subsidiaries, net of cash acquired (3,881) (4,911) Earn out payments associated with acquisitions - (1,000) Investments, at cost - (2,000) Loan to affiliate (1,872) - Other (438) - Proceeds from sale of marketable securities 63 - ------------ ------------ Net cash used in investing activities (14,190) (22,147) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options 1,666 5,507 Deferred registration costs 564 (76) Payments under capital lease obligations 123 - Proceeds from officer's loan 350 - Proceeds from Initial Public Offering 77,041 - Proceeds from long term obligations (57) - Proceeds from exercise of Communicade's 10% option 25,303 - Proceeds from bank notes payable (51) - Net borrowings (repayments) under lines of credit (4,838) - Principal payments on long term debt (88) - Repurchase of Treasury Stock (588) - ------------ ------------ Net cash provided by financing activities 99,425 5,431 ------------ ------------ ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 29 (656) ------------ ------------ Net increase (decrease) in cash and cash equivalents 88,304 (14,729) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,227 98,798 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 100,531 $ 84,069 ============ ============ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Income taxes paid 10,276 2,726 Income paid - 148 SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES Fair market value of common stock issued for earn out payments associated with acquisitions - 90,923 Fair market value of common stock issued for acquisitions 54,940 16,996
The accompanying notes are an integral part of these consolidated financial statements 3 RAZORFISH, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS ($ in thousands, except per share amounts) 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Razorfish, Inc. ("Razorfish"), together with its wholly owned subsidiaries (the "Company"), is a leading provider of global digital solutions. Digital solutions are business solutions that use digital technologies to enhance communications and commerce between businesses and their consumers, suppliers, employees, and other partners. These digital solutions utilize a wide variety of platforms, including the World Wide Web, wireless, broadband, and satellite communications and a variety of digital devices and information appliances, including desktop PCs, mobile phones, pagers, personal digital assistants, and backend ERP and legacy systems. The Company thereby creates for its clients digital solutions and designs to help them fundamentally re-architect their business models and identify and improve communications and commerce opportunities. Razorfish currently has offices in New York, Boston, Los Angeles, San Francisco, Santa Clara, Amsterdam, Frankfurt, Hamburg, Helsinki, London, Milan, Munich, Oslo, Stockholm, and Tokyo. On January 12, 2000, the Board of Directors authorized a 2-for-1 stock split of the Company's Class A common stock effected as a 100% stock dividend on January 27, 2000 for stockholders of record on January 20, 2000. All references in the accompanying unaudited interim consolidated financial statements and footnotes have been retroactively restated to give effect to this stock split. Principles of Consolidation The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K, as amended (File No. 000-25847). In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the periods presented. The results of operations presented for the three and nine month periods ended September 30, 1999 and 2000 are not necessarily indicative of the results to be expected for any other interim period or any future fiscal year. SEGMENT REPORTING The Company discloses business segments under SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS No. 131 established standards for the way public business enterprises report information about operating segments in annual financial statements and required those enterprises to report selected information about operating segments in interim financial statements. It also requires disclosures about products and services, geographic areas, and major customers. The Company is a provider of global digital solutions. The Company evaluated its business activities that are regularly reviewed by executive management and the Board of Directors for which discrete financial information is available. As a result of this evaluation, the Company determined that it has one operating segment. ACQUISITIONS On January 24, 2000, Razorfish acquired all of the outstanding stock of Stockholm-based Qb International Holding AB. Under the terms of the acquisition, Razorfish issued 399,284 shares of its Common Stock and paid $2,939,159 in cash to Qb International's stockholders in exchange for the entire equity interest of Qb International Holding AB. Qb is a Swedish IT/Strategic consulting company. The Qb acquisition strengthens Razorfish's expertise in change and knowledge management and will help the company meet the increased demand for its services across Europe by adding 40 billable employees with strong skills in management consulting and systems development. 4 On May 15, 2000, Razorfish issued 140,772 shares of its Common Stock in exchange for substantially all of the net assets of Limage Dangerouse Rotterdam B.V. ("Limage"). Limage is a award winning visual communications agency based in Rotterdam, The Netherlands. Founded in 1986, Limage is mainly focused on the creation of (online-) identities, interactive and graphic design. The Limage acquisition strengthens Razorfish's presence in the Benelux region with premier strategic, creative, and technological capabilities to deliver complex digital solutions and will help the company meet the increased demand for its services across Europe by adding approximately 45 billable employees with strong creative skills. On August 18, 2000 Razorfish issued 446,080 shares of common stock and paid $1.4 million in cash to acquire MediaLab AG, a Munich based e-business solutions provider that specialized in strategy consulting, back end technology and advanced web design. The following unaudited Pro Forma consolidated results of operations reflects the results of operations for the three and nine month periods ended September 30, as if the aforementioned acquisitions had occurred on January 1, 1999.
