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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10 - Q/A
X Quarterly report pursuant to Section 13 or 15(d) of the
--- Securities Exchange Act of 1934 for the quarterly
period ended June 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: 0-20789
PRIMIX SOLUTIONS INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3249618
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Arsenal Marketplace, Second Floor, Watertown, Massachusetts 02472
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 923-6500
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
------ ------
As of August 2, 1999, there were 14,683,721 shares of registrant's Common
Stock outstanding.
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Primix Solutions Inc.
Table of Contents
<TABLE>
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PAGE
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1998 and June 30, 1999 3
Condensed Consolidated Statements of Operations for the three and six months ended
June 30, 1998 and 1999 4
Condensed Consolidated Statements of Cash Flows for the six months ended
June 30, 1998 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
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Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Primix Solutions Inc.
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1998 1999
------------ -----------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 26,693 $ 14,712
Marketable securities - 8,505
Accounts receivable, net 2,871 3,557
Prepaid expenses and other current assets 443 567
Note receivable from related party - 150
Total current assets 30,007 27,491
Property and equipment, net 821 489
Other assets:
Goodwill, net 2,178 2,110
Notes receivable from related parties 150 150
-------- --------
Total other assets 2,328 2,260
-------- --------
Total assets $ 33,156 $ 30,240
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 965 $ 895
Current portion of capital lease obligation 83 -
Accrued expenses 2,162 1,989
Note payable to related party 204 -
Deferred revenue 84 80
-------- --------
Total current liabilities 3,498 2,964
Capital lease obligation, net of current portion 42 -
-------- --------
Total liabilities 3,540 2,964
-------- --------
-------- --------
Stockholders' equity:
Common stock 15 15
Treasury stock (1,517) (1,416)
Additional paid-in capital 59,180 59,153
Accumulated deficit (28,062) (30,476)
-------- --------
Total stockholders' equity 29,616 27,276
-------- --------
Total liabilities and stockholders' equity $ 33,156 $ 30,240
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
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Primix Solutions Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Unaudited Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1998 1999 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Professional services $ 964 $ 2,552 $ 1,929 $ 4,492
Software license and maintenance 85 - 179 -
-------- -------- -------- --------
Total revenue 1,049 2,552 2,108 4,492
Operating expenses:
Professional services 1,002 2,169 1,876 3,604
Sales and marketing 390 790 699 1,324
General and administrative 1,223 1,309 2,237 2,445
Research and development - - 295 -
Amortization of goodwill - 54 - 109
-------- -------- -------- --------
Total operating expenses 2,615 4,322 5,107 7,482
-------- -------- -------- --------
Operating loss (1,566) (1,770) (2,999) (2,990)
Interest income, net 425 278 864 576
-------- -------- -------- --------
Net loss $ (1,141) $ (1,492) $ (2,135) $ (2,414)
-------- -------- -------- --------
-------- -------- -------- --------
Basic and diluted net loss per common
share $ (0.08) $ (0.10) $ (0.15) $ (0.17)
-------- -------- -------- --------
-------- -------- -------- --------
Shares used in computing net loss
per common share 14,394 14,621 14,392 14,620
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
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Primix Solutions Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Unaudited
Six Months Ended
June 30,
------------------------
1998 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,135) $ (2,414)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 431 563
Changes in operating assets and liabilities:
Accounts receivable (148) (686)
Prepaid expenses and other current assets 76 (124)
Accounts payable 55 (70)
Other current liabilities (167) (173)
Deferred revenue (362) (4)
-------- --------
Net cash used in operating activities (2,250) (2,908)
-------- --------
Cash flows from investing activities:
Sales (purchases) of marketable securities,net 9,819 (8,505)
Purchases of property and equipment (32) (122)
Increase in purchase of Advis - (41)
Increase in other assets (150) (150)
-------- --------
Net cash provided by (used in) investing activities 9,637 (8,818)
-------- --------
Cash flows from financing activities:
Payment of note payable to related party - (204)
Proceeds from common stock purchased through
employee stock purchase plan 30 29
Proceeds from the exercise of stock options 5 45
Payment of capital lease obligations - (125)
-------- --------
Net cash provided by (used in) financing activities 35 (255)
-------- --------
Net increase (decrease) in cash and cash equivalents 7,422 (11,981)
Cash and cash equivalents, beginning of period 10,804 26,693
-------- --------
-------- --------
Cash and cash equivalents, end of period $ 18,226 $ 14,712
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
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Primix Solutions Inc.
