UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1998.
[ ] 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 0-29098
NAVIDEC, INC.
--------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 33-0502730
- -------- ----------
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or organization)
14 INVERNESS DRIVE, SUITE F-116,
ENGLEWOOD, CO 80112
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 303-790-7565
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing required for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of June 30, 1998, Registrant had 3,606,221 shares of common stock
outstanding.
<PAGE>
NAVIDEC, INC.
INDEX
-----
PART I. FINANCIAL INFORMATION
- -----------------------------
Item 1. Financial Statements
Balance Sheets as of June 30, 1998 and December 31, 1997
Statements of Operations, Three and Six months ended
June 30, 1998 and 1997
Statements of Cash Flows,
Six months ended June 30, 1998 and 1997
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
- --------------------------
Item 1. Not Applicable
Item 2. Change in Securities and Use of Proceeds
Item 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART III. SIGNATURES
- --------------------
Item 1. Signatures
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
NAVIDEC, INC.
BALANCE SHEETS
June 30, December 31,
1998 1997
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 407,000 $ 369,000
Accounts Receivable:
Trade net of $50,000 allowance for doubtful
accounts $ 1,065,000 $ 726,000
Retainage $ 21,000
Cost and estimated earnings in excess of billing $ 303,000 $ 106,000
Notes Receivable $ 36,000 $ 60,000
Inventory $ 352,000 $ 549,000
Prepaid expenses and other current assets $ 94,000 $ 86,000
----------- -----------
Total current assets $ 2,257,000 $ 1,917,000
PROPERTY AND EQUIPMENT, net $ 953,000 $ 713,000
OTHER ASSETS
Restricted certificate of deposit $ 300,000 $ 300,000
Intangibles, net $ 52,000 $ 169,000
----------- -----------
Total Assets $ 3,562,000 $ 3,099,000
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Current portion of capital lease obligations $ 37,000 $ 37,000
Notes payable $ 63,000 $ 63,000
Accounts payable $ 801,000 $ 778,000
Payable to factor $ 96,000 $ 190,000
Other accrued liabilities $ 240,000 $ 171,000
----------- -----------
Total current liabilities $ 1,237,000 $ 1,239,000
CAPITAL LEASE OBLIGATIONS,
net current portion $ 78,000 $ 95,000
NOTES PAYABLE,
net current portion $ 185,000 $ 215,000
STOCKHOLDERS EQUITY
Common stock, no par value;
20,000,000 shares authorized
3,606,221 and 3,201,000 shares
issued and outstanding $ 8,319,000 $ 6,768,000
Accumulated deficit (6,257,000) (5,218,000)
----------- -----------
Total stockholders
equity $ 2,062,000 $ 1,550,000
TOTAL LIABILITIES and
STOCKHOLDERS EQUITY $ 3,562,000 $ 3,099,000
=========== ===========
See accompanying notes to these financial statements.
3
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<TABLE>
<CAPTION>
NAVIDEC, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------------- --------------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 1,837,000 $ 1,589,000 $ 3,539,000 $ 2,952,000
Cost of sales 1,284,000 1,069,000 2,339,000 1,926,000
----------- ----------- ----------- -----------
GROSS MARGIN 553,000 520,000 1,200,000 1,026,000
Operating expense 1,118,000 1,222,000 2,230,000 1,991,000
----------- ----------- ----------- -----------
OPERATING (LOSS) (565,000) (702,000) (1,030,000) (965,000)
OTHER INCOME (EXPENSE):
Interest, net 12,000 24,000 (4,000) (246,000)
Other (5,000) 2,000 (5,000) 1,000
----------- ----------- ----------- -----------
Other, Net 7,000 26,000 (9,000) (245,000)
----------- ----------- ----------- -----------
NET (LOSS) $ (558,000) $ (676,000) $(1,039,000) $(1,210,000)
=========== =========== =========== ===========
NET LOSS PER SHARE (Basic) $ (.16) $ (.24) $ (.30) $ (.50)
NET LOSS PER SHARE (Diluted) $ (.16) $ (.24) $ (.30) $ (.50)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES AND EQUIVALENTS
OUTSTANDING 3,585,000 2,805,000 3,410,000 2,437,000
=========== =========== =========== ===========
See accompanying notes to these financial statements.
