UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-QSB
(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, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-26008
MYSOFTWARE COMPANY
STATE OF INCORPORATION: DELAWARE
IRS EMPLOYER I.D. NUMBER: 77-0195362
2197 E. BAYSHORE ROAD
PALO ALTO, CA 94303
(650) 473-3600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No .
The number of shares outstanding of the registrant's common stock as of
June 30, 1999 was 4,519,832.
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
MYSOFTWARE COMPANY
FORM 10-QSB
For the Quarterly Period Ended June 30, 1999
Table of Contents
Part I. Financial Information Page
Item 1. Financial Statements
a) Condensed Balance Sheets as of June 30, 1999
and December 31, 1998 3
b) Condensed Statements of Operations for the
three and six months ended June 30, 1999 and 1998 4
c) Condensed Statements of Cash Flows for the six
months ended June 30, 1999 and 1998 5
d) Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of
Operation 9
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and reports on form 8-K 14
Signatures 15
<PAGE>
<TABLE>
<CAPTION>
Part I. Financial Information
Item 1. Financial Statements
MYSOFTWARE COMPANY
CONDENSED BALANCE SHEETS
June 30, 1999 and December 31, 1998
(Unaudited)
(in thousands except share data)
June 30, December 31,
---------- --------------
1999 1998
---------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,452 $ 5,387
Accounts receivable, net 4,687 3,355
Inventories 505 266
Other current assets 202 88
---------- --------------
Total current assets 10,846 9,096
Property and equipment, net 395 217
Other assets 394 619
---------- --------------
Total assets $ 11,635 $ 9,932
========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,135 $ 1,088
Accrued compensation 433 460
Other accrued liabilities 1,604 2,174
Deferred revenues 2,032 599
---------- --------------
Total current liabilities 5,204 4,321
Stockholders' equity:
Preferred stock; $0.001 par value;
2,000,000 shares authorized; none
outstanding ----- -----
Common stock; $0.001 par value;
20,000,000 shares authorized; 4,519,832
and 4,458,950 shares issued and outstanding 5 4
Deferred compensation (210) (249)
Additional paid-in capital 9,434 9,259
Accumulated deficit (2,798) (3,403)
--------- --------------
Total stockholders' equity 6,431 5,611
--------- --------------
Total liabilities and stockholders' equity $ 11,635 $ 9,932
========= ==============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MYSOFTWARE COMPANY
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1999 AND 1998
(Unaudited)
(in thousands except per share data)
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net revenues $ 4,854 $ 3,461 $ 9,172 $ 6,591
Cost of revenues 1,343 927 2,739 1,983
-------- -------- -------- -------
Gross profit 3,511 2,534 6,433 4,608
-------- -------- -------- -------
Operating expenses:
Product development 623 436 1,185 762
Sales and marketing 1,958 1,460 3,508 2,942
General and administrative 668 618 1,235 1,135
-------- -------- ------- -------
3,249 2,514 5,928 4,839
-------- -------- ------- -------
Operating income (loss) 262 20 505 (231)
Interest income, net 53 61 119 122
-------- -------- ------- -------
Income (loss) before taxes 315 81 624 (109)
Income tax expense 9 --- 19 ---
-------- -------- ------- -------
Net income (loss) $ 306 $ 81 $ 605 $ (109)
======== ======== ======= =======
Basic net income (loss) per share $ 0.07 $ 0.02 $ 0.13 $ (0.03)
======== ======== ======= =======
Shares used in computing basic net
income (loss) per share 4,513 4,381 4,542 4,320
======== ======== ======= =======
Diluted net income (loss) per share $ 0.06 $ 0.02 $ 0.11 $ (0.03)
======== ======== ======= =======
Shares used in computing diluted
net income (loss) per share 5,399 4,736 5,452 4,320
======== ======== ======= =======
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MYSOFTWARE COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended
June 30 1999 and 1998
(Unaudited)
(in thousands)
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 605 $ (109)
Adjustments to reconcile net income
(loss) to net cash used for operating
activities:
Depreciation and amortization 390 406
Amortization of deferred compensation 39 ---
Provision for returns and doubtful accounts (82) (1,162)
Changes in operating assets and liabilities:
Accounts receivable (1,303) (413)
Inventories (239) 262
Other assets (114) 897
Accounts payable 47 46
Accrued compensation (27) (66)
Deferred revenues 1,433 ---
Other accrued liabilities (517) 164
------------- -----------
Net cash used for operating activities 232 25
------------- -----------
Cash flows from investing activities:
Additions to property and equipment (281) (38)
Software production costs and other assets ( 61) (392)
------------- -----------
Net cash used for investing activities (342) (430)
------------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options 175 285
------------- -----------
Net provided by financing activities 175 285
------------- -----------
Net change in cash and cash equivalents 65 (120)
Cash and cash equivalents at beginning of
period 5,387 5,035
------------- -----------
Cash and cash equivalents at end of period $ 5,452 $ 4,915
============= ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
MYSOFTWARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of management, the accompanying unaudited condensed balance
sheets, statements of operations, and statements of cash flows include all
material adjustments necessary for their fair presentation. The interim results
presented are not necessarily indicative of results for a full year. Certain
reclassifications have been made for consistent presentation. For further
information, refer to the financial statements and footnotes thereto included in
the Company's 1998 Annual Report on Form 10-KSB.
