================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended April 30, 1997 Commission File Number 0-27830 ___________ LYCOS, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-3277338 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 500 Old Connecticut Path, Framingham, Massachusetts 01701-4576 (Address of principal executive offices, including Zip Code) (508)-424-0400 (Registrant's telephone number, including area code) 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. [X] Yes [_] No The number of shares outstanding of the registrant's Common Stock as of June 13, 1997 was 13,796,620. ================================================================================
LYCOS, INC. INDEX <TABLE> <CAPTION> Page ---- <S> <C> Part I. Financial Information Item 1 Consolidated Financial Statements: Consolidated Balance Sheets (unaudited) April 30, 1997 and July 31, 1996............................... 3 Consolidated Statements of Operations (unaudited) Three and nine months ended April 30, 1997 and 1996............ 4 Consolidated Statements of Cash Flows (unaudited) Nine months ended April 30, 1997 and 1996...................... 5 Notes to Consolidated Financial Statements (unaudited)............ 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 10 Part II. Other Information Item 1 Legal Proceedings................................................. 13 Item 2 Changes in Securities............................................. 13 Item 3 Defaults Upon Senior Securities................................... 13 Item 4 Submission of Matters to a Vote of Securities Holders............. 13 Item 5 Other Information................................................. 13 Item 6 Exhibits and Reports on Form 8-K.................................. 13 Signature......................................................... 14 </TABLE> 2
LYCOS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) <TABLE> <CAPTION> April 30, July 31, 1997 1996 ------------ ------------ <S> <C> <C> Assets Current assets: Cash and cash equivalents $ 37,010,072 $ 44,142,187 Accounts receivable, less allowance for doubtful accounts of $389,000 at 6,094,811 3,293,925 April 30, 1997 and $200,000 at July 31, 1996 License fees receivable 4,589,351 1,032,405 Prepaid expenses 5,510,236 981,711 ------------ ------------ Total currrent assets 53,204,470 49,450,228 ------------ ------------ Property and equipment, less 2,388,611 1,405,768 accumulated depreciation Long-term license fees receivable 1,700,000 951,816 License agreement, net 1,221,100 1,513,466 Goodwill, net 128,737 171,682 Other assets 354,140 167,615 ------------ ------------ Total assets $ 58,997,058 $ 53,660,575 ============ ============ Liabilities and stockholders' equity Current liabilities: Accounts payable $ 2,899,179 $ 2,741,879 Accrued expenses 8,236,998 1,746,418 Deferred revenues 6,575,228 3,148,422 Billings in excess of revenues 1,315,757 1,402,432 Due to related parties 206,053 437,267 ------------ ------------ Total current liabilities 19,233,215 9,476,418 ------------ ------------ Long-term deferred revenue 1,500,000 - Deferred taxes 61,667 78,000 Stockholders' equity: Common stock, $.01 par value 137,966 137,929 Additional paid-in capital 49,546,316 49,537,608 Deferred compensation (245,048) (376,161) Accumulated deficit (11,237,058) (5,193,219) ------------ ------------ Total stockholders' equity 38,202,176 44,106,157 ------------ ------------ Commitments Total liabilities and stockholders' equity $ 58,997,058 $ 53,660,575 ============ ============ </TABLE> See accompanying notes to consolidated financial statements 3
LYCOS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) <TABLE> <CAPTION> Three Months Ended Nine Months Ended April 30, April 30, 1997 1996 1997 1996 --------------- -------------- ------------- --------------- <S> <C> <C> <C> <C> Revenues: Advertising $ 4,487,541 $ 1,305,865 $11,600,135 $ 2,244,912 License and product 1,365,486 246,417 2,920,086 348,833 --------------- -------------- ------------- --------------- Total revenues 5,853,027 1,552,282 14,520,221 2,593,745 Cost of revenues 2,190,981 1,472,012 6,618,845 2,139,094 --------------- -------------- ------------- --------------- Gross profit 3,662,046 80,270 7,901,376 454,651 Operating expenses: Research and development 1,167,161 226,112 3,110,702 514,176 In process research and development - - - 452,000 Sales and marketing 3,565,490 1,055,228 10,437,989 1,495,171 General and administrative 682,322 499,241 1,999,601 997,027 --------------- -------------- ------------- --------------- Total operating expenses 5,414,973 1,780,581 15,548,292 3,458,374 --------------- -------------- ------------- --------------- Operating loss (1,752,927) (1,700,311) (7,646,916) (3,003,723) Interest income, net 480,145 111,937 1,603,077 121,883 --------------- -------------- ------------- --------------- Net loss $ (1,272,782) $ (1,588,374) $(6,043,839) $ (2,881,840) =============== ============== ============= =============== Net loss per share $ (0.09) $ (0.13) (0.44) $ (0.25) =============== ============== ============= =============== Shares used in computing net loss per share 13,796,620 11,973,097 13,794,110 11,328,202 =============== ============== ============= =============== </TABLE> See accompanying notes to consolidated financial statements 4
