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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2002
Commission file no.0-15152
FIND/SVP, INC.
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(Exact name of Registrant as specified in its charter)
New York 13-2670985
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
625 Avenue of the Americas, New York, NY 10011
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (212) 645-4500
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 ___
Number of shares of Common Stock outstanding at August 5, 2002: 10,177,977
FIND/SVP, INC. AND SUBSIDIARIES
Index
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets 3
June 30, 2002 (unaudited) and December 31, 2001
Condensed Consolidated Statements of Operations 4
Six Months Ended June 30, 2002 and 2001 (unaudited)
Condensed Consolidated Statements of Operations 5
Three Months Ended June 30, 2002 and 2001 (unaudited)
Condensed Consolidated Statements of Cash Flows 6
Six Months Ended June 30, 2002 and 2001 (unaudited)
Notes to Condensed Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial Condition 11
and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 15
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 16
ITEM 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
2
PART I.
FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
FIND/SVP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
June 30, December 31,
2002 2001
----------- ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 959 $ 1,951
Marketable securities 39 --
Accounts receivable, net 2,084 1,415
Note receivable 138 138
Deferred tax assets 194 194
Prepaid expenses and other current assets 444 311
-------- --------
Total current assets 3,858 4,009
Equipment and leasehold improvements, at cost, less accumulated
depreciation and amortization of $8,729 in 2002 and
$8,264 in 2001 2,611 2,892
Other assets:
Deferred tax assets 1,345 1,063
Accrued rent receivable 881 788
Cash surrender value of life insurance 673 747
Non-marketable equity securities 500 500
Other assets 503 384
-------- --------
$ 10,371 $ 10,383
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable $ 400 $ 924
Trade accounts payable 499 469
Accrued expenses and other 1,070 1,175
Accrued interest 10 89
-------- --------
Total current liabilities 1,979 2,657
-------- --------
Unearned retainer income 2,181 1,753
Notes payable, including accrued deferred interest 1,575 895
Other liabilities 596 588
Commitments and contingencies
Shareholders' equity:
Common stock, $.0001 par value. Authorized 100,000,000 shares;
issued and outstanding 10,172,977 at June 30, 2002 and
10,043,443 at December 31, 2001 1 1
Capital in excess of par value 7,194 6,985
Accumulated deficit (3,155) (2,496)
-------- --------
Total shareholders' equity 4,040 4,490
-------- --------
$ 10,371 $ 10,383
======== ========
See accompanying notes to condensed consolidated financial statements
3
FIND/SVP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Six months ended June 30
(in thousands, except share and per share data)
2002 2001
---------- ---------
Revenues $ 10,270 $ 11,876
---------- ---------
Operating expenses:
Direct costs 5,207 5,713
Selling, general and administrative expenses 5,976 6,228
---------- ---------
Operating loss (913) (65)
Interest income 9 35
Other income 39 --
Interest expense (76) (137)
---------- ---------
Loss before benefit for income taxes (941) (167)
Benefit for income taxes (282) (42)
---------- ---------
Net loss $ (659) $ (125)
========== =========
Earnings per common share:
Basic $ (0.07) $ (0.02)
========== =========
Diluted $ (0.07) $ (0.02)
========== =========
Weighted average number of common shares:
Basic 10,098,193 7,605,943
========== =========
Diluted 10,098,193 7,605,943
========== =========
See accompanying notes to condensed consolidated financial statements.
4
FIND/SVP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended June 30
(in thousands, except share and per share data)
2002 2001
---------- ---------
Revenues $ 5,226 $ 5,753
---------- ---------
Operating expenses:
Direct costs 2,569 2,789
Selling, general and administrative expenses 2,896 3,107
---------- ---------
Operating loss (239) (143)
Interest income 3 15
Other income 5 --
Interest expense (36) (63)
---------- ---------
Loss before benefit for income taxes (267) (191)
Benefit for income taxes (81) (48)
---------- ---------
Net loss $ (186) $ (143)
========== =========
Earnings per common share:
Basic $ (0.02) $ (0.02)
========== =========
Diluted $ (0.02) $ (0.02)
========== =========
Weighted average number of common shares:
Basic 10,134,611 7,605,943
========== =========
Diluted 10,134,611 7,605,943
========== =========
See accompanying notes to condensed consolidated financial statements.