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAVIDEC, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30
--------------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(1,039,000) $(1,210,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 307,000 184,000
Accounts receivable (318,000) (631,000)
Costs and estimated earnings in
excess of billings (197,000) (133,000)
Inventories 197,000 (178,000)
Other assets (8,000) (185,000)
Increase (decrease) in:
Accounts payable and accrued liabilities 23,000 (438,000)
Other liabilities 69,000
----------- -----------
Net cash used in operating activities (966,000) (2,591,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease (increase) in Notes Receivable 24,000 (30,000)
Capital expenditures for property and equipment (430,000) (64,000)
----------- -----------
Net cash used in investing activities (406,000) (94,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from factoring of accounts receivable 752,000 240,000
Payment to factor (846,000) (532,000)
Proceeds from issuance of common stock 1,551,000 5,115,000
Proceeds from issuance of notes payable -- 300,000
Proceeds from notes payable -related parties 40,000
Payment on notes payable-related parties (40,000)
Payment on notes payable and capital leases (47,000) (1,202,000)
----------- -----------
Net cash provided by financing activities 1,410,000 3,921,000
INCREASE IN CASH AND CASH EQUIVALENTS 38,000 1,236,000
CASH AND CASH EQUIVALENTS,
beginning of period 369,000 231,000
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 407,000 $ 1,467,000
=========== ===========
SUPPLEMENTAL SCHEDULE OF CASH
FLOW INFORMATION:
Cash payments for interest $ 18,000 $ 231,000
=========== ===========
Debentures converted to common stock $ -- $ 1,437,000
=========== ===========
See accompanying notes to these financial statements.
5
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
-----------------------------
UNAUDITED FINANCIAL STATEMENTS
The unaudited financial statements and related notes to the financial
statements presented herein have been prepared by the Company pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and
regulations. The accompanying financial statements were prepared in
accordance with the accounting policies used in the preparation of the
Company's audited financial statements included in its Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1997, and should be read
in conjunction with such financial statements and notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair presentation of
operating results for the interim periods presented have been made.
STOCKHOLDERS' EQUITY
Public Stock Offering - On February 14, 1997, the Company completed an
initial public stock offering of 1,000,000 Units (comprised of 1,000,000
shares of common stock and warrants for the purchase of 1,000,000 shares of
common stock) which provided gross proceeds to the Company of approximately
$4,555,000. Simultaneous with the offering convertible debenture holders
converted $1,438,000 in convertible notes into common stock and warrants.
Included in the 1,000,000 Units are 245,000 shares of common stock offered
by the holders of the unsecured subordinated convertible promissory notes.
Each warrant allows the holder to purchase one share of common stock at an
exercise price of $7.20 for a period of five years after the date of the
offering. The warrants are redeemable by the Company at $.05 per warrant
upon 30 days notice if the market price of the common stock for 20
consecutive trading days within the 30-day period preceding the date the
notice is given equals or exceeds $8.40. The Company also sold to the
underwriter at the close of the public offering underwriters warrants, at a
price of $0.001 per warrant, to purchase 100,000 shares of common stock
exclusive of the over-allotment. The underwriters warrants are exercisable
for 4 years beginning in February 1998 at $7.38 per share.
Stock Split - During 1996, the Company declared a 1 for 2 reverse stock
split and 510.2041 to 1 stock split. The Company also declared a .85 for 1
reverse stock split which became effective upon the initial public offering
in February 1997. All common stock reflected in the financial statements
and accompanying notes reflect the effect of the split and reverse split.
