-----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, VrnDvzrQqASpOAtl/mWd6wwvf9IUMJ5wTr6j2sN6SaNTcdfSXZc6fkffa2Ax0L1j 9UAyWg09a7pvp6hrW6SU2A== 0000912057-99-006242.txt : 19991117 0000912057-99-006242.hdr.sgml : 19991117 ACCESSION NUMBER: 0000912057-99-006242 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: A D A M SOFTWARE INC CENTRAL INDEX KEY: 0000863650 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 581878070 STATE OF INCORPORATION: GA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-26962 FILM NUMBER: 99756457 BUSINESS ADDRESS: STREET 1: 1600 RIVEREDGE PARKWAY STREET 2: STE 800 CITY: ATLANTA STATE: GA ZIP: 30328 BUSINESS PHONE: 7709800888 MAIL ADDRESS: STREET 1: 1600 RIVEREDGE PKWY STREET 2: STE 800 CITY: ATLANTA STATE: GA ZIP: 30328 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM 10-Q /X/ QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1999 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: 0-26962 ------------------------ ADAM.COM, INC. (Exact Name of Registrant as specified in its charter) GEORGIA 58-1878070 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1600 RIVEREDGE PARKWAY, SUITE 800 30328 ATLANTA, GEORGIA (Zip Code) (Address of principal executive offices)
770-980-0888 (Registrant's telephone number, including area code) A.D.A.M. SOFTWARE, INC. (Former name or former address, if changed since last report) 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. YES _X_ NO ____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of November 15, 1999 there were 4,825,736 shares of the Registrant's Common Stock, par value $.01 per share, outstanding (excluding shares held in treasury by the Registrant). ADAM.COM, INC. INDEX PART I--FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheet at September 30, 1999 and March 31, 1999.......................................... 3 Condensed Consolidated Statement of Operations For the Three and Six Months Ended September 30, 1999 and 1998............ 4 Condensed Consolidated Statement of Cash Flows For the Six Months Ended September 30, 1999 and 1998.................... 5 Statement of Changes in Shareholders' Equity For the Six Months Ended September 30, 1999.......................................... 6 Notes to Condensed Consolidated Financial Statements........ 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 9 ITEM 3. Quantitative and Qualitative Disclosure about Market Risk... 15
PART II--OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders......... 15 ITEM 6. Exhibits and Reports on Form 8-K............................ 16
2 PART I: FINANCIAL INFORMATION ITEM I: FINANCIAL STATEMENTS ADAM.COM, INC. CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
SEPTEMBER 30, MARCH 31, 1999 1999 ------------- --------- ASSETS Current assets: Cash and cash equivalents................................. $2,745 $2,369 Investment Securities..................................... -- 3,792 Accounts receivable (net of allowances of $114 and $373, respectively)........................................... 755 950 Inventories............................................... 329 292 Prepaids and other........................................ 455 164 ------ ------ Total current assets.................................. 4,284 7,567 Property and equipment, net................................. 1,385 644 Restricted certificate of deposit........................... 476 522 Intangible assets, net...................................... 2,092 237 Other non-current assets.................................... 180 -- ------ ------ Total Assets $8,417 $8,970 ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 865 $ 332 Other accrued liabilities................................. 1,020 842 ------ ------ Total current liabilities............................. 1,885 1,174 Shareholders' Equity: Convertible preferred stock, no par value; 10,000,000 shares authorized; 0 Series A shares issued and outstanding.................. -- -- Common Stock, $.01 par value; 20,000,000 authorized; 5,400,581 and 5,285,747 shares issued and outstanding..... 54 53 Other shareholders' equity.................................. 6,478 7,743 ------ ------ Total liabilities and shareholders' equity $8,417 $8,970 ====== ======
The accompanying notes are an integral part of these financial statements. 3 ADAM.COM, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS SIX MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, ------------------- ------------------- 1999 1998 1999 1998 -------- -------- -------- -------- Net Internet Revenues............................... $ 181 $ -- $ 213 $ -- Net Product Revenues................................ 903 1,402 1,672 3,151 ------- ------ ------- ------ Total Revenues.................................. 1,084 1,402 1,885 3,151 ------- ------ ------- ------ Operating expenses: Cost of revenues.................................. 197 383 392 714 Sales and marketing............................... 824 630 1,516 1,270 Product and content development................... 1,728 239 2,890 474 General and administration........................ 1,294 538 2,449 988 ------- ------ ------- ------ Total operating expenses........................ 4,043 1,790 7,247 3,446 ------- ------ ------- ------ Operating loss.................................. (2,959) (388) (5,362) (295) Interest income, net.............................. 61 108 131 223 ------- ------ ------- ------ Loss before income taxes and minority interest...................................... (2,898) (280) (5,231) (72) Minority interest in consolidated subsidiary...... 105 -- 142 -- Income tax expense................................ -- -- -- -- ------- ------ ------- ------ Net loss............................................ $(2,793) $ (280) $(5,089) $ (72) ======= ====== ======= ====== Basic and Diluted net loss per common share......... $ (0.59) $(0.06) $ (1.10) $(0.02) ======= ====== ======= ====== Weighted average number of common shares outstanding....................................... 4,759 4,569 4,641 4,614 ======= ====== ======= ======
The accompanying notes are an integral part of these financial statements. 4 ADAM.COM, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED SEPTEMBER 30, ------------------- 1999 1998 -------- -------- (IN THOUSANDS) Net cash used in operating activities....................... $(4,281) $ (283) ------- ------- Investing activities Purchases of property and equipment....................... (950) (177) Purchases of investment securities........................ -- (13,228) Proceeds from maturity of investment securities........... 3,762 14,380 Purchase of restricted time deposit....................... (297) -- Redemption of restricted time deposit..................... 345 -- Software development costs................................ (6) (317) Acquisitions of intangible assets......................... (50) -- ------- ------- Net cash provided by investing activities................. 2,804 658 ------- ------- Financing activities Repurchase of common stock................................ -- (618) Proceeds from related party for interest in consolidated subsidiary.............................................. 125 -- Proceeds from exercise of common stock options and warrants................................................ 1,728 2 ------- ------- Net cash provided by (used by) financing activities....... 1,853 (616) ------- ------- Increased (decrease) in cash and cash equivalents........... 376 (241) Cash and cash equivalents, beginning of period.............. 2,369 704 ------- ------- Cash and cash equivalents, end of period.................... $ 2,745 $ 463 ======= =======
