SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period June 30, 1998;
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or
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from__________ to ___________
Commission file #0-15797
XIOX CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 95-3824750
- ------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No)
incorporation or organization)
577 Airport Blvd, Suite 700,
Burlingame, California 94010
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (650) 375-8188
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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). Yes X No
--- ---
(2) Has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Issuer's number of common shares
outstanding at June 30, 1998 3,147,231 shares
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PAGE 1 of 16
XIOX CORPORATION
INDEX
Page No.
--------
PART I Financial Information
Item 1.
Condensed Consolidated Balance Sheets -
June 30, 1998 (unaudited) and December 31, 1997 3
Condensed Consolidated Statements of Operations Three Months
ended June 30, 1998 (unaudited) and June 30, 1997 (unaudited) 4
Condensed Consolidated Statements of Operations Six Months ended
June 30, 1998 (unaudited) and June 30, 1997 (unaudited) 5
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 1998 (unaudited)
and June 30, 1997 (unaudited) 6-7
Notes to Condensed Consolidated Financial Statements 8-10
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-14
PART II Other Information
Item 6.
Exhibits and Reports on Form 8-K 15
Exhibit 27.
Financial Data Schedule - June 30, 1998 (unaudited) (separate
electronic document attached)
Signatures 16
PAGE 2
XIOX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1998 December 31, 1997
----------------- -------------------
(unaudited) ***
ASSETS:
CURRENT ASSETS
CASH & CASH EQUIVALENTS $ 918,375 2,633,860
ACCOUNTS RECEIVABLE, NET 725,844 884,612
OTHER RECEIVABLES 14,337 433,190
INVENTORIES 474,396 474,865
PREPAID EXPENSES AND OTHER ASSETS 153,520 158,311
------------------ -------------------
TOTAL CURRENT ASSETS 2,286,472 4,584,838
PROPERTY & EQUIPMENT, NET 859,925 432,292
PURCHASED SOFTWARE, NET 91,877 42,673
NOTES RECEIVABLE 100,000 100,000
DEPOSITS & OTHER ASSETS 389,356 494,397
----------------- ---------------------
$ 3,727,630 5,654,200
================== =====================
LIABILITIES/STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 190,009 202,648
ACCRUED EXPENSES 274,255 175,962
ACCRUED COMPENSATION 192,929 118,252
PURCHASE DEPOSITS 33,396 51,231
DEFERRED REVENUE 837,130 916,237
----------------- --------------------
TOTAL CURRENT LIABILITIES $ 1,527,719 1,464,330
NOTES PAYABLE 60,467 --
COMMITMENTS & CONTINGENCIES
MINORITY INTEREST 115,287 127,776
STOCKHOLDERS' EQUITY
PREFERRED STOCK, $0.01 par value; 2,000,000
shares authorized; None issued and outstanding -- --
COMMON STOCK, $.01 Par, 10,000,000 shares authorized,
3,147,231 and 2,932,934 shares issued and outstanding as
of June 30, 1998 and December 31,1997 respectively 31,472 29,329
PAID-IN CAPITAL 8,279,992 8,266,576
NOTE RECEIVABLE FROM SHAREHOLDER -- (15,938)
DEFERRED COMPENSATION (9,865) --
CUMULATIVE TRANSLATION ADJUSTMENT (17,559) (13,175)
ACCUMULATED DEFICIT (6,259,883) (4,204,698)
