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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10 - Q
X Quarterly report pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934 for the
quarterly period ended September 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
--- ---
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<S> <C>
As of November 1, 1999, there were 14,590,758 shares of registrant's Common Stock outstanding.
</TABLE>
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Primix Solutions Inc.
Table of Contents
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<CAPTION>
PART I - FINANCIAL INFORMATION Page
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Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at December 31, 1998 and September 30, 1999 3
Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 1998 and 1999 4
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 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 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
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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, September 30,
1998 1999
------------ -------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 26,693 $ 9,176
Marketable securities - 12,116
Accounts receivable, net 2,871 3,200
Prepaid expenses and other current assets 443 805
Note receivable from related party - 150
--------- ---------
Total current assets 30,007 25,447
Property and equipment, net 821 330
Other assets:
Goodwill, net 2,178 2,065
Notes receivable from related parties 150 325
--------- ---------
Total other assets 2,328 2,390
========= =========
Total assets $ 33,156 $ 28,167
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 965 $ 972
Current portion of capital lease obligation 83 -
Accrued expenses 2,162 2,092
Note payable to related party 204 -
Deferred revenue 84 43
--------- ---------
Total current liabilities 3,498 3,107
Capital lease obligation, net of current portion 42 -
--------- ---------
Total liabilities 3,540 3,107
--------- ---------
Stockholders' equity:
Common stock 15 15
Treasury stock (1,517) (1,563)
Additional paid-in capital 59,180 59,119
Accumulated deficit (28,062) (32,511)
--------- ---------
Total stockholders' equity 29,616 25,060
--------- ---------
Total liabilities and stockholders' equity $ 33,156 $ 28,167
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
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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 Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
1998 1999 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Professional services $ 1,305 $ 3,700 $ 3,234 $ 8,192
Software license and maintenance 32 - 211 -
---------- ---------- ---------- ----------
Total revenue 1,337 3,700 3,445 8,192
Operating expenses:
Professional services 915 2,886 2,791 6,490
Sales and marketing 729 1,063 1,428 2,387
General and administrative 947 1,997 3,184 4,442
Research and development - - 295 -
Amortization of goodwill - 59 - 168
---------- ---------- ---------- ----------
Total operating expenses 2,591 6,005 7,698 13,487
---------- ---------- ---------- ----------
Operating loss (1,254) (2,305) (4,253) (5,295)
Interest income, net 408 270 1,272 846
---------- ---------- ---------- ----------
Net loss $ (846) $ (2,035) $ (2,981) $ (4,449)
========== ========== ========== ==========
Basic and diluted net loss per common
share $ (0.06) $ (0.14) $ (0.21) $ (0.30)
========== ========== ========== ==========
Shares used in computing net loss
per common share 14,402 14,627 14,395 14,622
========== ========== ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
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Primix Solutions Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Unaudited
Nine Months Ended
September 30,
--------------------------------
1998 1999
------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,981) $ (4,449)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 650 857
Changes in operating assets and liabilities:
Accounts receivable (560) (329)
Prepaid expenses and other current assets (74) (606)
Accounts payable (234) 6
Other current liabilities (112) (69)
Deferred revenue (402) (41)
---------- ----------
Net cash used in operating activities (3,713) (4,631)
---------- ----------
Cash flows from investing activities:
Sales (purchases) of marketable securities,net 18,768 (12,115)
Purchases of property and equipment (57) (199)
Increase in purchase of Advis - (55)
Increase in other assets (150) (325)
---------- ----------
Net cash provided by (used in) investing activities 18,561 (12,694)
---------- ----------
Cash flows from financing activities:
Payment of note payable to related party - (204)
Proceeds from common stock purchased through
employee stock purchase plan 30 92
Proceeds from the exercise of stock options 29 45
Payment of capital lease obligations - (125)
---------- ----------
Net cash provided by (used in) financing activities 59 (192)
---------- ----------
Net increase (decrease) in cash and cash equivalents 14,907 (17,517)
Cash and cash equivalents, beginning of period 10,804 26,693
---------- ----------
Cash and cash equivalents, end of period $ 25,711 $ 9,176
========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
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
1,268,000 and 2,310,000 at September 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. On September 20, 1999, one of the $75,000 notes was
converted to a promissory note totalling $250,000. The note bears interest at
a rate of 7% per annum until September 30, 2002 when the interest rate will
convert to the Prime rate plus two percentage points for the remainder of the
term. The outstanding principal balance is payable quarterly in arrears in
equal installments beginning on January 1, 2005. The note is due on September
30, 2029.
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
7
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"Held-to-Maturity" Securities. Accordingly, marketable securities at
September 30, 1999 are recorded at amortized cost, which approximates market.
The Company had no investments in marketable securities at December 31, 1998.
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") is a strategic
Internet services firm that helps clients define, develop and deploy
e-business solutions that deliver superior business results. Primix brings
management consulting insight, creative talent and systems integration skill
to four areas of e-business professional services: e-Commerce, Customer
Relationship Management, Supply Chain Management, and Knowledge Management.
The firm's essential e-business(tm) approach to delivering fully custom and
customized solutions in each of these domains has helped leading clients
increase revenue, cut costs, move faster, optimize assets and build loyalty.
The Company's net revenues increased 45% from the second quarter of
1999. The Company has generally derived its professional services revenues
from engagements that have been priced on a fixed-time/fixed-price model.
This model contains inherent risks that are greater than engagements priced
on a time and materials basis. Accordingly, the Company diligently evaluates
the scope of each project and its related risk. To the extent that the
Company has not adequately assessed the risk associated with its engagements,
revenues could be materially delayed and therefore adversely affect the
Company's results. As is the nature with most consulting firms, the Company's
costs are relatively fixed.
