<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
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 No. 000-21539
ALYSIS TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 94-3161772
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
</TABLE>
1900 Powell Street, Suite 500
Emeryville, California 94608
(Address of principal executive offices)
(510) 450-7000
(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 outstanding shares of the Registrant's Common Stock, $0.01
par value, was 13,411,116 as of August 9, 2000.
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<PAGE>
ALYSIS TECHNOLOGIES, INC.
REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<C> <S> <C>
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets at June 30, 2000 and
December 31, 1999.............................................. 1
Condensed Consolidated Statements of Operations for the three
months and six months ended June 30, 2000 and 1999............. 2
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 2000 and 1999............................ 3
Notes to Condensed Consolidated Financial Statements............ 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 6
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders............. 18
Item 6. Exhibits and Reports on Form 8-K................................ 18
Signatures............................................................... 19
</TABLE>
i
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
ALYSIS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
-------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents............................. $ 2,316 $ 9,159
Receivables, including unbilled receivables of $798 at
June 30, 2000 and $548 at December 31, 1999, less
allowance for doubtful accounts of $396 at June 30,
2000 and $126 at December 31, 1999................... 1,725 1,807
Other current assets.................................. 270 494
-------- --------
Total current assets.............................. 4,311 11,460
Property and equipment, net............................. 852 770
Other assets............................................ 58 34
Intangible assets....................................... 1,912 2,337
-------- --------
$ 7,133 $ 14,601
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable...................................... $ 488 $ 547
Accrued compensation and related liabilities.......... 1,303 2,483
Deferred revenues..................................... 2,833 1,973
Other accrued liabilities............................. 794 584
-------- --------
Total current liabilities......................... 5,418 5,587
Stockholders' equity:
Preferred shares, Series B, $.001 par value:
Authorized shares--5,000,000
Issued and outstanding shares--400 at June 30, 2000
and December 31, 1999.............................. 3,814 3,814
Common stock, $0.01 par value:
Authorized shares--35,000,000
Issued shares--11,005,595, outstanding shares--
10,981,595 at June 30, 2000 Issued shares--
10,643,792, outstanding shares--10,619,792 at
December 31, 1999.................................. 110 106
Class B common stock, $0.01 par value:
Authorized shares--5,000,000
Issued and outstanding shares--2,417,112 at June 30,
2000 and December 31, 1999......................... 25 25
Additional paid-in capital............................ 30,328 30,067
Treasury stock at cost (24,000 shares)................ (39) (39)
Accumulated deficit................................... (32,403) (24,632)
Deferred stock compensation........................... (124) (327)
Foreign currency translation adjustment............... 4 --
-------- --------
Total stockholders' equity........................ 1,715 9,014
-------- --------
$ 7,133 $ 14,601
======== ========
</TABLE>
Note: The December 31, 1999 balance sheet amounts were derived from the
December 31, 1999 audited financial statements.
See accompanying notes
1
<PAGE>
ALYSIS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------- ----------------
2000 1999 2000 1999
------- ------ ------- -------
<S> <C> <C> <C> <C>
Revenues
License................................... $ 895 $1,540 $ 1,831 $ 1,930
Service................................... 435 2,101 1,227 3,766
Maintenance............................... 1,032 1,190 2,076 2,579
------- ------ ------- -------
Total revenues.......................... 2,362 4,831 5,134 8,275
Cost of revenues:
License................................... 3 14 23 31
Service................................... 328 1,034 648 2,319
Maintenance............................... 458 547 962 1,244
------- ------ ------- -------
Total cost of revenues.................. 789 1,595 1,633 3,594
Operating expenses:
Sales and marketing....................... 1,538 1,088 3,131 2,417
General and administrative................ 2,617 2,044 5,918 3,862
Product development....................... 1,169 330 2,214 534
------- ------ ------- -------
Total operating expenses................ 5,324 3,462 11,263 6,813
------- ------ ------- -------
Loss from operations........................ (3,751) (226) (7,762) (2,132)
Other income:
Interest income........................... 48 43 142 115
Other income.............................. 4 -- 4 --
------- ------ ------- -------
Loss before income taxes.................... (3,699) (183) (7,616) (2,017)
Provision for income taxes................ (17) -- (17) --
------- ------ ------- -------
Net loss.................................... (3,716) (183) (7,633) (2,017)
Preferred stock dividends................... 69 -- 138 --
------- ------ ------- -------
Net loss applicable to common stockholders.. $(3,785) $ (183) $(7,771) $(2,017)
======= ====== ======= =======
Basic and diluted net loss per share
applicable to common stockholders.......... $ (.28) $ (.02) $ (.59) $ (.17)
======= ====== ======= =======
Shares used in computing basic and diluted
net loss per share applicable to common
stockholders............................... 13,364 12,187 13,258 12,187
======= ====== ======= =======
</TABLE>
See accompanying notes
2
<PAGE>
ALYSIS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30
----------------
2000 1999
------- -------
<S> <C> <C>
Operating activities
Net loss.................................................... $(7,633) $(2,017)
Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:
Depreciation and amortization............................. 651 182
Amortization of deferred stock compensation............... (16) 238
Gain on sale of equipment................................. (4) --
Net changes in operating assets and liabilities:
Receivables............................................. 82 (2,583)
Other net current assets................................ 224 48
Other assets............................................ (24) --
Accounts payable........................................ (59) (92)
Accrued compensation and related liabilities............ (1,180) 76
Deferred revenues....................................... 860 4,891
Other accrued liabilities............................... 72 96
------- -------
Net cash (used in) provided by operating activities......... (7,027) 839
Investing activities
Purchases of property and equipment......................... (327) (94)
Net proceeds from the sale of property and equipment........ 23 --
------- -------
Net cash used in investing activities....................... (304) (94)
Financing activities
Net proceeds from exercise of stock options................. 382 212
Net proceeds from employee stock purchase plan.............. 102 101
------- -------
Net cash provided by financing activities................... 484 313
------- -------
Effect of exchange rate changes on cash..................... 4 --
Net (decrease) increase in cash and cash equivalents........ (6,843) 1,058
Cash and cash equivalents at beginning of period............ 9,159 7,582
------- -------
Cash and cash equivalents at end of period.................. $ 2,316 $ 8,640
======= =======
Supplemental cash flow information:
Deferred stock compensation adjustment related to variable
stock options.............................................. $ 219 $ --
======= =======
</TABLE>
See accompanying notes
3
<PAGE>
ALYSIS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Our Company and Basis of Presentation
Alysis Technologies, Inc. (previously known as IA Corporation I) was
incorporated on July 20, 1992. We develop, market, implement and support
large-scale application software solutions to financial services organizations
primarily in North America. Certain reclassifications have been made to the
prior periods financial statements in order to conform to the current periods
presentation.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments,
consisting of normal recurring accrual adjustments, considered necessary for a
fair presentation have been included. Operating results for the three and six
months ended June 30, 2000 are not necessarily indicative of the results that
may be expected for any future period.