----------------- --------------------
TOTAL STOCKHOLDERS' EQUITY 2,024,157 4,062,094
----------------- --------------------
$ 3,727,630 5,654,200
================= ====================
<FN>
*** Condensed from audited financial statements.
PAGE 3
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</FN>
XIOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Three months ended
June 30, 1998 June 30, 1997
-------------------- ------------------------
REVENUES $ 1,357,915 1,249,627
-------------------- ------------------------
PRODUCT COSTS 638,099 502,630
RESEARCH AND DEVELOPMENT 1,062,681 174,024
MARKETING, SALES, GENERAL AND ADMINISTRATIVE 696,176 567,346
-------------------- ------------------------
2,396,956 1,244,000
-------------------- ------------------------
(LOSS) INCOME FROM OPERATIONS (1,039,041) 5,627
OTHER INCOME (LOSS), NET 15,559 (3,232)
-------------------- ------------------------
(LOSS) INCOME BEFORE INCOME TAXES (1,023,482) 2,395
INCOME TAXES 5,302 450
-------------------- ------------------------
NET (LOSS) INCOME $ (1,028,784) 1,945
==================== ========================
PER SHARE INFORMATION:
BASIC NET (LOSS) INCOME PER SHARE $ (0.33) 0.00
==================== ========================
NUMBER OF SHARES USED IN BASIC
PER SHARE COMPUTATION 3,147,231 2,358,534
==================== ========================
DILUTED NET (LOSS) INCOME PER SHARE $ (0.33) 0.00
==================== ========================
NUMBER OF SHARES USED IN DILUTED
PER SHARE COMPUTATION 3,147,231 2,427,438
==================== ========================
PAGE 4
<FN>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</FN>
XIOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Six months ended Six months ended
June 30, 1998 June 30, 1997
-------------------- --------------------
REVENUES $ 2,555,776 2,522,561
-------------------- --------------------
PRODUCT COSTS 1,221,846 983,367
RESEARCH AND DEVELOPMENT 1,994,747 375,394
MARKETING, SALES, GENERAL AND ADMINISTRATIVE 1,431,762 1,118,354
-------------------- --------------------
4,648,355 2,477,115
-------------------- --------------------
(LOSS) INCOME FROM OPERATIONS (2,092,579) 45,446
OTHER INCOME (LOSS), NET 43,896 (10,973)
-------------------- --------------------
(LOSS) INCOME BEFORE INCOME TAXES (2,048,683) 34,473
INCOME TAXES 6,502 3,275
-------------------- --------------------
NET (LOSS) INCOME $ (2,055,185) 31,198
==================== ====================
PER SHARE INFORMATION:
BASIC NET (LOSS) INCOME PER SHARE $ (0.65) 0.01
==================== ====================
NUMBER OF SHARES USED IN BASIC
PER SHARE COMPUTATION 3,145,739 2,365,421
==================== ====================
DILUTED NET (LOSS) INCOME PER SHARE $ (0.65) 0.01
==================== ====================
NUMBER OF SHARES USED IN DILUTED
PER SHARE COMPUTATION 3,145,739 2,425,421
==================== ====================
PAGE 5
<FN>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</FN>
XIOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(unaudited)
Six months ended Six months ended
June 30, 1998 June 30, 1997
-------------------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET (LOSS) INCOME $ (2,055,185) 31,198
ADJUSTMENTS TO RECONCILE NET (LOSS) INCOME
TO NET CASH (USED IN) PROVIDED BY OPERATIONS
DEPRECIATION AND AMORTIZATION 137,232 114,944
AMORTIZATION OF DEFERRED COMPENSATION 2,933 --
MINORITY INTEREST IN NET LOSS (12,042) --
CHANGE IN OPERATING ASSETS AND LIABILITIES:
ACCOUNTS RECEIVABLE, NET 158,767 345,356
OTHER RECEIVABLES 417,483 66,350
PROMISSORY NOTE -- 31,138
INVENTORIES 468 65,409
PREPAIDS, DEPOSITS AND OTHER ASSETS 106,837 (52,095)
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 158,931 (192,548)
PURCHASE DEPOSITS (17,835) 589
DEFERRED REVENUE (79,106) (56,392)
-------------------- ---------------------
NET CASH( USED IN) PROVIDED BY OPERATIONS (1,181,517) 353,949
-------------------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (546,368) (56,237)
ACQUISITION OF SOFTWARE (67,491) (5,013)
-------------------- ---------------------
NET CASH (USED IN) INVESTING ACTIVITIES (613,859) (61,250)
-------------------- ---------------------
CASH FROM FINANCING ACTIVITIES:
PROCEEDS FROM BORROWINGS 60,467 --