Private Placement - From November 1997 to April 1998, the Company raised
additional capital in a private placement offering of 594,500 units at
$4.50 per unit (comprised of 594,500 shares of common stock and warrants
for the purchase of 594,500 shares of common stock) which provided gross
proceeds to the Company of approximately $2,229,750. Each warrant allows
the holder to purchase one share of common stock at an exercise price of
$7.20 for a period extending through February 10, 2002. The warrants are
redeemable by the Company at $.05 per warrant upon 30 days notice if the
market price of the Company's common stock for 20 consecutive trading days
within the 30 day period preceding the date the notice is given equals or
exceeds $8.40. Offering costs associated with the private placement
included sales commissions and non-accountable expenses totaling 13% of the
proceeds of the offering, as well as placement agent warrants to purchase
59,450 units for 5 years from the date of closing at $4.50 per unit. In
addition, the Company agreed to issue any broker or registered agent who
placed four or more units (consisting of 6,000 units or $27,000 each) one
broker warrant for each $20 sold. During the private placement the Company
issued 121,613 warrants to brokers or registered agents. This offering was
made pursuant to Rule 506 of Regulation D under the Securities Act of 1933,
as amended, as an offering not involving any public offering solely to
accredited and not more than 35 sophisticated investors.
6
<PAGE>
COMPREHENSIVE INCOME
In June, 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No 130, Reporting Comprehensive Income ("FAS
130"). FAS 130, which is effective for fiscal years beginning after
December 15, 1997, defines comprehensive income as all changes in
shareholder equity exclusive of transactions with owners, such as capital
investments. Comprehensive income includes net income or loss, changes in
certain assets and liabilities that are reported directly in equity such as
translation adjustments on investments in foreign subsidiaries, and certain
changes in minimum pension liabilities. The Company's comprehensive income
(loss) was equal to its net income (loss) for the three and six month
periods ended June 30, 1998 and 1997.
NOTES PAYABLE
Notes payable at June 30, 1998, consists of the following:
Note payable to a bank, interest at prime plus 1/2% (8.75% as of
March 31, 1998) and principal payments of $5,000 payable monthly
with remaining principal paid upon maturity in June 2002,
collateralized by a CD owned by the company. $245,000
Note payable to officer/director /shareholder,
principal along with interest at 10% per annum
due on December 31, 1998. $ 3,000
SUBSEQUENT EVENTS
On August 5, 1998, the Company announced that is signed a letter of intent
to merge with VSI Holdings Inc. (AMEX:VIS). VSIH is comprised of five
wholly owned subsidiaries focused on marketing and entertainment, and has
1,250 employees in the U.S. and Canada. The five integrated subsidiaries
provide technology and systems for relationship marketing, entertainment
products, education and training for clients such as Ford Motor Company,
General Motors, Schering Plough Pharmaceuticals and Universal Studios. It
is expected that the merger will create a large Internet/new media company
with the capability to provide comprehensive integrated technology
applications for marketing and e-commerce. Annual revenues of the new
company are expected to exceed $170 million.
It is anticipated that the merger will involve an exchange of the common
stock of the two companies and be accounted for on a pooling of interest
basis. The consummation of the merger is subject to due diligence review,
negotiation of a definitive agreement, tax-free status compliance,
preparation of filings with the Securities and Exchange Commission, and
approval by the shareholders of both companies. The merger is expected to
close in the fourth quarter of 1998.
7
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward Looking Statements. The matters
discussed here and elsewhere in this report, when not historical matters, are
forward looking statements that involve a number of risks and uncertainties that
could cause actual results to differ materially from projected results. Such
factors include, among other things, the rapidly developing and unpredictable
nature of the Internet, intense competition in all of the Company's markets,
obsolescence of products and technological changes, the need for management of
growth and the dependence on relationships of the Company with its customers and
suppliers, as well as other risk factors described elsewhere in this report.
Overview
The Company was organized as ACI Systems, Inc. in July 1993 and changed its
name to NAVIDEC, Inc. in July 1996 when it acquired Interactive Planet, Inc.
("IPI"), a designer and developer of Internet World Wide Web sites. The
Company's principal sources of revenue are from the resale of computer
equipment, high technology peripherals and electronic components manufactured by
independent vendors (Product Distribution) and services related to
Internet/Intranet Solutions, license fees from recurring lead revenue from the
Wheels solution. The Company issued an aggregate of 678,877 shares of Common
Stock to the shareholders of IPI and a promissory note in the amount of $75,000
to one shareholder of IPI in exchange for all of the issued and outstanding
stock of IPI. The Company acquired TouchSource, Inc. ("TS"), a designer and
developer of interactive Kiosks, in July 1997. The Company issued an aggregate
of 207,000 shares of Common Stock to the shareholders of TS and TS was merged
into the Company in exchange for all of the issued and outstanding stock of TS.