These financial statements and notes should be read in conjunction with
Alysis Technologies, Inc.'s audited financial statements and notes thereto for
the year ended December 31, 1999 included in the Company's 1999 Annual Report
on Form 10-K.
2. Basic and Diluted Net Loss Per Share
Our net loss per share applicable to common shareholders has been
calculated in accordance with Statement of Financial Accounting Standards
(SFAS) No. 128, Earnings Per Share. Basic net loss per share applicable to
common shareholders has been computed using the weighted average number of
common shares outstanding during the period. Diluted net loss per share
applicable to common shareholders has been computed using the weighted average
number of common shares outstanding plus the dilutive effect of outstanding
stock options using the "treasury stock" method. The following table shows the
computation of basic and diluted net loss per share applicable to common
shareholders.
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
6/30/00 6/30/99 6/30/00 6/30/99
------------ ------------ ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Net loss applicable to
common stockholders...... $(3,785) $ (183) $(7,771) $(2,017)
Weighted average common
shares outstanding....... 13,364 12,187 13,258 12,187
Effect of dilutive
securities(a)............ (a) (a) (a) (a)
------- ------ ------- -------
Shares used in computing
diluted net loss per
share.................... 13,364 12,187 13,258 12,187
======= ====== ======= =======
Basic net loss per share
applicable to common
stockholders............. $ (.28) $ (.02) $ (.59) $ (.17)
======= ====== ======= =======
Diluted net loss per share
applicable to common
stockholders............. $ (.28) $ (.02) $ (.59) $ (.17)
======= ====== ======= =======
</TABLE>
--------
(a) The effect of outstanding stock options and other common stock equivalents
is excluded from the calculation of diluted net loss per share, as their
inclusion would be anti-dilutive.
4
<PAGE>
ALYSIS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Revenue Recognition
Our total revenues are derived from software licenses, maintenance and
support contracts and implementation and training services. Software license
and service revenue from contracts requiring significant customization
services are recognized on the percentage-of-completion method based on the
ratio of incurred costs to total estimated costs. The implementation of these
application frameworks can take several months or more depending on the
complexity of the customer's environment and the resources directed by the
customers to the implementation projects. Estimated losses, if any, on
contracts are reported in the period in which such losses become known.
Revenues from contracts for software licenses that don't require
significant customization are recognized upon delivery and installation of the
software if there is persuasive evidence of an arrangement, collection of the
related receivable is probable, the fee is fixed or determinable and there is
sufficient vendor-specific objective evidence to support allocating the total
fee to all elements of multiple-element arrangements. Software maintenance
revenues are recognized ratably over the term of the support contract, which
is generally one year. Other service revenue is recognized as services are
performed.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements",
("SAB 101"). SAB 101 provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements. All registrants are expected to
apply the accounting and disclosures described in SAB 101. The Company is
currently evaluating SAB 101 and has not completed its assessment of the
impact of adoption. If a change in its revenue recognition policy resulting
from SAB 101 proves necessary, it will be reported as a change in accounting
principle in the quarter ending December 31, 2000.
4. Comprehensive Loss
The following table sets forth the calculation of comprehensive loss for
all periods presented (in thousands):
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
---------------- ----------------
6/30/00 6/30/99 6/30/00 6/30/99
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net loss.................................... $(3,716) $(183) $(7,633) $(2,017)
Foreign currency translation losses......... (4) -- (4) --
------- ----- ------- -------
Comprehensive loss.......................... $(3,720) $(183) $(7,637) $(2,017)
======= ===== ======= =======
</TABLE>
5
<PAGE>
The following "Management Discussion and Analysis of Financial Condition
and Results of Operations" should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included elsewhere in this
report and Annual Report on Form 10-K. Additionally, this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contains forward-looking statements (identified with an asterisk "*") that
involve risk and uncertainties. The Company's actual results may differ
materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and in "Risk Factors." The Company
assumes no obligation to update such forward-looking statements or to update
the reasons actual results could differ materially from those anticipated in
such forward-looking statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
Alysis develops and delivers electronic billing and statement presentment
software that document intensive industries need to remain competitive in the
electronic commerce arena. We were incorporated in July 1992, when management,
in partnership with EM Warburg Pincus and Co. LLC, purchased certain assets
and liabilities of Litton Industries' Integrated Automated Division, a leading
system integrator with a primary focus on the aerospace industry and secondary
focus on the financial services and transportation industries. At that time, a
decision was made to de-emphasize the aerospace market and develop an
enterprise transaction management platform and corresponding software
application frameworks targeted to the financial services industry.
