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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
(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
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-30828
PRECISE SOFTWARE SOLUTIONS LTD.
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(Exact Name of Registrant as Specified in Its Charter)
Israel Not Applicable
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(State or Other Jurisdiction (I.R.S. Employer
of Organization) Identification No.)
1 Hashikma Street
P.O. Box 88 Savyon, 56518 Israel
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 972-(3)-635-2566
Indicate by check |X| whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No |X|
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At August 11, 2000, 21,903,803 of the registrant's ordinary shares (par
value, 0.03 NIS per share) were outstanding.
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<PAGE>
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED June 30,2000
TABLE OF CONTENTS
PAGE
PART I: FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of June 30,
2000 (unaudited) and December 31, 1999...................... 5
Condensed Consolidated Statements of Operations
(unaudited) for the three months and six months ended
June 30, 2000 and 1999...................................... 7
Consolidated Statements of Cash Flows (unaudited) for
the six months ended June 30, 2000 and 1999................. 8
Notes to Consolidated Financial Statements (unaudited)......10
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................15
ITEM 3. Quantitative and Qualitative Disclosures
About Market Risk...........................................18
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings........................................... *
ITEM 2. Changes in Securities and Use of Proceeds...................19
ITEM 3. Defaults Upon Senior Securities............................. *
ITEM 4. Matters submitted to a vote of Security Holders.............19
ITEM 5. Other Information........................................... *
ITEM 6. Exhibits and Reports on Form 8-K............................27
Exhibit 27.1 Financial Data Schedule (EDGAR only)
SIGNATURES...................................................................28
*No information provided due to inapplicability of item.
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<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD.
FORM 10-Q
QUARTER ENDED JUNE 30, 2000
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
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<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2000
IN U.S. DOLLARS
UNAUDITED
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<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE><CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
----------- -----------
UNAUDITED
-----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,693 $ 6,099
Short-term deposits 888 --
Trade receivables, net 3,767 2,736
Other accounts receivable 358 745
----------- -----------
Total current assets 11,706 9,580
----------- -----------
SEVERANCE PAY FUND 308 390
----------- -----------
PROPERTY AND EQUPIMENT, NET 972 1,285
----------- -----------
OTHER ASSETS, NET -- 1,167
----------- -----------
$ 12,986 $ 12,422
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the condensed consolidated financial statements.
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<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE><CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
----------- -----------
UNAUDITED
-----------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ -- $ 235
Trade payables 628 757
Deferred revenues 1,535 1,964
Employees and payroll accruals 921 1,365
Accrued expenses 835 998
Other accounts payable 78 103
----------- -----------
Total current liabilities 3,997 5,422
----------- -----------
LONG-TERM LIABILITIES:
Long-term debt 199 --
Accrued severance pay 497 680
----------- -----------
Total long-term liabilities 696 680
----------- -----------
SHAREHOLDERS' EQUITY
Preferred shares, common shares and
additional paid-in capital 25,400 33,802
Deferred compensation (665) (4,954)
Accumulated deficit (16,442) (22,528)
----------- -----------
Total shareholders' equity 8,293 6,320
----------- -----------
$ 12,986 $ 12,422
=========== ===========
</TABLE>
The accompanying notes are an integral part of
the condensed consolidated financial statements.
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<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS (EXCEPT PER SHARE DATA)
<TABLE><CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
UNAUDITED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Software licenses $ 2,072 $ 4,875 $ 4,013 $ 8,463
Services 396 870 686 1,824
------------ ------------ ------------ ------------
2,468 5,745 4,699 10,287
------------ ------------ ------------ ------------
Cost of revenues:
Software licenses 167 181 323 297
Services 139 411 226 767
------------ ------------ ------------ ------------
306 592 549 1,064
------------ ------------ ------------ ------------
Gross profit 2,162 5,153 4,150 9,223
------------ ------------ ------------ ------------
Operating expenses:
Research and development, net 690 1,032 1,422 2,051
Selling and marketing, net 1,628 4,555 3,148 8,309
General and administrative 343 758 740 1,367
Amortization of deferred
stock-based compensation to employees
and others 42 2,938 72 3,718
------------ ------------ ------------ ------------
Total operating expenses 2,703 9,283 5,382 15,445
------------ ------------ ------------ ------------
Operating loss 541 4,130 1,232 (6,222)
Financial income (expenses), net (14) 99 (17) 136
------------ ------------ ------------ ------------
Net loss $ (555) $ (4,031) $ (1,249) $ (6,086)
============ ============ ============ ============
Net loss per share:
Basic and diluted net loss per share $ (0.17) $ (1.20) $ (0.38) $ (1.84)
============ ============ ============ ============
Weighted average number of shares
used in computing basic and diluted
net loss per share 3,298,749 3,336,369 3,298,749 3,317,568
============ ============ ============ ============
Pro forma basic and diluted net loss
per share $ (0.05) $ (0.26) $ (0.12) $ (0.40)
============ ============ ============ ============
Pro forma weighted average number of
shares used in computing proforma basic
and diluted net loss per share 10,417,688 15,331,091 10,417,688 15,312,290
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of
the condensed consolidated financial statements.