The merger and acquisition were consummated in order to expand the Company's
business model of combined expertise in traditional marketing and distribution
and Internet/ Intranet technology. On August 5, 1998 the Company signed a letter
of intent to merge with VSI Holdings ("VSIH")(VIS:AMEX) in an anticipated stock
for stock exchange that is scheduled to be completed during the fourth quarter
of 1998. VSIH is comprised of five wholly owned subsidiaries focused on
marketing and entertainment, and has 1,250 employees in the U.S. and Canada. The
five integrated subsidiaries provide technology and systems for relationship
marketing, entertainment products, education and training for clients. Annual
revenues of the new company are expected to exceed $170 million. The
consummation of the merger is subject to due diligence review, negotiation of a
definitive agreement, tax-free status compliance, preparation of filings with
the Securities and Exchange Commission, and approval by the shareholders of both
companies.
The Company's strategy is to increase revenue generated by its two core
competencies: (1) Internet/Intranet Solutions, which are focused in five major
market areas, including computer and network infrastructure equipment, software
and services, content aggregation, electronic commerce and order fulfillment,
and (2) Product Distribution. The Company has built and intends to continue to
build an infrastructure that assumes this strategy will succeed. Management
believes that, based on the current product mix, the Company's new Wheels
solution will provided for the majority of its increased revenues in 1998 and
years to follow. The Wheels solution combines the company's two core
competencies of Internet/Intranet solutions and product distribution. Wheels is
designed on a state of the art platform that allows it to distribute electronic
information out to consumers through regional wheels web sites, individual
dealer web sites, remote automotive kiosks and also in mobile sales laptops. The
failure of the Company to achieve this strategy could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company recognizes revenue upon delivery of its Internet/Intranet
Solutions and Product Distribution goods. Internet/Intranet Solutions generally
begin with consulting arrangements that are billed on an hourly basis and
progress to a bid for a proposed project. Deposits are then taken upon
acceptance of the bid. Most of the Company's customers elect to update and
expand their Web sites frequently, and clients are billed monthly on a time and
materials basis for these services. Additional sources of ongoing revenue
include revenue from advertising sold by the Company on clients Web sites,
revenue from sales of merchandise and services over clients Web sites and
revenue from maintenance and hosting of client Web sites.
8
<PAGE>
From August through October, 1996, the Company raised net proceeds of
approximately $1,233,000 from the sale of 10% Unsecured Subordinated Convertible
Promissory Notes (the "Bridge Promissory Notes") in a private placement (the
"Bridge Private Placement"). These notes were converted by their terms into an
aggregate of 349,126 Units upon consummation of the Company's public offering
described below. The Units were identical to the Units offered in the public
offering.
On February 14, 1997, the Company consummated a public offering of
1,000,000 Units consisting of one share of Common Stock and one Common Stock
purchase warrant ("Warrant"). Each Warrant entitles the holder to purchase one
share of Common Stock at a price of $7.20 per share until February 10, 2002. The
Warrants are redeemable at the option of the Company, at $.05 per Warrant, at
any time on or after February 10, 1998 or such earlier date as may be determined
by Joseph Charles & Associates ("JCA"). Of the 1,000,000 shares of Common Stock
and 1,000,000 Warrants included in the offering, 755,000 shares of Common Stock
and 1,000,000 Warrants were sold by the Company, for net proceeds of
approximately $3,436,000 (after subtracting the underwriting discount and other
expenses of the offering). The remaining 255,000 shares of Common Stock were
sold by the investors in the Bridge Private Placement.
From November 1997 to April 1998, the Company raised net proceeds of
approximately $2,229,750 from the issuance of 594,500 shares of commons stock
and warrants in a private placement. Each Warrant entitles the holder to
purchase one share of Common Stock at a price of $7.20 per share until February
10, 2002. The Warrants are redeemable at the option of the Company, at $.05 per
Warrant, at any time on or after February 10, 1998 when the Company's Common
Stock on 20 consecutive trading days has closing market price above $8.40 per
share and there is an effective registration statement on file with the
Securities and Exchange Commission.