2. Per Share Computation
Basic net income (loss) per share is computed using the weighted average
number of common shares outstanding during each period presented. Diluted
net income (loss) per share is computed using the weighted average number of
shares of common stock and potential common stock using the treasury stock
method, when dilutive. The difference between shares used for basic net
income per share and diluted net income per share for the three-month and
six-month periods ended June 30, 1999 is comprised of the weighted average
number of common stock options outstanding during these periods using the
treasury stock method. A total of 273,789 common equivalent shares with a
weighted average exercise price of $2.06 was not included in the computation
of diluted loss per share for the six-month period ended June 30, 1998
because their effect would have been antidilutive.
3. Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative financial instruments and hedging
activities and requires the Company to recognize all derivatives as either
assets or liabilities on the balance sheet and measure them at fair value.
Gains and losses resulting from changes in fair value would be accounted for
depending on the use of the derivative and whether it is designated and
qualifies for hedge accounting. The Company will be required to implement
SFAS No. 133 as amended by SFAS No 137 for fiscal 2001 and does not believe
its adoption will have an effect on its financial statements.
In December 1998, the AICPA issued SOP 98-9, Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions. SOP 98-9
establishes the method of recognizing revenue for certain multiple-element
software arrangements. The Company will be required to adopt SOP 98-9 for
transactions entered into beginning January 1, 2000. The Company expects
that the adoption of SOP 98-9 will not have a material impact on the Company
financial position, results of operations or cash flows.
4. Segment and Geographic Information
The Company is principally engaged in the development, marketing and
manufacturing of small business application programs and Internet services.
The Company's main products provide solutions for creating customized,
professional-quality mailing lists, brochures, labels, business cards,
invoices/estimates, and other marketing communications materials. The
Company also markets annuity-based mailing products and services which
complement the Company's existing mailing software products.
<PAGE>
MYSOFTWARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED
The Company identifies such segments based principally upon the type of
products sold. There have been no significant changes in operating segments
or the basis of measurement of segment profit(loss) since December 31, 1998.