In August 1998, with the hiring of a new Chief Executive Officer, we
decided to aggressively pursue a new product strategy of Internet presentment
of legacy data primarily based on a successful installation of an intranet
based statement delivery system at Merrill Lynch. This installation, which was
completed in early 1998, was the precursor to the CyberStatement application
framework. In order to further penetrate the e-presentment marketplace, Alysis
acquired At Work, a New York based provider of Electronic Bill Presentment and
Payment ("EBPP") software and early pioneer in XML technology. As a result,
our CyberStatement(TM) product was replaced by At Work's WorkOut product, and
renamed WorkOut(R). In 2000, management believes we will derive an increasing
amount of revenue from the WorkOut product, however, there can be no assurance
that we will be successful in our efforts.*
Through June 30, 2000, revenues primarily consisted of large application
development contracts and were derived from three application frameworks,
CheckVision, RemitVision, and WorkOut. Our total revenues declined 51.1% from
$4.8 million for the three months ended June 30, 1999 to $2.4 million for the
three months ended June 30, 2000. Also, for the three months ended June 30,
2000, we recorded a net loss of $3.7 million as compared to a net loss of
$183,000 for the three months ended June 30, 1999. These results are due to
our continued building of infrastructure and pipeline necessary to position
WorkOut in the e-presentment marketplace. Also, management has re-deployed the
majority of its product development and engineering resources to focus solely
on the WorkOut product. However, we continue to support agreements with
existing customers of our CheckVision product line. It is also management's
intention to pursue strategic options in 2000 regarding the remaining
CheckVision application framework product line.
WorkOut enables financial services firms to efficiently manage, store and
distribute legacy reports and print-formatted documents such as customer
statements over the Internet. It is a solution to parse and render print
streams from billing systems, and to implement electronic data interchange and
other structured data feeds. CheckVision provides high-volume check image
capture, storage, and distribution functions necessary to meet the stringent
processing deadlines of check operations.
Our total revenues are derived from software licenses, maintenance and
support contracts and implementation and training services. Software license
and service revenue from contracts requiring significant
6
<PAGE>
customization services are recognized on the percentage-of-completion method
based on the ratio of incurred costs to total estimated costs. The
implementation of these application frameworks can take several months or more
depending on the complexity of the customer's environment and the resources
directed by the customers to the implementation projects. Estimated losses on
contracts are reported in the period in which such losses become known or
expected.
Revenues from contracts for software licenses that don't require
significant customization are recognized upon delivery of the software if
there is persuasive evidence of an arrangement, collection is probable, the
fee is fixed or determinable and there is sufficient vendor-specific objective
evidence to support allocating the total fee to all elements of multiple-
element arrangements. Software maintenance revenues are recognized ratably
over the term of the support contract, which is generally one year. Other
service revenue is recognized as services are performed.
We adopted Statement of Position 97-2, "Software Revenue Recognition" ("SOP
97-2") and Statement of Position 98-4, "Deferral of the Effective Date of a
Provision of SOP 97-2, Software Revenue Recognition" ("SOP 98-4") as of
January 1, 1998. SOP 97-2 and SOP 98-4 provide guidance for recognizing
revenue on software transactions and supercede Statement of Position 91-1,
"Software Revenue Recognition" ("SOP 91-1"). The adoption of SOP 97-2 and SOP
98-4 did not have a material impact on our financial results.
In December 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position 98-9, "Modification of SOP 97-2,
Software Revenue Recognition with Respect to Certain Transactions" ("SOP 98-
9"). SOP 98-9 amends SOP 98-4 to extend the deferral of the application of
certain passages of SOP 97-2 provided by SOP 98-4 through fiscal years
beginning on or before March 15, 1999. All other provisions of SOP 98-9 are
effective for transactions entered into in fiscal years beginning after March
15, 1999. The adoption of SOP 98-9 did not have a material impact on our
financial results.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements,"
("SAB 101"). SAB 101 provides guidance on the recognition, presentation, and
disclosure of revenue in financial statements. All registrants are expected to
apply the accounting and disclosures described in SAB 101. The Company is
currently evaluating SAB 101 and has not completed its assessment of the
impact of adoption. If a change in its revenue recognition policy, resulting
from SAB 101 proves necessary, it will be reported as a change in accounting
principle in the quarter ending December 31, 2000.
As of June 30, 2000, we had an accumulated deficit of approximately $32.4
million, including a net loss of $3.7 million for the three months ended June
30, 2000. We expect to incur operating losses in the foreseeable future as we
continue to invest in further development of the WorkOut product and to
recruit and train personnel for engineering, sales, marketing and professional
services for the WorkOut product.*
7
<PAGE>
RESULTS OF OPERATIONS
Comparison of Three Months Ended June 30, 2000 and 1999
Revenues
License. License revenue for the three months ended June 30, 2000 has been
primarily derived from the sale of licenses of CheckVision. License revenue
decreased 42% to $895,000 from $1.5 million for the three months ended June
30, 2000 and 1999, respectively. This decrease in license revenue primarily
resulted from decreased licenses and royalties recorded in connection with the
amendment of the Global Strategic Alliance Agreement signed in June 1999, and
decreased recognition of revenue from significant CheckVision customers. This
decrease reflects our not actively pursuing new CheckVision customers as we
have redirected our resources to support our newest product, WorkOut.
Management believes that an increasing amount of future license revenue will
be derived from the WorkOut product.*
Service. Service revenue is comprised primarily of fees from software
application development contracts, and to a lesser extent, fees from
installation services and training for our CheckVision and WorkOut software
application solutions. Service revenue decreased 79% to $435,000 from $2.1
million for the three months ended June 30, 2000 and 1999, respectively. The
decrease is primarily due to the company not actively pursuing new CheckVision
customers as we have redirected our resources to support our newest product,
WorkOut. Management believes that an increasing amount of future service
revenue will be derived from installation services performed for the WorkOut
product.*
Maintenance. Maintenance revenue is generated by software support contracts
to customers who have entered into license agreements for the use of our
software application solutions. Maintenance support includes telephone
support, minor software upgrades and, in some cases, third party support.