Three Months Ended Nine Months Ended September 30, September 30, Pro forma 1999 2000 1999 2000 -------- -------- -------- -------- (unaudited) (unaudited) Revenues $ 47,162 $ 78,323 $ 124,373 $ 221,504 Net Income $ 3,627 $ 46 $ 8,561 $ 9,987 Basic earnings per share $ .04 $ .00 $ .09 $ .11 ======== ======== ========= ========= Diluted earnings per share $ .04 $ .00 $ .10 $ .10 ======== ======== ========= =========
On May 17, 2000 Razorfish, Inc. and Intervision Inc. an advertising agency affiliated with Sony Group, entered into a 50/50 joint venture agreement resulting in the incorporation of Intervision-Razorfish, Inc., located in Tokyo. The joint venture with Intervision allows Razorfish rapid entry into the Asia-Pacific region, which current has a strong digital economy that is projected to continue growing, complementing Razorfish's ongoing operations in North America and Europe. In February 2000, Razorfish issued an aggregate of 1,039,946 shares of Common Stock, paid cash of $1.0 million, and agreed to issue 520,054 shares of Common Stock for a total fair value of $72,323 to the former principals of Media, Plastic, and CHBi in consideration for their agreement to amend their respective acquisition agreements to remove the earn-out provisions contained therein. The amounts associated with these transactions were accounted for as additional purchase price and an adjustment to goodwill. EARNINGS PER SHARE Basic earnings per share is calculated as net income divided by the weighted average common shares outstanding. Diluted earnings per share is calculated as net income divided by the weighted average common shares outstanding including the dilutive effects of potential common shares, which include the Company's stock options. 5 A reconciliation of the numerator and denominator of the calculations for the three and nine month periods ended September 30, 2000 and 1999, respectively, is presented below.
Three Months Ended Nine Months Ended September 30, September 30, Diluted EPS Computation 1999 2000 1999 2000 -------- -------- -------- -------- (unaudited) (unaudited) Numerator: Net Income $ 3,610 $ (453) $ 8,481 $ 9,175 Denominator: Weighted common shares outstanding 85,348 95,356 80,787 92,622 Potential common shares; common stock options 9,037 3,890 7,867 6,284 Diluted common and common equivalent shares 94,385 99,246 88,654 98,906 ======== ======== ========= ========= Basic earnings per share $ .04 $ .00 $ .10 $ .10 ======== ======== ========= ========= Diluted earnings per share $ .04 $ .00 $ .10 $ .09 ======== ======== ========= =========
COMPREHENSIVE INCOME The Company accounts for comprehensive income under SFAS No. 130, "Reporting Comprehensive Income." This statement established standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as other financial statements. The components of comprehensive income are as follows:
Three Months Ended Nine Months Ended September 30, September 30, Diluted EPS Computation 1999 2000 1999 2000 -------- -------- --------- --------- (unaudited) (unaudited) Net income $ 3,610 $ (453) $ 8,481 $ 9,175 Foreign currency translation adjustment 38 (1,247) (79) (656) -------- -------- --------- --------- Comprehensive income (loss) $ 3,648 $ (1,700) $ 8,591 $ 8,519 ======== ======== ========= =========
LEGAL PROCEEDINGS On March 17, 2000, a legal action was commenced against the Company by a former consultant of a wholly owned subsidiary for, amongst other things, breach of contract. The Company is reviewing the action and believes that the allegations are baseless and without merit in law or fact. No assurance can be given, however, that this matter will be resolved in the Company's favor. On July 14, 2000, the Company was served with a complaint by IAM.com that alleges that the Company did not fulfill its duties in connection with work performed for IAM.com for recovery of monies owed under the contract. The Company disputes IAM.com's allegations and believes that IAM.com's action is without merit in law or fact. No assurances can be given, however, that this matter will be resolved in the Company's favor. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards of derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. This 6 statement is effective for all quarters of fiscal years beginning after June 15, 1999. In July 1999, the FASB issues SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of FASB No. 133, "which amends SFAS No. 133 effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138 "Accounting for Certain Hedging Activities, an amendment of FASB Statement No. 133", effective for all interim and annual periods beginning after June 15, 2000. As indicated, SFAS No. 138 amend accounting and reporting standards for certain derivative instruments and certain hedging activities. Razorfish does not expect the adoption of these standards to have a material effect on the results of consolidated operations, financial position or cash flows. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements," which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC. SAB 101 was effective the first fiscal quarter of fiscal years beginning after December 15, 1999 and requires companies to report any changes in revenue recognition as a cumulative change in accounting principle at the time of implementation in accordance with Accounting Principles Board Opinion 20, "Accounting Changes". In June 2000, the SEC issued SAB 101B, "Amendment: Revenue Recognition in Financial Statements," which delayed implementation of SAB 101 until Razorfish's fourth fiscal quarter of 2000. Razorfish does not expect the implementation of SAB 101 to have a material effect on the results of consolidated operations, financial position, or cash flows. In March 2000, the Financial Accounting Standard Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation -- an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44 clarifies the application of APB Opinion No. 25 and among other issues clarifies the following: the definition of an employee for purposes of applying APB Opinion No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Razorfish has adopted FIN 44 with no known reportable changes n the Company's financial position or results of operations. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion of the financial condition and results of operations of Razorfish should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, and actual results could be significantly different than those discussed in this Quarterly Report on Form 10-Q. All forward-looking statements included in this document are made as of the date hereof, and the risk factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 were made as of the date thereof, based on information available to the Company on the date thereof, and the Company assumes no obligation to update any forward-looking statements or risk factors. Overview Razorfish is a leading provider of global digital solutions. Digital solutions are business solutions that use digital technologies to enhance communications and commerce between businesses and their consumers, suppliers, employees, and other partners. Razorfish provides an integrated, end-to-end solution. Razorfish's strategy involves creative and technology professionals carrying out every aspect of a solution from strategic consulting to design of information architectures and user-interfaces to integration of backend Enterprise Resource Planning (ERP) and legacy systems. These digital solutions utilize a wide variety of platforms, including the World Wide Web, wireless, broadband and satellite communications and a variety of digital devices and information appliances, including desktop PCs, mobile phones, pagers and personal digital assistants. Razorfish thereby creates for its clients digital solutions designed to help them re-architect their traditional business models and identify and improve communications and commerce opportunities. Razorfish derives substantially all of its revenues from fees for services generated on a project-by-project basis. Razorfish's services are provided on both a fixed-time, fixed-price basis and on a time and materials basis. 7 Razorfish recognizes revenues for both time and materials-based arrangements and fixed-time, fixed-price arrangements on the percentage-of-completion method of accounting based on the ratio of costs incurred to total estimated costs. In developing the fixed price of a project, Razorfish follows a process that assesses the technical complexity of the project, the nature of the work, the functions to be performed and the resources required to complete the engagement. Razorfish periodically reassesses its estimated costs for each project, and provisions for estimated losses on unfinished projects are recorded in the period in which such losses are determined. To date, such losses have not been significant. Revenues exclude reimbursable expenses charged to clients. Agreements entered into in connection with time and materials projects are generally terminable by the client upon 30-days' prior written notice, and clients are required to pay Razorfish for all time, materials and expenses incurred by Razorfish through the effective date of termination. Agreements entered into in connection with fixed-time, fixed-price projects, are generally terminable by the client upon payment for work performed and the next progress payment due. If clients terminate existing agreements or if Razorfish is unable to enter into new engagements, Razorfish's business, financial condition, and results of operations could be materially and adversely affected. In addition, because a proportion of Razorfish's expenses is relatively fixed, a variation in the number of client engagements can cause significant variations in operating results from quarter to quarter. Razorfish's projects vary in size and scope; therefore, a client that accounts for a significant portion of Razorfish's revenues in one period may not generate a similar amount of revenue in subsequent periods. No client accounted for more than 10.0% of Razorfish's revenues in the periods ended December 31, 1999 or September 30, 2000. Razorfish does not believe that it will derive a significant portion of its revenues from a limited number of clients in the near future. However, there is a risk that the source of Razorfish's revenues may be generated from a small number of clients. These clients may not retain Razorfish in the future. Any cancellation, deferral, or significant reduction in