The following segment information is provided for the three months and six
months ended June 30, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
Mailing Core Other
Retail Annuity Retail OEM Other Total
------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
For the three months
ended June 30, 1999
Net revenues $ 815 $ 652 $1,675 $ 1,331 $ 381 $ 4,854
Cost of revenues 366 86 688 70 133 1,343
------- ------- ------ ------- ------ -------
Gross profit 449 566 987 1,261 248 3,511
Segment operating expenses 410 328 807 157 879 2,581
------- ------- ------ ------- ------ -------
Segment profit (loss) $ 39 $ 238 $ 180 $ 1,104 $ (631) 930
======= ======= ====== ======= ======
General and administrative expenses (668)
Interest income, net 53
-------
Income before taxes, as reported $ 315
=======
</TABLE>
<TABLE>
<CAPTION>
Mailing Core Other
Retail Annuity Retail OEM Other Total
------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
For the three months ended
June 30, 1998
Net revenues $ 402 $ 490 $1,369 $ 638 $ 562 $ 3,461
Cost of revenues 133 71 458 90 175 927
------- ------- ------ ------- ------- -------
Gross profit 269 419 911 548 387 2,534
Segment operating expenses 311 326 799 170 290 1,896
------- ------- ------ ------- ------- -------
Segment profit (loss) $ (42) $ 93 $ 112 $ 378 $ 97 638
======= ======= ====== ======= =======
General and administrative expenses (618)
Interest income, net 61
-------
Income before taxes, as reported $ 81
=======
</TABLE>
<PAGE>
MYSOFTWARE COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED
<TABLE>
<CAPTION>
Mailing Core Other
Retail Annuity Retail OEM Other Total
------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
For the six months ended
June 30, 1999
Net revenues $ 2,098 $ 1,093 $3,371 $ 1,818 $ 792 $9,172
Cost of revenues 835 135 1,281 203 285 2,739
------- ------- ------ ------- ------- ------
Gross profit 1,263 958 2,090 1,615 507 6,433
Segment operating expenses 878 621 1,308 250 1,636 4,693
------- ------- ------ ------- ------- ------
Segment profit (loss) $ 385 $ 337 $ 782 $ 1,365 $(1,129) 1,740
======= ======= ====== ======= ======= ======
General and administrative expenses (1,235)
Interest income, net 119
------
Income before taxes, as reported $ 624
======
</TABLE>
<TABLE>
<CAPTION>
Mailing Core Other
Retail Annuity Retail OEM Other Total
-------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
For the six months ended
June 30, 1998
Net revenues $ 994 $ 796 $2,644 $ 1,011 $ 1,146 $6,591
Cost of revenues 304 80 973 238 388 1,983
-------- ------- ------ ------- ------- ------
Gross profit 690 716 1,671 773 758 4,608
Segment operating expenses 760 680 1,475 387 402 3,704
-------- ------- ------ ------- ------- ------
Segment profit (loss) $ (70) $ 36 $ 196 $ 386 $ 356 904
======== ======= ====== ======= =======
General and administrative expenses (1,135)
Interest income, net 122
------
Income before taxes, as reported $ (109)
======
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
In addition to historical information contained herein, the following
discussion contains words such as "intends," "believes," "anticipates,"
"plans," "expects" and similar expressions which are intended to identify
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ significantly from the results discussed in these
forward-looking statements. Factors that could cause or contribute to such
differences include the factors discussed below as well as the factors
discussed in the Company's Form 10-KSB for the fiscal year ended December 31,
1998. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to release the results of any revision to these
forward-looking statements which may be made to reflect events or
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
Results of Operations
Three Months Ended June 30, 1999 and 1998
- -----------------------------------------
Net revenues for the three months ended June 30, 1999 increased $1.4 million,
or 40 percent, to $4.9 million, compared with net revenues of $3.5 million
for the corresponding quarter in 1998. The increase in second quarter
revenue was due primarily to the Company's continued success in the retail,
Original Equipment Manufacturers (OEM) and direct sales channels with respect
to its e-marketing products and services. During the quarter, the Company
also benefited from sales of MyWebTools, which was introduced in the second
quarter of 1999.
Gross profit for the three months ended June 30, 1999 increased 39 percent to
$3.5 million, from $2.5 million in the same period in 1998. Gross margin for
the second quarter of 1999 was 72.3 percent, compared to 73.2 percent for the
same period in 1998. The decrease in the gross profit for the quarter was
primarily due to cost of goods sold associated with promotional offerings. The
Company's gross margins vary from period to period due primarily to changes
in product mix, the timing and nature of promotional activities, changes in
product return levels, and the amortization of capitalized software
production costs.
The Company's total operating expenses for the three months ended
June 30, 1999 increased 29 percent to $3.2 million, from $2.5 million for
the corresponding period in 1998. The increase in operating expenses resulted
primarily from higher product development, marketing and selling expenses
associated with its Internet products and services.