Maintenance revenue decreased 13% to $1.0 million from $1.2 million for the
three months ended June 30, 2000 and 1999, respectively. Maintenance revenue
decreased due to a smaller number of maintenance customers.
Cost of Revenues
License. Cost of license revenue decreased to $3,000 from $14,000 for the
three months ended June 30, 2000 and 1999, respectively, representing 0.3% and
0.9% of license revenues for the three months ended June 30, 2000 and 1999,
respectively. The cost of license revenue as a percentage of license revenue
is small because there are no associated costs of license with the license and
royalty revenues realized on the amendment of the Global Strategic Alliance
Agreement. The cost of license revenue as a percentage of license revenue may
increase in the future if we negotiate royalty agreements with partners and
customers that fund or partially fund the ongoing development of our WorkOut
product.*
Service. Cost of service revenue is primarily comprised of employee-related
costs and fees for third-party consultants incurred in providing
customization, installation, and training and development services. Cost of
service revenue decreased 68% to $328,000 for the three months ended June 30,
2000 as compared to $1.0 million for the three months ended June 30, 1999,
representing 75% and 49% of service revenues for the three months ended June
30, 2000 and 1999, respectively. Cost of service revenue decreased in absolute
dollars due primarily to a reduction in engineers and a decline in the number
of contracts to serve as we have redirected our resources to support WorkOut.
The increased cost of service revenue as a percentage of service revenue is
primarily due to certain contracts having costs associated with deferred
revenues as required by revenue recognition guidelines.
Maintenance. Cost of maintenance revenue is primarily comprised of
employee-related costs incurred in providing customer support and also
includes the costs of services provided by third parties for hardware-related
maintenance for certain of the installed base of customers. Cost of
maintenance revenue decreased 16% to $458,000 for the three months ended June
30, 2000, from $547,000 for the three months ended June 30, 1999, representing
44% and 46% of maintenance revenue for the three months ended June 30, 2000
and 1999, respectively. The decrease in maintenance costs is primarily due to
reduced headcount and improved productivity in delivering maintenance.
8
<PAGE>
Operating expenses
Sales and marketing. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses earned by sales personnel, cost of running
field offices, travel and related expenses, promotional and advertisement
expenses. Sales and marketing expenses increased 41% to $1.5 million from $1.1
million for the three months ended June 30, 2000 and 1999, respectively,
representing 65% and 23% of total revenue for the three months ended June 30,
2000 and 1999, respectively. Sales and marketing expenses increased primarily
due to a increase in the sales and marketing personnel related to the WorkOut
product.
General and administrative. General and administrative expenses were $2.6
million and $2.0 million for the three months ended June 30, 2000 and 1999,
respectively, representing 111% and 42% of total revenue for the three months
ended June 30, 2000 and 1999, respectively. General and administrative
expenses increased in absolute dollars primarily due to increased retention
bonuses and amortization of purchased technology acquired during the
acquisition of At Work Corporation in September 1999.
Product development. Product development expenses consist primarily of
salaries and other personnel-related expenses. Product development expenses
increased 254% to $1.2 million for the three months ended June 30, 2000, from
$330,000 for the three months ended June 30, 1999, representing 49% and 7% of
total revenues for the three months ended June 30, 2000 and 1999,
respectively. The increase in product development expenses for the three
months ended June 30, 2000 is primarily due to the increase in costs incurred
for the ongoing development of our WorkOut product. In 2000, management
expects to incur increased costs in the ongoing development of our WorkOut
product.
Interest Income. Interest income represents interest earned by the Company
on its cash and cash equivalents. Interest income increased to $48,000 from
$43,000 for the three months ended June 30, 2000 and 1999 respectively, due to
higher average invested cash balances in the three months ended June 30, 2000.
RESULTS OF OPERATIONS
Comparison of Six Months Ended June 30, 2000 and 1999
Revenues
License. License revenue decreased 5% to $1.8 from $1.9 million for the six
months ended June 30, 2000 and 1999, respectively. This decrease in license
revenue primarily resulted from decreased recognition of revenue from
significant CheckVision customers. Management believes that an increasing
amount of future license revenue will be derived from the WorkOut product.*
Service. Service revenue decreased 67% to $1.2 million from $3.8 million
for the six months ended June 30, 2000 and 1999, respectively. The decrease is
primarily due to the company not actively pursuing new CheckVision customers
as we have redirected our resources to support WorkOut. Management believes
that an increasing amount of future service revenue will be derived from
installation services performed for the WorkOut product.*
Maintenance. Maintenance revenue decreased 20% to $2.1 million from $2.6
million for the six months ended June 30, 2000 and 1999, respectively.
Maintenance revenue decreased due to a smaller number of maintenance
customers.
Cost of Revenues
License. Cost of license revenue decreased to $23,000 from $31,000 for the
six months ended June 30, 2000 and 1999, respectively, representing 1.3% and
1.6% of license revenues for the six months ended June 30, 2000 and 1999,
respectively. The cost of license revenue as a percentage of license revenue
is small because
9
<PAGE>
there are no associated costs of license with the license and royalty revenues
realized on the amendment of the Global Strategic Alliance Agreement. The cost
of license revenue as a percentage of license revenue may increase in the
future if we negotiate royalty agreements with partners and customers that
fund or partially fund the ongoing development of our WorkOut product.*
Service. Cost of service revenue decreased 72% to $648,000 for the six
months ended June 30, 2000 as compared to $2.3 million for the six months
ended June 30, 1999, representing 53% and 62% of service revenues for the six
months ended June 30, 2000 and 1999, respectively. Cost of service revenue
decreased in absolute dollars due primarily to a reduction in engineers and a
decline in the number of contracts to serve as we have redirected our
resources to support WorkOut.