-7-
<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE><CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1999 2000
------- -------
UNAUDITED
------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,249) $(6,086)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 197 263
Amortization of deferred compensation 72 3,718
Decrease (increase) in trade receivables, net (655) 1,489
Increase in other accounts receivable (129) (321)
Increase (decrease) in trade payables 33 (38)
Increase in other accounts payable 587 726
Increase in accrued severance pay, net 48 101
Other 58 8
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Net cash used in operating activities (1,038) (140)
------- -------
Cash flows used in investing activities:
Purchase of property and equipment (219) (508)
Purchase of short-term deposits (41) --
Proceeds from sale of short-term deposits -- 888
Prepaid issuance expenses -- (479)
Payment for acquisition of consolidated subsidiary (1) -- (507)
------- -------
Net cash used in investing activities (260) (606)
------- -------
</TABLE>
The accompanying notes are an integral part of
the condensed consolidated financial statements.
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<PAGE>
PRECISE SOFTWARE SOLUTIONS LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS
<TABLE><CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1999 2000
------- -------
UNAUDITED
------------------------
<S> <C> <C>
Cash flows from financing activities:
Short-term bank credit, net 573 (27)
Proceeds from issuance of shares, net -- 196
Repayment of long-term debt (9) (17)
------- -------
Net cash provided by financing activities 564 152
------- -------
Decrease in cash and cash equivalents (734) (594)
Cash and cash equivalents at the beginning of the period 844 6,693
------- -------
Cash and cash equivalents at the end of the period $ 110 $ 6,099
======= =======
(1) Payment for acquisition of consolidated subsidiary:
In February 2000, the Company acquired all of the
outstanding shares of Knight Fisk Software Ltd.
The net fair value of the assets acquired was as
follows:
Working capital $ (8)
Fixed assets 41
Long-term loans and other (45)
Goodwill 718
-------
706
Options granted (199)
-------
$ 507
=======
Supplemental disclosure of cash flows information:
Cash paid during the period for:
Interest $ 9 $ 1
======= =======
</TABLE>
The accompanying notes are an integral part of
the condensed consolidated financial statements.
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<PAGE>
NOTE 1: BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by
Precise Software Solutions Ltd., pursuant to the rules and regulations
of the Securities and Exchange Commission and include the accounts of
Precise Software Solutions Ltd. and its wholly-owned subsidiaries
collectively the "Company"). Certain information and footnote
disclosures, normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been
condensed or omitted pursuant to such rules and regulations. While in
the opinion of the Company, the unaudited financial statements reflect
all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position at June
30, 2000 and the operating results and cash flows for the three and
six months ended June 30, 2000 and 1999, these financial statements
and notes should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto, included in the
Company's Registration Statement on Form F-1 filed with the Securities
and Exchange Commission.
The results of operations for the three months and six months ended
June 30, 2000 are not necessarily indicative of results that may be
expected for any other interim period or for the full fiscal year
ending December 31, 2000.
NOTE 2: ACQUISITION OF KNIGHT FISK SOFTWARE LTD.
In February 2000, the Company acquired all the outstanding shares of
Knight Fisk Software Ltd. ("Knight Fisk"), a U.K. - based company and
the distributor of the Company's products in the United Kingdom.
The consideration for the shares acquired was $ 684,000 in cash and
stock options, which were valued as of the date of the purchase. The
acquisition was accounted for under the purchase method. The excess of
the purchase price over the fair value of net liabilities acquired was
allocated to goodwill.
PRO FORMA FINANCIAL INFORMATION:
The operations of Knight Fisk are included in the Company's
consolidated operating results from February 1, 2000. The following
unaudited pro forma information presents the results of operations for
the Company and Knight Fisk for the six months ended June 30, 2000,
1999 and for the year ended December 31, 1999, as if the acquisition
had been consummated as of January 1, 2000 and January 1, 1999,
respectively. This pro forma information does not purport to be
indicative of what may occur in the future (in thousands):
Page 10 of 28
<PAGE>
<TABLE><CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ------------------------
1999 1999 2000
----------- ----------- -----------
UNAUDITED
------------------------
<S> <C> <C> <C>
Total revenues $ 12,100 $ 4,950 $ 10,469
=========== =========== ===========
Net loss $ (3,027) $ (1,439) $ (6,011)
=========== =========== ===========
Basic and diluted net loss per share $ (0.92) $ (0.44) $ (1.81)
=========== =========== ===========
</TABLE>
NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. CASH, CASH EQUIVALENTS AND SHORT-TERM DEPOSITS:
The Company considers all highly liquid investment securities
with maturities from date of purchase of three months or less
to be cash equivalents. As well as short-term deposits with
maturities of more than three months but less than one year.
B. REVENUE RECOGNITION:
Revenues from software sales are recognized in accordance with
SOP 97-2, as amended. License revenues are comprised of
perpetual license fees which are derived from contracts with
end-customers, distributors and an original equipment
manufactures ("OEMs"). The Company generally does not grant
rights of return. When right of return exists, the Company
defers the revenues until such right expires. The Company is
entitled to royalties from the OEM upon the sublicensing of the
Company's products to end users. Royalties due from this OEM
are recognized when such royalties are reported to the Company
by the OEM. License revenues from sales to distributors and
end-customers are recognized upon delivery of the software when
collection is probable; all license payments are due within one
year; the license fee is otherwise fixed or determinable;
vendor-specific objective evidence exists and persuasive
evidence of an arrangement exists.
Service revenues are comprised of revenues from maintenance and
support arrangements, consulting fees, and training, none of
which are considered essential to the functionality of the
software license. Revenues from support arrangements are
deferred and recognized on a straight-line basis as service
revenues over the life of the related agreement. Consulting and
training revenues are recognized at the time the services are
rendered. Customer advances and billed amounts due from
customers in excess of revenue recognized are recorded as
deferred revenues.