The accompanying notes are an integral part of these financial statements. 5 ADAM.COM, INC. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
COMMON STOCK ADDITIONAL COMMON -------------------- PAID-IN STOCK ACCUMULATED TREASURY SHARES AMOUNT CAPITAL WARRANTS DEFICIT STOCK TOTAL --------- -------- ---------- -------- ----------- -------- -------- BALANCE AT MARCH 31, 1999.......... 5,285,747 $53 $33,911 $135 $(24,117) $(2,186) $7,796 Exercise of common stock options and warrants..................... 114,834 1 1,379 (34) -- 401 1,747 Re-issuances of common stock for acquisitions..................... -- -- 1,797 -- -- 281 2,078 Net loss........................... -- -- -- -- (5,089) -- (5,089) --------- --- ------- ---- -------- ------- ------ BALANCE AT SEPTEMBER 30, 1999...... 5,400,581 $54 $37,087 $101 $(29,206) $(1,504) $6,532 ========= === ======= ==== ======== ======= ======
The accompanying notes are an integral part of these financial statements. 6 ADAM.COM, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1999 1. BASIS OF PRESENTATION adam.com, Inc. ("adam.com" or the "Company"), formerly A.D.A.M. Software, Inc., is a developer of health education content and software technologies, and since January 1999, the Company has taken steps to become a leading provider of health, medical and wellness information online. The Company had historically created, published and marketed multimedia software products, content and Internet-ready applications providing anatomical, medical and health-related information for the education, consumer and professional markets. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, the general instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying financial statements include the accounts of the Company and thePort.com, Inc., an affiliated entity that the Company controls through a financial and operational interest. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month or six-month periods ended September 30, 1999 are not necessarily indicative of the results that may be expected for the year ended March 31, 2000. For further information, refer to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 1999, which includes audited financial statements for the year ended March 31, 1999. Certain amounts in the prior years' financial statements have been reclassified to conform to the current year presentation. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. 2. INTANGIBLE ASSETS During the three months ended September 30, 1999, the Company completed the acquisitions of certain intellectual and intangible assets from drgreene.com and Information Medical Systems, Inc. for an aggregate amount of approximately $2,088,000 through the issuance of 104,000 shares of common stock. The purchase price for the two acquisitions are being amortized over the estimated useful lives of the assets of two and five years, respectively. Prior to the current quarter ended September 30, 1999, intangible assets consisted entirely of capitalized software product costs. Capitalized software development costs as of September 30, 1999 totaled approximately $157,000. 3. LOSS PER COMMON SHARE The Company computes basic loss per share based upon the weighted average number of issued common shares for each period. Diluted loss per share is based upon the addition of the effect of common stock equivalents (stock options and warrants) to the denominator of the basic loss per share calculation, using the treasury stock method, if their effect is dilutive. 4. INVESTMENT AND RELATED PARTY TRANSACTION In May 1999, the Company acquired a preferred stock interest in thePort.com, for $250,000 in cash representing a 40% voting interest. The Company's chairman also invested $125,000 in this entity for a 7 ADAM.COM, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) SEPTEMBER 30, 1999 4. INVESTMENT AND RELATED PARTY TRANSACTION (CONTINUED) 20% voting interest. The results of operations of this entity, which are not significant at this time, have been accounted for as a majority owned subsidiary and accordingly the results of operations, net of the minority interest, are included in the condensed consolidated financial statements of the Company. 5. LEGAL PROCEEDINGS On April 25, 1996, a class action lawsuit in Fulton County Superior Court in Atlanta, Georgia was filed against the Company and certain of its then officers and directors. The complaint alleges violations of sections 11, 12(2) and 15 of the Securities Act of 1933, violations of the Georgia Securities Act and negligent misrepresentation arising out of alleged disclosure deficiencies in connection with the Company's initial public offering, which was completed on November 10, 1995. The complaint seeks compensatory damages and reimbursements for plaintiff's fees and expenses. A motion to dismiss is pending and the Company and its officers and directors are vigorously defending against the allegations. 6. SUPPLEMENTAL CASH FLOW INFORMATION Cash and cash equivalents include cash on hand and on deposit and highly liquid investments with an original maturity of three months or less. Cash payments for the six months ended September 30, 1999 and 1998 include interest of approximately $3,700 and $0, respectively. 7. COMPREHENSIVE INCOME The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS No. 130) to be effective for fiscal years beginning after December 15, 1997. This statement requires that all items which are to be recognized as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as net income (loss). The Company's comprehensive income (loss) is the same as its net income (loss). 