Notes to Condensed Consolidated Financial Statements
( Unaudited )
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein are
unaudited and reflect all adjustments, consisting of normal recurring
adjustments, which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. These financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 as filed with the Securities and Exchange Commission.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates and would impact future
results of operations and cash flows.
The results of operations for the reported 1999 periods are not
necessarily indicative of the results to be achieved for the entire year ending
December 31, 1999.
2. ACQUISITION OF ADVIS, INC.
On December 31, 1998, the Company acquired Advis, Inc., a privately
held Boston based e-Business consulting company, which augmented the depth and
breadth of the Company's capabilities in developing highly advanced systems
architectures that support e-Business solutions.
The transaction has been accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16, "Business Combinations".
Accordingly, the operating results of Advis, Inc. are included in the Company's
consolidated financial statements effective January 1, 1999. The excess purchase
price over the net assets acquired of $2.2 million has been recorded as goodwill
and is being amortized over its estimated useful life of 10 years.
3. RECLASSIFICATION OF FINANCIAL STATEMENTS
Certain prior and current year amounts have been reclassified to
conform to the current year presentation. The unaudited data below is shown for
informational purposes only and is prepared on a basis consistent with the
current year presentation of the income statement:
6
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<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------------------------
March 31, June 30, Sept. 30, Dec. 31, March 31, June 30,
1998 1998 1998 1998 1999 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Professional services $ 965 $ 964 $ 1,305 $ 1,371 $ 1,940 $ 2,552
Software license and maintenance 94 85 32 - - -
-------- -------- -------- -------- -------- --------
Total revenue 1,059 1,049 1,337 1,371 1,940 2,552
Operating expenses:
Professional services 874 1,002 915 1,087 1,435 2,169
Sales and marketing 309 390 729 644 534 790
General and administrative 1,014 1,223 947 1,211 1,136 1,309
Research and development 295 - - - - -
Amortization of goodwill - - - - 55 54
-------- -------- -------- -------- -------- --------
Total operating expenses 2,492 2,615 2,591 2,942 3,160 4,322
-------- -------- -------- -------- -------- --------
Operating loss (1,433) (1,566) (1,254) (1,571) (1,220) (1,770)
Interest income, net 439 425 408 350 298 278
-------- -------- -------- -------- -------- --------
Net loss $ (994) $ (1,141) $ (846) $ (1,221) $ (922) $ (1,492)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Basic and diluted net loss per common
share $ (0.07) $ (0.08) $ (0.06) $ (0.08) $ (0.06) $ (0.10)
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Shares used in computing net loss
per common share 14,984 14,394 14,402 14,406 14,618 14,621
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
4. COMPUTATION OF BASIC AND DILUTED NET LOSS PER COMMON SHARE
In accordance with the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 128, Earnings Per Share, basic net loss
per share is computed by dividing net loss by the weighted average common shares
outstanding, with no consideration given for any potentially dilutive
securities. Diluted net loss per share is the same as basic net loss per share
because the inclusion of common stock issuable pursuant to stock options and
warrants (number of antidilutive shares were 1,152,000 and 2,240,000 at June 30,
1998 and 1999, respectively) would be antidilutive.
5. OTHER ASSETS
In March 1999, the Company issued two separate promissory notes, each
in the amount of $75,000, to two employees of the Company. The promissory notes
are due on December 31, 2001 and bear interest at a rate of 6.75% per annum.
6. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES
The Company classifies all short-term, highly liquid investments with
original maturities of three months or less as cash equivalents. Marketable
securities consist of marketable financial instruments with original maturities
greater than 90 days. The Company has established guidelines relative to
concentration, maturities, and credit ratings that maintain safety and
liquidity.
In accordance with Statement of Financial Accounting Standard No. 115
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115"), the Company has classified its investments in marketable securities as
"Held-to-Maturity" Securities. Accordingly, marketable securities at June 30,
1999 are recorded at amortized cost, which approximates market. The Company had
no investments in marketable securities at December 31, 1998.
7
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7. COMPREHENSIVE INCOME
During 1998, the Company adopted SFAS No. 130, "Reporting of
Comprehensive Income". Comprehensive income refers to the change in an entity's
equity during a period, exclusive of investment by and distributions to owners.
Comprehensive income includes net income and other comprehensive income items.
The Company has no other comprehensive income items as defined in SFAS No. 130
and, therefore, net income is equal to comprehensive income and no other
additional disclosure is required.
8. SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes standards
for the way that public business enterprises report information and operating
segments in annual and interim financial statements and requires that
enterprises report selected information about operating segments in financial
reports issued to stockholders. The Company adopted this statement in the year
ended December 31, 1998. Based on a review of SFAS No. 131, the Company believes
that it currently operates in one segment.
9. NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". The
statement is effective for the year ended December 31, 2000. SFAS No. 133
establishes accounting and reporting standards for derivative instruments
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities. The
Company does not expect adoption of this statement to have a material impact on
its consolidated financial position or result of operations.
8
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following information should be read in conjunction with the
financial statements and notes thereto contained herein and the risk factors
contained in the section entitled "Certain Factors That May Affect Future
Results" on page 17 of the Company's 1998 Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
This Form 10-Q contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially from
those set forth in the forward-looking statements. Factors that might cause such
a difference are discussed in the section entitled "Certain Factors That May
Affect Future Results" below.
OVERVIEW
Primix Solutions Inc. ("Primix" or the "Company") historically has
helped organizations build applications that integrate and extend disparate
information systems. Late in the first quarter of 1998, the Company unified
its software products and consulting services business units into a single
consulting services organization focused on delivering "e-Business" solutions
on a fixed-price/fixed-time basis. On December 31, 1998, Primix acquired
Advis, Inc. ("Advis"), a privately held e-Business consulting company. During
the first quarter of 1999, the Company added to its management team
executives with experience in cross-media brand development, Web site design,
and strategic and business process consulting. Primix is a strategic Internet
services firm that brings management consulting insight, creative talent and
systems integration skills to companies, helping deliver business results
using e-Business methods and technologies.
As a result of the Company's significant transition during 1998,
management cannot currently anticipate future revenue levels. However,
management does anticipate incurring significant expenses as the Company
continues to grow its sales, creative, strategy and consulting staffs.
RESULTS OF OPERATIONS
REVENUE
Total revenue increased $1.5 million to $2.6 million for the three
months ended June 30, 1999 from $1.1 million for the comparable quarter in 1998.
For the six months ended June 30, 1999, total revenue increased $2.4 million to
$4.5 million from $2.1 million for the comparable prior year period.
Professional services revenue increased $1.6 million to $2.6 million for the
three months ended June 30, 1999 from $964,000 for the comparable quarter in
1998 as a result of an increase in the number of consulting engagements serviced
during the second quarter of 1999 relative to the second quarter of 1998.
Professional services revenue increased $2.6 million to $4.5 million for the six
months ended June 30, 1999 from $1.9 million for the comparable period in 1998
as a result of an increase in the number of consulting engagements serviced
during the first six months of 1999 relative to the first six months of 1998.
Additionally, software license and maintenance revenue decreased to $0 for the
three months ended June 30, 1999 from $85,000 for the comparable quarter in
1998. For the six months ended June 30, 1999, software license and maintenance
revenue decreased to $0 from $179,000 for the comparable period in 1998. These
decreases are due to the fact that the Company ceased marketing its software
products in 1998.