Page 11 of 28
<PAGE>
Where software arrangements involve multiple elements, revenue
is allocated to each element based on vendor specific objective
evidence ("VSOE") of the relative fair values of each element
in the arrangement. The Company's VSOE used to allocate the
sales price to consulting, training and maintenance is based on
the price charged when these elements are sold separately.
License revenues are recorded based on the residual method.
Under the residual method, revenue is recognized for the
delivered elements when (1) there is vendor-specific objective
evidence of the fair values of all the undelivered elements
other than those accounted for using long-term contract
accounting, and (2) all revenue recognition criteria of SOP
97-2, as amended, are satisfied.
C. BASIC AND DILUTED NET LOSS PER SHARE:
Basic net loss per share is computed based on the weighted
average number of Ordinary shares outstanding during each
period. Diluted net loss per share is computed based on the
weighted average number of Ordinary shares outstanding during
each period, plus dilutive potential Ordinary shares considered
outstanding during the period, in accordance with FASB
Statement No. 128, "Earnings per Share".
All convertible Preferred shares, outstanding stock options,
and warrants have been excluded from the calculation of the
diluted net loss per share as their inclusion would be
anti-dilutive for all periods presented.
Pro forma basic and diluted shares outstanding include the
automatic conversion of the convertible Preferred Shares into
Ordinary shares that will occur upon the closing of the initial
public offering using the if-converted method from the original
date.
The following table presents the calculation of unaudited pro
forma basic and diluted net loss per share (in thousands,
except share and per share data):
<TABLE><CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
UNAUDITED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss $ (555) $ (4,033) $ (1,249) $ (6,088)
============ ============ ============ ============
Pro forma:
Shares used in computing basic
and diluted net loss per share 3,298,766 3,336,369 3,298,766 3,317,568
Effect of assumed conversion of
convertible Preferred shares 7,118,922 11,994,722 7,118,922 11,994,722
------------ ------------ ------------ ------------
Shares used in computing pro
forma basic and diluted net loss
per share 10,417,688 15,331,091 10,417,688 15,312,290
============ ============ ============ ============
Pro forma basic and diluted net
loss per share $ (0.05) $ (0.26) $ (0.12) $ (0.40)
============ ============ ============ ============
</TABLE>
Page 12 of 28
<PAGE>
D. SHAREHOLDERS' EQUITY:
1. Reverse split:
On April 12, 2000, the Company's shareholders approved a
two for three reverse share split. All share and per
share data have been retroactively adjusted to reflect
this split.
2. Stock options plans:
The following table summarized information about stock
options outstanding as of June 30, 2000:
<TABLE><CAPTION>
NUMBER OF WEIGHTED AVERAGE
OPTIONS EXERCISE PRICE
----------- -----------
<S> <C> <C>
Outstanding at December 31, 1999 3,681,044 $ 1.04
Granted 1,345,444 $ 9.70
Exercised (65,167) $ 0.60
Forfeited (97,502) $ 1.49
----------- -----------
Outstanding at June 30, 2000 4,863,819 $ 3.43
=========== ===========
</TABLE>
E. SEGMENT, CUSTOMERS AND GEOGRAPHIC INFORMATION:
1. Summary information about geographical areas
(in thousands):
The Company operates in one industry segment, the
development and marketing of performance software
products. Operations in Israel include research and
development, selling and marketing. Operations in the
United States include selling and marketing. The
following is a summary of operations within geographic
areas based on customer's location.
<TABLE><CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
UNAUDITED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues from sales to
unaffiliated customers:
U.S.A. $ 1,448 $ 4,065 $ 2,809 $ 7,353
North and South America
(except U.S.A) 80 142 290 249
Japan 50 159 137 433
Far East (except Japan) 139 220 173 269
Europe and others 751 1,159 1,290 1,983
------------ ------------ ------------ ------------
$ 2,468 $ 5,745 $ 4,699 $ 10,287
============ ============ ============ ============
</TABLE>
Page 13 of 28
<PAGE>
<TABLE><CAPTION>
JUNE 30,
----------------------------
1999 2000
------------ ------------
UNAUDITED
----------------------------
<S> <C> <C>
Long-lived assets, by
geographic region:
Israel $ 434 $ 566
United States 456 640
Europe -- 79
------------ ------------
$ 890 $ 1,285
============ ============
</TABLE>
2. Major customer data as a percentage of total revenues:
<TABLE><CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
UNAUDITED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Customer A 25.8% 5.7% 21.4% 6.3%
Customer B -- 27.0% -- 23.3%
</TABLE>
F. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", which will be effective for fiscal years
beginning after June 15, 2000. This Statement establishes
accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments
embedded in other contracts, be recorded in the balance sheet
as either an asset or liability measured at its fair value. The
Statement also requires that changes in the derivative's fair
value be recognized in earnings unless specific hedge
accounting criteria are met. The Company does not expect the
impact of this new Statement on the Company's consolidated
balance sheet or results of operations to be material.
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101 - Revenue Recognition in
Financial Statements ("SAB 101"), which among other things
clarifies certain conditions to be met in order to recognize
revenue. The Company is currently in the process of assessing
the impact of SAB 101.