Maintenance. Cost of maintenance revenue decreased 23% to $962,000 for the
six months ended June 30, 2000, from $1.2 million for the six months ended
June 30, 1999, representing 46% and 48% of maintenance revenue for the six
months ended June 30, 2000 and 1999, respectively. The decrease in maintenance
costs is primarily due to reduced headcount and improved productivity in
delivering maintenance.
Operating expenses
Sales and marketing. Sales and marketing expenses increased 30% to $3.1
million from $2.4 million for the six months ended June 30, 2000 and 1999,
respectively, representing 61% and 29% of total revenue for the six months
ended June 30, 2000 and 1999, respectively. Sales and marketing expenses
increased primarily due to an increase in the sales and marketing personnel
related to the WorkOut product.
General and administrative. General and administrative expenses were $5.9
million and $3.9 million for the six months ended June 30, 2000 and 1999,
respectively, representing 115% and 47% of total revenue for the six months
ended June 30, 2000 and 1999, respectively. General and administrative
expenses increased in absolute dollars primarily due to increased retention
bonuses, an increase in the allowance for doubtful accounts for certain
contracts associated with high collectibility risks, and amortization of
purchased technology acquired during the acquisition of At Work Corporation in
September 1999.
Product development. Product development expenses increased 315% to $2.2
million for the six months ended June 30, 2000, from $534,000 for the six
months ended June 30, 1999, representing 43% and 6% of total revenues for the
six months ended June 30, 2000 and 1999, respectively. The increase in product
development expenses for the six months ended June 30, 2000 is primarily due
to the increase in costs incurred for the ongoing development of our WorkOut
product. In 2000, management expects to incur increased costs in the ongoing
development of our WorkOut product.
Interest Income. Interest income represents interest earned by the Company
on its cash and cash equivalents. Interest income increased to $142,000 from
$115,000 for the six months ended June 30, 2000 and 1999 respectively, due to
higher average invested cash balances in the six months ended June 30, 2000.
Liquidity and Capital Resources
Operating activities for the six months ended June 30, 2000 used $7.0
million of cash. For the six months ended June 30, 1999, operating activities
provided $839,000 of cash. The net cash used by the operating activities of
the Company for the six months ended June 30, 2000 was primarily the result of
a decrease in accrued compensation and related liabilities and the increase in
net loss applicable to common stockholders.
Our investing activities for the six months ended June 30, 2000 and June
30, 1999, used $304,000 and $94,000 of cash, respectively. Our investing
activities for the three months ended June 30, 2000, consisted of capital
expenditures for computer equipment and office furniture to support our
product development needs for WorkOut. We currently have no significant
capital spending requirements or purchase commitments other than a non-
cancelable operating lease for our facilities.
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<PAGE>
Cash provided by financing activities was $484,000 and $313,000 for the six
months ended June 30, 2000 and 1999, respectively. The cash generated during
the six months ended June 30, 2000, was the result of net proceeds from the
exercise of stock options and employee stock purchases under our employee
stock purchase plan.
As of June 30, 2000, we had $2.3 million in cash and cash equivalents and
$1.1 million in negative working capital. We do not believe that our existing
cash and cash equivalents, together with expected cash flows from operations
will be sufficient to fund our operations through the end of the third quarter
of this year.* Accordingly, we will be required to raise additional capital
through debt or equity financings or other arrangements to fund operations,
including the continued building of infrastructure and pipeline with respect
to WorkOut. There can be no assurance that such financings will be available
on acceptable terms, if at all and that such terms will not be dilutive to our
existing stockholders. Our inability to secure necessary funding would have a
material adverse effect on our financial condition and results of operations.*
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<PAGE>
This "Risk Factors" section contains forward-looking statements (identified
with an asterisk "*") that involve risk and uncertainties. The Company's
actual results may differ materially from the results discussed in the
forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in this "Risk Factors"
section and in "Business" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations". The Company assumes no
obligation to update such forward-looking statements or to update the reasons
actual results could differ materially from those anticipated in such forward-
looking statements.
RISK FACTORS
We Can Make No Assurances that We Will Be Profitable in Any Future
Period. We have incurred significant net losses since our inception. At June
30, 2000, we had an accumulated deficit of approximately $32.4 million.
Although we achieved a net operating profit in the three months ended
September 30, 1999 and the three months ended March 31, 1995, 1996 and 1997,
June 30, 1996, September 30, 1996 and 1997, and December 31, 1996 and 1997, we
cannot assure you that we will have operating profits in any future period.
We Must Raise Additional Capital in Order to Continue Operations. This
Capital May Not Be Available on Acceptable Terms, if at All. We do not believe
that our existing cash and cash equivalents, together with expected cash flows
from operations, will be sufficient to fund our operations for through the end
of the third quarter of this year.* Accordingly, we will be required to raise
additional capital through debt or equity financings or other arrangements to
fund our operations, including the continued building of infrastructure and
pipeline with respect to WorkOut. There can be no assurance that such
financings will be available on acceptable terms, if at all and that such
terms will not be dilutive to our existing stockholders. Our inability to
secure necessary funding would have a material adverse effect on our financial
condition and results of operations.*
Our Quarterly Operating Results Will Fluctuate because of Many Factors. Our
quarterly operating results have varied in the past, and we expect our
quarterly operating results to vary significantly in the future.* Our revenues
and operating results are difficult to forecast and could be significantly
affected by many factors, some of which are outside our control, including,
among others:
. Demand for the Company's products and services;
. The variable size and timing of individual license transactions;
. The timing of our future revenue which we will recognize under SOP 97-2,
SOP 98-4, SOP 98-9, and SAB 101;
. Increased competition;
. The timing of new product releases by us and our competitors;
. Market acceptance of our software;
. The ability to expand our sales and marketing operations, including
hiring additional sales personnel;
. Software defects or other quality problems with our software;
. Changes in pricing policies by us and our competitors;
. The mix of our license and service revenue;
. Budgeting cycles of our customers;
. Success in maintaining and enhancing existing relationships and
developing new relationships with strategic partners;
. The introduction of indirect sales into our revenue mix which has
resulted in and could continue to result in lower gross margins;
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. The ability to control costs;
. Technological changes in our markets;
. Changes in our strategy;
. Personnel changes; and
. General economic factors.