LYCOS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <TABLE> <CAPTION> Nine Months Ended April 30, 1997 1996 -------------- -------------- <S> <C> <C> Operating activities Net loss $ (6,043,839) $ (2,881,840) Adjustments to reconcile net loss to net cash used in operating activities: Amortization of deferred compensation 121,456 164,148 Depreciation and amortization 913,445 313,219 Provision for bad debts 240,000 100,000 In process research and development expense - 452,000 Changes in operating assets and liabilities: Accounts receivable (3,040,886) (1,905,726) License fees receivable (4,305,130) (3,018,708) Prepaid expenses (4,528,525) (134,469) Other assets (186,525) (369,250) Accounts payable 157,300 846,551 Accrued expenses 6,490,580 1,272,693 Deferred revenues 4,926,806 2,290,338 Billings in excess of revenues (86,675) 1,449,024 Due to related parties (231,214) 793,035 Deferred taxes (16,333) - -------------- -------------- Net cash used in operating activities (5,589,540) (628,985) Investing activities Purchase of property and equipment (1,560,977) (1,288,412) Payments under License Agreement - (747,500) Cash acquired through acquisition of Point Communications - 17,137 -------------- -------------- Net cash used in investing activities (1,560,977) (2,018,775) Financing activities Proceeds from issuance of common stock, net of issuance costs 18,402 46,021,314 Proceeds from capital contribution - 1,000,000 -------------- -------------- Net cash provided by financing activities 18,402 47,021,314 -------------- -------------- Decrease in cash and cash equivalents (7,132,115) 44,373,554 -------------- -------------- Cash and cash equivalents at beginning of period 44,142,187 446,447 -------------- -------------- Cash and cash equivalents at end of period $ 37,010,072 $ 44,820,001 ============== ============== </TABLE> 5
LYCOS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS-(CONTINUED) (Unaudited) <TABLE> <CAPTION> Nine Months Ended April 30, 1997 1996 ---------- ---------- <S> <C> <C> Schedule of non-cash financing and investing activities: Issuance of common stock for License Agreement - $300,000 Recognition of deferred tax liability related to License Agreement - 50,000 Assets and liabilities recognized upon acquisition of Point Communications: Accounts receivable - 33,975 Property and equipment - 47,496 Goodwill - 186,633 Accounts payable - 97,734 Deferred revenues - 23,137 Accrued expenses - 4,370 Due to related parties - 70,000 Supplementary disclosure of cash flow information: Interest paid - $ 8,942 </TABLE> See accompanying notes to consolidated financial statements 6
LYCOS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The Company and Basis of Presentation Lycos, Inc. ("the Company") provides among the most widely used online navigational guides to the Internet's World Wide Web. The Company was formed in June 1995 by CMG@Ventures, L.P., a wholly-owned subsidiary of CMG Information Services. The Company operates in one industry segment, selling advertising on its Web sites and licensing its technology and products to customers in various industries worldwide. The Company's fiscal year end is July 31. The accompanying unaudited consolidated financial statements include the accounts of the Company and Point Communications Corporation, its wholly- owned subsidiary, and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of these interim periods. Certain information and related footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes the disclosures in these financial statements are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the Company's audited financial statements for the year ended July 31, 1996, included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the interim periods shown are not necessarily indicative of the results for any future interim period or for the entire fiscal year. 2. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original or remaining maturities of three months or less to be cash equivalents, and those with maturities of greater than three months but less than twelve months to be short-term investments. At April 30, 1997, the Company had no investments with maturities greater than three months. 3. Commitments In April 1996, the Company entered into a one year "Premier Provider" agreement ("the 1996 Agreement") with Netscape Communications Corporation ("Netscape") pursuant to which the Company was designated one of five "Premier Providers" of search and navigation services accessible from the "Net Search" button on the Netscape browser. Under the terms of the 1996 Agreement, the Company was obligated to make installment payments totaling $5 million over its term. At April 30, 1997, the Company had no remaining financial obligations under the terms of the 1996 Agreement. The cost of the 1996 Agreement was recognized ratably over its term and therefore, $972,000 relating to the 1996 Agreement was included in "Cost of revenues" in the accompanying Consolidated Statements of Operations for the three months ended April 30, 1997. 7