G. SUBSEQUENT EVENTS:
On July 6, 2000, the Company completed an initial public
offering in which it sold 4,887,500 Ordinary Shares (including
the over-allotted option for 637,500 shares). The Company also
issued 312,500 shares to EMC Corporation in a concurrent
offering at $16 per share. The aggregate proceeds received by
the Company from these offerings was approximately $83 million.
Page 14 of 28
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Form 10-Q contains certain statements of a forward-looking nature
relating to future events or the future financial performance of Precise
Software Solutions Ltd. ("Precise"). Precise's actual future results may differ
significantly from these statements. In evaluating these statements, the various
factors identified in the caption "Factors Affecting Future Operating Results"
should be considered.
OVERVIEW
Precise is a provider of software that assists organizations in
monitoring and optimizing the performance of their complex Information
Technology infrastructure. We were incorporated in Israel in November 1990.
Initially, we focused on developing and marketing performance management
software for mainframe computer systems. In 1995, we shifted our focus from
performance management software for mainframe systems to Information Technology
infrastructure performance management software for Oracle database environments.
In 1996, we released the initial version of our Precise/SQL software for
database monitoring. In 1998, we released several new products, including our
Precise/Pulse! software for proactive monitoring, Precise/Presto for EMC
software for monitoring database along with EMC storage systems and
Precise/Interpoint software for monitoring ERP applications. In 1999, we
introduced our Precise/SWIFT-E software for IT infrastructure performance
management in e-business environments and in April 2000, we introduced
Precise/Insight.
REVENUES
We derive our revenues from the sale of software licenses and from
services consisting primarily of maintenance fees, and, to a lesser extent,
professional services. Total revenues were $5.7 million for the three months
ended June 30, 2000 and $2.5 million for the comparable quarter of 1999,
representing an increase of $3.2 million, or 133%, and were $10.3 million for
the six months ended June 30, 2000 and $4.7 million for the comparable period of
1999, representing an increase of $5.6 million, or 119% .
Revenues from sales of software licenses were $4.9 million for the
three months ended June 30, 2000 and $2.1 million for comparable quarter of
1999, representing an increase of $2.8 million, or 135% and were $8.5 million
for the six months ended June 30, 2000 and $4 million for the comparable period
of 1999, representing an increase of 4.5 million, or 111%. The increase in
software license revenues during the period is attributable to the expansion of
our direct sales force and indirect sales channels, and recurring sales to our
installed customer base.
Revenues from services were $0.9 million for the three months ended
June 30, 2000 and $0.4 million for the comparable quarter of 1999, representing
an increase of $0.5 million, or 119% and were $1.8 million for the six months
ended June 30, 2000 and $0.7 million for the comparable period of 1999
representing an increase of $1.1 million, or 166%. The increase in service
revenues during this period is attributable to maintenance agreements resulting
from new sales of software licenses, renewals of annual maintenance agreements
with existing customers and to sales of our new professional services.
COST OF REVENUES
Cost of revenues consists of costs associated with generating software
license and service revenues. Cost of revenues was $0.6 million for the three
months ended June 30, 2000 and $0.3 million for the comparable quarter of 1999,
representing an increase of $0.3 million, or 93%, and were $1.1 million for the
six months ended June 30, 2000 and $0.5 million for the comparable period of
1999. Cost of revenues as a percentage of total revenues was 10% for the three
months ended June
Page 15 of 28
<PAGE>
30, 2000 and 12% for the comparable quarter of 1999 and was 10% for the six
months ended June 30, 2000 and 12% for the comparable period of 1999.
Cost of software license revenues consists of royalties to the
government of Israel as consideration for royalty-bearing research and
development grants received in previous years and, to a lesser extent,
production costs. Cost of software license revenues was $180,000 for the three
months ended June 30, 2000 and $170,000 for the comparable quarter of 1999,
representing an increase of $10,000, or 5%. The increase is due to an increase
in production costs and a smaller decrease in royalties accrued in connection to
royalty-bearing marketing grants, as these grants were fully repaid. Cost of
license revenue was $0.3 million for both the six months ended June 30, 2000 and
for the comparable period of 1999. Cost of software license revenues as a
percentage of total software license revenues was 4% for the three months ended
June 30, 2000 and 8.0% for the comparable quarter in 1999, and was 3% for the
six months ended June 30, 2000 and 8% for the comparable period of 1999.
Cost of service revenues consists primarily of costs related to
personnel providing customer support and professional services. Cost of service
revenues was $0.4 million for the three months ended June 30, 2000 and $0.1
million for the comparable quarter of 1999, representing an increase of $0.3
million, or 196%, and was $0.8 million for the six months ended June 30, 2000
and $0.2 million for the comparable period of 1999 representing an increase of
$0.6 million or 239%. Cost of service revenues as a percentage of service
revenues was 47% in the three months ended June 30, 2000 and 35% in the
comparable quarter of 1999 and was 42% in the six months ended June 30, 2000 and
33% in the comparable period of 1999. The increases are due to personnel costs
of our professional services organization, established in the later half of
1999, and to a lesser extent to the increase in the number of customer support
personnel hired to service our growing customer base.