We are in the process of transitioning to the Electronic Statement
Presentment ("ESP") and EBPP application business. During this process we plan
to increase our operating expenses to expand our sales and marketing
operations, fund greater levels of research and development, develop new
partnerships, expand our two East Coast facilities, expand our London sales
office, and expand into Europe and Asia. If our revenues do not increase along
with these expenses, our business, operating results and financial condition
could be seriously harmed and net losses in a given quarter could be even
larger than expected.*
In addition, because our expense levels are relatively fixed in the near
term and based in part on expectations of our future revenues, any decline in
our revenues to a level that is below our expectations would have a
disproportionately adverse impact on our operating results.*
We May Have Difficulties in Retaining the Proper Resources to Address Our
Current Contract Obligations that Extend as Far as 2006. During our transition
out of CheckVision and our other mature software application frameworks, we
may incur transition expenses over the next few quarters such as retention
bonuses, severance payments and moving expenses.* In addition, the company
expects to incur a short-term decline in total revenues over the next few
quarters.* Since the majority of our sales of CheckVision and our other mature
software application frameworks are to customers in the financial services
industry, this transition could result in ill will towards the company and, as
a result, hinder our ability to penetrate the financial services industry with
sales of our new ESP and EBPP products.* This transition could also result in
litigation. If we are unable to retain the proper resources, or if we are
hindered in our ability to penetrate the financial services industry, or if we
incur litigation resulting from this transition, our business, operating
results and financial condition could be significantly harmed.*
The Business-To-Business Electronic Presentment Industry Is Very
Competitive, and We Face Intense Competition from Many Participants in this
Industry. The markets for electronic commerce software ESP and EBPP are
becoming progressively competitive. While Alysis believes that our product
offering is unique and our technology superior, there can be no assurance that
new competitors will not emerge and/or current competitors will match our
technology in the near to medium term.* There are a number of companies from
various industries vying for market share in the ESP and EBPP markets. Some
companies have more established alliances, marketing and sales departments and
greater financial resources. While we intend to maintain our current
advantages and seek out new ways to minimize our weaknesses, through
acquisition or other means, there can be no assurances that this will be
achieved.*
We Derive a Significant Portion of Our Revenue from the Financial Services
Industry and for Us to Be Successful We Will Need to Penetrate Additional
Industries Such as Telecommunications and Utilities. Currently, a substantial
majority of our total revenue results from services and licenses provided to
large banks and other financial institutions. Our future operating results
will depend in part on our ability to penetrate additional industries such as
telecommunications and utilities. While we may devote substantial resources to
penetrate these and other markets, we cannot assure you that the revenues we
generate from this effort, if any, will exceed the cost of such efforts.* To
successfully expand our product offerings to industries other than the
financial services industry, we must continue to enhance our ESP and EBPP
products and to expand our sales and marketing departments. We cannot assure
you that we will be able to create or modify our software products
effectively, that they will achieve market acceptance, or that we will be able
to expand our sales and marketing departments.* If we are unable to penetrate
new industries, our future financial condition will depend upon our ability to
further penetrate the financial services industry. The current focus of the
banking
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industry on mergers may impede our ability to further penetrate this
industry.* If we are unable to adapt our software and product solutions or our
sales and marketing efforts to meet the needs of new industries, or if we are
not able to further penetrate the financial services industry, our business,
operating results and financial condition could continue to be significantly
harmed.*
Our Business Could Be Affected by Software Defects and Product Liability
Claims. Software products as complex as ours may contain errors that may be
detected at any point in a product's life cycle. We have in the past
discovered software errors in certain of our software application solutions
and have experienced delays in shipment of application frameworks during the
period required to correct these errors. We can make no assurances that,
despite testing by us as well as by current and potential customers, errors
will not be found, resulting in:*
. Loss of, or delay in, market acceptance;
. Diversion of development resources;
. Injury to our reputation; or
. Increased service and warranty costs, any of which could significantly
harm our business, operating results and financial condition.
Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. Our
software application solutions are generally used to manage data that is
critical to an organization, and as a result, our sale and support of our
application frameworks may entail the risk of significant product liability
claims. A liability claim brought against us could significantly harm our
business, operating results and financial condition.*
Our Success Depends on Our Ability to Expand Our Distribution Channels and
Successfully Manage the Risks Associated with Such Expansion. To date, we have
sold our ESP, EBPP and software application solutions primarily through our
direct sales force. We will need to successfully recruit, retain and train
sufficient direct sales personnel and establish other distribution channels
and partnerships to achieve significant revenue growth in the future.* We
continue to seek ways to augment our direct sales force by establishing
indirect distribution channels, including relationships with OEMs, resellers,
bill consolidators, application service providers and service bureaus. Our
distribution channels and alliances have to-date produced substantially less
revenue than we originally expected. We can make no assurances that we will
successfully increase our revenue through channels and alliances. We can make
no assurances that we will successfully expand our direct sales force or that
any such expansion will result in any substantial increase in our revenues.