5
FIND/SVP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Six months ended June 30
(in thousands)
2002 2001
------- -------
Cash flows from operating activities:
Net loss $ (659) $ (125)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 529 561
Provision for losses on accounts receivable 80 152
Increase in marketable securities (39) --
Stock option compensation expense 132 --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (749) 22
Increase in prepaid expenses (133) (102)
Increase in deferred tax assets (283) (42)
Increase in other assets (202) (192)
Increase (decrease) in accounts payable 30 (257)
Decrease in accrued expenses and other current liabilities (183) (290)
Increase in unearned retainer income 428 273
Increase in other liabilities 8 28
------- -------
Net cash (used in) provided by operating activities (1,041) 28
------- -------
Cash flows from investing activities:
Capital expenditures (184) (166)
Repayment of note receivable -- 137
------- -------
Net cash used in investing activities (184) (29)
------- -------
Cash flows from financing activities:
Principal borrowings under notes payable 2,030 --
Principal payments under notes payable (1,875) (100)
Proceeds from exercise of stock options 78 --
------- -------
Net cash provided by (used in) financing activities 233 (100)
------- -------
Net decrease in cash (992) (101)
Cash at beginning of period 1,951 901
------- -------
Cash at end of period $ 959 $ 800
======= =======
See accompanying notes to condensed consolidated financial statements.
6
FIND/SVP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
A. MANAGEMENT'S STATEMENT
In the opinion of Management, the accompanying condensed consolidated financial
statements contain all adjustments necessary to present fairly the financial
position at June 30, 2002, and the results of operations for the six and three
month periods ended June 30, 2002 and 2001 and cash flows for the six month
periods ended June 30, 2002 and 2001. All such adjustments are of a normal and
recurring nature. Operating results for the six and three month periods ended
June 30, 2002 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2002.
FIND/SVP, Inc. and its Subsidiaries (the "Company") have reclassified certain
prior year balances to conform with the current presentation. References in this
report to "we," "us," or "our" refer to FIND/SVP, Inc. and its subsidiaries.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with our
consolidated financial statements and notes thereto for the year ended December
31, 2001 included in the Company's 2001 Annual Report on Form 10-K.
B. (LOSS) EARNINGS PER SHARE
Basic earnings per share are computed by dividing net (loss) income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share are computed by dividing net (loss) income by a diluted
weighted average number of common shares outstanding during the period. Such
dilution is computed using the treasury stock method for the assumed conversion
of stock options and warrants whose exercise price was less than the average
market price of the common shares during the respective period, and certain
additional dilutive effects of exercised and terminated stock options. For the
six and three month periods ended June 30, 2002 and 2001 there was no dilutive
effect.
Options and warrants to purchase 3,383,226 and 1,743,335 common shares during
the six months ended June 30, 2002 and 2001, respectively, were antidilutive and
were therefore excluded from the computation of diluted earnings per share.
Options and warrants to purchase 3,452,705 and 1,779,180 common shares during
the three months ended June 30, 2002 and 2001, respectively, were antidilutive
and were therefore excluded from the computation of diluted earnings per share.
C. MARKETABLE SECURITIES
In January 2002, the Company received shares of common stock of a mutual company
which had converted to a stock company. As a result, the Company recognized
$34,000 as other revenue. These securities are classified as trading securities,
as they are being held primarily for sale in the near term. The shares have been
recorded at their fair market value. As a result, the Company recorded an
unrealized holding gain on these securities of $5,000, which is included in
other income for the six and three month periods ended June 30, 2002.
7
D. DEBT
The Company has a $1,000,000 line of credit at its lender's prime commercial
lending rate plus 0.5%, reduced by outstanding letters of credit totaling
$30,000. The line is renewable annually, and was put in place on December 30,
1999. No amounts were borrowed under the line of credit as of June 30, 2002.
In February 2002, the Company entered into a financing agreement with a
commercial bank for a $2,000,000 Term Note, due December 31, 2006. The Term Note
bears interest at prime plus 1.25%, and is payable in quarterly installments
beginning March 31, 2002. As of June 30, 2002, there was $1,900,000 outstanding
under this Term Note.
The proceeds from this Term Note were used to repay the $1,100,000 balance of
the previous term note, dated August 1, 2000, and to repay the remaining portion
of the Company's Senior Subordinated Notes.
The Company's debt agreements with its lender are secured by a general security
interest in all of the Company's assets.
E. INCOME TAXES
The $282,000 income tax benefit as of June 30, 2002 represents 30% of the loss
before benefit for income taxes. The difference between this rate and the
statutory rate primarily relates to expenses that are not deductible for income
tax purposes.
F. NEW ACCOUNTING PRINCIPLES
In June 2001, the FASB issued Statements of Financial Accounting Standards No.