work performed for these principal clients or a significant number of smaller clients could have a material adverse affect on Razorfish's business, financial condition, and results of operations. Operating and other expenses Razorfish's project personnel costs consist primarily of compensation and related costs of personnel dedicated to customer assignments. Project personnel costs also include fees paid to subcontractors for work performed in connection with projects and non-reimbursed project travel expenses. Razorfish's selling and marketing costs consist primarily of compensation and related costs of sales and marketing personnel, travel expenses, and marketing programs and promotion costs. Razorfish's general and administrative costs consist primarily of compensation and related costs of the management and administrative functions, including finance and accounting, human resources and internal information technology, and the costs of Razorfish's facilities and other general corporate expenses. Seasonality In general, the laws of the European countries in which Razorfish operates mandate that all employees receive significantly more vacation days than in the United States. For example, in Sweden, each employee must receive a minimum of 25 days paid vacation per year. These vacations are typically taken in the third quarter, resulting in declining revenues during this period due to a reduction in both billable hours and client demand. Quarter-to-quarter fluctuations in margins The Company's operating results and quarter-to-quarter margins may fluctuate in the future as a result of many factors, some of which are beyond the Company's control. Historically, the Company's quarterly margins have been impacted by: . the number of client engagements undertaken or completed; . a change in the scope of ongoing client engagements; 8 . seasonality; . a shift from fixed-fee to time and materials-based contracts; . the number of days during the quarter; . utilization rates of employees; . marketing and business development expenses; . charges relating to strategic acquisitions; . pricing changes in the information technology services market; and . economic conditions generally or in the information technology services market. The Company expects this trend to continue. Results of operations Three Months Ended September 30, 2000 Compared to the Three Months Ended September 30, 1999 Revenues The Company's revenues increased $32.2 million, or 72%, to $77.1 million for the three months ended September 30, 2000 from $44.9 million for the comparable period in 1999. This increase in revenue was primarily due to the growth of the Company's offices as a result of the increase in the number of projects, an increase in the billing rates of the Company's employees, and revenues related to the acquisitions that were made in the previous nine months. Project personnel costs The Company's project personnel costs increased $20.4 million, or 96%, to $41.6 million for the three months ended September 30, 2000 from $21.3 million for the comparable in period in 1999. This increase was due to an increase in personnel required to service the company's expanding projects. Sales and marketing The Company's sales and marketing costs increased $2.6 million, or 72%, to $6.2 million for the three months ended September 30, 2000 from $3.2 million for the comparable period in 1999. The increase in sales and marketing costs in absolute dollar terms was primarily due to an increase in the number of personnel who spend a portion of their time on sales and marketing activities and an increase in spending on promotional activities. General and administrative The Company's general and administrative expenses increased $15.6 million, or 121%, to $28.5 million for the three months ended September 30, 2000 from $12.9 million for the comparable period in 1999. The increase in general and administrative expenses was a result of the increase in the number of non-billable employees and an increase in other types of general and administrative expenses, such as salaries and bonuses, rent expense, equipment rental, and depreciation necessary to maintain company growth and efficiency. Amortization of intangibles Amortization of intangibles for the Company was $2.3 million for the three months ended September 30, 2000 compared to $.9 million for the comparable period in 1999. This increase was due to the amortization of intangibles resulting from the purchase of Qb in January 2000, the purchase of MediaLab in August 2000, acquisitions closed in the second, third and fourth quarters of 1999, and the consideration paid to the principles of three companies 9 acquired by the Company in previous years to amend their respective acquisition agreements to remove the earn-out provisions contained therein. Income Taxes The effective income tax rate was 50% and 49% for the three months ended September 30, 2000 and 1999, respectively, the effective tax rate for the periods was primarily the result of non-tax deductible expenses, including amortization of intangible and non-cash compensation expense. Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30, 1999. Revenues The Company's revenues increased $100.3 million, or 85%, to $217.8 million for the nine months ended September 30, 2000 from $117.5 million for the comparable period in 1999. This increase in revenue was primarily due to the growth of the Company's offices as a result of the increase in the number of projects, an increase in the billing rates of the Company's employees, and revenues related to the acquisitions that were completed in the last twelve months. Project personnel costs The Company's project personnel costs increase $51.4 million, or 91%, to $107.9 million for the nine months ended September 30, 2000 from $56.5 million for the comparable period in 1999. This increase was due to an increase in personnel required to service the company's increasing project and client base. Sales and marketing The Company's sales and marketing costs increased $6.6 million, or 77%, to $15.2 million for the nine months ended September 30, 2000 from $8.6 million for the comparable period in 1999. The increase in sales and marketing costs was primarily due to an increase in the number of personnel who spend a portion of their time on sales and marketing activities and an increase in spending on promotional activities. General and administrative The Company's general and administrative expenses increased $40.5 million, or 124%, to $73.2 million for the nine months ended September 30, 2000 from $32.8 million for the comparable period in 1999. The increase in general and administrative expenses was a result of the increase in the number of non- billable employees and an increase in other types of general and administrative expenses, such as salaries and bonuses, rent expense, equipment rental, and depreciation that are necessary expenses to maintain company growth and efficiency. Amortization of intangibles Amortization of intangibles for the Company was $6.5 million for the nine months ended September 30, 2000 compared to $2.5 million for the comparable period in 1999. This increase was due to the amortization of intangibles resulting from the purchase of Qb in January 2000, Limage in May 2000, MediaLab in August 2000, acquisitions closed in the second, third and fourth quarters of 1999, and the consideration paid to the principles of six companies acquired by the Company in previous years to amend their respective acquisition agreements to remove the earn-out provisions contained therein. Income Taxes The effective income tax rate was 48% and 47% for the nine months ended September 30, 2000 and 1999, respectively, the effective tax rate for the periods was primarily the result of non-tax deductible expenses, including amortization of intangibles and non-cash compensation expense. 10 Liquidity and Capital Resources Razorfish believes that cash generated by operations combined with the proceeds of its initial public offering will be sufficient to meet its working capital needs for the next twelve months. The Company's net cash provided by operating activities was $2.6 million for the nine months ended September 30, 2000 compared to net cash provided by operating activities of $3.0 million for the nine months ended September 30, 1999. The decrease in net cash used in operating activities during the period ended September 30, 2000 when compared to the same period ending September 30, 1999 was mainly due to an increase in accounts receivable, prepaid expenses. The Company's net cash used in investing activities was $20.1 million for the nine months ended September 30, 2000 compared to $14.2 million for the nine months ended September 30, 2000. Net cash used in investing activities for the period ended September 30, 2000 was mainly due to capital expenditures of $14.2 million, and $4.9 million used for the acquisition of subsidiaries. Net cash used in investing activities for the period ended September 30, 1999 was mainly due to capital expenditures of $8.1 million, and $3.9 million used for acquisitions net of cash acquired. The Company's net cash provided by financing activities was $5.4 million for the nine months ended September 30, 2000 compared to $99.4 million for the nine months ended September 30, 1999. Net cash provided for the period ended September 30, 2000 was mainly due to proceeds received from the exercise of stock options of $5.5 million. Net cash provided from financing activities for the period ended September 30, 1999 was mainly due to $77.1 million in proceeds from the initial public offering and $25.3 in proceeds from the exercise of Communicade's 10% option. Capital expenditures, earn-out payments and rent expenses Razorfish's capital expenditures for the period ended September 30, 2000 were $14.2 million compared to $8.1 million for the comparable period in 1999. The increase in capital expenditures during 2000 was due primarily to leasehold improvements made to Razorfish's leased office space and to purchase computer hardware and software and furniture and fixtures. In February 2000, Razorfish issued an aggregate of 1,039,946 shares of Common Stock, paid cash of $1.0 million, and agreed to issue 520,054 shares of Common Stock for a total fair value of $72,323 to the former principals of Media, Plastic, and CHBi in consideration for their agreement to amend their respective acquisition agreements to remove the earn-out provisions contained therein. The amounts associated with these