RESEARCH AND DEVELOPMENT
Research and development expenses consist primarily of costs related
to research and development personnel, including salaries and other
personnel-related expenses, sub-contracting fees, facilities and computer
equipment used in our product and technology development. Research and
development expenses were $1.0 for the three months ended June 30, 2000 and $0.7
million for the comparable period of 1999, representing an increase of $0.3
million, or 50%, and were $2.1 million for the six months ended June 30, 2000
and $1.4 million for the comparable period of 1999 representing an increase of
$0.7 million, or 44%. The increases were primarily related to the increase in
the number of software developers and quality assurance personnel engaged in the
continuing enhancement of our software suite. Research and development expenses
as a percentage of total revenues were 18% in the three months ended June 30,
2000 and 28% in the comparable quarter of 1999, and were 20% for the six months
ended June 30, 2000 and 30% for the comparable period of 1999. We expect
research and development expenses to increase as we extend the functionality of
our software and as we hire additional personnel.
SALES AND MARKETING
Sales and marketing expenses consist primarily of salaries and other
personnel-related expenses, commissions and other costs associated with our
sales and marketing efforts. Sales and marketing expenses were $4.6 million for
the three months ended June 30, 2000 and $1.6 million for the comparable quarter
of 1999, representing an increase of $3.0 million, or 180%, and were $8.3
million in the six months ended June 30, 2000 and $3.1 million in the comparable
period of 1999, representing an increase of $5.2 million, or 164%. This increase
is attributable to the increase in commission expenses attributable to the
increase in software license revenues, increased expenditures on marketing
programs to support new and existing products and to penetrate new markets, and
the increase in the number of people comprising our direct sales force. Sales
and marketing expenses as a percentage of total revenues were 79% for the three
months ended June 30, 2000 and 67% for the comparable period of 1999 and were
81% for the six months ended June 30, 2000 and 67% for the comparable period of
1999. We expect sales and marketing expenses to increase as we expand our
geographic reach and hire additional personnel.
Page 16 of 28
<PAGE>
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of salaries and
other personnel-related expenses for our administrative and finance personnel,
facilities, computer equipment and professional services fees. General and
administrative expenses were $0.8 million for the three months ended June 30,
2000 and $0.3 million for the comparable quarter of 1999, representing an
increase of $0.5 million, or 121%, and were $1.4 million for the six months
ended June 30, 2000 and $0.7 million for the comparable period of 1999,
representing an increase of $0.7 million, or 85%. This increase is attributable
to the increased personnel in our financing department. General and
administrative expenses as a percentage of total revenues were 13% for the three
months ended June 30, 2000 and 14% for the comparable quarter in 1999, and were
13% for the six months ended June 30, 2000 and 16% for the comparable period of
1999. We expect general and administrative expenses to increase for the
foreseeable future as we expand our administrative staff and incur expenses
associated with being a public company, including the costs of annual and
periodic reporting and investor relations programs.
AMORTIZATION OF STOCK-BASED COMPENSATION
Our stock-based compensation expenses increased from $42,000 for the
three months ended June 30, 1999 to $2.9 million for the three months ended June
30, 2000, and from $72,000 for the six months ended June 30, 1999 to $3.7
million in the comparable period in 2000 due to additional amortization of
deferred compensation recorded during the three months and the six months ended
June 30, 2000. The deferred compensation is amortized over the vesting schedule,
generally four years. We had $8 million of deferred compensation at June 30,
2000.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have funded our operations primarily through
private placements of our equity securities, the issuance of convertible notes
to shareholders and, to a lesser extent, borrowings from financial institutions.
Through June 30, 2000, our sales of securities resulted in net proceeds of
approximately $24 million. On July 6, 2000 we completed our initial public
offering of ordinary shares in which we sold 4,887,500 shares (including the
exercise of the over allotment option) at a price of $16.00 per share. We also
sold 312,500 ordinary shares to EMC Corporation on July 6, 2000 at $16.00 per
share. Since proceeds from these offerings were received during July 2000, these
amounts are not included in the financial results described herein. Total
proceeds, before offering expenses, were approximately $83 million.
As of June 30, 2000 our principal source of liquidity was $6.1 million
of cash and cash equivalents. As of June 30, 2000 we had an outstanding
obligation of $0.2 million payable to two of our former shareholders, which we
repaid upon the consummation of the public offering in July 2000.
As of June 30, 2000 our accumulated net deficit was $22.5 million.
Net cash used in operating activities for the six months ended June
30, 2000 and 1999 was $0.1 million and $1 million, respectively. Net cash used
in operating activities in the six months ended June 30, 2000 was primarily the
result of net losses that were offset by the amortization of deferred
compensation and by the decrease in trade receivables. Net cash used in
operating activities in the six months ended June 30,1999 was primarily the
result of net losses and the increase in trade receivables that was in part
offset by the increase of payables.
Net cash used in investing activities was $0.6 million and $0.3
million in the six months ended June 30, 2000 and 1999, respectively. Investing
activities in the six months ended June 30, 2000 consisted of capital
expenditures, the payment for the acquisition of Knight Fisk, and purchases of
short-term investments, partially offset by the sale of short-term deposits.
Investing activities in the six months ended June 30, 1999 consisted of capital
expenditures.
Page 17 of 28
<PAGE>
Net cash provided by financing activities was $0.2 million, and $0.6
million in the six months ended June 2000 and 1999 , respectively. Cash provided
by financing activities in the six months ended June 30, 2000 resulted primarily
from net proceeds from the exercise of certain warrants held by our
shareholders. Cash provided by financing activities in the six months ended June
30, 1999 resulted from the use of a short term line of credit.
We believe that the net proceeds from the offering, together with our
existing cash equivalents, and short-term investments will be sufficient to meet
our anticipated cash needs for working capital and capital expenditures for at
least the next 12 months. Thereafter, if we do not have available sufficient
cash to finance our operations, we may be required to obtain additional debt or
equity financing. We cannot be certain that we will be able to obtain, if
required, additional financing on acceptable terms or at all.