PROCEEDS FROM SALE OF COMMON STOCK 2,762 (43,819)
REPAYMENT OF STOCKHOLDER NOTE 15,938 --
-------------------- ---------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
79,167 (43,819)
-------------------- ---------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 724 --
-------------------- ---------------------
NET (DECREASE)/INCREASE IN
CASH & CASH EQUIVALENTS (1,715,485) 248,880
BEGINNING CASH AND CASH EQUIVALENTS 2,633,860 291,488
-------------------- ---------------------
ENDING CASH AND CASH EQUIVALENTS $ 918,375 540,368
==================== =====================
(continued)
PAGE 6
<FN>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</FN>
XIOX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(unaudited)
June 30, 1998 June 30, 1997
-------------------- ---------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
INTEREST PAID $ 2,771 --
INCOME TAXES 3,850 3,650
NONCASH FINANCING ACTIVITIES
COMMON STOCK ISSUED UPON EXERCISE OF STOCK
OPTIONS IN EXCHANGE FOR NOTE RECEIVABLE
FROM SHAREHOLDER $ -- 27,188
==================== =====================
ADDITIONAL SHARES ISSUED IN CONNECTION WITH
THE FLANDERS LANGUAGE VALLEY STOCK
PURCHASE AGREEMENT 211,297 --
==================== =====================
PAGE 7
<FN>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</FN>
XIOX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 : BASIS OF PRESENTATION
The financial statements included herein have been prepared by the Company,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the fiscal year. In the
opinion of management, the information contained herein reflects all adjustments
necessary to make the results of operations for the interim periods a fair
statement of such operations. For further information, refer to the financial
statements and footnotes thereto, included in the Annual Report on Form 10-KSB,
filed with the Securities and Exchange Commission for the year ended December
31, 1997.
NOTE 2 : REVENUE RECOGNITION
In October 1997, the AICPA issued SOP 97-2, Software Revenue Recognition, which
supersedes SOP 91-1. The Company adopted SOP 97-2 for software transactions
entered into beginning January 1, 1998. SOP 97-2 generally requires revenue
earned on software arrangements involving multiple elements (i.e., software
products, upgrades/enhancements, post-contract customer support, installation,
training, etc.) to be allocated to each element based on the relative fair
values of the elements. The fair value of an element must be based on evidence
which is specific to the Company. The revenue allocated to software products
(including specified upgrades/enhancements) generally is recognized upon
shipment of the products. The revenue allocated to post-contract customer
support generally is recognized ratably over the term of the support and revenue
allocated to services as they are performed. If the Company does not have
evidence of the fair value for all elements in a multiple-element arrangement,
all revenue from the arrangement is deferred until such evidence exists or until
all elements are delivered. The adoption of SOP 97-2 did not have a material
impact on the Company's consolidated results of operation for the six months
ended June 30, 1998.
NOTE 3 : INVENTORIES
Inventories at June 30, 1998 have been stated at the lower of first-in,
first-out cost or market. Inventories consist solely of purchased hardware and
software products (finished goods).
NOTE 4 : BANK LINE OF CREDIT
The Company maintains a $1,000,000 line of credit collateralized by eligible
accounts receivable. The line bears interest at prime plus 1.0% (8.5% as of June
30, 1998) and is renewable in May 1999. No amounts were outstanding under the
line as of June 30, 1998.
NOTE 5: XIOX FLANDERS N.V.
In the third quarter of 1997, Xiox Flanders N.V. ("Xiox Flanders") was
incorporated in Belgium pursuant to an agreement between the Company and
Flanders Language Valley (Flanders") and is owned 94.9% by the Company and 5.1%
by Flanders. The Company has committed to fund Xiox Flanders with approximately
$300,000 in 1998 and approximately $1,472,000 in 1999. The actual amount of
funding provided by the Company will depend on the business needs of Xiox
Flanders and can be modified by a vote of the Board of Directors.