transactions were accounted for as additional purchase price and an adjustment to goodwill. Currency fluctuation and the euro conversion Razorfish does not believe that it is subject to material currency fluctuations as a result of its international operations. Revenues from the operations of its European subsidiaries are currently denominated primarily in the applicable local currencies. Razorfish does not plan to repatriate such revenues to the United States in the foreseeable future. However, no assurance can be given that the quarterly results will not be impacted in the future, for financial reporting purposes only, due to the conversion into dollars of non-dollar denominated revenues. Eleven of the fifteen member states of the European Union have agreed to adopt the euro as their common legal currency. On January 1, 1999, these members began the process of converting their native currencies to the euro, and on that date the euro commenced trading on currency exchanges and became available for non-cash transactions. For the period from January 1, 1999 to January 1, 2002, both the euro and the native currencies will be legal tender in the participating member states. During this period, the conversion rates for currencies will be determined by a formula that has been established by the European Commission. On January 1, 2002, new euro-denominated bills and coins will be fully deployed and all native bills and coins will be withdrawn by July 1, 2002. In addition, as of January 1, 1999, the new European Central Bank gained the authority to direct monetary policy with respect to the euro, including money supply and official interest rates for the euro. Some of the rules and regulations with regard to the euro have yet to be promulgated and completed by the European Commission. 11 While the United Kingdom and Sweden, two of the countries in which Razorfish operates, are members of the European Union, they are not participating in the euro conversion; however, they may elect to convert to the euro at a later date. Risks related to the conversion to the euro may not impact Razorfish directly, but could have a materially adverse effect on its clients' businesses, which could have an indirect effect on their demand for Razorfish's services. Razorfish's management does not believe that the conversion to the euro will have a material or adverse impact on its business. Recent Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards of derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. This statement is effective for all quarters of fiscal years beginning after June 15, 1999, In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of FASB No. 133," which amends SFAS No. 133 effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138 "Accounting for Certain Hedging Activities, an amendment of FASB Statement No. 133," effective for all interim and annual periods beginning after June 15, 2000. As indicated, SFAS No. 138 amends accounting and reporting standards for certain derivative instruments and certain hedging activities. The Company does not expect the adoption of these standards to have a material effect on the Company's results of consolidated operations, financial position, or cash flows. In December 1999, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial Statements," which provides guidance related to revenue recognition based on interpretations and practices followed by the SEC. SAB 101 was effective the first fiscal quarter of fiscal years beginning after December 15, 1999 and requires companies to report any changes in revenue recognition as a cumulative change in accounting principle at the time of implementation in accordance with Accounting Principles Board Opinion 20, "Accounting Changes". In June 2000, the SEC issued SAB 101B, "Amendment: Revenue Recognition in Financial Statements," which delayed implementation of SAB 101 until Razorfish's fourth fiscal quarter of 2000. Razorfish does not expect the implementation of SAB 101 to have a material effect on its financial position or results of operations. In March 2000, the Financial Accounting Standard Board issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44 clarifies the application of APB Opinion No. 25 and among other issues clarifies the following: the definition of an employee for purposes of applying APB Opinion No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Razorfish has adopted FIN 44 with no known reportable changes in the Company's financial position or results of operations. Item 3. Qualitative and Quantitave Disclosures about Market Risk - Not applicable. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On March 17, 2000, a legal action was commenced against the Company by a former consultant of a wholly owned subsidiary for, amongst other things, breach of contract. The Company is reviewing the action and believes that the allegations are baseless and without merit in law or fact. No assurance can be given, however, that this matter will be resolved in the Company's favor. On July 14, 2000, the Company was served with a complaint by IAM.com that alleges that the Company did not fulfill its duties in connection with work performed for IAM.com. The Company has sued IAM.com for recovery of monies owed under the contract. The Company disputes IAM.com's allegations and believes that IAM.com's action is without merit in law or fact. No assurances can be given, however, that this matter will be resolved in the Company's favor. 