141, "Business Combinations" effective July 1, 2001, and No. 142, "Goodwill and
Other Intangible Assets" (SFAS No. 142), effective for fiscal years beginning
after December 15, 2001. Under SFAS No. 142, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the statements. Other intangible
assets will continue to be amortized over their useful lives.
The Company adopted SFAS No. 142 as of January 1, 2002. On an annual basis, the
Company's amortization of goodwill had been approximately $10,000. The Company
retains $75,448 of net goodwill on its balance sheet.
In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting for Asset Retirement Obligations," which will be adopted by the
Company as of January 1, 2003. This standard addresses issues associated with
the retirement of tangible long-lived assets. The Company has not completed its
evaluation of the impact, if any, on its consolidated financial position and
results of operations that will result from the adoption of this standard.
In August 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which was
adopted by the Company as of January 1, 2002. This standard also addresses
issues associated with the disposal of a segment of a business. There was no
effect of adoption of this standard on its consolidated financial position or
results of operations as of January 1, 2002.
8
G. STOCK OPTIONS
During the six month period ended June 30, 2002, options to purchase 256,750
shares of common stock were granted under the Company's Stock Option Plan, at
prices ranging from $0.83 to $1.50.
During the six month period ended June 30, 2001, options to purchase 181,550
shares of common stock were granted under the Company's Stock Option Plan, at
prices ranging from $0.625 to $0.800.
Stock options that were granted in November 2001 for future services to be
rendered to the Company by the Chief Executive Officer, the Chairman and a
consultant were granted at a price below the fair market value of the Company's
common stock on the measurement date for accounting purposes. Compensation
expense related to such grants is amortized over the vesting period of the
options and was $132,000 and $77,000 in the six and three month periods ended
June 30, 2002.
At the Annual Meeting of Shareholders of the Company on June 6, 2002, an
amendment to the Company's 1996 Stock Option Plan was ratified whereby the
number of shares of common stock issuable thereunder was increased from
1,650,000 to 3,500,000.
H. SEGMENT REPORTING
The Company manages its consulting and business advisory services in two
business segments: Quick Consulting (which includes LiveAnswer Desk ("LAD")) and
Strategic Consulting. The Company operates primarily in the United States. The
Company considers its quick consulting and strategic consulting services to be
its core businesses. References to "Corporate and other" in our financial
statements refer to assets and activities that are not allocated to a segment.
- -------------------------------------------------------------------------------------------------
(in thousands) SIX MONTHS THREE MONTHS
---------------- -----------------
ENDED JUNE 30, ENDED JUNE 30,
---------------- -----------------
2002 2001 2002 2001
---- ---- ---- ----
REVENUES
- --------
Quick Consulting, including LAD $ 9,131 $ 10,224 $ 4,607 $ 5,051
Strategic Consulting 1,139 1,652 619 702
--------------------------------------------
Total revenues $ 10,270 $ 11,876 $ 5,226 $ 5,753
============================================
OPERATING INCOME
- ----------------
Quick Consulting, including LAD $ 1,852 $ 2,524 $ 940 $ 1,236
Strategic Consulting (172) (87) (15) (79)
--------------------------------------------
Segment operating income 1,680 2,437 925 1,157
Corporate and other (1) (2,621) (2,604) (1,192) (1,348)
--------------------------------------------
Loss before benefit for income taxes $ (941) $ (167) $ (267) $ (191)
============================================
(1) Includes interest income and interest expense
- -------------------------------------------------------------------------------------------------
I. ACCRUED EXPENSES
During the quarter ended March 31, 2002 the Company accrued an additional
liability of $188,000 related to contractual severance payments due to a former
member of the Operating Management Group. Such contractual severance benefits
were triggered by personnel changes after the change in control of FIND/SVP,
Inc. in November 2001.
9
Accrued restructuring charges of $228,000 were recorded at December 31, 2001
under a severance plan approved by our Board of Directors. The estimated cost of
the accrued severance was increased by $21,000 during the quarter ended March
31, 2002 as final calculations were made. Payments totaling $112,000 were made
to 9 individuals during the six months ended June 30, 2002. The remainder of the
balance will be paid through May 2003.
J. SUBSEQUENT EVENT
In July 2002, the Company borrowed $1,000,000 under its line of credit, of which
approximately $824,000 was used to acquire approximately 3% of the outstanding
common shares of a publicly traded research and consulting company in connection
with potential strategic opportunities involving such company. The Company may
in the future sell these shares to an affiliated third-party in connection with
such potential strategic opportunities. The Company consulted with, and obtained
the consent of, its lender with respect to this transaction.
