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GuruNet Announces Fourth Quarter and Full Year 2004 Financial
Results
GuruNet to Hold Investor Conference Call Today, March 16, 2005 at 2:00 PM EST
WESLEY HILLS, New York, March 16 /PRNewswire-FirstCall/ -- GuruNet Corporation
(AMEX:GRU), creator of reference search engine Answers.com, today announced its
unaudited financial results for the fourth quarter and full year of 2004, the
last quarter before the Company released Answers.com, on January 3, 2005. The
Company, through its Answers.com site, has begun to generate fees from ads
placed alongside its topic entries. Prior to the launch of Answers.com, the
Company's primary means of generating revenues was from the subscription fees
it charged for the use of its GuruNet premium product.
"In Q4, we successfully completed our IPO and at the end of the quarter we also
decided to move from the subscription model to the much more scalable
advertising-based one, a proven approach in the search space today," said Bob
Rosenschein, GuruNet's CEO. "We are very pleased with the initial reception to
Answers.com: with the press, with consumers, with potential business partners,
and with traffic. And we have recently seen the monetization start to kick in.
With our company's expanded resources, we are better suited to respond to the
heightened interest we are seeing. These financial resources allow the company
to fulfill its mission: to offer Internet consumers an easier way to look up
concise information in one click."
In the fourth quarter of 2004, the Company completed its IPO of 2.35 million
shares of its common stock and the underwriters exercised their over-allotment
option and purchased 352,500 additional shares. Total proceeds, including the
exercise of the over-allotment option, were approximately $10,786,000, net of
fees and offering expenses. In conjunction with the offering, the Company
repaid $3,160,000 of its Bridge debt. On December 31, 2004, the Company had
cash and cash equivalents of $7,415,000. In February 2005 the Company entered
into an agreement with certain holders of warrants pursuant to which such
holders exercised an aggregate of 1,871,783 Bridge Warrants. As a result, the
Company raised approximately $12,225,000, net of costs and fees relating to the
exercise. Further, in 2005, to date, the Company raised additional amounts, in
excess of $1 million, from other exercises of options and warrants.
The Company currently has approximately 6.9 million shares outstanding,
including 1.5 million shares subject to lock-up agreements. Additionally, there
are approximately 2.4 million stock options and warrants outstanding.
"We are pleased to have a healthy balance sheet and the resources to execute on
our new business model. Based on our current plans, the net proceeds of our IPO
and recent fundraising events, will be sufficient to enable us to meet our
planned operating needs for the foreseeable future and to fund possible future
acquisitions," stated Steve Steinberg, GuruNet's CFO.
Revenues for the three months and full year ended December 31, 2004, were
$76,245 and $193,283, respectively, compared to $9,646 and $28,725,
respectively, for the same periods in 2003. The operating losses for the three
months and full year ended December 31, 2004 were $1,101,893 and $3,544,812,
respectively, compared to operating losses of $603,700 and $2,762,325 for the
same periods in 2003. The net loss for the fourth quarter of 2004 was $855,131,
or $.20 per share, compared to a net loss of $659,760, or $1.86 per share, for
the same period in 2003. The net loss for the full year ended December 31, 2004
was $6,590,519, or $2.90 per share, compared to a net loss of $2,808,783, or
$7.93 per share, for the same period in 2003.
The primary reason for the increase in the net loss for the three months and
full year ending December 31, 2004 compared to the same periods in 2003 is the
increase in operating losses noted earlier and increases in interest expense,
net, less offsets for gain on extinguishment of debt. Interest expense, net,
for the three months and full year ended December 31, 2004 includes
approximately $1,110,000 and $3,962,000, respectively, of non-cash charges
resulting from the amortization of note discounts and deferred charges relating
to the convertible bridge notes, which will be described further in the
footnotes to the financial statements that we plan to file later this month.
Gain on extinguishment of debt, for the three months and full year ended
December 31, 2004 includes approximately $1,493,000 of non-cash gain resulting
from the fact that, in October 2004, 63% of the Bridge Notes did not actually
convert, but rather were repaid.