As of September 30, 1999, the Company's total headcount was 112
compared to 57 as of September 30, 1998.
RESULTS OF OPERATIONS
REVENUE
Total revenue increased $2.4 million to $3.7 million for the three
months ended September 30, 1999 from $1.3 million for the comparable quarter
in 1998. For the nine months ended September 30, 1999, total revenue
increased $4.8 million to $8.2 million from $3.4 million for the comparable
prior year period. Professional services revenue increased $2.4 million to
$3.7 million for the three months ended September 30, 1999 from $1.3 million
for the comparable quarter in 1998 as a result of an increase in the number
of consulting engagements serviced during the third quarter of 1999 relative
to the third quarter of 1998. Professional services revenue increased $5.0
million to $8.2 million for the nine months ended September 30, 1999 from
$3.2 million for the comparable period in 1998 as a result of an increase in
the number of consulting engagements serviced during the first nine months of
1999 relative to the first nine months of 1998. Additionally, software
license and maintenance revenue decreased to $0 for the three months ended
September 30, 1999 from $32,000 for the comparable quarter in 1998. For the
nine months ended September 30, 1999, software license and maintenance
revenue decreased to $0 from $211,000 for the comparable period in 1998.
These decreases are due to the fact that the Company ceased to market its
software products in 1998 as it focused on its new business plan of providing
only professional services.
PROFESSIONAL SERVICES
The cost of professional services consists primarily of compensation
and benefits for employees engaged in the delivery of professional services
as well as fees to third party consultants and non-reimbursable expenses
related to client projects. Professional services expenses increased to $2.9
million, or 78% of total revenue, for the three months ended
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September 30, 1999 from $915,000, or 68% of total revenue, for the comparable
prior year period. The increase as a percentage of total revenue is primarily
due to lower utilization rates, which resulted from the hiring of senior
management personnel in the professional services group this quarter. The
Company anticipates that these employees will become more utilized in the
future, thus increasing gross margins. For the nine months ended September
30, 1999, professional services expenses increased to $6.5 million, or 79% of
total revenue, from $2.8 million, or 81% of total revenue, for the comparable
prior year period. The absolute dollar increase for the three and nine month
periods is primarily due to increased headcount, an increased usage of third
party consultants and increased travel costs. Professional services headcount
increased from 28 at September 30, 1998 to 72 at September 30, 1999. The
Company expects professional services expenses to increase during the
remainder of 1999 as the Company seeks to hire additional professional
services personnel.
SALES AND MARKETING
Sales and marketing expenses consist primarily of compensation and
benefits for sales and marketing personnel and costs for advertising and
marketing. Sales and marketing expenses increased to $1.1 million, or 29% of
total revenue, for the three months ended September 30, 1999 from $729,000,
or 55% of total revenue, for the comparable prior year period. For the nine
months ended September 30, 1999, sales and marketing expenses increased to
$2.4 million, or 29% of total revenue, from $1.4 million, or 41% of total
revenue, for the comparable prior year period. The absolute dollar increase
for the three and nine month periods is primarily due to increased headcount,
commissions as a result of higher revenue levels, and increases in marketing
programs. 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
compensation and benefits for executive, finance, information technology,
human resource, recruiting and administrative personnel, rent expense,
depreciation expense, professional fees, recruiting fees, and system support
costs. General and administrative expenses increased to $2.0 million, or 54%
of total revenue, for the three months ended September 30, 1999 from
$947,000, or 71% of total revenue, for the comparable prior year period. For
the nine months ended September 30, 1999, general and administrative expenses
increased to $4.4 million, or 54% of total revenue, from $3.2 million, or 92%
of total revenue, for the comparable prior year period. The absolute dollar
increase for the three and nine month periods is primarily due to increased
headcount-related costs and increased consulting fees. General and
admistrative headcount increased from 12 at September 30, 1998 to 28 at
September 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 nine months ended September 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 $59,000 and $168,000 for the three and
nine months ended September 30, 1999, respectively, is attributable to the
acquisition of Advis, Inc. in December 1998. 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 $270,000 for the three months
ended September 30, 1999 from $408,000 for the comparable prior year period.
For the nine months ended September 30, 1999, interest income, net decreased
to $846,000 from $1.3 million 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
10
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The Company's operating activities utilized approximately $4.6
million for the nine months ended September 30, 1999, resulting primarily
from the net loss and the growth in accounts receivable, prepaid expenses and
other current assets.
The Company's investing activities, which primarily consisted of net
purchases of short-term marketable securities, utilized approximately $12.7
million for the nine months ended September 30, 1999.
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 $192,000 for the nine months ended
September 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. On September 20, 1999, one of the $75,000 notes was converted to a
promissory note totalling $250,000. The note bears interest at a rate of 7%
per annum until September 30, 2002 when the interest rate will convert to the
Prime rate plus two percentage points for the remainder of the term. The
outstanding principal balance is payable quarterly in arrears in equal
installments beginning on January 1, 2005. The note is due on September 30,
2029.
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. As of
September 30, 1999, the Company has tested each significant program which is
believed to be Year 2000 compliant and has remediated all significant
programs that are not Year 2000 compliant. In some cases, Year 2000 issues
were corrected in the development of new programs, which enhanced or provided
new functionality to these financial and management operating systems.
The Company has taken 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 believes that it
is Year 2000 compliant in these areas.
The Company continues 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's 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.
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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 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 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 and services 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.
12
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
13
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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.
Dated: November 15, 1999
PRIMIX SOLUTIONS INC.
/S/ DAVID W. CHAPMAN
-------------------------------------------------------
David W. Chapman
Chief Financial Officer and Principal Financial Officer
14
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