Back to GetFilings.com

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K   

FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value per share
(Title of Class)

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  Yes  o      No x

The aggregate market value of the common equity held by non-affiliates of the registrant, based upon the closing sales price of Common Stock, par value $0.01 per share, on June 30, 2003 as reported on the OTC Bulletin Board, was approximately $2.0 million.  Shares of Common Stock held by each officer and director and by each person who owns 5% or more of the outstanding Common Stock have been excluded in that such persons may be deemed to be affiliates.  This determination of affiliate status is not necessarily a conclusive determination for other purposes.  The registrant has no shares of non-voting Common Stock authorized or outstanding.

As of March 1, 2004, Registrant had 17,784,185 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the Proxy Statement for the Registrant’s 2004 Annual Meeting of Stockholders to be held on Friday, May 14, 2004 (the “2004 Proxy Statement”) which will be filed with the Securities and Exchange Commission no later than 120 days after December 31, 2003, are incorporated by reference in Part III of this Report on Form 10-K.  With the exception of the portions of the 2004 Proxy Statement expressly incorporated into this Annual Report on Form 10-K by reference, such document shall not be deemed filed as a part of this Form 10-K.

FORWARD LOOKING STATEMENTS

          This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are subject to a number of risks and uncertainties.  All statements, other than statements of historical facts included in this Annual Report on Form 10-K, regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements.  When used in this Annual Report on Form 10-K, the words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.  For example, we have made forward-looking statements with respect to our future revenue growth herein.  We cannot guarantee future results, levels of activity, performance or achievements and you should not place undue reliance on our forward-looking statements.  Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or strategic alliances.  Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described in “Certain Factors that May Affect Future Operating Results” and elsewhere in this Annual Report on Form 10-K.  You should carefully review the risk factors included in our documents filed from time to time with the Securities and Exchange Commission, includ ing our Annual Report on Form 10-K for the year ended December 31, 2003 and our Quarterly Reports on Form 10-Q.  In addition, from time to time we may also provide oral or written forward-looking statements in other materials we release to the public.  We do not assume any obligation to update any of the forward-looking statements we make.

FLEXIINTERNATIONAL SOFTWARE, INC.

FORM 10-K

2003 ANNUAL REPORT

                                                                                        Table of Contents

FlexiFinancials, FlexiLedger, FlexiPayables and FlexiReceivables are registered trademarks, and the Flexi logo, FlexiAnalysis, FlexiASP, FlexiObjects, FlexiWorkFlow, FlexiActiveXControls, FlexiAssets, FlexiCenter, FlexiDB, FlexiDesigner, FlexiDeveloper, FlexiFDW, FlexiInternational, FlexiInventory, FlexiPortal, FlexiProjects, FlexiPurchasing, FlexiSecure, FlexiFRE, FlexiXL, FlexiOpenAccess, Flexi.Com, FlexiQuery, FlexiBatch, FlexiNet, FlexiWriter, justaboutbiz, FlexiDistribute and FlexiTools are trademarks of FlexiInternational Software, Inc.  All other trademarks or trade names referred to in this Annual Report on Form 10-K are the property of their respective owners.

PART I

Item 1.        Business 

General

          FlexiInternational Software, Inc., or Flexi or the Company, was organized as a Connecticut corporation in 1990 and reincorporated in Delaware in 1993.  Flexi designs, develops, markets and supports the FlexiFinancial Enterprise Suite of financial and accounting software applications and related tools.  The Flexi solution — composed of FlexiFinancials, Flexi Financial Datawarehouse, or FlexiFDW, FlexiInfoAccess and FlexiTools — is designed to address the needs of users with sophisticated financial accounting and operational analysis requirements.  We sell our software for use in traditional in-house accounting operations as well as through our accounting solution partners.  Flexi sells through two types of accounting solution partners. Our Flexi Industry Partners (FIP) and our Flexi Outsourcing Partners (FOP).  A FIP is typically an industry leading software company which wants to private label all or portions of FlexiFinancials to be seamlessly integrated with its own industry specific solution.  A FOP is typically a company engaged in or planning to engage in business process outsourcing (BPO) which will utilize all or some of FlexFinancials to provide the Finance and Accounting specific BPO service.

          Our FIP and FOP sales strategy is to license our software components to a partner for a fee and receive a royalty for the Flexi portion on the sales of the enterprise solution by our partners.  Additionally, Flexi receives revenue for software enhancements and maintenance agreements from the FIPs.

          In 2001, we signed a BPO reseller agreement in which we provided the reseller a convertible loan, in the aggregate principal amount of $272,000, to help launch the reseller’s BPO service.  On April 14, 2003, the reseller was acquired by a larger BPO provider.  Flexi was paid $357,000 immediately for its ownership share of the reseller and may realize an additional gain of up to $400,000 if certain earn-out targets are achieved by the reseller in 2003 and 2004.  The acquirer of the reseller continues to utilize FlexiFinancials in its BPO enterprise.  According to industry analysts, the finance and accounting outsourcing segment of the BPO market is in the early adoption phase and is expected to continue to grow.  However, we believ e the full acceptance of this solution is still several years away.