10
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Six and three months ended June 30, 2002 compared to six and three months ended
June 30, 2001.
GENERAL
FIND/SVP, Inc. provides a broad range of consulting, advisory and business
intelligence service to executives and other decision-making employees of client
companies, primarily in the United States. The Company currently operates
primarily in two business segments, providing consulting and business advisory
services including: the Quick Consulting and Research Service ("QCS") which
provides retainer clients with access to the expertise of the Company's staff
and information resources as well as Live AnswerDesk ("LAD") services (together
the "Quick Consulting" segment); and the Strategic Consulting and Research Group
("SCRG") which provides more extensive, in-depth custom market research and
competitive intelligence information, as well as customer satisfaction and
loyalty programs (the "Strategic Consulting" segment). The Company considers its
QCS and SCRG service businesses, which operate as "consulting and business
advisory" businesses, to be its core businesses.
REVENUES
Revenues decreased by $1,606,000 or 13.5% to $10,270,000 for the six-month
period ended June 30, 2002 from $11,876,000 for the six-month period ended June
30, 2001. Revenues decreased by $527,000 or 9.2% to $5,226,000 for the
three-month period ended June 30, 2002 from $5,753,000 for the three-month
period ended June 30, 2001.
QCS revenues decreased by 7.5%, LAD revenues decreased by 87.6% and SCRG
revenues decreased by 31.1% for the six-month period ended June 30, 2002 as
compared to the comparable period of the prior year. QCS accounted for 87.8% and
82.1%, LAD accounted for 0.5% and 3.4% and SCRG accounted for 11.1% and 13.9% of
our revenues for the six-month periods ended June 30, 2002 and 2001,
respectively.
QCS revenues decreased by 5.6%, LAD revenues decreased by 89.4% and SCRG
revenues decreased by 11.8% for the three-month period ended June 30, 2002 as
compared to the comparable period of the prior year. QCS accounted for 87.1% and
83.6%, LAD accounted for 0.4% and 3.4% and SCRG accounted for 11.8% and 12.2% of
our revenues for the three-month periods ended June 30, 2002 and 2001,
respectively.
We believe that the decreases in revenue, in all aspects of our business, were
related to the weakened economy and the weakened market for the Company's
services, most notably since the events of September 11, 2001. Both segments of
our business were affected by cancellations, which were not sufficiently offset
by new business, during the first six months of 2002.
DIRECT COSTS
Direct costs (those costs directly related to generating revenue, such as direct
labor and expenses incurred to provide services to clients and the costs of
electronic resources and databases) decreased by 8.9% or $506,000 to $5,207,000
for the six-month period ended June 30, 2002, from $5,713,000 for the six-month
period ended June 30, 2001. Direct costs represented 50.7% and 48.1% of revenues
for the six-month periods ended June 30, 2002 and 2001, respectively.
11
Direct costs decreased by 7.9% or $220,000 to $2,569,000 for the three-month
period ended June 30, 2002, from $2,789,000 for the three-month period ended
June 30, 2001. Direct costs represented 49.2% and 48.5% of revenues for the
three-month periods ended June 30, 2002 and 2001, respectively.
The decrease in total direct costs in terms of dollars was due primarily to the
decrease in revenues, as well as various cost containment measures implemented
by the Company.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased by 4.0% or $252,000 to
$5,976,000 for the six-month period ended June 30, 2002, from $6,228,000 for the
six-month period ended June 30, 2001. The June 30, 2002 expenses include
one-time costs of $188,000 for severance benefits relating to the resignation of
our former Chief Financial Officer. Selling, general and administrative expenses
represented 58.2% and 52.4% of revenues for the six-month periods ended June 30,
2002 and 2001, respectively.
Selling, general and administrative expenses decreased by 6.8% or $211,000 to
$2,896,000 for the three-month period ended June 30, 2002, from $3,107,000 for
the three-month period ended June 30, 2001. Selling, general and administrative
expenses represented 55.4% and 54.0% of revenues for the three-month periods
ended June 30, 2002 and 2001, respectively.
The decrease in selling, general and administrative expenses in terms of dollars
was due primarily to various cost containment measures that were implemented
during the second half of 2001 and the first half of 2002.
OPERATING INCOME
The Company had an operating loss of $913,000 for the six months ended June 30,
2002, as compared to an operating loss of $65,000 for the six months ended June
30, 2001.