PAGE 8
XIOX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6: MARKETING AGREEMENT
In July 1998, the Company signed a marketing agreement with Lucent Technologles
(Lucent) whereby Lucent will market XIOX products to hotels and motels
throughout the United States. The three-year agreement also calls for XIOX to
support Lucent in the pre-sale and post-installation process.
NOTE 7: EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income or loss by
weighted average common shares outstanding during the period. Diluted earnings
per share reflects the net incremental shares that would be issued if dilutive
outstanding stock options were exercised, using the treasury stock method.
In the case of a net loss, it is assumed that no incremental shares would be
issued because they would be antidilutive. In addition, certain options are
considered antidilutive because the options' exercise price was above the
average market price during the period. Antidilutive shares are not included in
the computation of diluted earnings per share, in accordance with SFAS No. 128.
The shares used in per share computations for the periods ended June 30, 1998 and 1997 are
as follows:
Three months Three months Six months Six months
ended ended ended ended
June 30,1998 June 30, 1997 June 30, 1998 June 30, 1997
----------------- ---------------- --------------- ----------------
Weighted average common shares
outstanding-basic 3,147,231 2,358,534 3,145,739 2,365,421
Dilutive incremental shares -
stock options -- 68,904 -- 60,000
----------------- ---------------- --------------- ----------------
Shares used in diluted per
share computations 3,147,231 2,427,438 3,145,739 2,425,421
================= ================ ================ ================
The diluted per share computation for the three and six months ended June 30,
1998, excludes 138,326 and 127,466 incremental shares, respectively,
attributable to stock options because the effect of their inclusion would have
been antidilutive.
NOTE 8: COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". SFAS No, 130 establishes standards of
reporting and display of comprehensive income and its components of net income
and "other comprehensive income" in a full set of general purpose financial
statements. " Other comprehensive income" refers to revenues, expenses, gains
and losses that are not included in net income but rather are recorded directly
in shareholders' equity. SFAS No. 130 is effective for annual and interim
periods beginning after December 15, 1997 and for periods ended before that date
when presented for comparative purposes. The Company has not yet determined the
format it will use to display the information required by SFAS No. 130 in the
financial statements for the year ending December 31, 1998.
Total comprehensive loss was $1,020,541 and $2,061,682 for the three and six
months, respectively, ended June 30, 1998. The Company's total comprehensive
income for the three and six months ended June 30, 1997, did not differ from
those amounts reported as net income in the 1997 consolidated statements of
operations. The primary difference between net loss and comprehensive loss for
the three and six months ended June 30, 1998 is the result of translation of the
Company's foreign subsidiary which has a local functional currency.
PAGE 9
XIOX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: SEGMENT REPORTING
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise". SFAS No. 131 changes current
practice under SFAS No. 14 by establishing a new framework on which to base
segment reporting and also requires interim reporting of segment information.
SFAS No. 131 is effective for fiscal years beginning after December 31, 1997,
with earlier application encouraged. The statement's interim reporting
disclosures would not be required until the first quarter immediately subsequent
to the fiscal year in which SFAS No. 131 is effective.
PAGE 10
XIOX CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The forward-looking statements included in this Quarterly Report filed on Form
10-QSB, which reflect management's best judgment based on factors known, involve
risks and uncertainties. In addition, the Company may from time to time make
forward-looking statements. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of a
number of factors, including but not limited to those discussed under "Certain
Risk Factors Which May Impact Future Operating Results and Market Price of Stock
on page 13. Forward-looking information provided by Xiox should be evaluated in
the context of these factors.
The following is management's discussion and analysis of certain significant
factors which have effected Xiox's financial position and operating results
during the periods included in the accompanying condensed consolidated financial
statements.
Results of Operations
Second Quarter 1998 vs. 1997
Revenue for the three months ended June 30, 1998 was $ 1,357,915, an increase of
9% versus the $1,249,627 recorded during the three months ended June 30, 1997.