LYCOS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED) (Unaudited) 3. Commitments (continued) In March 1997, the Company renewed its one year "Premier Provider" agreement ("the 1997 Agreement") with Netscape which commenced in May, 1997 for an additional one year term, pursuant to which the Company was designated as one of four "Premier Providers" of search and navigation services accessible from the "Net Search" button on the Netscape browser. The Company is obligated to make minimum payments of $4.7 million under the terms of the 1997 Agreement. To the extent that the minimum guaranteed exposures are exceeded, the Company is obligated to make additional payments. In addition, during the term of the 1997 Agreement, Netscape is required to purchase advertising and services on the Company's Web Site valued at $1,500,000. The cost of the 1997 Agreement will be recognized over its term, however, no costs have been incurred through April, 1997 under the 1997 Agreement. The Company leases its facilities and certain other equipment under operating agreements expiring through 2001. Future noncancelable minimum payments as of April 30, 1997 under these leases for each fiscal year end are as follows: <TABLE> <S> <C> 1997 $ 666,312 1998 2,506,560 1999 2,230,337 2000 941,113 2001 276,981 Thereafter 238,270 ---------- $6,859,573 ========== </TABLE> The Company is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the ultimate liability with respect to these actions will not materially affect the financial position of the Company. In December 1996, the Company entered into a lease for new corporate offices located in Framingham, Massachusetts. The lease, which has a three and one- half year term, commenced in February 1997. In addition, during the nine months ended April 30, 1997, the Company entered into three lease agreements for sales offices in New York, San Francisco, and a new operations center in Pittsburgh. 4. Net Loss Per Share Net loss per share is computed using the weighted average number of shares of common stock and dilutive common stock equivalent shares outstanding during the period. Pursuant to the Securities and Exchange Commission Staff Accounting Bulletins, for periods prior to the Company's initial public offering such computations include those common and common equivalent shares issued within 12 months of the filing date as if they were outstanding for all periods presented using the treasury stock method. Common equivalent shares consist of shares issuable upon the exercise of stock options. Fully diluted net loss per share approximates primary net loss per share. 8
4. Net Loss Per Share (Continued) In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128, "Earnings per Share". This Statement is effective for the Company's fiscal year ending July 31, 1997. The Statement redefines earnings per share under generally accepted accounting principles. Under the new standard, primary earnings per share is replaced by basic earnings per share and fully diluted earnings per share is replaced by diluted earnings per share. If the Company had adopted this Statement for the three month periods ended April 30, 1997 and 1996, the Company's basic and diluted net income per share would have been unchanged from primary and fully diluted earnings per share for the three month periods ended April 30, 1997 and 1996. 5. Subsequent Event Lycos entered into a joint venture agreement with Bertelsmann Internet Services GmbH ("Bertelsmann") dated as of May 1, 1997, to create and distribute Internet navigation centers throughout Eastern and Western Europe. Bertelsmann will provide up to $10 million in financing to the venture and Lycos will contribute its technology and Internet expertise. Lycos and Bertelsmann will each own a 50% stake in the new venture, named Lycos- Bertelsmann. The venture has commenced operations in Germany, the United Kingdom and France and is expected to establish operations by September in Italy, Belgium, Netherlands, Luxembourg and Spain. 9
Management's Discussion and Analysis of Financial Condition and Results of Operations The matters discussed in this report contain forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section and elsewhere in this Report, and the risks discussed in the "Factors Affecting the Company's Business, Operating Results and Financial Condition" section included in the Company's 1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission. Overview Lycos, Inc. ("the Company") provides among the most widely used online navigational guides to the Internet's World Wide Web. The Company was formed in June 1995 by CMG@Ventures, L.P., a wholly-owned subsidiary of CMG Information Services. The Company operates in one industry segment, selling advertising on its Web sites and licensing its technology and products to customers in various industries worldwide. The Company's fiscal year end is July 