8 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following information should be read in conjunction with the financial statements and the notes thereto and in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1999. At the 1999 Annual Meeting of Shareholders, the Company's shareholders approved an amendment to the Company's articles of incorporation to change the Company's name from A.D.A.M. Software, Inc. to adam.com, Inc. adam.com is a leading developer of health education content and software technologies, and since January 1999, we have taken steps to become a leading provider of health, medical and wellness information online. We have created, published and marketed multimedia software products, content and Internet-ready applications that provide anatomical, medical and health-related information for the education, consumer, professional and online health information provider markets. During the fiscal year ended March 31, 1999 ("fiscal 1999"), adam.com made the strategic decision to focus the majority of its efforts on the online dissemination of consumer health information, resulting in the May 1999 launch of www.adam.com, adam.com's consumer health destination (the "Web site" or "site"). Additionally, our business-to-business syndication model provides customized co-branded solutions to healthcare enterprises and other commercial Web sites by providing those business partners with our unique proprietary content to enhance the usefulness, relevance and value of their Web sites. In connection with this redirected strategy, we decided to shift sales and marketing efforts toward initiatives that create awareness of our ability and intention to provide back-end content to other health information providers on the Internet. Accordingly, we discontinued product update and upgrade support for certain of our historical products as of April 1, 1999. Founded in 1990, adam.com historically created visual anatomy and health information content that was delivered to end-users through a variety of distribution mediums, including CD-ROM, broadcast, Internet licensing and print. Those efforts continue today, but are designed to support the growth and development of the consumer health information Web site and business-to-business content syndication model. adam.com is headquartered in Atlanta, Georgia, with a significant operation in San Francisco, California. RESULTS OF OPERATIONS REVENUES. Total revenues decreased 23% to $1,084,000 for the three months ended September 30, 1999 compared to $1,402,000 for the three months ended September 30, 1998. During the three months ended September 30, 1999 we derived 83% of total revenue from product sales and licensing to education, consumer, professional and international markets compared to 100% during the three months ended September 30, 1998. During the three months ended September 30, 1999 we earned approximately $181,000, or 17% of total revenue from activities related to providing health related content over the Internet, including page view-based advertising revenue and license fees from Internet-based third parties. Total software product sales and licensing revenue decreased $499,000, or 35%, to $903,000 for the three months ended September 30, 1999 compared to $1,402,000 for the three months ended September 30, 1998. This decrease is due to our transition from a software products-based company to an Internet-based, online content provider and the resulting reduction in our product sales force and marketing activities. For the six months ended September 30, 1999, total revenues decreased 40% to $1,885,000 compared to $3,151,000 for the six months ended September 30, 1998. During the six months ended September 30, 1999, we derived 89% of total revenue from product sales and licensing compared to 100% during the six months ended September 30, 1998. During the six months ended September 30, 1999 we earned 9 approximately $213,000 or 11% of total revenue from activities related to providing health-related content over the Internet. Total software product sales and licensing revenue decreased $1,479,000, or 47%, to $1,672,000 for the six months ended September 30, 1999 compared to $3,151,000 for the six months ended September 30, 1998. This decrease is due to our transition from a software products-based company to an Internet based, online content provider and the resulting reduction in our product sales force and marketing activities. COST OF REVENUES. Cost of revenues decreased 49% to $197,000 for the three months ended September 30, 1999 from $383,000 for the three months ended September 30, 1998 due to decreased software product shipments, decreased costs of product support and reduced amortization of capitalized software development costs. Amortization of capitalized software development costs decreased 70% to $41,000 compared to $137,000 for the three months ended September 30, 1998 as a result of reductions in previously recorded capitalized development costs during fiscal 1999 to bring levels closer to expected future revenues to be generated, or net realizable value. The reduction in net realizable value during the fourth quarter of fiscal 1999 was the result of our decision not to support certain products moving forward and instead to focus on development and execution of our Internet strategies. Shipped product component costs decreased 35% to $71,000 for the three months ended September 30, 1999 compared to $110,000 for the three months ended September 30, 1998 due to decreased unit shipments of our software products during the three months ended September 30, 1999. As a percentage of total software product revenues, cost of revenues decreased to 22% for the three months ended September 30, 1999 from 27% for the three months ended September 30, 1998. For the six months ended September 30, 1999, cost of revenues decreased 45% to $392,000 compared to $714,000 for the six months ended September 30, 1998 due to decreased software product shipments, decreased costs of product support and reduced amortization of capitalized software development costs. Amortization of capitalized software development costs decreased 67% to $86,000 compared to $261,000 for the six months ended September 30, 1998 as a result of reductions in previously recorded capitalized development costs during fiscal 1999. Shipped product component costs decreased 54% to $140,000 for the six months ended September 30, 1999 compared to $216,000 for the six months ended September 30, 1998 due to decreased unit shipments of our software products during the six months ended September 30, 1999. As a percentage of total software product revenues, cost of revenues remained steady at 23% for the six months ended September 30, 1999 compared to the six months ended September 30, 1998. SALES AND MARKETING. Sales and marketing expenses increased 31% to $824,000 for the three months ended September 30, 1999 compared to $630,000 for the three months ended September 30, 1998, and increased 19% to $1,516,000 for the six months ended September 30, 1999 compared to $1,270,000 for the six months ended September 30, 1998. All sales and marketing expenses for the three and six month periods ended September 30, 1998 were the result of activities supporting software product revenues, while sales and marketing expenses during the three and six month periods ended September 30, 1999 included significant incremental amounts to support the Company's online health information business strategy of $594,000 and $1,011,000, respectively. PRODUCT AND CONTENT DEVELOPMENT. Product and content development expenses increased 623%, to $1,728,000, and 510%, to $2,890,000, respectively, for the three and six month periods ended September 30, 1999 from $239,000 and $474,000 for the three and six month periods ended September 30, 1998, respectively. The primary factor for the increased