The $108,288 increase in revenue is attributable to higher demand for call
accounting products in the second quarter of 1998 versus the second quarter of
1997.
Total operating expenses for the three months ended June 30, 1998 were
$2,396,956, an increase of 93% or $1,152,956 versus the $1,244,000 of operating
expenses incurred during the three months ended June 30, 1997. Total product
costs as a percentage of revenue increased to 47% in the second quarter of 1998
from 40% in the second quarter in 1997, primarily due to variations in product
mix and an increase in fixed labor costs.
Research and development expenses increased by 511% or $888,657 to $1,062,681 in
the second quarter of 1998 compared to $174,024 in the second quarter of 1997
due to an increased investment in new product development. The Company expects
quarterly research and development spending to exceed 1997 levels throughout
1998.
Marketing, sales and general and administrative expenses in the second quarter
of 1998 increased by 23% or $128,830 to $696,176 compared to $567,346 in the
second quarter of 1997, primarily due to administrative costs associated with
formation of a foreign subsidiary and increased costs associated with new
product business development.
Other income increased by $18,791 from the second quarter of 1997 primarily due
to income earned on cash equivalent investments of $16,944 in the second quarter
of 1998 versus $2,950 earned in the second quarter of 1997. In addition, there
was no profit sharing distribution in the second quarter of 1998 versus a
distribution of $6,182 in the second quarter of 1997.
The Company lost $1,039,041 from operations during the second quarter of 1998
and reported a net loss after taxes of $1,028,784 versus income of $5,627 earned
from operations and a net profit after taxes of $1,945 in the comparable quarter
of 1997. The Company attributes this to increased research and development
expenses associated with its new product development in addition to
administrative and marketing expenses necessary to support this effort.
PAGE 11
XIOX CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
First Half 1998 vs. 1997
Revenue for the six months ended June 30, 1998 was $2,555,776, an increase of 1%
versus the $2,522,561 recorded during the six months ended June 30, 1997. The
$33,215 increase in revenue is attributable to increased demand for
Telemanagement products in the first half of 1998 versus the first half of 1997.
Total operating expenses for the six months ended June 30, 1998 were $4,648,355,
an increase of 88% or $2,171,240 versus the $2,477,115 of operating expenses
incurred during the six months ended June 30, 1997. Total product costs as a
percentage of revenue increased to 48% in the first half of 1998 from 39% in the
first half in 1997, primarily due to variations in product mix and an increase
in fixed labor costs.
Research and development expenses increased by 431% or $1,619,353 to $1,994,747
in the first half of 1998 compared to $375,394 in the first half of 1997 due to
an increased investment in new product development. The Company expects
quarterly research and development spending to exceed 1997 levels throughout
1998.
Marketing, sales and general and administrative expenses in the first half of
1998 increased by 28% or $313,408 to $1,431,762 compared to $1,118,354 in the
first half of 1997, primarily due to administrative costs associated with
formation of a foreign subsidiary and increased costs associated with new
product business development.
Other income increased by $54,869 from the first half of 1997 primarily due to
income earned on cash equivalent investments of $46,667 in the first six months
of 1998 versus $6,092 earned in the first six months of 1997. In addition, there
was no profit sharing distribution in the first half of 1998 versus a
distribution of $17,065 in the first half of 1997.
The Company lost $2,092,579 from operations during the first half of 1998 and
reported a net loss after taxes of $2,055,185 versus income of $45,446 earned
from operations and a net profit after taxes of $31,198 in the comparable period
of 1997. The Company attributes this to increased research and development
expenses associated with its new product development in addition to
administrative and marketing expenses necessary to support this effort.
PAGE 12
XIOX CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital
At June 30, 1998, Xiox held cash and cash equivalents totaling $918,375 and had
working capital of $758,753 versus cash equivalents of $2,633,860 and working
capital of $3,120,508 at December 31, 1997. The Company anticipates investing in
excess of $1,000,000 in capital equipment during 1998, consisting primarily of
computer hardware and software and testing equipment. Since December 31, 1997,
capital equipment procurements have totaled $613,859.