31. The Company has an extremely limited operating history upon which an evaluation of the Company and its prospects can be based. The Company and its prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. The Company has achieved only limited revenues to date. The limited operating history of the Company makes the prediction of future results of operations difficult or impossible, and therefore, there can be no assurance that the Company will sustain revenue growth or achieve profitability. The Company has incurred significant losses since inception and expects to continue to incur significant losses on a quarterly basis for the foreseeable future. As of April 30, 1997, the Company had an accumulated deficit of $11,237,058. As a result of the Company's limited operating history, the Company does not have historical financial data for any significant period of time on which to base planned operating expenses. The Company's expense levels are based in part on its expectations as to future revenues and to a large extent are fixed. Quarterly sales and operating results generally depend on the advertising revenues, license fees and other revenues received within the quarter, which are difficult to forecast. Since the Company's expense levels are based upon anticipated advertising and licensing revenue, the Company may not be able to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in relation to the Company's expectations would have an immediate adverse impact on the Company's business, results of operations and financial condition. In addition, the Company plans to increase its operating expenses to fund greater levels of research and development, increase its sales and marketing operations, develop new distribution channels, broaden its customer support capabilities and establish brand identity and strategic alliances. In the future, leading Web sites, browser providers and other distribution channels may require payments or other consideration for listing the Company's products and services such as the Company's arrangement with Netscape. To the extent that such expenses precede or are not subsequently followed by increased revenues, the Company's business, results of operations and financial condition will be materially adversely affected. The Company's operating results may fluctuate significantly in the future as a result of a variety of factors, some of which are outside of the Company's control. These factors include general economic conditions, specific economic conditions in the Internet industry, usage of the Internet, demand for Internet advertising, seasonal trends in advertising sales, the advertising budgeting cycles of individual advertisers, capital expenditures and other costs relating to the expansion of operations, the introduction of new products or services by the Company or its competitors, the mix of the services sold and the channels through which those services are sold and pricing changes. As a strategic response to the changing competitive environment, the Company may elect from time to time to make certain pricing, service or marketing decisions or acquisitions that could have a material adverse effect on the Company's business, results of operations and financial condition. The Company believes that period to period comparisons of its operating results are not meaningful and should not be relied upon for an indication of future performance. The Company also expects that, in the future, it may experience seasonality in its business, with advertising impressions (and therefore revenues) being somewhat lower during the summer months, when usage of the Company's products and services may be expected to decline. Due to all of the foregoing factors, it is possible that in some future quarter, the Company's operating results may be below the expectations of public market analysts and investors. In such event, the price of the Company's Common Stock would likely be materially adversely affected. Results of Operations Revenues Total revenues for the three and nine months ended April 30, 1997 were $5.9 million and $14.5 million versus $1.6 and $2.6 million for the three and nine months ended April 30, 1996, representing an increase of 277% and 460%, respectively. As of April 30, 1997, the Company had deferred revenues of $9.4 million attributable to advertising and license agreements for which there are significant obligations of the Company remaining, and billings in excess of revenues attributable to billings in advance of revenue recognized on advertising contracts. Advertising revenues Advertising revenues were $4.5 million and $11.6 million for the three and nine months ended April 30, 1997, representing 77% and 80% of total revenues as compared to advertising revenues of $1.3 million and $2.2 million for the three and nine months ended April 30, 1996, which represented 84% and 87% of total revenues, respectively. The Company's advertising revenues are derived principally from the sale of advertising on its Internet web sites. Advertising contracts vary in duration from several days to five