           We derive our revenue primarily from:

·        royalties paid to us from FIPs that distribute our products;

·        noncancellable software license agreements entered into with respect to our products;

·        payment from our FOPs for use of our products and services;

·        to a lesser extent, third-party products distributed by us; and

·        annual software maintenance agreements entered into with our customers.

          Our revenues have been derived from both domestic sales and international sales, with the international sales comprising 17.6%, 20.4% and 19.2% of total revenues for 2003, 2002 and 2001, respectively.   The international sales generally have the same revenue and cost structure as our domestic sales.  The majority of our international sales are transacted in British pounds sterling, and an increase in the value of the British pound relative to the currency of the country in which we are selling our product could make our products more expensive and potentially less competitive in these markets.  In addition, our international business may be subject to a variety of other risks, including difficulties in collecting international accounts receivable or obtaining U.S. export licenses for certain countries, the introduction of non-tariff barriers and higher duty rates and fiscal and monetary policies that adversely affect non-native firms.  See “Certain Factors that May Affect Future Operating Results.”

Table of Contents

Products

          The Flexi solution, FlexiFinancial Enterprise Suite, is an integrated suite of financial accounting applications, together with related information applications and development tools, that address the needs of users with sophisticated financial accounting requirements, is easily customized and supports the latest technologies as they evolve.  The FlexiFinancial Enterprise Suite is composed of the Company's three core families of products:

FlexiFinancials financial accounting solution;

Flexi Financial Datawarehouse “FlexiFDW”; and

FlexiTools development and customized tools.

          The following table provides selected information relating to these core products.  All of our products can operate on a fully integrated basis, can be licensed separately for use on a stand-alone basis or for integration with products from third-party vendors, or can be purchased for use in outsourced environments.

          FlexiFinancials

·        FlexiLedger.  FlexiLedger, the general ledger module for FlexiFinancials, provides the functionality required for users with sophisticated financial accounting requirements, including the ability to support an unlimited number of currencies including the Euro, multicurrency accounts and multicurrency sets of books; multi-company consolidations; user-defined subledgers; flexible account validation; sophisticated summarization and allocation structure; daily and monthly closing cycles, as well as other normal ledger functions, with levels of security traditionally a ssociated with mainframes.

·        FlexiPayables.  FlexiPayables is an accounts payable module that supports centralized and decentralized accounts payable processing through sophisticated operation and accounting security controls, while supporting the generation of invoices and payment authorizations automatically routed for approval.  Users have the flexibility to establish payment rules, terms for payment, cash management, and expense control and vendor management.

·        FlexiReceivables.  FlexiReceivables is an accounts receivable module that supports automatic cash application, invoice aging and discounts, as well as flexible rules for account group, payment schedule commission and other terms.  It can be easily configured to define multiple account distribution or multiple-company accounting for management of receivables across large organizations.

·        FlexiPurchasing.  FlexiPurchasing is a dynamic purchasing management module that tracks purchases from requisition to purchase order to invoicing, as well as delivery and storage, including data ranging from discount levels to receipt and acceptance of goods.  Users can define, among other items, management approval levels, all relevant report information and payment terms.

·        FlexiAssets.  FlexiAssets is a fixed-asset module for controlling and tracking the physical location of all assets, while providing depreciation calculations on a fully automated basis.  The user can maintain records on an unlimited number of assets.  FlexiAssets permits the user to choose depreciation methods, and to maintain multiple sets of records to satisfy GAAP and federal, state and local property tax reporting requirements.

·        FlexiProjects.  FlexiProjects allows for the management of costs for any type of capital project, whether it's software development, building a new facility, or building improvements.  FlexiProjects stores, tracks and analyzes all project costs and insures that project information is always reconciled with general ledger, purchasing, and other financial data.

Table of Contents

Flexi FDW

          The ability to produce in-depth management reports on the various aspects of a business is crucial.  FlexiFDW is a high-performance financial and operational tool for performing analysis with multi-dimensional roll-ups, and drill-down and multi-currency capabilities.  It creates a single repository of financial and operational information for the user.  It processes data according to customer defined accounting and financial rules and offers a unified view of a company’s entire operation, giving the user the information on profitability, risk, and new opportunities.  It provides this visibility through a flexible data model.

FlexiFDW.  FlexiFDW features an open client/server architecture and uses an event-driven model to organize and track information.  It processes, reconciles, standardizes and reports information based on the business or accounting rules established by the user in the Flexi Financial Rules Engine “FlexiFRE” or some other type of rules engine.  FlexiFDW accepts information directly from the user organization's source systems - regardless of their age, complexity, or number.  FlexiFDW is fully Euro compliant.

FlexiFRE. FlexiFRE provides an efficient, effective way to clean, validate, enrich and transform data from an organization's source systems.  It creates a single, standardized layer between front- and back-office source systems and a data warehouse or back-end reporting system.  Just as important, it enables the user to use a graphical interface to build an organization's business logic directly into the data capture process.

          FlexiTools

          FlexiTools are development and customization tools based on the open technologies that permit users to take advantage of the object-oriented, component-based architecture of our systems to accommodate their unique requirements in a timely and cost-effective manner. We believe that FlexiTools increase the flexibility of our products and facilitates seamless integration with customer applications.

·        FlexiControl permits users to define and manage system-wide controls, such as security and server-based processing.

·        FlexiDeveloper, FlexiDesigner and FlexiDB