12 Item 2. CHANGE IN SECURITIES AND USE OF PROCEEDS -- Not applicable. Item 3. DEFAULTS UPON SENIOR SECURITIES -- Not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting ("Annual Meeting") of Stockholders of Razorfish was held on July 6, 2000. The 82,138,814 shares of Common Stock ("Common Stock") present at the Annual Meeting out of a then total of 94,161,724 shares outstanding and entitled to vote acted as follows with respect to the following proposals: Approved, by a vote of 81,750,315 shares of Common Stock for and 388,499 shares against the election of Jeffrey A. Dachis as a director of Razorfish; 80,119,774 shares stock for and 2,019,040 shares against the election of Craig M. Kanarick as a director of Razorfish, 80,131,972 shares of Common Stock for and 2,006,842 shares against the election of Michael S. Simo as a director of Razorfish, 80,397,049 shares of Common Stock for and 1,741,765 shares against the election of Carter F. Bales as a director of Razorfish, 81,752,293 shares of Common Stock for and 386,521 shares against Pat A. Loconto as a director of Razorfish. In addition, no shares of Common Stock represented at the Meeting for other purposes withheld or abstained from a response to this item. Rejected, by a vote of 15,850,910 shares of Common Stock for and 36,053,598 against the Amendment of the 1999 Stock Incentive Plan to increase the number of shares reserved for issuance under the 1999 Stock Incentive Plan by 14,778,100 shares to 21,902,912 shares. 60,824 shares abstained from voting on this Matter, and holders of 30,173,482 shares represented at the meeting for other purposes withheld a response on this item. Item 5. OTHER INFORMATION -- None Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger, dated as of August 10, 1999, by and between Razorfish, Razorfish Merger Sub and i-Cube.(2) 3.1 Certificate of Incorporation of Razorfish, Inc. (the "Company"), as amended.(2) 3.2 By-laws of Razorfish.(1) 4.1 Stockholders Agreement, dated as of October 1, 1998, among Razorfish, Spray Ventures, Communicade, Jeffrey A. Dachis and Craig M. Kanarick.(1) 4.2 Amendment to Stockholders Agreement, dated February 3, 1999, among Razorfish, Spray Ventures, Communicade, Jeffrey A. Dachis and Craig M. Kanarick.(1) 4.6 Registration Rights Agreement, dated March 30, 1999, between Razorfish and Communicade Inc.(1) 4.7 Specimen Common Stock Certificate of Razorfish.(1) 10.1 The Amended and Restated 1997 Stock Option and Incentive Plan.(1) 10.2 1999 Amended and Restated Stock Incentive Plan.(2) 10.3 Employment Agreement, dated September 18, 1996, between Razorfish and Jeffrey A. Dachis.(1) 10.4 Non-competitive Agreement, dated September 18, 1996, between Razorfish and Jeffrey A. Dachis.(1) 13 10.5 Employment Agreement, dated September 18, 1996, between Razorfish and Craig M. Kanarick.(1) 10.6 Non-competitive Agreement, dated September 18, 1996, between Razorfish and Craig M. Kanrick.(1) 10.7 Employment Agreement, dated June 19, 1997, between Razorfish and Jean-Philippe Maheu.(1) 10.8 Employment Agreement, dated June 1, 1997, between Razorfish and Evan Orensten.(1) 10.9 Employment Agreement, dated October 1, 1998, between Razorfish and Por Bystedt.(10) 10.10 Employment Agreement, dated October 1, 1998, between Razorfish and Jonas Svensson.(1) 10.11 Employment Agreement, dated August 10, 1999, between Razorfish and Michael Pehl.(4) 10.12 Letter Agreement, dated as of August 9, 1999, between Razorfish and Lawrence P. Begley.(4) 10.13 Lease Agreement, dated October 28, 1996, between Razorfish and Man Yun Real Estate Corporation.(1) 10.14 Lease Agreement, dated April 30, 1997, between Razorfish and Man Yun Real Estate Corporation.(1) 10.15 Lease Agreement, dated December 23, 1998, between C.H.B.I. Razorfish Limited and the Mayor and Commonality and Citizens of the City of London.(1) 10.16 Lease Agreement, dated March 10, 1998, between J&R Bechelli and Alpha Online, Inc., as amended by letter dated February 9, 1999.(1) 10.17 Lease Agreement No. 731 100, dated April 12, 1996, between Spray (f/k/a Spray Interactive Media Agency AB) and Bojner Estate AB ("Bojner") and the English translation thereof.(1) 10.18 Lease Agreement No. 741 100, dated September 30, 1997, between Spray (f/k/a Spray Interactive Media Agency AB) and Bojner Estate AB ("Bojner") and the English translation thereof.(1) 10.19 Lease Contract No. 01009 001 024 ("Trygg-Hansa Lease"), dated April 30, 1998, between Spray and Trygg-Hansa ("Trygg-Hansa") and the English translation thereof.(1) 10.20 Supplement No. 1, dated April 30, 1998, to Trygg-Hansa Lease and the English translation thereof.(1) 10.21 Supplement No.2, dated August 18, 1998, to Trygg-Hansa Lease and the English translation thereof.(1) 10.22 Personal Guarantee for Premises, dated April 29, 1998, made by Lars T. Andersson and per Bystedt in favor of Trygg-Hansa with respect to Trygg- Hansa Lease and the English translation thereof.(1) 10.23 Personal Guarantee for Premises, dated April 29, 1998, made by Johan Ihrfelt and Jonas Svensson in favor of Trygg-Hansa with respect to Trygg-Hansa Lease and the English translation thereof.