Product development expenses increased 43 percent to $623,000 in the three
months ended June 30, 1999, from $436,000 in the same period in 1998. The
increase in product development expenses was mainly due to the development
and enhancement of the Company's Internet e-marketing products and services.
Sales and marketing expenses increased 34 percent to $2.0 million in the
first quarter of 1999, from $1.5 million for the corresponding period in
1998. Sales and marketing expenses increased principally as a result of
higher marketing expenses associated with its Internet e-marketing services,
MyProspects.com as well as channel promotional selling expenses for the
retail channel.
General and administrative expenses increased 8 percent to $668,000 in the
three months ended June 30, 1999, from $618,000 in the same period of 1998,
primarily as a result of an increase in system expenses and headcount to
support the development of the Company's Internet products and services.
The Company had operating income of $262,000 for the three months ended
June 30, 1999, compared to $20,000 in the comparable period of 1998.
<PAGE>
Net interest income was $53,000 for the quarter ended June 30, 1999, compared
to $61,000 for the comparable period of 1998. The decrease in interest income
was due primarily to lower average daily cash balances in the second quarter
of 1999 compared to the second quarter of 1998.
The Company reported income tax expertise of $9,000 for the three months
ended June 30, 1999 as compared to no income tax expense for the same period
of 1998. The income tax expense reported in 1999 represents alternative
minimum taxes. The Company has NOL carryforwards available to offset current
taxable income and continues to maintain a full valuation allowance against
its deferred tax assets due to uncertainty about their realization.
The resulting net income for the three months ended June 30, 1999 was
$306,000, compared to $81,000 in the comparable period in 1998.
Six Months Ended June 30, 1999 and 1998
- ---------------------------------------
For the six months ended June 30, 1999, net revenues increased 39 percent to
$9.2 million, compared with net revenues of $6.6 million for the corresponding
period in 1998. The increase was primarily attributable to increased sales
from the Company's continued success in the retail, Original Equipment
Manufacturers (OEM) and direct sales channels with respect to its e-marketing
products and services.
For the six months ended June 30, 1999, gross profit increased 40 percent to
$6.4 million, from $4.6 million for the corresponding period in 1998. Gross
margin for the six months ended June 30, 1999 was 70.1 percent, compared to
69.9 percent for the same period in 1998. The increase in gross margin in
1999 was primarily due to the mix of OEM sales during the first six months of
1999 compared to the same period in 1998.
For the six months ended June 30, 1999, total operating expenses increased 23
percent to $5.9 million, from $4.8 million for the corresponding period in 1998.
For the six months ended June 30, 1999, product development expenses were up
56 percent to $1.2 million, compared to $762,000 for the corresponding period in
1998. The increase in product development expenses was primarily due to the
increase in headcount for the development of the Company's Internet
e-marketing web services.
For the six months ended June 30, 1999, sales and marketing expenses
increased 19 percent to $3.5 million compared to $2.9 million for the
corresponding period in 1998, primarily as a result of the promotional
expenses for the Company's Internet e-marketing services and retail channel.
For the six months ended June 30, 1999, general and administrative expenses
increased 9% to $1.2 million compared to $1.1 million for the corresponding
period in 1999, primarily due to the increase in systems expenses and
headcount to support the development of the Company's Internet product and
services.
For the six months ended June 30, 1999, the Company reported an operating
income of $505,000, compared to an operating loss of $231,000 in the
corresponding period in 1998. The improvement was primarily due to increases
in net revenues, as well as higher gross margin.
Interest income in the first half of 1999 was $119,000, compared to $122,000
for the corresponding period in 1998. The decrease in interest income was
primarily due to lower average cash balances in 1999.
The Company reported income tax expense of $19,000 for the six months ended
June 30, 1999 as compared to no income tax expense for the same period of 1998.
The income tax expense reported in 1999 represents alternative minimum taxes.
The Company has NOL carryforwards available to offset current taxable income
and continues to maintain a full valuation allowance against its deferred tax
assets due to uncertainty about their realization.
<PAGE>
For the six months ended June 30, 1999, the Company reported a net income of
$605,000, compared to a net loss of $109,000 in the comparable period in 1998.