The Company had an operating loss of $239,000 for the three months ended June
30, 2002, as compared to an operating loss of $143,000 for the three months
ended June 30, 2001.
INTEREST INCOME AND EXPENSE; OTHER ITEMS
During the six months ended June 30, 2002, the Company earned $9,000 in interest
income, which decreased from $35,000 for the same period in 2001. During the
three months ended June 30, 2002, the Company earned $3,000 in interest income,
which decreased from $15,000 for the same period in 2001. The decrease was a
result of lower cash balances in interest bearing accounts during the first half
of 2002 as compared to the same period in 2001.
Interest expense was $76,000 for the six-month period ended June 30, 2002, which
was a decrease from $137,000 for the same period in 2001. Interest expense was
$36,000 for the three-month period ended June 30, 2002, which was a decrease
from $63,000 for the same period in 2001. The decrease was a result of the
replacement of the remaining Senior Subordinated Note with a term note bearing a
lower interest rate.
In January 2002, the Company received shares of common stock of a mutual company
which converted to a stock company. The Company recognized $34,000 as other
revenue at that time. These securities
12
are classified as trading securities, as they are being held primarily for sale
in the near term. The shares have been recorded at the fair market value. As a
result, the Company recorded an unrealized holding gain on these securities of
$5,000, which is included in other income for the six and three month periods
ended June 30, 2002.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our preparation of our financial statements requires us to make estimates and
judgments that affect reported amounts of assets, liabilities, revenues and
expenses, as more fully disclosed in our 2001 annual report on Form 10-K.
Accounting policies which we believe are critical to our business operations and
the understanding of our results of operations continue to include accounting
for non-marketable equity securities and income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary sources of liquidity and capital resources
have been cash flow from operations (including prepaid retainer fees from
clients) and borrowings. Cash balances were $959,000 and $1,951,000 at June 30,
2002 and December 31, 2001, respectively. The Company's working capital position
(current assets less current liabilities) at June 30, 2002 was $1,879,000, as
compared to $1,352,000 at December 31, 2001.
The Company believes that its cash generated from operations, together with its
existing cash balances, will be sufficient to meet its operating cash needs and
expected capital expenditures for the near term. To supplement possible
short-term cash needs, the Company maintains a $1,000,000 line of credit at its
lender's prime commercial lending rate plus one-half percent, reduced by
outstanding letters of credit totaling $30,000. No amounts were borrowed under
the line of credit as of June 30, 2002. In July 2002, the Company borrowed
$1,000,000 under its line of credit, of which approximately $824,000 was used to
acquire approximately 3% of the outstanding common shares of a publicly traded
research and consulting company in connection with potential strategic
opportunities involving such company. The Company may in the future sell these
shares to an affiliated third-party in connection with such potential strategic
opportunities. The Company consulted with, and obtained the consent of, its
lender with respect to this transaction.
Cash (used in) provided by operating activities was ($1,041,000) and $28,000 in
the six-month periods ended June 30, 2002 and 2001, respectively.
Cash used in investing activities was $184,000 and $29,000 in the six-month
periods ended June 30, 2002 and 2001, respectively. The major portion of capital
expenditures in 2002 and 2001 were for computer hardware upgrades and for
leasehold improvements. The Company expects to spend approximately $175,000 for
capital items during the remainder of 2002.
Cash provided by (used in) financing activities was $233,000 and ($100,000) in
the six-month periods ended June 30, 2002 and 2001, respectively.
13
The Company believes that its current cash balance and cash flow from operations
will be sufficient to cover its expected capital expenditures for the next 12
months and that it will have sufficient liquidity for the next 12 months.
During the six months ended June 30, 2002, the Company granted options to
purchase 256,750 shares of common stock under the Company's Stock Option Plan,
at prices ranging from $0.83 to $1.50.
During the six months ended June 30, 2001, the Company granted options to
purchase 181,550 shares of common stock under the Company's Stock Option Plan,
at prices ranging from $0.625 to $0.800.
In May 2002, the Company's lender agreed to revise the minimum tangible net
worth covenant in our Term Note agreement to $3,500,000, and the bank waived the
prior covenant at the March 31, 2002 reporting date.
The Company's debt agreements with its lender are secured by a general security
interest in all of the Company's assets.
MARKET FOR COMPANY'S COMMON EQUITY
In April 2001, due to our failure to comply with NASDAQ's $1.00 minimum bid
price requirement, our shares of common stock were delisted. Trading has
continued to be conducted on the over-the-counter bulletin board.