FACTORS AFFECTING FUTURE OPERATING RESULTS
This Form 10-Q contains forward-looking statements that involve risks
and uncertainties. These forward-looking statements include management's plans
and objectives for future operations, as well as statements regarding the
strategy and plans of Precise. Precise's actual experience may differ materially
from those discussed in the forward-looking statements. Factors that might cause
such a difference include the size, timing and recognition of revenue from major
customers; the status of Precise's continuing relationship with Oracle; the
continued development of the market for Oracle databases and related
applications software; market acceptance of new product offerings and Precise's
ability to predict and respond to market developments; the failure to keep pace
with the rapidly changing requirements of its customers; Precise's ability to
attract and retain key personnel; the development and expansion of Precise's
direct sales force; risks associated with management of growth; Precise being
held liable for defects or errors in its products; political, economic and
business fluctuations in Israel and Precise's international markets; as well as
risks of downturns in economic conditions generally, and in the information
technology and software industries specifically, and risks associated with
competition, and competitive pricing pressures. For a more detailed description
of the risk factors associated with Precise, please refer to Precise's
Registration Statement on Form F-1 on file with the Securities and Exchange
Commission.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
As of June 30, 2000, our investments in securities subject to equity
market risks and other income producing assets subject to interest rate risks
are not material in amount. We do not hold such assets for trading purposes. In
addition, we do not engage in currency hedging activities and hold no foreign
currency related derivative instruments that would subject our financial
condition or results of operations to risks associated with foreign currency
exchange rate fluctuations. We do, however, incur a portion of our expenditures
in foreign currencies, such as NIS and British pound sterling, that could cause
our results of operations to fluctuate.
PART II. OTHER INFORMATION
Page 18 of 28
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 20, 2000, options to purchase a total of 65,168 ordinary
shares were exercised under the Company's stock option plans, of which 43,084
were issued pursuant to the 1995 Stock Option plan and 22,084 were issued
pursuant to the 1998 Share Option and Incentive Plan.
On June 29, 2000, we commenced our initial public offering of
4,250,000 ordinary shares, 0.03 NIS par value per share, pursuant to a final
prospectus dated June 29, 2000. The prospectus was contained in the Company's
registration statement on Form F-1 (SEC File No. 333-11992), covering 4,250,000
ordinary shares plus an additional 637,500 ordinary shares to cover
over-allotments by the underwriters. The registration statement was declared
effective by the Securities and Exchange Commission on June 29, 2000. The
aggregate offering price of the offering to the public was $68.0 million. As of
June 30, 2000, Precise had not received any proceeds in connection with this
offering, which closed on July 6, 2000. The underwriting discount in connection
with the initial public offering was $971,429. None of the expenses incurred by
Precise in connection with the offering represented payments, direct or
indirect, to directors, officers, persons owning 10% or more of the equity
securities of Precise, or affiliates of Precise. No direct or indirect payments
were made during this period. Merrill Lynch & Co., CIBC World Markets and Wit
SoundView acted as underwriters for the initial public offering.
In a private placement consummated on June 29, 2000, Precise issued to
EMC Corporation 312,500 ordinary shares at a price of $5,000,000.
On June 29, 2000, all outstanding 7,118,922 Preferred A shares and all
outstanding 4,875,800 Preferred B shares were converted into the same number of
ordinary shares.
On June 29, 2000, warrants to acquire 1,195,256 ordinary shares were
exercised.
Other than our initial public offering, all such issuances of
securities of Precise during the quarter ending June 30, 2000 were made in
reliance on Section 4(2), Rule 701 and/or Regulation D under the Securities Act
of 1933, as amended.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Precise's General Meeting of Shareholders was held on April 12, 2000.
Holders of an aggregate of 15,293,488 shares were entitled to vote at the
meeting. At this meeting, Precise's shareholders voted as follows:
Resolution 1. To approve the financial statements of Precise for the year ending
December 31, 1999.
<TABLE><CAPTION>
<S> <C> <C> <C>
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
15,045,266 None None Not Applicable
Resolution 2. To re-appoint Kost, Forer & Gabay as the auditor for Precise, and
to authorize the Board of Directors to set the auditor's compensation.
Total Votes for Resolution 2 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 2
------------
15,045,266 None None Not Applicable
</TABLE>
Page 19 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Resolution 3. To appoint or re-appoint six members to the Board of Directors.
Director Name Total Votes for Total Votes Withheld Abstentions Broker Non-Votes
------------- ---------------- --------------------- ----------- ----------------
Each Nominee from Each Nominee
------------ -----------------
Yuval Cohen 15,045,266 None None Not Applicable
Yoseph Sela 15,045,266 None None Not Applicable
Ron Zuckerman 15,045,266 None None Not Applicable
Erel Margalit 15,045,266 None None Not Applicable
Shimon Alon 15,045,266 None None Not Applicable
Anton Simunovic 15,045,266 None None Not Applicable
No other persons were nominated or received votes for election as directors of
Precise at this General Meeting of Shareholders.
Resolution 4. To classify the Board of Directors into three classes upon
Precise's Initial Public Offering. Yuval Cohen and Yoseph Sela will be in Class
I; Ron Zuckerman and Erel Margalit will be in Class II; and Shimon Alon and
Anton Simunovic will be in Class III.