The Company is in negotiation with certain investors to raise additional funds
to support development of a new product line addressing the combined telecom and
datacom markets. In connection with this new product line, the Company has
committed to fund Xiox Flanders N.V., a 94.9% owned subsidiary, with
approximately $300,000 in 1998. In the current quarter, the Company has not paid
any money directly to Xiox Flanders.
The Company maintains a bank line of credit of $1,000,000. The bank line, when
utilized, is collateralized by certain current assets and property and
equipment. The line carries a variable interest rate based upon prime plus 1.0
(8.5% as of June 30, 1998). No amounts were outstanding under the line as of
June 30, 1998.
Certain Risk Factors Which May Impact Future Operating Results and Market Price
of Stock
Xiox operates in a rapidly changing environment that involves a number of risks
and uncertainties, some of which are beyond the Company's control and any of
which may have an adverse effect on the Company's business, financial condition
and results of operations. These uncertainties include, but are not limited to,
the Company's reliance on the sale of few products; the Company's dependence on
the ability of its distribution channels to market the Company's products; the
fluctuations in the Company's quarterly results and the effect of these results
on the Company's ability to maintain its listed status on the Nasdaq Small Cap
Market; the ability of the Company's product developers to design products and
software that do not contain defects and "bugs" which render the products or
software inoperable or susceptible to breakdown, software viruses or "hacking";
and the outcome of any litigation the Company may be involved in. In addition,
the Company typically experiences weaker sales in the first quarter of each
calendar year compared to sales for the last quarter of the previous year.
PAGE 13
XIOX CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Year 2000 Compliance
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Computer programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. If the Company's internal systems do not correctly
recognize date information when the year changes to 2000, there could be an
adverse impact on the Company's operations. The Company is in the process of
completing an assessment and plans to modify or replace portions of its internal
software so that its computer systems will function properly with respect to
dates in the year 2000 and thereafter. The Company has also assessed the
capability of its products sold to customers and believes that any potential
obligations related to the Year 2000 Issues for the products it has sold will
not be material. The Company's products receive data from other equipment such
as PC's and PBX's and can only properly handle Year 2000 dates if it receives
Year 2000 compliant data.
Management believes that the likelihood of a material adverse impact due to
problems with internal systems or products sold to customers is remote and
expects that any costs to be incurred to assure Year 2000 capability will not
have a material adverse effect on the Company's financial position or results of
operations. However, there may be contingencies related to Year 2000 Issues
which are unknown to Management at this time which may have material adverse
effect on the Company. There can be no assurance that another company's failure
to ensure Year 2000 capability would not have an adverse effect on the Company.
PAGE 14
PART II - OTHER INFORMATION
XIOX CORPORATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
None.
PAGE 15
********************************************************************************
XIOX CORPORATION
SIGNATURES
In accordance with 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 duly authorized officers of the registrant.
XIOX CORPORATION
Registrant
Date: August 14, 1998
/s/ William H. Welling
--------------------------------------
(Duly Authorized Officer)
Date: August 14, 1998
/s/ Melanie D. Reid
--------------------------------------
Melanie D. Reid, VP Finance/CFO/Secretary
(Duly Authorized Officer)
PAGE 16
August 14, 1998
Files Desk
Securities & Exchange Commission
450 Fifth Street, N. W.
Washington, D. C. 20549
SUBJECT: Xiox Corporation
Commission File Number 0-15797
Dear SEC Representative:
Attached for filing pursuant to the Securities Exchange Act of 1934 (the "ACT" )
is Xiox Corporation's August 14, 1998 Edgar filing of a Financial Report for the
period ending June 30, 1998, under cover of the facing page of Form 10-QSB,
prepared pursuant to Securities and Exchange Commission Rule 15d-2.
Please acknowledge receipt of this filing.
Sincerely,
Melanie D. Reid
Vice-President, Finance/CFO
Xiox Corporation
577 Airport Boulevard, Suite 700
Burlingame, CA 94010
Attachments