(1) 10.24 Rent Contract Covering Business Premises, dated February 3, 1998, between Spray Interactive Media AB and DEGI Deutsche Gesellschaft fur Immobilienfonds mbH and the English translation thereof.(1) 10.25 Rental Agreement for Office Space No. 910539, dated April 25, 1997, between Spray Interactive Media Oy and Valtion Kuenteistolaitos (State real property Authority)/Uusimaa ("State Real Property Authority") and the English translation thereof.(1) 10.26 Rental Agreement for Office Space No. 910539, dated May 14, 1997, between Spray Interactive Media Oy and State Real Property Authority and the English translation thereof.(1) 14 10.27 Lease Contract, dated June 17, 1998, between Spray Geelmuyden, Kiese A.S. and Kongensgate 2 ANS and the English translation thereof.(1) 10.28 Subscription and Exchange Agreement, dated as of October 1, 1998, among Razorfish, Spray Ventures AB and Communicade.(1) 10.29 First Amendment of the Subscription and Exchange Agreement, dated November 25, 1998, among Razorfish, Spray Ventures AB, Spray Network AB and Communicade.(1) 10.30 Second Amendment to the Subscription and Exchange Agreement, dated December 10, 1998, among Razorfish, Spray Ventures AB, Spray Network AB and Communicade.(1) 10.31 Stock Purchase Agreement, dated as of October 1, 1998, among Communicade, Jeffrey A. Dachis and Craig M. Kanarick.(1) 10.32 Stock Purchase Agreement, dated October 23, 1998, among Communicade and Spray Ventures AB.(1) 10.33 Amendment to Stock Purchase Agreement, dated December 10, 1998, between Communicade and Spray Ventures AB.(1) 10.34 Loan Agreement, dated September 18, 1996, between Razorfish and Omnicom Finance Inc.(1) 10.35 Forms of Voting Agreements.(2) 10.36 Letter Agreement dated August 8, 1995 between i-Cube and Silicon Valley Bank.(2) 10.37 Promissory Note dated August 8, 1998 between i-Cube and Silicon Valley Bank.(2) 10.38 Commercial Security Agreement dated August 8, 1995 between i-Cube and Silicon Valley Bank.(2) 10.39 Negative Pledge Agreement dated August 8, 1995 between i-Cube and Silicon Valley Bank.(2) 10.40 Letter Agreement dated October 7, 1996 between i-Cube and Silicon Valley Bank.(2) 10.41 Promissory Note dated July 31, 1997 between i-Cube and Silicon Valley Bank.(2) 10.42 Loan Modification Agreements between Registrant and Silicon Valley Bank dated August 6, 1996, August 7, 1996 and August 28, 1997, respectively.(2) 10.43 Lease Agreement dated November 20, 1996 between i-Cube, RR&C Development Company and Patrician Associates, Inc.(2) 10.44 Lease Agreement dated as of July 14, 1995 between i-Cube and Riverfront Office Park Joint Venture.(2) 10.45 Amendment No. 1 to Lease Agreement dated as of July 14, 1995 between i-Cube and Riverfront Office Park Joint Venture.(2) 10.46 Sublease dated as of June 19, 1995 between i-Cube and MathSoft Inc.(2) 18.1 Letter re: Resignation of Certifying Accountant.(3) 18.2 Letter re: Appointment of New Certifying Accountant.(5) 21.1 Subsidiaries of Razorfish.(4) 27.1 Financial Data Schedule. 15 (1) Filed as an exhibit to Razorfish's Registration Statement on Form S-1 or amendments thereto declared effective by the Securities and Exchange Commission on April 26, 1999 (File No. 333-71043) and incorporated herein by reference. (2) Filed as an exhibit to Razorfish's Registration Statement on Form S-4 or amendments thereto declared effective by the Securities and Exchange Commission on October 1, 1999 (File No. 333-87031) and incorporated herein by reference. (3) Filed as an exhibit to Razorfish's Report on Form 8-K that was filed with the Securities and Exchange Commission on June 30, 2000 and incorporated herein by reference. (4) Filed as an exhibit to Razorfish's Report on Form 10-K that was filed with the Securities and Exchange Commission on March 30, 2000 and incorporated herein by reference. (5) Filed as an exhibit to Razorfish's Report on Form 8-K that was filed with the Securities and Exchange Commission on July 25, 2000 and incorporated herein by reference. (b) Reports on Form 8-K: On each of June 30, 2000 and July 25, 2000, the Company Filed forms 8-K to report the resignation of PricewaterhouseCoopers as the Company's Independent Certified Public Accountant and the appointment of Arthur Andersen, LLP as the Company's Independent Certified Public Accountant. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly cause this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, state of New York, on November 13, 2000. RAZORFISH, INC. By: /s/ Jeffrey A. Dachis ----------------------------- Jeffrey A. Dachis President and Chief Executive Officer By: /s/ John J. Roberts ----------------------------- John J. Roberts Chief Financial Officer (Principal Financial and Accounting Officer) 16 EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Balance Sheet at September 30, 2000 (unaudited) and The Interim Consolidated Statement of Operations for the nine months ended September 30, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 84,069 0 47,972 2,046 0 163,091 36,577 12,020 385,626 52,412 0 0 0 976 326,522 385,626 217,754 217,754 107,888 202,785 0 0 0 0 8,753 0 0 0 0 9,175 .10 .09
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