Total Votes for Resolution 4 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 4
------------
15,045,266 None None Not Applicable
</TABLE>
Page 20 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Resolution 5. To reaffirm all previous Board of Director resolutions increasing
the number of shares that may be granted as options under the Company's 1998
Share Option and Incentive Plan.
Total Votes for Resolution 5 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 5
------------
15,045,266 None None Not Applicable
Resolution 6. To declare that the total number of shares granted or reserved for
future granting under the Company's 1998 Share Option and Incentive Plan shall
be 12 million. This includes all options granted under the various Share Option
and Incentive Plans, any options granted thereunder, and all shares to be
purchased under Precise's 2000 Employee Stock Purchase Plan.
Total Votes for Resolution 6 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 6
------------
15,045,266 None None Not Applicable
Resolution 7. To approve the amendment of the first sentence of Section 5 of the
Company's 1998 Share Option and Incentive Plan changing the aggregate number of
shares which may be granted to 12 million, subject to adjustment.
Total Votes for Resolution 7 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 7
------------
15,045,266 None None Not Applicable
Resolution 8. To approve the amendment of Section 9.3 of the Company's 1998
Share Option and Incentive Plan, converting all shares and options into ordinary
shares, upon the closing of Precise's Initial Public Offering.
Total Votes for Resolution 8 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 8
------------
15,045,266 None None Not Applicable
Resolution 9. To approve the adjustment of the total number of shares from 12
million to 8 million, in accordance with the revision of Precise's share
capital.
Total Votes for Resolution 9 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 9
------------
15,045,266 None None Not Applicable
</TABLE>
Page 21 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Precise held a meeting of its Preferred A Shareholders on April 12, 2000.
Holders of an aggregate of 7,118,992 Preferred A shares were entitled to vote at
the meeting. At this meeting, Precise's Preferred A Shareholders voted as
follows:
Resolution 1. To increase Precise's authorized share capital from 790,000 NIS to
2,100,000 NIS.
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
6,897,760 None None Not Applicable
Resolution 2. To revise the par value of Precise's shares to 0.03 NIS,
authorizing 9,410,257 Preferred A Shares, 6,666,667 Preferred B Shares,
49,523,898 Ordinary Shares and 4,399,178 Ordinary A Shares.
Total Votes for Resolution 2 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 2
------------
6,897,760 None None Not Applicable
Resolution 3. To substitute two shares of 0.03 NIS par value for every three
shares of 0.02 NIS par value.
Total Votes for Resolution 3 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 3
------------
6,897,760 None None Not Applicable
Resolution 4. To amend Precise's Memorandum of Association requiring an ordinary
majority to amend said Memorandum.
Total Votes for Resolution 4 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 4
------------
6,897,760 None None Not Applicable
Resolution 5. To restate the Company's Articles of Association contingent upon
consummation of Precise's Initial Public Offering.
Total Votes for Resolution 5 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 5
------------
6,897,760 None None Not Applicable
Resolution 6. To convert all shares of Precise into Ordinary Shares, carrying
equal rights and privileges contingent upon consummation of Precise's Initial
Public Offering.
Total Votes for Resolution 6 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 6
------------
6,897,760 None None Not Applicable
</TABLE>
Page 22 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Precise held a meeting of its Preferred B Shareholders on April 12, 2000.
Holders of an aggregate of 4,875,800 Preferred B Shares were entitled to vote at
the meeting. At this meeting, the Company's Preferred B Shareholders voted as
follows:
Resolution 1. To increase Precise's authorized share capital from 790,000 NIS to
2,100,000.
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
4,875,636 None None Not Applicable
Resolution 2. To revise the par value of Precise's shares to 0.03 NIS,
authorizing 9,410,257 Preferred A Shares, 6,666,667 Preferred B Shares,
49,523,898 Ordinary Shares and 4,399,178 Ordinary A Shares.
Total Votes for Resolution 2 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 2
------------
4,875,636 None None Not Applicable
Resolution 3. To substitute two shares of 0.03 NIS par value for every three
shares of 0.02 NIS par value.
Total Votes for Resolution 3 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 3
------------
4,875,636 None None Not Applicable
Resolution 4. To amend Precise's Memorandum of Association requiring an ordinary
majority to amend said Memorandum.
Total Votes for Resolution 4 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 4
------------
4,875,636 None None Not Applicable
Resolution 5. To restate Precise's Articles of Association contingent upon
consummation of Precise's Initial Public Offering.
Total Votes for Resolution 5 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 5
------------
4,875,636 None None Not Applicable
Resolution 6. To convert all shares of Precise into Ordinary Shares, carrying
equal rights and privileges upon consummation of Precise's Initial Public
Offering.
Total Votes for Resolution 6 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 6
------------
4,875,636 None None Not Applicable
Precise held an Extraordinary Meeting of ordinary Shareholders on April 12,
2000. Holders of an aggregate of 15,293,488 shares were entitled to vote at the
meeting. At this meeting, Precise's shareholders voted as follows:
</TABLE>
Page 23 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Resolution 1. To increase Precise's authorized share capital from 790,000 NIS to
2,100,000 NIS.
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
13,994,312 None None Not Applicable
Resolution 2. To revise the par value of Precise's shares to 0.03 NIS,
authorizing 9,410,257 Preferred A Shares, 6,666,667 Preferred B Shares,
49,523,898 Ordinary Shares and 4,399,178 Ordinary A Shares.