GuruNet will host a conference call today, Wednesday, March 16; at 2:00 PM EST,
to discuss the results of its fourth quarter and full year ended December 31,
2004. Bob Rosenschein, Chief Executive Officer, and Steven Steinberg, Chief
Financial Officer, will be making the presentation, which will be followed by a
question and answer session. Investors will have the opportunity to listen to
the conference call and the replay over the Internet through GuruNet's Investor
Relations page at http://www.gurunet.com/ir. To listen to the live call via
webcast, please go to the Web site at least 10 minutes early to connect and
register. To dial in to listen and/or submit a question, please dial
888-889-2497 and request the GuruNet call. For those unable to listen to the
live broadcast, a replay will be available on the site shortly after the call,
and will remain available on the site for a period of three weeks following the
call.
About GuruNet
GuruNet Corporation (AMEX:GRU) operates a reference search engine, Answers.com
(http://www.answers.com/). Founded in 1999 by Bob Rosenschein, GuruNet provides
patented technology and software tools to access concise information on demand.
For additional information, visit http://www.gurunet.com/.
Cautionary Statement
Some of the statements included in this press release are forward-looking
statements that involve a number of risks and uncertainties. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
Important factors may cause our actual results to differ materially, including
our inability to increase the number of persons who use our products and the
number of partners who will generate increase traffic to our sites, and other
risk factors identified from time to time in our SEC reports, including, but
not limited to, the registration statement on Form SB-2 filed in connection
with our initial public offering in October 2004. Any forward-looking
statements set forth in this news release speak only as of the date of this
news release. We do not intend to update any of these forward-looking
statements to reflect events or circumstances that occur after the date hereof.
This press release and prior releases are available at http://www.gurunet.com/.
The information in GuruNet's website is not incorporated by reference into this
press release and is included as an inactive textual reference only.
(Tables to follow)
GuruNet Contact:
Jay Bailey
Director of Communications
+1-866-576-0352
Selected Consolidated Financial Data (Unaudited)
Statements of Operations:
Three months ended
December 31, Year ended December 31,
2004 2003 2004 2003
$ $ $ $
Revenue 76,245 9,646 193,283 28,725
Cost of revenue 213,442 185,167 647,055 723,349
Gross margin (137,197) (175,521) (453,772) (694,624)
Operating
expenses:
Research and 243,559 173,467 1,033,521 910,114
development
Sales and 232,406 122,508 932,455 478,942
marketing
General and 488,731 132,204 1,125,064 678,645
administrative
Total operating
expenses 964,696 428,179 3,091,040 2,067,701
Operating loss (1,101,893) (603,700) (3,544,812) (2,762,325)
Interest income (1,134,809) (5,386) (4,382,583) 719
(expense), net
Gain on 1,493,445 - 1,493,445
extinguishment of
debt
Other income (105,340) (16,084) (116,012) (12,586)
(expense), net
Loss before income (848,597) (625,170) (6,549,962) (2,774,192)
taxes
Income taxes (6,534) (34,591) (40,557) (34,591)
Net loss (855,131) (659,761) (6,590,519) (2,808,783)
Basic and diluted
net loss per
common share (0.20) (1.86) (2.90) (7.93)
Weighted average
shares used in
computing basic
and diluted net
loss per common
share 4,369,929 354,842 2,273,675 354,112
Balance Sheets:
The following table summarizes our balance sheet data as of December 31, 2004
and 2003:
2004 2003
Cash and short-term investments * $7,415,415 $123,752
Working capital (deficiency) $6,688,721 ($752,934)
Total assets $8,907,183 $1,043,292
Long-term liabilities $1,078,548 $1,023,521
Total stockholders' equity (deficit) $6,824,122 ($1,044,446)
* In February 2005, GuruNet received gross consideration of approximately $12.5
million from the exercise of warrants. As this event took place after December
31, 2004, such amount is not reflected above.
DATASOURCE: GuruNet Corporation
CONTACT: GuruNet Contact: , Jay Bailey, Director of
Communications, +1-866-576-0352