The Company's business has experienced and is expected to continue to
experience significant seasonality, primarily due to retailer, distributor
and end-user buying patterns. Typically, net revenues are weakest in the
second and third quarters. The Company expects its net revenues and
operating results to continue to reflect seasonality.
The Company has experienced, and may continue to experience, significant
fluctuations in operating results due to a variety of factors. These factors
include: the size and rate of growth of the market for task-specific
applications for small businesses and of the software market in general;
market acceptance of the Company's products and those of its competitors;
development and promotional expenses; product returns; changes in pricing
policies by the Company and its competitors; accuracy of retailers' forecasts
of consumer demand; the timing of orders from major retailer and distributor
customers; and cancellations or terminations by retail or distributor
accounts; shelf space reductions; delays in shipment and general market and
economic conditions.
Liquidity and Capital Resources
Since its inception, the Company has financed its activities almost
exclusively from cash generated by operations and contributions to capital by
its stockholders.
As of June 30, 1999, the Company had $5.5 million in cash and cash
equivalents and had no debt. The Company believes that its existing cash, its
ability to obtain additional credit, and cash generated by operations will be
sufficient to meet its working capital needs at least through mid 2000.
Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities. " SFAS No. 133 establishes accounting and
reporting standards for derivative financial instruments and hedging
activities and requires the Company to recognize all derivatives as either
assets or liabilities on the balance sheet and measure them at fair value.
Gains and losses resulting from changes in fair value would be accounted for
depending on the use of the derivative and whether it is designated and
qualifies for hedge accounting. The Company will be required to implement
SFAS No. 133 as amended by SFAS No. 137 for fiscal 2001 and does not believe
its adoption will have an effect on its financial statements.
In December 1998, the AICPA issued SOP 98-9, Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions. SOP 98-9
establishes the method of recognizing revenue for certain multiple-element
software arrangements. The Company will be required to adopt SOP 98-9 for
transactions entered into beginning January 1, 2000. The Company expects that
the adoption of SOP 98-9 will not have a material impact on the Company
financial position, results of operations or cash flows.
Year 2000 Issues
Background of Year 2000 Issues
Many currently installed computer systems and software use only two digits to
identify a year in the date field and are unable to distinguish between
twentieth and twenty-first century dates. Such systems, applications and/or
devices could result in system failures or miscalculations causing
disruptions of operations of many businesses, including, among other things, a
temporary disability to process transactions, send invoices or engage in
similar normal business activities. As a result, many companies' software and
computer systems may need to be upgraded or replaced to comply with such
"Year 2000" requirements.
<PAGE>
State of Readiness
The Company has undertaken various initiatives intended to help ensure that
its computer equipment and software, as well as its software products, will
function properly with respect to dates in the Year 2000 and thereafter. For
this purpose, the term "computer equipment and software" includes systems
that are commonly thought of as information technology systems, including
accounting, data processing, communications networks such as the Internet and
private Intranets, telephone/PBX systems, and other miscellaneous systems.
"Computer equipment and software" also include systems that are not commonly
thought of as IT systems, such as fax machines, or other miscellaneous
systems. In addition, IT and non-IT systems may contain embedded technology,
which complicates the Company's Year 2000 assessment, remediation, and
testing efforts.
Company's External Software Products
As of June 30, 1999, all of the Company's current software products for
Windows 95 are Year 2000 compliant. Although the Company's software which is
designed for use with Windows 3.1, is not Year 2000 compliant, the Company
provides upgrades to Windows 95 software products for a fee. In addition, the
Company encourages its customers to upgrade to products compatible with
Windows 95 through its written materials and during oral communications with
end-users. There is no assurance that customers whose computer equipment and
software are not Year 2000 compliant will not encounter unforeseen problems
or disruption to their systems.
Company's Internal Systems and Equipment
Based on an analysis of all systems potentially impacted by conducting
business in the year 2000 and beyond, the Company applies a phased approach
to make such systems and software applications. Beyond awareness of the issues
and the scope of systems involved, the phases of activities in progress
include: an assessment and evaluation of specific underlying computer
systems, software applications and/or hardware; remediation or replacement of
Year 2000 non-compliant technology; validation and testing of technologically
compliant Year 2000 solutions; and the implementation of Year 2000 compliant
solutions. The following table outlines the status and the timing of such
phased activities.