Total Votes for Resolution 2 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 2
------------
13,994,312 None None Not Applicable
Resolution 3. To substitute two shares of 0.03 NIS par value for every three
shares of 0.02 NIS par value.
Total Votes for Resolution 3 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 3
------------
13,994,312 None None Not Applicable
Resolution 4. To amend Precise's Memorandum of Association requiring an ordinary
majority to amend said Memorandum.
Total Votes for Resolution 4 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 4
------------
13,994,312 None None Not Applicable
Resolution 5. To restate Precise's Articles of Association contingent upon
consummation of Precise's Initial Public Offering.
Total Votes for Resolution 5 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 5
------------
13,994,312 None None Not Applicable
Resolution 6. To convert all shares of Precise into Ordinary Shares, carrying
equal rights and privileges upon consummation of Precise's Initial Public
Offering.
Total Votes for Resolution 6 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 6
------------
13,994,312 None None Not Applicable
Precise held an Extraordinary Meeting of Shareholders on April 13, 2000.
Holders of an aggregate of 15,293,448 shares were entitled to vote at the
meeting. At this meeting, Precise's shareholders voted as follows:
Resolution 1. To declare that all participation rights of Precise's shareholders
shall not apply to any round of financing of up to $30 million, prior to
Precise's Initial Public Offering.
</TABLE>
Page 24 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
11,905,768 None None Not Applicable
Precise held an Extraordinary Meeting of Shareholders on April 20, 2000.
Holders of an aggregate of 15,293,448 shares were entitled to vote at the
meeting. At this meeting, Precise's shareholders voted as follows:
Resolution 1. To approve Amendments to Article 60 of Precise's Articles of Association.
------------
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
13,991,238 None None Not Applicable
Precise held an Extraordinary Meeting of Shareholders on June 26, 2000.
Holders of an aggregate of 15,358,656 shares were entitled to vote at the
meeting. At this meeting, Precise's shareholders voted as follows:
Resolution 1. To amend Article 9(a) of Precise's post-IPO Articles of
Association approved at the April 12, 2000 Preferred A, Preferred B and
Extraordinary Shareholders Meetings.
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
13,822,764 None None Not Applicable
Resolution 2. To appoint two members as External Directors on the Company's
Board of Directors, effective upon the date of the Company's Initial Public
Offering, to serve for a three year term.
Director Name Total Votes for Total Votes Withheld Abstentions Broker Non-Votes
------------- ---------------- --------------------- ----------- ----------------
Each Nominee from Each Nominee
------------ -----------------
Robert J. Dolan 13,822,764 None None Not Applicable
Mary A. Palermo 13,822,764 None None Not Applicable
No other persons were nominated, or received votes, for election as directors of
Precise at this Extraordinary Meeting of Shareholders. The other director(s) of
Precise whose term of office continued after this Extraordinary Meeting were
Yuval Cohen, Yoseph Sela, Ron Zuckerman, Erel Margalit, Shimon Alon, and Anton
Simunovic.
</TABLE>
Page 25 of 28
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
Resolution 3. To approve amendments to Precise's classification of its Board of
Directors effecting the transfer of Shimon Alon from Class III to Class I, Ron
Zuckerman from Class II to Class III, and Yoseph Sela from Class I to Class II.
Total Votes for Resolution 3 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 3
------------
13,822,764 None None Not Applicable
Resolution 4. To grant options to purchase Precise's Ordinary Shares to each
newly appointed External Director.
Total Votes for Resolution 4 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 4
------------
13,822,764 None None Not Applicable
Resolution 5. To approve the offer and sale to the newly appointed External
Directors of Ordinary Shares of Precise reserved by the underwriters of
Precise's Initial Public Offering for sale to persons affiliated with Precise.
Total Votes for Resolution 5 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 5
------------
13,822,764 None None Not Applicable
Resolution 6. To approve Precise's 2000 Employee Share Purchase Plan.
------------
Total Votes for Resolution 6 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 6
------------
13,822,764 None None Not Applicable
Resolution 7. To authorize Precise's Board of Directors to approve amendments to
Precise's 2000 Employee Share Purchase Plan.
Total Votes for Resolution 7 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 7
------------
13,822,764 None None Not Applicable
Precise held an Extraordinary Meeting of Shareholders on June 26, 2000.
Holders of an aggregate of 15,358,656 shares were entitled to vote at the
meeting. At this meeting, Precise's shareholders voted as follows:
Resolution 1. To approve an amendment to Article 60.5 of Precise's Articles of
Association.
Total Votes for Resolution 1 Total Votes Against Abstentions Broker Non-Votes
---------------------------- -------------------- ----------- ----------------
Resolution 1
------------
13,721,128 None None Not Applicable
</TABLE>
Page 26 of 28
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27.1 Financial Data Schedule (EDGAR filing only)
Precise did not file any current reports on Form 8-K during the quarter
ended June 30, 2000.
Page 27 of 28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRECISE SOFTWARE SOLUTIONS LTD.
Date August 14, 2000 By /s/ Shimon Alon
--------------- ---------------------------------
Shimon Alon, Chief Executive
Officer and President
Date August 14, 2000 By /s/ J. Benjamin H. Nye
--------------- --------------------------------
J. Benjamin H. Nye, Chief
Financial Officer
Date August 14, 2000 By /s/ Dror Elkayam
--------------- --------------------------------
Dror Elkayam, Chief Accounting
Officer
Page 28 of 28