years. Advertising contracts are principally sold as either: (1) a "general rotation" contract under which a customer is guaranteed a minimum number of impressions; (2) a "key word" contract in which a customer purchases the right to specified words and the customer's advertisement is shown as those words are "searched"; or (3) a combination of general rotation and key word contracts. License and product revenues License and product revenues were $1.4 million and $2.9 million for the three and nine months ended April 30, 1997, representing 23% and 20% of total revenues as compared to $246,000 and $349,000 for the three and nine months ended April 30, 1996, representing 16% and 13% of total revenues, respectively. This increase is attributable primarily to the addition of new licensees, including, among others, GTE, Blockbuster, Compuserve, and Dun and Bradstreet. The Company licenses its products and technology generally in exchange for a license fee, maintenance fees for product updates and, where applicable, a share of the advertising revenues, subscription fees or product sales received by licensees. The Company's license agreements generally have terms of one to three years. Cost of revenues Cost of revenues were $2.2 million and $6.6 million for the three and nine months ended April 30, 1997, representing 37% and 46% of total revenues, as compared to $1.5 million and $2.1 million in the three and nine months ended April 30, 1996, which represented 95% and 83% of total revenues, respectively. Cost of revenues consist primarily of expenses associated with the ongoing enhancement, maintenance and support of the Company's products and services, including compensation, consulting fees, equipment, networking and other related indirect costs. Cost of revenues also includes amortization costs associated with the Company's License Agreement with Carnegie Mellon University, as well as costs associated with the Company's "Premier Provider" agreement, as further described below. 10
In April 1996, the Company entered into a one year "Premier Provider" agreement ("the Agreement") with Netscape pursuant to which the Company was designated one of five "Premier Providers" of search and navigation services accessible from the "Net Search" button on the Netscape browser. Under the terms of the Agreement, the Company made installment payments totaling $5 million over the term of the Agreement. The Company recognized the cost of this agreement ratably over the term of the agreement. For the three months ended April 30, 1997, cost of revenues includes $972,000 attributable to the Agreement. In March 1997, the Company renewed its one year "Premier Provider" agreement ("the 1997 Agreement") with Netscape pursuant to which the Company was designated one of four "Premier Providers" of search and navigation services accessible from the "Net Search" button on the Netscape browser. Under the terms of the 1997 Agreement, the Company is obligated to make installment payments totaling $4.7 million over the term of the 1997 Agreement. The Company recognizes the cost of the 1997 Agreement ratably over its term. For the three months ended April 30, 1997, no costs have been incurred attributable to the 1997 Agreement. Operating expenses Research and Development Research and development expenses were $1.2 million and $3.1 million for the three and nine months ended April 30, 1997, representing 20% and 21% of total revenues, versus $226,000 and $966,000 for the three and nine months ended April 30, 1996, or 15% and 37% of total revenues, respectively. In addition, during the nine months ended April 30, 1996, the Company recorded $452,000 of in process research and development expense related to the acquisition of Point Communications. Research and development expenses consist primarily of equipment depreciation, personnel costs and editorial costs. The overall increase in research and development spending was primarily due to increased staffing required to continue to develop and enhance the Company's product lines. The Company expects to continue to commit substantial resources to research and development in the future. Sales and Marketing Sales and marketing expenses were $3.6 million and $10.4 million for the three and nine months ended April 30, 1997, representing 61% and 72% of total revenues, versus $1.1 million and $1.5 million for the three and nine months ended April 30, 1996, representing 68% and 58% of total revenues, respectively. The spending increases were due to the addition of sales and marketing personnel and expenses associated with the Company's expanded advertising, marketing and public relations campaigns. The Company expects to continue to build its sales force and promote its brand resulting in continued increases in sales and marketing expenses in future periods. General and Administrative General and administrative expenses were approximately $682,000 and $2.0 million for the three and nine months ended April 30, 1997, representing 12% and 14% of total revenues versus $500,000 and $997,000 for the three and nine months ended April 30, 