expenses during the three and six month periods ended September 30, 1999, included approximately $1,368,000 and $2,194,000, respectively, as a result of our Web site and other Internet initiative launch costs, consisting primarily of personnel and consulting costs. As a result of the Company's decision in fiscal 1999 to no longer develop traditional products, capitalized software development costs were $0 and $6,000, respectively, of development costs for the three and six month periods ended September 30, 1999 10 compared to $178,000 and $317,000, respectively, of development costs for the three and six month periods ended September 30, 1998. However, the Company did capitalize $2,088,000 of acquired content from the asset purchases from drgreen.com and Information Medical Systems, Inc. during the three months ended September 30, 1999. These amounts are being amortized to production expense over their estimated useful lives of two and five years, respectively. As a percentage of total net revenues, product and content development expenses increased to 159% and 153%, respectively, for the three and six month periods ended September 30, 1999 compared to 17% and 15%, respectively, for the three and six month periods ended September 30, 1998. GENERAL AND ADMINISTRATIVE. General and administrative expenses increased 140% and 148% to $1,294,000 and $2,449,000, respectively, for the three and six month periods ended September 30, 1999 from $538,000 and $988,000, respectively, for the three and six month periods ended September 30, 1998 primarily due to the additional operating costs of our San Francisco office which opened in February 1999, increased personnel costs and increased legal costs. As a percentage of total net revenues, general and administrative expenses increased to 119% and 130%, respectively, for the three and six month periods ended September 30, 1999 compared to 38% and 31%, respectively, for the three and six month periods ended September 30, 1998. OPERATING LOSS. As a result of the factors described above, the operating loss increased $2,571,000 to a loss of $2,959,000 for the three months ended September 30, 1999 from a loss of $388,000 for the three months ended September 30, 1998. The operating loss increased $5,067,000 to a loss of $5,362,000 for the six months ended September 30, 1999 from a loss of $295,000 for the six months ended September 30, 1998. NET LOSS. The Company had a net loss of $2,793,000 or $.59 per share for the three months ended September 30, 1999, compared with net loss of $280,000 or $.06 per share for the three months ended September 30, 1998. Net loss was $5,089,000 or $1.10 per share for the six months ended September 30, 1999, compared with net loss of $72,000 or $.02 per share for the six months ended September 30, 1998. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1999, we had cash and cash equivalents of $2,745,000 and working capital of $2,399,000. The Company uses working capital to finance ongoing operations, fund the development and introduction of our new business strategy and acquire capital equipment. Through March 31, 1999 the Company had repurchased 847,240 shares of common stock on the open market for an average price of approximately $2.58 per share for an aggregate purchase price of approximately $2,186,000. During the six months ended September 30, 1999, the Company re-issued 155,457 of those shares for total cash proceeds of approximately $998,000, and re-issued 104,000 of those shares for the purchases of drgreene.com and Informational Medical Systems, Inc. The remaining repurchased shares represent approximately 11% of the shares of common stock issued and outstanding as of September 30, 1999. The Company has been authorized by its Board of Directors to purchase up to 25% of the common shares issued and outstanding; however, management does not intend to purchase any shares of common stock during the current fiscal year. The Company has experienced a substantial increase in expenditures since the launch of our San Francisco operation through the growth in those operations and related staffing. Management anticipates that these increased expenditure levels will continue for the foreseeable future. Management anticipates incurring additional expenses to increase our marketing and sales efforts, for content development and for technology and infrastructure development. Additionally, we will continue to evaluate possible investments in businesses, products and technologies and the expansion of our marketing and sales programs. 11 Management previously disclosed that it anticipated that available cash resources were sufficient to meet anticipated needs for working capital and capital expenditures at least through the end of September 1999. Management believes the Company has adequate capital resources to meet anticipated needs for working capital and capital expenditures through the end of December 1999, but the Company needs to enhance its capital resources in order to provide it with sufficient cash to meet its current operating needs and to address such needs through the end of March 2000. If the Company is unable to enhance its capital resources, the Company will be forced to reduce its spending on capital expenditures and product development until such financing is obtained. The Company currently is exploring a number of alternatives, including borrowings, the issuance of debt and/or equity securities, and other strategic transactions to enhance its cash position. Management is optimistic that the Company will be able to meet its liquidity needs through one or more of such alternatives under consideration; however, there can be no assurance that any particular alternative will be available on terms favorable to the Company, or at all. Further, any financing or capital transaction would be subject to customary closing conditions. If additional funds are raised by the issuance of equity securities, our shareholders may experience dilution of their ownership interest and these securities may have rights senior to those of the holders of the common stock. If additional funds are raised by the issuance of debt securities, we may be subject to certain limitations on our operations, including limitations on the payment of dividends. The Company may also issue equity securities for acquisitions of businesses or health information content to use in the Company's website or other internet based product offerings. If adequate funds are not available or not available on acceptable terms, we may be unable to fund our expansion, successfully promote our brandname, take advantage of acquisition opportunities, develop or enhance services or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations. YEAR 2000 COMPLIANCE The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Our computer equipment and software and devices with imbedded technology that are time-sensitive may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. We have made efforts to ensure that computer equipment and