Results of Operations
The following tables set forth for the periods indicated the percentage of
net sales represented by certain line items included in the Company's statements
of operations.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
---------------------------------------------- ----------------------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $ 1,837,000 100% $ 1,589,000 100% $ 3,539,000 100% $ 2,952,000 100%
COGS 1,284,000 70% 1,069,000 67% 2,339,000 66% 1,926,000 65%
Gross Profit 553,000 30% 520,000 33% 1,200,000 34% 1,026,000 35%
Oper Expenses 1,118,000 61% 1,222,000 77% 2,230,000 63% 1,991,000 67%
Oper (Loss) (565,000) (31%) (702,000) (44%) (1,030,000) (29%) (965,000) (33%)
Other 7,000 0% 26,000 2% (9,000) (0%) (245,000) (8%)
Net (Loss) (558,000) (30%) (676,000) (43%) (1,039,000) (29%) (1,210,000) (41%)
</TABLE>
Net sales for the six months ended June 30, 1998 were $3,539,000 which
represents an increase of 20% over net sales of $2,952,000 for the first six
months of 1997. Net sales were $1,837,000 for the three months ended June 30,
1998 an increase of 16% over sales of $1,589,000 for the three months ending
June 30, 1997. The increase is primarily attributed to sales of
Internet/Intranet Solutions, which were $1,275,000 an increase of 101% over net
sales of $634,000 during the first six months of 1997. Internet/Intranet sales
were $661,000 for the quarter ending June 30, 1998 an increase of 96% over sales
of $338,000 for the quarter ending June 30, 1997. Sales of the Company's Wheels
solution, which was introduced in the 4th quarter of 1997 accounted for $504,000
or 40% of the Internet/Intranet sales for the first six months of 1998. In
addition, net sales of Internet Infrastructure was $1,068,000 for the first six
months of 1998 an increase of 24% over net sales of $859,000 for the six months
ending June 30, 1997. Internet Infrastructure sales were $529,000 for the
quarter ending June 30, 1998 an increase of 16% over net sales of 457,000 for
the quarter ending June 30, 1997. The increase in net sales in all three
categories was primarily attributable to increased marketing activities and
greater market penetration.
Net sales in Distribution were $1,196,000 for the first six months of 1998
a decrease of 18% from net sales of $1,459,000 during the first six months of
1997. Net sales in Distribution were $657,000 for the three months ended June
30, 1998 a decrease of 17% from net sales of $792,000 for the three months ended
June 30, 1997. The decrease in sales is attributed to the discontinuation of
distribution products that did not have strong gross profit and or recurring
sales.
Gross margin was 34% during six months of 1998, an decrease of 1% over a
gross margin of 35% during the same period in 1997. The Company's gross margin
continues to remain strong which is attributed to management's elimination of
several distribution products that carried low gross margin and the strong gross
margin on Internet/Intranet Solutions.
9
<PAGE>
Operating expenses for the first six months of 1998 were $2,230,000 or 63%
of sales compared with $1,991,000 or 67% for the same period in 1997. The
increase in operating expenses was primarily the result of an increase in staff
and marketing activities associated with expanding the Wheels product and its
market area. Operating expenses are expected to remain stable as the Company
continues to invest in the development of high end Internet/Intranet Solutions.
Net interest expense for first six months of 1998 was $9,000 compared with
$245,000 for the first six months of 1997. The decrease was a result of the
Bridge Promissory Notes that were converted in February of 1997. The Company
expects interest expense to remain constant for the remainder of 1998.
Liquidity and Capital Resources
Through March 31, 1998, the Company funded its operations primarily through
equity investments, from the Company's IPO and subsequent Private Placement that
was completed in April of 1998 , and revenues generated from operations, lines
of credit and factoring arrangements made available to it by banks. On June 30,
1998 the Company had cash and cash equivalents of $407,000 and a net working
capital of $1,020,000 compared to cash and cash equivalents of $369,000 and a
net working capital of $678,000 as of December 31, 1997.
Cash used in operating activities for the Company totaled $966,000 and
$2,591,000 for first six months of 1998 and 1997, respectively. Cash used in
investing activities consisted of expenditures for property and equipment.