Our failure to expand our direct sales force or other distribution channels
could continue to significantly harm our business, operating results and
financial condition.*
We Expect Our Transition to the ESP and EBPP Application Market Will
Continue to Strain Our Management, Operational and Technical Resources. We are
in the process of transitioning from an application services focus to a
product-centric focus in the ESP and EBPP market. Our transition has placed
significant demands on our management, operational and technical resources. We
expect this transition to continue to challenge our sales, marketing,
technical and support personnel and senior management. Our future performance
will depend in part on our ability to adapt our operational systems to respond
to changes in our business. Our transition entails a number of risks,
including continued potential declines in revenue and the need to develop the
appropriate sales and marketing capabilities and software development
estimation, production, delivery and distribution infrastructure. We can make
no assurances that we will be successful in creating the necessary
capabilities and infrastructure at all. Our failure to manage the transition
successfully has had and could continue to significantly harm our business,
operating results and financial condition.*
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Our Senior Management and Other Key Personnel Are Critical to Our Business
and Those Managers and Personnel May Not Remain with Us in the Future. We must
retain the continued service of our senior management as well as sales and
product development personnel if we are to provide improved future
performance. We do not have and do not intend to obtain key person life
insurance on our personnel. The loss of one or more of our key personnel could
significantly harm our business, operating results and financial condition.*
We are also actively seeking key technical personnel. We believe that our
future success will depend in large part upon our ability to attract and
retain highly skilled management, marketing, sales and product development
personnel.* Competition for such personnel is intense, and we can make no
assurances that we can retain our key employees or that we will successfully
attract, assimilate and retain such personnel in the future. Our failure to
attract, assimilate and retain key personnel could significantly harm our
business, operating results and financial condition.*
Our Efforts to Protect Our Intellectual Property May Not Protect Us Against
Misuse and Others May Claim that Our Products Infringe. Our success depends in
significant part upon our proprietary technology. We rely on a combination of
copyright, patent, trademark and trade secret laws, confidentiality
procedures, and licensing arrangements to establish and protect our
proprietary rights. We have a recently issued patent for a System for Data
Extraction from a Print Data Stream and U.S. and international patents pending
for Data Parsing System for Use in Electronic Commerce. In addition, we have
four other patents. While our current products are not dependent on these four
patents, we may utilize these patents in future software products.
We vigorously enforce our patent rights. While there can be no assurances
of success, we continually evaluate methods by which to enforce and capitalize
on our patent rights. Such actions may cause us to incur substantial costs
which could impact our financial results.*
As part of our confidentiality procedures, we generally enter into non-
disclosure agreements with our employees, consultants, distributors and
business partners, and limit access to and distribution of our products,
supporting documentation and other proprietary information. Despite these
precautions, a third party may be able to copy or otherwise obtain and use our
software products or technology without our authorization, or to develop
similar technology independently. In addition, effective protection of
intellectual property rights is unavailable or limited in certain foreign
countries, where customers have in the past licensed and may in the future
license our products. We cannot assure you that protection of our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology, duplicate our software products or design around any
intellectual property rights upon which our business is now or may in the
future be dependent.
Our products incorporate certain software that we license from third
parties, including software that is integrated with internally developed
software and used in our products to perform key functions. We cannot assure
you that:
. Such firms will remain in business;
. They will continue to support their software products; or
. Their software products will otherwise continue to be available to us on
commercially reasonable terms.
We believe that substantially all of the software we license is available
from vendors other than our current vendors. We also believe that we could
develop such software internally.* However, it is possible that the loss or
inability to maintain any of these software licenses could result in delays or
reductions in product shipments until we could develop, identify, license and
integrate equivalent software.* Such delays could significantly harm our
business, operating results and financial condition.*
We are not aware that any of our products infringe on the proprietary
rights of third parties. We cannot assure you, however, that third parties
will not challenge our patents or claim infringement by us with respect to our
current or future products. We expect that software product developers will
increasingly be subject to such
15
<PAGE>
claims as the number of software products and competitors in our industry
segment grows and the functionality of software products in the industry
segment overlaps.* Any such claims, with or without merit, could result in
costly litigation that could absorb significant management time, which could
have a material adverse affect on our business, operating results and
financial condition.* Such claims might require us to enter into royalty or
license agreements. Such royalty or license agreements, if required, may not
be available on terms acceptable to us or at all, which could significantly
harm our business, operating results and financial condition.*
We Depend on the Introduction of New Versions of the Company's WorkOut
Products and on Enhancing the Functionality and Services Offered by the
Company. If we are unable to develop new software products or enhancements to
our existing products on a timely and cost-effective basis, or if new products
or enhancements do not achieve market acceptance, our business would be
seriously harmed.* The life cycles of our products are difficult to predict
because the market for our products is new and emerging, and is characterized
by rapid technological change, changing customer needs and evolving industry
standards. The introduction of products employing new technologies and
emerging industry standards could render our existing products or services
obsolete and unmarketable.*
To be successful, our products and services must keep pace with
technological developments and emerging industry standards, address the ever-
changing and increasingly sophisticated needs of our customers and achieve
market acceptance.
In developing new products and services, we may:*
. Fail to develop and market products that respond to technological
changes or evolving industry standards in a timely or cost-effective
manner;
. Encounter products, capabilities or technologies developed by others
that render our products and services obsolete or noncompetitive or that
shorten the life cycles of our existing products and services;
. Experience difficulties that could delay or prevent the successful
development, introduction and marketing of these new products and
services; or
. Fail to develop new products and services that adequately meet the
requirements of the marketplace or achieve market acceptance.