INFLATION
The Company has historically been able to increase the prices of its products
and services sufficiently to offset the effects of inflation on direct costs,
and anticipates that it will be able to do so in the future.
FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS
This Report on Form 10-Q (and any other reports issued by the Company from time
to time) contains certain forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Act of 1995. Such
forward-looking statements, including statements regarding its future cash
flows, sales, gross margins and operating costs, and the effect of conditions in
the industry and the economy in general, are based on current expectations that
involve numerous risks and uncertainties. Actual results could differ materially
from those anticipated in such forward-looking statements as a result of various
known and unknown factors, including, without limitation, future economic,
competitive, regulatory, and market conditions, future business decisions, and
those factors discussed under Management's Discussion and Analysis of Financial
Condition and Results of Operations. Words such as "believes", "anticipates",
"expects", "intends", "may", and similar expressions are intended to identify
forward-looking statements, but are not the exclusive means of identifying such
statements. The Company undertakes no obligation to revise any of these
forward-looking statements. Subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by cautionary statements in this paragraph
and elsewhere in this Form 10-Q, and in other reports filed by the Company with
the Securities and Exchange Commission.
14
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The financial position of the Company is subject to market risk associated with
interest rate movements on outstanding debt. Nearly all of the Company's debt
obligations are based upon variable interest rates. The carrying value of the
Company's variable rate debt obligations approximates fair value as the market
rate is based on our lender's prime rate. An increase in the underlying interest
rates would result in a corresponding increase in interest expense, based on the
then outstanding borrowings.
In July 2002, the Company borrowed $1,000,000 under its line of credit in
connection with potential strategic opportunities involving a research and
consulting company. As a result, the Company's total outstanding debt increased
as compared to December 31, 2001, which has increased the Company's exposure to
interest rate market risk.
Except as set forth in the preceding paragraph, there has been no material
change in the Company's assessment of its sensitivity to market risk as of June
30, 2002, as compared to the information included in Part II, Item 7A,
"Quantitative and Qualitative Disclosures About Market Risk", of the Company's
Form 10-K for the year ended December 31, 2001, as filed with the Securities and
Exchange Commission on April 1, 2002.
15
PART II.
OTHER INFORMATION
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on June 6, 2002.
Shareholders voted on four proposals.
The following votes were cast on Proposal #1, for the nominees for election of
directors, and all such nominees were elected.
FOR AGAINST WITHHELD
Martin E. Franklin 5,442,501 0 20,668
David Walke 5,442,001 0 21,168
Andrew P. Garvin 5,437,901 0 25,268
Marc L. Reisch 5,442,501 0 20,668
Robert J. Sobel 5,442,501 0 20,668
Warren Struhl 5,435,606 0 27,563
The following votes were cast on Proposal #2, to amend the Company's 1996 Stock
Option Plan to increase the number of shares of common stock issuable thereunder
from 1,650,000 to 3,500,000.
5,211,399 votes for the ratification and approval
241,365 votes against the ratification and approval
13,405 votes abstained from voting
The following votes were cast on Proposal #3, to amend the Company's Certificate
of Incorporation to increase the number of authorized shares of common stock,
par value $.0001 per share, from 20,000,000 to 100,000,000.
5,347,164 votes for the ratification and approval
103,800 votes against the ratification and approval
10,505 votes abstained from voting
4,700 votes did not vote
The following votes were cast on Proposal #4, on the ratification of the
selection of Deloitte & Touche LLP as independent auditors for the Company for
the year ending December 31, 2002.
4,097,052 votes for the ratification and approval
7,570 votes against the ratification and approval
1,356,847 votes abstained from voting
4,700 votes did not vote
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ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this quarterly report on Form 10-Q.
*10.1 Employment Agreement between Peter M. Stone and FIND/SVP, Inc.
dated May 13th, 2002.
*10.2 Employment Agreement between Daniel S. Fitzgerald and FIND/SVP,
Inc. dated January 17th, 2002.
99.1 Written Statement by the Chief Executive Officer and Chief
Financial Officer of FIND/SVP, Inc.
*This exhibit represents a management contract.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during the
quarter for which this report is filed.
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SIGNATURES
Pursuant to the requirements 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.
FIND/SVP Inc.
-------------
(REGISTRANT)
Date: August 9, 2002 /s/ DAVID WALKE
- --------------------- ----------------------------------
David Walke
Chief Executive Officer
Date: August 9, 2002 /s/ PETER M. STONE
- --------------------- ----------------------------------
Peter M. Stone
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
18