<TABLE>
<CAPTION>
Percentage Completed Expected
Impacted Systems As of June 30, 1999 Completion Date
----------------------- ------------------------ -------------------
<C> <C> <C>
Hardware and software systems
used to deliver services.... 85% Q3 1999
Telecommunication equipment.. 95% Q3 1999
Operability with internal systems
of customers and suppliers.. 25% Q3 1999
</TABLE>
Company's Vendors and Suppliers
The Company relies on two outside software vendors for part of its software
coding. These vendors have reported to the Company that they are Year 2000
compliant. The Company's operational suppliers are for the most part not
date-sensitive for the services or capacity that they are providing the
Company. However, the Company cannot be certain such vendors will not
encounter operational problems due to unforeseen problems related to the Year
2000 issue. Such unforeseen problems could disrupt the services these vendors
provide the Company. If such interruption should occur, the Company does not
foresee any major problems in replacing these vendors or suppliers, and the
cost of replacing such vendors and suppliers, if necessary, is not expected
to materially adversely affect the Company financially.
<PAGE>
Costs to Address Year 2000 Issues
The total cost associated with required modifications to become Year 2000
compliant is not expected to be material to the Company's financial position.
The estimated total cost of addressing Year 2000 issues is approximately
$200,000. As of June 30, 1999, the Company had incurred costs of
approximately $75,000 related to its Year 2000 identification, assessment,
upgrading, remediation and testing efforts.
Year 2000 Issues
The Company believes that the Year 2000 issues will not pose significant
operational problems for the Company. However, if all Year 2000 issues are not
properly identified, or if assessment, remediation and testing are not
effected timely with respect to Year 2000 problems that are identified, there
can be no assurance that the Year 2000 issue will not materially adversely
impact the Company's results of operations or adversely affect the Company's
relationship with customers or others. Additionally, the failure to correct a
material Year 2000 problem could result in an interruption in certain normal
business activities or operations. Such failure could materially and
adversely affect the Company's systems, results of operations, liquidity and
financial condition.
Contingency Plans
The Company expects to develop contingency plans for key internal systems by
the end of Q3 1999. This contingency planning includes, but is not limited to,
identifying additional vendors who could provide similar goods and services
on short notice. Management expects these plans to substantially reduce the risk
of interruption, delay, or failure of key processes required for the
Company's business operations.
<PAGE>
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of stockholders of MySoftware Company was held on
May 19, 1999.
The matters voted upon at the meeting and the voting of stockholders with
respect thereto are as follows:
(1) The election of David P. Mans, Gregory W. Slayton,Grant M. Inman, John
J. Katsaros, Donald F. Wood, and Emerick M. Woods as directors to hold
office until the 2000 annual meeting of stockholders:
<TABLE>
<CAPTION>
Directors For Withheld
------------- --------- --------------
<C> <C> <C>
David P. Mans 4,040,486 334,115
Gregory W. Slayton 4,159,741 214,860
Grant M. Inman 4,159,741 214,860
John J. Katsaros 4,159,741 214,860
Donald F. Wood 4,159,741 214,860
Emerick M. Woods 4,158,441 216,160
</TABLE>
(2) Amendment of MySoftware's 1995 Equity Incentive Plan to increase the
aggregate number of shares of Common Stock authorized for issuance
under such plan by 600,000 shares:
For: 2,282,803 Against: 798,814 Abstain: 3,400
Broker Non-Vote: 1,289,584
(3) Ratification of the selection of KPMG LLP as independent auditors of
the Company for its fiscal year ended December 31, 1999:
For: 4,366,491 Against: 6,100 Abstain:2,010
Item 6. Exhibits and reports on form 8-K
Exhibit 27. Financial Data Schedule.
No reports have been filed on Form 8-K during this quarter.
<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.
MySoftware Company
Date: August 10, 1999 By:/s/Sharon S. Chiu
____________________
Sharon S. Chiu
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 5,452
<SECURITIES> 0
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0
0
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</TABLE>