Capital expenditures increased to $430,000 in first six months of 1998 from
$94,000 during first six months of 1997.
Cash from financing activities in fiscal 1998 consisted of advances from
factoring arrangements of $752,000 net of repayments of $846,000, proceeds from
the issuance of common stock of $1,551,000. This compares to 1997 repayments of
Notes of $1,437,000 from the Bridge Private Placement, $226,000 in loans from
shareholders and employees and $71,00 in repayment of factoring arrangements.
The Company has not recorded a deferred tax asset as it cannot conclude to
date that it is more likely than not that the deferred tax asset will be
realized.
Year 2000
Management has initiated an enterprise-wide program to prepare the
Company's computer systems and applications for the year 2000. The Company
expects to incur internal staff cost as well as consulting and other expenses
related to the year 2000 project. At this point, the Company is not able to
determine the estimated cost for its year 2000 project and, if unresolved,
whether the year 2000 issue will have a material impact on the operations of the
Company.
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
See "Notes to Financial Statements - Private Placement"
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On June 24, 1998, the Annual Meeting of Shareholders of NAVIDEC, Inc. was
held. At that meeting, the following matters were approved by the shareholders
by the votes indicated below:
1) The following directors were elected to constitute the entire Board of
Directors of the Company:
Shares for Shares Withhold
Ralph Armijo 2,232,276 4,550
Andrew Davis 2,128,576 108,250
Patrick R Mawhinney 2,125,026 110,280
Lloyd G. Chavez Jr. 2,128,576 108,250
Gerald A Marroney 2,128,576 108,250
James Hosch 2,128,576 108,250
10
<PAGE>
2) A proposal to adopt the Company's Stock Option Plan received 1,440,683
shares voting in favor of the proposal, 6,000 shares voting against
the proposal, and 11,006 shares abstaining.
3) A proposal to authorize the company to issue in a non-public offering
up to 1,000,000 shares of the Company's common stock for an
approximate aggregate offering price of $6 million received 2,213,037
shares voting in favor of the proposal, 18,783 shares voting against
the proposal, and 5,006 shares abstaining.
4) A proposal to ratify the selection by the Board of Directors of Hein +
Associates LLP as the independent certified public accountants for the
Company for the fiscal year ending December 31, 1998 was approved with
a total of 2,226,520 shares voting in favor of the proposal, 1,300
shares voting against the proposal and 9,006 shares abstaining.
Item 5. Other Information
On August 5, 1998, the Company announced that is signed a letter of intent
to merge with VSI Holdings Inc. (AMEX:VIS). VSIH is comprised of five
wholly owned subsidiaries focused on marketing and entertainment, and has
1,250 employees in the U.S. and Canada. The five integrated subsidiaries
provide technology and systems for relationship marketing, entertainment
products, education and training for clients such as Ford Motor Company,
General Motors, Schering Plough Pharmaceuticals and Universal Studios. It
is expected that the merger will create a large Internet/new media company
with the capability to provide comprehensive integrated technology
applications for marketing and e-commerce. Annual revenues of the new
company are expected to exceed $170 million.
It is anticipated that the merger will involve an exchange of the common
stock of the two companies and be accounted for on a pooling of interest
basis. The consummation of the merger is subject to due diligence review,
negotiation of a definitive agreement, tax-free status compliance,
preparation of filings with the Securities and Exchange Commission, and
approval by the shareholders of both companies. The merger is expected to
close in the fourth quarter of 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The exhibits included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended June 30, 1998, the Company filed one report
on a form 8-K on April 19, 1998 reporting under Item 5 the closing of
the Company's private placement of securities and providing under Item
7 the Company financial statement as of April 30, 1998.
11
<PAGE>
PART III. SIGNATURES
- --------------------
Item 1. Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NAVIDEC, INC.
-------------
Date: August 14, 1998
By /S/ RALPH ARMIJO
Ralph Armijo
President and CEO
By /S/ PAT MAWHINNEY
Pat Mawhinney
Chief Financial Officer
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<S> <C>
<PERIOD-TYPE> 6-MOS
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0
0
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</TABLE>