PROFESSIONAL SERVICES
The cost of professional services consists primarily of salaries and
related costs for professional services personnel and fees to third party
consultants. Professional services expenses increased to $2.2 million, or 85%
of total revenue, for the three months ended June 30, 1999 from $1.0 million,
or 96% of total revenue, for the comparable prior year period. For the six
months ended June 30, 1999, professional services expenses increased to $3.6
million, or 80% of total revenue, from $1.9 million, or 89% of total revenue,
for the comparable prior year period. The absolute dollar increase for the
three and six month periods is primarily due to increased headcount and an
increased usage of third party consultants. Professional services headcount
increased 138% from June 30, 1998 to June 30, 1999, with 46% of this increase
due to the Advis December 1998 acquisition. The Company expects professional
services expenses to increase during the remainder of 1999 as the Company
seeks to hire additional professional services personnel.
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SALES AND MARKETING
Sales and marketing expenses consist primarily of salaries and benefits
for sales and marketing personnel and costs for advertising and marketing. Sales
and marketing expenses increased to $790,000, or 31% of total revenue, for the
three months ended June 30, 1999 from $390,000, or 37% of total revenue, for the
comparable prior year period. For the six months ended June 30, 1999, sales and
marketing expenses increased to $1.3 million, or 29% of total revenue, from
$699,000, or 33% of total revenue, for the comparable prior year period. The
absolute dollar increase for the three and six month periods is primarily due to
increased headcount in sales and marketing, commissions as a result of higher
revenue levels, travel costs, and increases in sales and marketing programs.
Sales and marketing headcount increased 75% from June 30, 1998 to June 30, 1999.
The increased headcount in sales is attributable to the Advis December 1998
acquisition. The Company expects sales and marketing expenses to increase during
1999 as the Company seeks to hire additional sales and marketing personnel.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of salaries
and benefits for executive, finance, information technology, human resource
and administrative personnel, rent expense, depreciation expense,
professional fees, recruiting costs, and system support costs. General and
administrative expenses increased to $1.3 million, or 51% of total revenue,
for the three months ended June 30, 1999 from $1.2 million, or 116% of total
revenue, for the comparable prior year period. For the six months ended June
30, 1999, general and administrative expenses increased to $2.4 million, or
54% of total revenue, from $2.2 million, or 106% of total revenue, for the
comparable prior year period. The absolute dollar decrease in the current
quarter over the prior year is primarily due to decreased professional fees
offset by increased headcount-related costs. General and admistrative
headcount increased 20% from June 30, 1998 to June 30, 1999. The Company
expects general and administrative expenses to increase during the remainder
of 1999 to support the Company's expanding business.
RESEARCH AND DEVELOPMENT
For the six months ended June 30, 1999, research and development
expenses decreased to $0 from $295,000 for the comparable prior year period. The
decrease is attributable to the discontinuance of the Company's software product
development.
AMORTIZATION OF GOODWILL
Amortization of goodwill of $55,000 and $109,000 for the three and six
months ended June 30, 1999, respectively, is attributable to the Advis December
1998 acquisition. The excess purchase price over the net assets acquired of $2.2
million was recorded as goodwill in December 1998 and is being amortized over
its estimated useful life of 10 years, beginning January 1, 1999.
INTEREST INCOME, NET
Interest income, net decreased to $278,000 for the three months ended
June 30, 1999 from $425,000 for the comparable prior year period. For the six
months ended June 30, 1999, interest income, net decreased to $576,000 from
$864,000 for the comparable prior year period. The decrease in interest income
is primarily the result of a decline in the average combined daily balances of
the Company's cash, cash equivalents and marketable securities.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities utilized approximately $2.9 million
for the six months ended June 30, 1999, resulting primarily from the net loss
and the growth in accounts receivable.
The Company's investing activities, which primarily consisted of net
purchases of short-term marketable securities, utilized approximately $8.8
million for the six months ended June 30, 1999.