If We Fail to Release Our Products in a Timely Manner, or if Our Products
Do Not Achieve Market Acceptance, Our Business Would Be Seriously Harmed. We
may fail to introduce or deliver new potential offerings on a timely basis or
at all. If new releases or potential new products are delayed or do not
achieve market acceptance, we could experience a delay or loss of revenues and
customer dissatisfaction.* Customers may delay purchases of WorkOut in
anticipation of future releases. If customers defer material orders of WorkOut
in anticipation of new releases or new product introductions, our business
would be seriously harmed.*
In Order to Manage Our Growth and Expansion, We Will Need to Improve and
Implement New Systems, Procedures and Controls. We have recently experienced a
period of rapid expansion in our East Coast locations and this has placed a
significant strain upon our management systems and resources. If we are unable
to manage our growth and expansion, our business will be seriously harmed.* In
addition, we have recently hired a large number of employees and plan to
further increase our total headcount. We also plan to expand the geographic
scope of our customer base and operations, both domestically and
internationally. This expansion has resulted and will continue to result in
substantial demands on our management resources. Our ability to compete
effectively and to manage future expansion of our operations, if any, will
require us to continue to improve our financial and management controls,
reporting systems and procedures on a timely basis, and expand, train and
manage our employee work force.*
As We Expand Our International Sales and Marketing Activities, Our Business
Will be Susceptible to Numerous Risks Associated With International
Operations. To be successful, we believe we must expand our international
operations and hire additional international personnel.* Therefore, we expect
to commit significant
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<PAGE>
resources to expand our international sales and marketing activities.* If
successful, we will be subject to a number of risks associated with
international business activities. These risks generally include:
. Currency exchange rate fluctuations;
. Seasonal fluctuations in purchasing patterns;
. Unexpected changes in regulatory requirements;
. Tariffs, export controls and other trade barriers;
. Longer accounts receivable payment cycles and difficulties in collecting
accounts receivable;
. Difficulties in managing and staffing international operations;
. Potentially adverse tax consequences, including restrictions on the
repatriation of earnings;
. The burdens of complying with a wide variety of foreign laws;
. The risks related to the recent global economic turbulence and adverse
economic circumstances in Asia; and
. Political instability.
We Depend on Increasing Use of the Internet and on the Growth of Electronic
Commerce. If the Use of the Internet and Electronic Commerce Do Not Grow as
Anticipated, Especially in the International Arena, Our Business Will Be
Seriously Harmed. Alysis' ESP and EBPP products depend on the increased
acceptance and use of the Internet as a medium of commerce. Rapid growth in
the use of the Internet is a recent phenomenon. As a result, acceptance and
use may not continue to develop at historical rates and a sufficiently broad
base of business customers may not adopt or continue to use the Internet as a
medium of commerce. Demand and market acceptance for recently introduced
services and products over the Internet are subject to a high level of
uncertainty, and there exist few proven services and products.
Our business would be seriously harmed if:*
. Use of the Internet and other online services does not continue to
increase or increases more slowly than expected;
. The technology underlying the Internet and other online services does
not effectively support any expansion that may occur;
. The Internet and other online services do not create a viable commercial
marketplace, inhibiting the development of electronic commerce and
reducing the need for our products and services; or
. There is increased governmental regulation.
Security Risks and Concerns May Deter the Use of the Internet for
Conducting Electronic Commerce. A significant barrier to electronic commerce
and communications is the secure transmission of confidential information over
public networks. Advances in computer capabilities, new discoveries in the
field of cryptography or other events or developments could result in
compromises or breaches of our security systems or those of other Web sites to
protect proprietary information. If any well-publicized compromises of
security were to occur, it could have the effect of substantially reducing the
use of the Web for commerce and communications. Anyone who circumvents our
security measures could misappropriate proprietary information or cause
interruptions in our services or operations. The Internet is a public network,
and data is sent over this network from many sources. In the past, computer
viruses, software programs that disable or impair computers, have been
distributed and have rapidly spread over the Internet. Computer viruses could
be introduced into our systems or those of our customers or suppliers, which
could disrupt WorkOut or make it inaccessible to customers or suppliers. We
may be required to expend significant capital and other resources to protect
against the threat of security breaches or to alleviate problems caused by
breaches. To the extent that our activities may involve the storage and
transmission of proprietary information, such as credit card numbers, security
breaches could expose us to a risk of loss or litigation and possible
liability.* Our security measures may be inadequate to prevent security
breaches, and our business would be harmed if we do not prevent them.*
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PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 14, 2000, at the annual stockholder's meeting, a quorum of
stockholders of the Company approved the following proposals: (1) election of
the Board of Directors; (2) ratification of the appointment of Ernst & Young
LLP to serve as the Company's independent auditors for the ensuing year.
Proposal 1. Election of Directors
<TABLE>
<CAPTION>
Director For Withheld
-------- --------- --------
<S> <C> <C>
Kevin D. Moran............................................ 9,698,410 24,660
Stewart K. P. Gross....................................... 9,698,860 24,210
Randy Katz................................................ 9,698,510 24,560
Henry Kressel............................................. 9,698,560 24,510
Timothy F. McCarthy....................................... 9,656,390 66,680
John Oltman............................................... 9,698,860 24,210
John J. Cook.............................................. 9,693,465 29,605
</TABLE>
Proposal 2. Ratification of Appointment of Independent Auditors.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
9,715,185 6,100 1,785
</TABLE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
The following exhibits are furnished along with this Form 10-Q Quarterly
Report for the three months ended June 30, 2000:
27.1 Financial Data Schedule (electronic filing only).
b. Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended June 30,
2000.
18
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ALYSIS TECHNOLOGIES, INC.
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.
ALYSIS TECHNOLOGIES, INC.
/s/ David R. Bankhead
Date: August 14, 2000 By___________________________________
David R. Bankhead
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
19