software will function properly with respect to dates in the Year 2000 and thereafter. The term "computer equipment and software" includes systems for product development, production and testing, accounting, data processing, telephone/PBX, contact management, and other miscellaneous systems as well as other systems not traditionally thought of as "computer-related" technologies such as fax machines, copiers, or other miscellaneous equipment and software. These systems may contain imbedded technology, which complicate our Year 2000 identification, assessment, remediation, and testing efforts. Based upon our identification and assessment efforts to date, we believe that our critical systems either are currently, or are committed by our vendors to be Year 2000 compliant. We have not directly surveyed our vendors as to Year 2000 compliance, but we plan to avail ourselves of any remedies developed by systems vendors and/or publishers that address current Year 2000 deficiencies, including currently known deficiencies or those discovered prior to Year 2000. In addition, in the ordinary course of replacing computer equipment and software, we will attempt to obtain replacements that are Year 2000 compliant. By utilizing our internal resources to ongoingly assess, test and remediate potential and discovered Year 2000 issues, we believe that we are on schedule with the current initiative. Our quality assurance team has tested all internally developed products for Year 2000 compliance. All internally developed products have been confirmed as Year 2000 compliant; however, two products acquired by us from Mosby, Inc. during fiscal 1998 were not Year 2000 compliant. During the quarter ended September 30, 1999 we remedied these two products to make them Year 2000 compliant, Through 12 September 30, 1999, we have sold approximately $60,000, or 8,982 units of the non-compliant products. We estimate our total exposure to remedy, which is limited to refunding customers their original purchase price, to be not greater than $25,000. All future sales of these products will be the Year 2000 compliant version. We believe that the cost of our Year 2000 identification, assessment, remediation and testing efforts will not exceed $50,000. These expenditures will be funded from existing cash balances. Such amount represents less than 5% of the actual and anticipated information system equipment, software technology, and product production expenditures for fiscal 2000. We estimate that we have spent approximately $25,000 as of September 30, 1999 on quality assurance testing of our products. Other non-Year 2000 product production and system technology efforts have not been materially delayed or impacted by the Year 2000 initiative. We presently believe that the Year 2000 issue will not pose significant operational problems for adam.com. However, if all Year 2000 issues are not properly identified, there can be no assurance that the Year 2000 issue will not materially adversely impact our results of operation or adversely affect our relationships with customers, vendors or others. Additionally, there can be no assurance that the Year 2000 issues of other entities will not have a material adverse impact on our systems or results of operations. We have evaluated all systems and identified possible Year 2000 compliance exposure for each system. As a result, we have put in place a plan that involves testing, upgrading, replacing (when necessary) and other needed modifications to ensure the Company's Year 2000 exposure is minimal. We have gathered cost estimates for remediation and fully anticipate all remedies will be in place by December 31, 1999. We believe that we have the necessary staffing resources to monitor any changes in our state of readiness and applying remedies as needed. Where possible vendors of mission critical applications have been contacted and the Year 2000 compliance of these applications were verified. Where verification is not possible, updates were obtained or the applications were replaced. The costs of our Year 2000 identification, assessment, remediation and testing efforts and the dates on which we believe we will complete such efforts are based upon our best estimates, which were derived using numerous assumptions regarding future events, including the availability of certain resources and other factors. There can be no assurance that these estimates will prove to be accurate and actual results could differ materially from those currently anticipated. Specific factors that could cause such material differences include, but are not limited to, the ability to identify, assess, and remediate and test all relevant computer codes and embedded technology, and similar uncertainties. In addition, variability of definitions of "compliance with Year 2000" and the myriad of different products and services, and combinations thereof, sold by adam.com may lead to claims whose impact on adam.com is not currently estimable. No assurance can be given that the aggregate cost of defending and resolving such claims, if any, will not materially adversely affect our results of operation. Although some of the our agreements and contracts with third parties contain provisions requiring such parties to indemnify us under some circumstances, there can be no assurance that such indemnification arrangements will cover all of our liabilities and costs related to claims by third parties related to the Year 2000 issue. 13 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS Certain statements made in this report, and other written or oral statements made by or on behalf of adam.com, may constitute "forward-looking statements" within the meaning of the federal securities laws. When used in this report, the words "believes," "expects," "estimates," "intends" and similar Expressions are intended to identify forward-looking statements. Statements regarding future events and developments and our future performance, as well as our expectations, beliefs, plans, intentions, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. Examples of such statements in this report include descriptions of our plans and strategies with respect to developing the site, our plans to develop additional strategic partnerships, our intention to add e-commerce to our business strategy, our continuing growth and our ability to address Year 2000 issues. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. We believe that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. The following are some of the factors that could cause our actual results to differ materially from the expected results described in our forward-looking statements: - Our Internet operations have a limited operating history, and adam.com was commercially launched in May 1999. Therefore, our historical operating history provides little basis on which to evaluate our current business and prospects. Further, we may be unable to execute our revised strategy. - We have a history of losses and we expect to incur future losses. We expect to incur significant expenses in connection with the site. - We may be unable to obtain additional funding to finance our growing business. - We may be unable to continue to identify additional strategic partners, which would adversely affect our ability to achieve broad brand recognition and additional traffic to the site. - We may be unable to manage our growing Internet business, which would adversely affect our ability to obtain advertising dollars and our results of operations. - We may face shortages of personnel that have the technological training required in our business. We may be required to increase the wages that we pay and the benefits that we provide in order to attract and retain a sufficient number of qualified employees. Any such increase in wages could adversely affect our results of operations. - We rely heavily on third parties, including Internet service providers, for delivery of our health information through the Internet. The performance of these third parties is not within our control. If these Internet service providers experience difficulties, it could affect the traffic to our site and, ultimately, our revenue from advertisers and sponsors. - Competition for online health information is intense, and we will compete for advertising dollars with other companies that have more Internet experience than we do. Our business has low barriers to entry, and our competitors may be more successful than we are at obtaining revenue from advertisers and sponsors. - The Internet and related technologies could fail to develop in accordance with the demands of the market. Because we are focusing on our Internet strategy and discontinuing support of some of our CD-ROM products, any failure of Internet technologies would adversely affect our business. 14 - Our intellectual property rights offer only limited protection against unauthorized use of our proprietary information. If a third party successfully pirated our information, our licensees could be unwilling to continue to pay for the use of our content. - Governmental regulation of the Internet is evolving, and we cannot predict whether new laws or regulations will be adopted that will adversely affect our business. - We may lose revenue or incur additional costs because of failure to adequately address the Year 2000 issue. - We will be affected by general economic conditions, which affect the overall level of economy. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of September 30, 1999, the Company had cash and cash equivalents of $2.7 million invested in liquid money market funds or bank accounts with average maturities of less than 90 days. The cash and cash equivalents are subject to interest rate risk and we may receive higher or lower interest income if market interest rates increase or decrease. A hypothetical increase or decrease in market interest rates by 10 percent from levels at March 31, 1999 would not have a material impact on our cash or cash equivalents. PART II--OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS adam.com, Inc. held its 1999 Annual Meeting of Shareholders on September 28, 1999. The following items were voted upon and the results of the voting were as follows: 1. To elect three directors to serve on the Company's Board of Directors until the 2002 Annual Meeting of Shareholders or until their successors have been duly elected and qualified. The nominees, Messrs. Cramer, and McClaugherty were elected to the Company's Board of Directors until the year 2002. There were 3,212,640 votes for and 78,544 withheld for Mr. Cramer, and 3,212,880 votes for and 78,304 votes withheld for Mr. McClaugherty. Mr. Gatti resigned his position with the board prior to the Annual Meeting of Shareholders. Directors continuing in office until the 2001 Annual Meeting of Shareholders are Ms. Linda Davis and Messrs. Daniel Howe and Francis Tedesco. Directors continuing in office until the 2002 Annual Meeting of Shareholders are Ms. Sally Elliot and Messrs. Gregory Swayne and Hamilton Jordon. 2. To amend Article I of the Company's articles of incorporation to result in a change in the Company's name to adam.com, Inc. The votes of the stockholders to ratify a change in the Company's name to adam.com, Inc. was as follows: 3,277,349 in favor, 4,865 opposed and 8,970 abstained. 3. To amend the A.D.A.M. Software, Inc. 1992 Stock Option Plan, increasing the number of shares of common stock authorized under the plan to 3,000,000. The votes of the stockholders to ratify an increase in the number of shares of common stock authorized under the A.D.A.M. Software, Inc. 1992 Stock Option Plan were as follows: 1,076,397 in favor, 193,751 opposed, 17,092 abstained, and 2,003,944 broker non-votes. 4. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal year ending March 31, 2000. The votes of the stockholders to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors were as follows: 3,275,772 in favor, 3,892 opposed and 11,520 abstained. 15 ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3.1 --Articles of Restatement of the Articles of Incorporation of A.D.A.M. Software, Inc. 3.2 --Amendment to the Articles of Incorporation of A.D.A.M. Software, Inc. filed September 30, 1999 27 --Financial Data Schedule (for electronic filing purposes only) (b) Reports on Form 8-K None 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ADAM.COM, INC., INC. (Registrant) /s/ ROBERT S. CRAMER, JR. ------------------------------------------------ Robert S. Cramer, Jr. Chairman of the Board, Co-Founder, Chief Executive Officer /s/ MICHAEL S. FISHER ------------------------------------------------ Michael S. Fisher VP-Finance/Administration (Principal financial officer)
Date: November 15, 1999 17 EX-3.1 2 EXHIBIT 3.1 EXHIBIT 3.1 ARTICLES OF RESTATEMENT OF THE ARTICLES OF INCORPORATION OF A.D.A.M. SOFTWARE, INC. Pursuant to the Georgia Business Corporation Code, A.D.A.M. Software, Inc., a Georgia corporation (the "Corporation"), submits these Articles of Restatement and Restated Articles of Incorporation and shows as follows: 1. The Corporation hereby certifies that these Articles of Restatement and Restated Articles of Incorporation of the Corporation, as set forth in Paragraph 3 below, were duly adopted by the Board of Directors of the Corporation by resolution on April 22, 1994, and duly approved by the Shareholders of the Corporation by resolution on May 4, 1994 in accordance with Section 14-2-1003 of the Georgia Business Corporation Code. 2. Effective upon the filing for record of these Articles of Restatement of the Articles of Incorporation, each issued and outstanding share of the Corporation's Class A Common Stock shall be reclassified as one (1) fully paid and nonassessable share of the Corporation's Common Stock, par value $.01 per share, and outstanding share certificates representing shares of the Corporation's Class A Common Stock shall thereafter be deemed to represent the same number of shares of the Corporation's Common Stock, par value $.01 per share, without any further action. 