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The Company's financing activities, which mainly consisted of payment
of the note payable to a related party and payment of the capital lease
obligations, utilized approximately $255,000 for the six months ended June 30,
1999.
In March 1999, the Company issued two separate promissory notes, each
in the amount of $75,000 to two employees of the Company. The promissory notes
are due on December 31, 2001 and bear interest at a rate of 6.75% per annum.
The Company currently anticipates that the existing cash, cash
equivalents and marketable securities balances will be sufficient to meet its
anticipated working capital and capital expenditure requirements for at least
the next twelve months. Thereafter, the Company may need to raise additional
funds. The Company may in the future seek to expand its business through
possible acquisitions. The Company, however, has no commitments or agreements
with respect to any future acquisition and no assurances can be given with
respect to the likelihood or financial or business effect of any future
acquisition. Future acquisitions could be financed by internally generated
funds, bank borrowings, public offerings or private placements of equity or debt
securities, or a combination of the foregoing. There can be no assurance that
additional financing will be available when needed on terms favorable to the
Company or at all.
YEAR 2000 READINESS
The following statements under this section include "Year 2000
readiness disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act.
Historically, certain computer programs have been written using two
digits rather than four digits, to identify the applicable year. This could
lead, in many cases, to a computer's recognition of a date using "00" as 1900
rather than the year 2000. This phenomenon could result in significant computer
system failures or miscalculations, and is generally referred to as the "Year
2000" problem or issue.
The Company is currently in the process of assessing its exposure from
the Year 2000 problem, and has established a response to that exposure.
Generally, the Company has Year 2000 exposure in the following areas: (i)
financial and management operating computer systems used to manage the Company's
business, (ii) microprocessors and other equipment used by the Company
("embedded chips") and (iii) computer systems used by third parties; in
particular financial institutions, vendors and suppliers of the Company.
As of December 31, 1998, the Company completed an inventory of its
financial and management operating systems and made a preliminary determination
of which programs were or were not Year 2000 compliant. Prior to September 30,
1999, the Company intends to test each significant program which is believed to
be Year 2000 compliant and to remediate all significant programs that are not
Year 2000 compliant. In some cases, Year 2000 issues will be corrected in the
development of new programs, which enhance or provide new functionality to these
financial and management operating systems. While the Company has not undertaken
any independent verification and review, the Company estimates that the
incremental cost of this remediation effort should not exceed $30,000, including
capital cost for new computers and related equipment. This amount does not
include costs for computer software developed in order to provide or improve
functionality. The Company expects to substantially complete Year 2000 testing
and remediation on its financial and management operating systems by September
30, 1999.
The Company has begun an inventory and assessment of its exposure to
embedded chips in its facilities or equipment used in those facilities and
capability of the vendors of such equipment to successfully remediate Year 2000
problems in equipment with embedded chips.
The Company began in the fourth quarter of 1998 to interview third
parties, vendors and suppliers of the Company to determine their exposure to
Year 2000 issues, their anticipated risks and responses to those risks.
If the Company is unsuccessful in completing remediation of
non-compliant systems, correcting embedded chips and vendors or suppliers cannot
rectify Year 2000 issues, the Company could incur additional costs. The cost to
develop alternative methods of managing its business and replacing non-compliant
equipment may be substantial. The Company is in the process of establishing a
contingency plan in the event of noncompliance by its vendors and suppliers and
expects to complete this contingency plan by September 30, 1999.
