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Stocks T / The Knot, Inc.


Subject:  Re: any word yet on franchisees? Date:  12/17/2000  9:07 AM
Author:  babybull Number:  41 of 127

I probably should have picked up some shares at .50 but I wasn't paying attention. Oh well. I have e-mailed the knot investor relations, as well as one of the franchisees involved in the lawsuit, so hopefully somebody will tell me something.

The lawsuit is both for unspecified damages, and an injunction (I think mostly it's about an injunction). What the plaintiffs want, as I understand it, is for the Knot to cease accepting ad revenue on its local "wedding pages" part of the website. This was brought up at the very end of the conference call (you can access the call on the knot website). They didn't talk about it much. They said less than 1% of their revenues are at issue. They also said the "alliance agreements" expire on Decemeber 31, 2000. I have no idea what the hell that means. The contracts run out with their franchisees? They no longer get revenues from weddingpages after 12/31/00? It was frankly a bizarre way to end a conference call, it raised more questions than it answered.

Some of the weddingpages magazines, by the way, are wholly owned by the company (not franchised out), no idea what percentage.

As for cash burn rates, the company had $19 million plus at the end of Q3, probably $16-$17 million now. Enough cash to last them through 2001, and one or two quarters in 2002, if the burn rates stay the same. Interestingly, as far as I can tell, they haven't laid anybody off (I've got three internet investments--Amazon, Internet Capital and SciQuest--and they have all laid people off). So either the company is very confident about its expenditures, or has trouble making tough decisions.

The November 30 deadline came and went, no news, no press release, no explanation. I'm not too impressed with allowing the lawsuit to happen, and the lack of info given to investors. Still have questions about management. Still love the business model. Great brand and they are a pr machine (but an ir disaster).

Watching and waiting...

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