3. The Articles of Incorporation of the Corporation shall be amended by the deletion in their entirety of Articles II through VIII, by the addition of new Articles 2, 3, 4, 5, 6, 7, 8, and 9, and by restating all other provisions of the Articles of Incorporation, as heretofore amended, now in effect and not being amended by foregoing amendments, and substituting therefor in all respects the Restated Articles of Incorporation as follows: RESTATED ARTICLES OF INCORPORATION 1. The name of the Corporation is A.D.A.M. Software, Inc. 2. Section 2.1. COMMON STOCK. The aggregate number of common shares (referred to in these Articles of Incorporation as "Common Stock") which the Corporation shall have the authority to issue is 20,000,000, with a par value of $.01 per share. Each share of Common Stock shall have one vote on each matter submitted to a vote of the shareholders of the Corporation. Subject to the provisions of the applicable law and the rights of the holders of the outstanding shares of Preferred Stock, if any, the holders of shares of Common Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation, out of the assets of the Corporation legally available therefor, dividends or other distributions, whether payable in cash, property or securities of the Corporation. The holders of shares of Common Stock shall be entitled to receive, in proportion to the number of shares of Common Stock held, the net assets of the Corporation upon dissolution after any preferential amounts required to be paid or distributed to holders of outstanding shares of Preferred Stock, if any, are so paid or distributed. 3. Section 2.2. PREFERRED STOCK. The aggregate number or preferred shares (referred to in these Articles of Incorporation as "Preferred Stock") which the Corporation shall have authority to issue is 10,000,000, with a par value of $.01 per share. The Preferred Stock may be issued from time to time by the Board of Directors as shares of one or more series. The description of shares of each series of Preferred Stock, including any designations, preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption shall be as set forth in resolutions adopted by the Board of Directors, and articles of amendment shall be filed with the Georgia Secretary of State as required by law to be filed with respect to issuance of such Preferred Stock, prior to the issuance of any shares of such series. The Board of Directors is expressly authorized, at any time, by adopting resolutions providing for the issuance of, or providing for a change in the number of, shares of any particular series of Preferred Stock and, if and to the extent from time to time required by law, by filing articles of amendment which are effective without shareholder action, to increase or decrease the number of shares included in each series of Preferred Stock, but not below the number of shares then issued, and to set in any one or more respects the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms and conditions of redemption relating to the shares of each such series. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, setting or changing the following: -2- (i) the dividend rate, if any, on shares of such series, the times of payment and the date from which dividends shall be accumulated, if dividends are to be cumulative; (ii) whether the shares of such series shall be redeemable and, if so, the redemption price and the terms and conditions of such redemption; (iii) the obligation, if any of the Corporation to redeem shares of such series pursuant to a sinking fund; (iv) whether shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class or classes and, if so, the terms and conditions of such conversion or exchange, including the price or prices of the rate or rates of conversion or exchange and the terms of adjustment, if any; (v) whether the shares of such series shall have voting rights, in addition to the voting rights provided by law, and, if so, to the extent of such voting rights; (vi) the rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding-up of the Corporation; and (vii) any other relative rights, powers, preferences, qualifications, limitations or restrictions thereof relating to such series. Section 2.3. SHARES ACQUIRED BY THE CORPORATION. Shares of Common Stock that have been acquired by the Corporation shall become treasury shares and may be resold or otherwise disposed of by the Corporation for such consideration, not less than the par value thereof, as shall be determined by the Board of Directors, unless or until the Board of Directors shall by resolution provide that any or all treasury shares so acquired shall constitute authorized, but unissued shares. 3. No shareholder shall have any preemptive right to subscribe for or to purchase any shares of other securities issued by the Corporation. 4. Section 4.1. PERSONAL LIABILITY OF DIRECTORS. No director of the Corporation shall be personally liable to the Corporation or its shareholders for monetary damages for breach of duty of care or other duty as a director, except for liability (i) for any appropriation, in violation of the director's duties, of any business opportunity of the Corporation, (ii) for acts or -3- omissions which involved intentional misconduct or a knowing violation of law, (iii) for the types of liabilities set forth in Section 14-2-832 of the Georgia Business Corporation Code, or (iv) for any transaction from which the director derived an improper personal benefit. If the Georgia Business Corporation Code is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Georgia Business Corporation Code, as amended. Section 4.2 EFFECT OF REPEAL OR MODIFICATION. Neither the repeal or modification of this Article 4 nor the adoption of any provision of these Articles of Incorporation inconsistent with these Articles shall eliminate or adversely affect any right or protection of a director of the Corporation existing immediately prior to such repeal, modification or adoption. 5. Section 5.1. NUMBER OF DIRECTORS. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the number of directors that shall constitute the Board of Directors of the Corporation shall be determined from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board. Section 5.2. CLASSIFIED BOARD. The directors of the Corporation (other than any directors who may be elected by holders of any series of Preferred Stock then outstanding) shall be and are divided into three classes: Class I, Class II and Class III. The number of directors in each class shall be as nearly equal as the then-authorized number of directors constituting the Board of Directors permits. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; PROVIDED, HOWEVER, that the directors first elected to Class I shall serve for a term ending on the date of the annual meeting next following the end of the calendar year 1994, the directors first elected to Class II shall serve for a term ending on the date of the second annual meeting next following the end of the calendar year 1994, and the directors first elected to Class III shall serve for a term ending on the date of the third annual meeting next following the end of the calendar year 1994. Any director who may be elected by holders of any series of Preferred Stock then outstanding shall serve for a term ending on the date of the next annual meeting following the annual meeting at which such director was elected. Section 5.3. INCREASE OR DECREASE IN AUTHORIZED NUMBER OF DIRECTORS. In the event of any increase or decrease in the authorized number of directors: -4- (a) Each director then serving shall nevertheless continue as a director of the class of which he is a member until the expiration of his term, or his prior death, retirement, resignation or removal; and (b) Newly-created or eliminated directorships resulting from any increase or decrease shall be apportioned by the Board of Directors among the three classes so as to keep the number of directors in each class as nearly equal as possible. Section 5.4. REMOVAL. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any or all Directors may be removed from office at any time for cause, but only by the same affirmative vote of the shareholders required to amend this Article 5 as provided in Section 9.2 of these Articles of Incorporation. Section 5.5. VACANCIES. Subject to the rights of the holders of any series of Preferred Stock then outstanding to fill director vacancies, vacancies on the Board of Directors (including vacancies resulting from retirement, resignation, removal from office or death) shall be filled exclusively by the Board of Directors. Any director so elected shall hold office until the next annual meeting of shareholders. 6. In discharging the duties of their respective positions and in determining what is believed to be in the best interests of the Corporation, the Board of Directors, committees of the Board of Directors, and individual directors, in addition to considering the effects of any action on the Corporation or its shareholders, may consider the interests of the employees, customers, suppliers and creditors of the Corporation and its subsidiaries, the communities in which offices or other establishments of the Corporation and its subsidiaries are located, and all other factors such directors consider pertinent; provided, however, that this provision solely grants discretionary authority to the directors and no constituency shall be deemed to have been given any right to consideration hereby. 7. Any action required or permitted to be taken at a shareholders' meeting may be taken without a meeting if the action is taken by all of the shareholders entitled to vote on the action, or by persons who would be entitled to vote at a meeting those shares having voting power to cast not less than the minimum number (or numbers, in the case of voting by groups) of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote were present and voted. The action must be evidenced by one or more written consents -5- describing the action taken, signed by shareholders entitled to take action without a meeting and delivered to the Corporation for inclusion in the minutes or filing with the corporate records. 8. The mailing address of the principal office of the Corporation is 1600 RiverEdge Parkway, Suite 800, Fulton County, Atlanta, Georgia 30328. 9. Section 9.1. AMENDMENT. These Articles of Incorporation may not be amended without the affirmative vote of at least a majority of the shares entitled to vote generally in the election of directors, voting as a single voting group. Section 9.2. SUPERMAJORITY VOTE REQUIRED FOR CERTAIN AMENDMENTS. Notwithstanding anything to the contrary in these Articles of Incorporation or the Bylaws of the Corporation and subject to the rights of holders of any series of Preferred Stock then outstanding (and notwithstanding that a lesser percentage may be specified by law, these Articles of Incorporation or the Bylaws of the Corporation), (i) the affirmative vote of the holders of at least 75% of the shares of the Corporation entitled to vote generally in the election of directors, voting as a single voting group, shall be required to alter, amend or repeal, or adopt any provisions inconsistent with, Article 4, Article 5 or this Section 9.2 of these Articles of Incorporation, and (ii) Article II of the Bylaws of the Corporation shall not be altered, amended or repealed, and no provision inconsistent therewith shall be adopted, without the affirmative vote of a majority of the entire Board of Directors or of the holders of at least 75% of the shares of the Corporation entitled to vote generally in the election of directors, voting as a single voting group. Said Restated Articles of Incorporation supersede the original Articles of Incorporation as heretofore amended. -6- IN WITNESS WHEREOF, A.D.A.M. Software, Inc. has caused these Articles of Restatement to be executed, its corporate seal to be affixed, and its seal and execution hereof to be attested, all by its duly authorized officers, this 9th day of May, 1994. A.D.A.M. SOFTWARE, INC. By: /s/ Robert S. Cramer, Jr. -------------------------- Name: Robert S. Cramer, Jr. Title: Chairman of the Board [CORPORATE SEAL] Attest: /s/ Clay E. Scarborough -------------------------------- Name: Clay E. Scarborough Title: Secretary -7- EX-3.2 3 EXHIBIT 3.2 EXHIBIT 3.2 ARTICLES OF AMENDMENT OF ARTICLES OF INCORPORATION OF A.D.A.M. SOFTWARE, INC. 1. The name of the Corporation is A.D.A.M. Software, Inc. 2. The amendment to the Corporation's Articles of Incorporation is to amend Article I of the Articles of Incorporation so that Article I shall hereafter be as follows: I. The name of the Corportion is adam.com, Inc. 3. In accordance with Code Sections 14-2-705 and 14-2-1003(d) of the Georgia Business Corporation Code, the Corporation gave proper notice to each shareholder entitled to vote on said amendment. 4. In accordance with Code Section 14-2-1003(e) of the Georgia Business Corporatin Code, said amendment was duly approved by a majority of the shares entitled to be cast on the amendment by each voting group entitled to vote on the amendment. Articles of Amendment to Articles of Incorporation Page 2 of 2, A.D.A.M. Software, Inc. 5. Said amendment was approved by a majority of the shares of the Corporation on September 28, 1999. IN WITNESS WHEREOF, A.D.A.M. Software, Inc. has caused these Articles of Amendment to be executed, its corporate seal to be affixed, and its seal and the execution hereof to be attested by its duly authorized officer, this 30th day of September, 1999. A.D.A.M. SOFTWARE, INC. By: /s/ Robert Cramer ----------------------------------- Robert Cramer Chairman and Chief Executive Officer EX-27 4 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF ADAM.COM,INC. FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS MAR-31-2000 APR-01-1999 SEP-30-1999 2,745 0 869 114 329 4,284 1,385 0 8,417 1,885 0 0 0 54 6,478 8,417 1,885 1,885 392 7,247 0 0 4 (5,231) 0 (5,231) 0 0 0 (5,089) (1.10) (1.10)
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