The preceding "Year 2000 Readiness Disclosure" contains various
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and Section 27A of the Securities Act of 1933. These
forward-looking statements represent the Company's beliefs or expectations
regarding future events. When used in the "Year 2000 Readiness Disclosure," the
words "believes," "expects," "estimates" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements include, without
limitation, the Company's expectations as to when it will complete the
modification and testing phases of its Year 2000 project plan as well as its
Year 2000 contingency plans; and its estimated cost of achieving Year 2000
readiness. All forward-looking statements involve a
11
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number of risks and uncertainties that could cause the actual results to differ
materially from the projected results. Factors that may cause these differences
include, but are not limited to, the availability of qualified personnel and
other information technology resources; the ability to identify and remediate
all date sensitive lines of computer code or to replace embedded computer chips
in affected systems or equipment; and the actions of governmental agencies or
other third parties with respect to Year 2000 problems.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Statements made or incorporated into this Form 10-Q include a number of
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward
looking statements include, without limitation, statements containing the words
"anticipates," "believes," "expects," "intends," "future," and words of similar
import which express management's beliefs, expectations or intentions regarding
the Company's future performance. The Company's actual results could differ
materially from its historical results and from those set forth in the
forward-looking statements and may fluctuate between operating periods. Factors
that might cause such differences and fluctuations include the following: the
success of the Company's new business strategy, the Company's ability to
efficiently consolidate the operations of its newly acquired subsidiary, Advis,
Inc., the Company's ability to attract, train and retain qualified strategic,
creative and technical personnel, the Company's ability to retain its sales and
consulting staffs, the Company's ability to close sales, risks related to the
management of growth, development and promotional expenses related to the
introduction of new service offerings, changes in technology and industry
standards, limited operating history, changes in the market for the Company's
services, the rate of acceptance of the Company's services, dependence of the
Company's business on the Internet, increased competition, changing of pricing
policies by the Company or its competitors, the timing of receipt of orders from
major customers, development of Internet and Intranet products or enhancements
by vendors of existing client/server or legacy software systems that compete
with the Company's consulting services, dependence on key personnel, proprietary
technology and the inherent difficulties in protecting intellectual property,
dependence on third-party technology, and exposure for product and professional
services liability. The market price of the Company's Common Stock has been, and
in the future will likely be, subject to significant fluctuations in response to
variations in quarterly operating results and other factors, such as
announcements of technological innovations or new products by the Company or its
competitors, or other events.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company owns financial instruments that are sensitive to market
risks as part of its investment portfolio. The investment portfolio is used to
preserve the Company's capital until it is required to fund operations. All of
these market-risk sensitive instruments are classified as held-to-maturity and
are not held for trading purposes. The Company does not own derivative financial
instruments in its investment portfolio. The investment portfolio contains
instruments that are subject to the risk of a decline in interest rates.
INTEREST RATE RISK. The Company's investment portfolio includes
investment grade debt instruments. These bonds are subject to interest rate
risk, and could decline in value if interest rates fluctuate. Due to the short
duration and conservative nature of these instruments, the Company does not
believe that it has a material exposure to interest rate risk.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of shareholders was held on June 25, 1999.
(b) The following are the Directors whose terms of office as Directors
continued after the meeting: Kevin Azzouz,Robert B.Hedges Jr.,
Ofer Nemirovsky and Lennart Mengwall.
(c) The following matters were submitted to a vote:
<TABLE>
<CAPTION>
Matter Submitted to Vote Votes in Votes Votes Broker
Favor against Abstained Non-Votes
<S> <C> <C> <C> <C>
1. The election of one 12,502,863 0 60,100 0
Class III Director, Robert
B. Hedges Jr., for a
three-year term, with such
term to continue until the
year 2002 annual meeting
of shareholders and until
his successor is duly
elected and qualified.
2. An amendment to the 8,566,306 368,747 19,385 3,608,525
1996 Stock Plan to increase
the authorized number of
shares of the Company's
Common Stock to be issued
thereunder from 1,745,867
to 3,500,000.
</TABLE>
(d) None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
13
<PAGE>
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.
Dated: August 13, 1999
PRIMIX SOLUTIONS INC.
/s/ David W. Chapman
-----------------------------------------------
David W. Chapman
Chief Financial Officer and Principal Financial
Officer
<TABLE> <S> <C>
<PAGE>
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<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-01-1999 JAN-01-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
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0 0
0 0
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<LOSS-PROVISION> 0 0
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<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,492) (2,414)
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<NET-INCOME> (1,492) (2,414)
<EPS-BASIC> (.10) (.17)
<EPS-DILUTED> (.10) (.17)
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