1996, representing 32% and 38% of total revenues, respectively. The increases in spending were primarily due to the expansion of the Company's corporate infrastructure, including the addition of finance and administrative personnel and increased costs for professional services. Interest Income, net Interest income, net, was approximately $480,000 and $1.6 million for the three and nine months ended April 30, 1997 versus $112,000 and $122,000 for the three and nine months ended April 30, 1996, respectively. The increase is due primarily to the investment of proceeds received upon the closing of the Company's initial public offering in April 1996. Other factors which may affect future operations There are a number of business factors which singularly or combined may affect the Company's future operating results. These factors include the limited operating history of the Company, dependence on major customers, dependence on advertising revenues, dependence on third party relationships, dependence on the Internet, rapid technological change, competition and variability of quarterly results, which have been outlined in the Company's 1996 Annual Report on Form 10-K, filed with the Securities and Exchange Commission. 11
Liquidity and Capital Resources At April 30, 1997, the Company had cash and cash equivalents of $37.0 million. The Company regularly invests excess funds in short-term money market funds, government securities, and commercial paper. At April 30, 1997, the Company also has available a bank revolving credit facility providing for borrowings up to $1.0 million which matures on June 1, 1997. As of April 30, 1997, there were no borrowings outstanding under this credit facility. The Company used cash from operations of $5.6 million in the nine months ended April 30, 1997, due primarily to the net loss, as well as the increase in accrued expenses, primarily attributable the Company's Premier Provider Agreement with Netscape. The Company's primary investing activity in the three month period has been, and further expenditures are anticipated to be, for the purchase of computer and office equipment to support the Company's growth. From time to time the Company expects to evaluate the acquisition of products, businesses and technologies that complement the Company's business. Currently, however, the Company does not have any understandings, commitments or agreements with respect to any such material acquisitions. The Company believes that its existing cash and cash equivalents, together with borrowings available under the Company's credit facility, will be sufficient to meet the Company's cash requirements for at least the next twelve months. Thereafter, the Company may need to raise additional funds. The Company may need to raise additional funds sooner in order to fund more rapid expansion, to develop new or enhanced products and services, to respond to competitive pressures or to acquire complementary businesses or technologies. If additional funds are raised through the issuance of equity securities, the percentage ownership of the stockholders of the Company will be reduced, stockholders may experience additional dilution, and such equity securities may have rights, preferences or privileges senior to those of the Company's Common Stock. There can be no assurance that additional financing will be available when needed on terms favorable to the Company or at all. If adequate funds are not available or are not available on acceptable terms, the Company may be unable to develop or enhance products and services, take advantage of future opportunities or respond to competitive pressures, which could have a material adverse effect on the Company's business, results of operations or financial condition. 12
PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is not currently involved in any legal proceedings that it believes could have, either individually or in the aggregate, a material adverse effect on its business or financial condition. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Securities Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) *Exhibit 10.1: Netscape Premier Provider Agreement, dated as of April 1, 1997 *Exhibit 10.2: Agreement dated as of May 1, 1997 between Bertelsmann Internet Services GmbH and Lycos, Inc. *Exhibit 10.3: GTE New Media Services License and Services Agreement, dated as of November 18, 1996 Exhibit 10.4: Praxis International Sublease, dated as of December 4, 1996 Exhibit 11: Statement of Computation of Net Loss Per Share included herein on page 14. Exhibit 27: Financial Data Schedule (Edgar Version Only) (b) No reports on Form 8-K were filed during the three-month period ended April 30, 1997. - ------------------------ * Confidential material omitted and filed separately with the Securities and Exchange Commission. 13
SIGNATURE 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. LYCOS, INC. Date: June 13, 1997 By: ------------------------------------ Edward M. Philip Chief Operating Officer and Chief Financial Officer (Principal Financial and Accounting Officer, Authorized Officer) 14