10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-25040

APPLIX, INC.

(Exact name of registrant as specified in its charter)

MASSACHUSETTS	04-2781676
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

289 Turnpike Road, Westborough, Massachusetts 01581
(Address of principal executive offices)

(508) 870-0300
(Registrant’s telephone number)

     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 þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o                      Accelerated filer þ                     Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes o No þ

     As of August 3, 2007, the Registrant had 16,047,975 outstanding shares of common stock, par value $0.0025.

APPLIX, INC.

Form 10-Q

For the Quarterly Period Ended June 30, 2007

Table of Contents

	Page No.
Part I — Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006		3
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2007 and 2006		4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3. Quantitative and Qualitative Disclosures About Market Risk		18
Item 4. Controls and Procedures		18
Part II — Other Information
Item 1A. Risk Factors		19
Item 4. Submission of Matters to a Vote of Security Holders		23
Item 6. Exhibits		23
Signature		25
EX-3.1 - Restated Articles of Organization
EX-10.1 - 2003 Director Equity Plan
EX-31.1 - Sec 302 Certification of CEO
EX-31.2 - Sec 302 Certification of CFO
EX-32.1 - Sec 906 Certification of CEO
EX-32.2 - Sec 906 Certification of CFO

     Applix and TM1 are registered trademarks of Applix, Inc. TM1 Integra, TM1 Financial Reporting, TM1 Consolidations, TM1 Planning Manager, TM1 Web and Executive Viewer are trademarks of Applix, Inc. All other trademarks and company names mentioned are the property of their respective owners. All rights reserved.

     Certain information contained in this Quarterly Report on Form 10-Q is forward-looking in nature. All statements included in this Quarterly Report on Form 10-Q or made by management of Applix, Inc. and subsidiaries (“Applix” or the “Company”), other than statements of historical facts, are forward-looking statements. Examples of forward-looking statements include statements regarding Applix’s future financial results, operations, business strategies, projected costs, products, competitive positions and plans and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “would”, “expect”, “plan”, “anticipates”, “intend”, “believes”, “estimates”, “predicts”, “potential”, “continue”, or the negative of these terms or other comparable terminology. Forward-looking statements necessarily involve risks and uncertainties. Actual results could differ materially from those indicated by such forward-looking statements as a result of important factors, including those discussed in the section below entitled “Risk Factors”. Applix does not undertake an obligation to update its forward-looking statements to reflect future events or circumstances and the forward-looking statements in this document should not be relied upon as representing the Company’s views as of any date subsequent to the date of this document.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Applix, Inc.

Condensed Consolidated Balance Sheets
(In thousands, except share and par value amounts)

	June 30,			December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	33,977		$	23,487
Short-term investments		4,160			3,723
Accounts receivable, less allowances for doubtful accounts of $417 and $368, respectively		12,363			13,582
Other current assets		2,001			1,585
Deferred tax assets, current		663			619
Total current assets		53,164			42,996
Restricted cash		400			400
Property and equipment, net		1,316			1,313
Intangible assets, net of accumulated amortization of $2,300 and $1,853, respectively		5,030			5,477
Goodwill		13,418			13,341
Deferred tax assets, long-term		995			1,876
Other assets		727			684
TOTAL ASSETS	$	75,050		$	66,087
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,134		$	2,068
Accrued expenses		8,447			9,324
Accrued restructuring expenses, current portion		52			51
Current portion of debt		2,167			2,167
Deferred revenues		15,348			11,052
Total current liabilities		28,148			24,662
Accrued restructuring expenses, non-current portion		139			161
Long-term debt		2,708			3,792
Other long-term liabilities		739			122
Total liabilities		31,734			28,737
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.0025 par value; 50,000,000 and 30,000,000 shares authorized, respectively; 16,006,147 and 15,657,258 shares issued and outstanding, respectively		40			39
Additional paid-in capital		66,382			63,365
Accumulated deficit		(21,796	)		(24,604	)
Accumulated other comprehensive loss		(1,310	)		(1,450	)
Total stockholders’ equity		43,316			37,350
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	75,050		$	66,087

See accompanying Notes to Condensed Consolidated Financial Statements.

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Applix, Inc.

Condensed Consolidated Statements of Income
(In thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
Revenues:
Software license	$	9,424		$	8,192		$	16,529		$	12,619
Professional services and maintenance		8,016			5,128			14,806			9,694
Total revenues		17,440			13,320			31,335			22,313
Cost of revenues:
Software license		120			131			226			175
Professional services and maintenance		1,734			1,149			3,244			2,165
Amortization of an acquired intangible asset		92			—			185			—
Total cost of revenues		1,946			1,280			3,655			2,340
Gross margin		15,494			12,040			27,680			19,973
Operating expenses:
Sales and marketing		7,706			5,707			14,249			10,280
Product development		2,446			1,739			4,733			3,307
General and administrative		2,081			2,205			4,454			3,929
Amortization of acquired intangible assets		100			62			262			125
Total operating expenses		12,333			9,713			23,698			17,641
Operating income		3,161			2,327			3,982			2,332
Non-operating income (expense):
Interest income		356			275			660			505
Interest expense		(131	)		(40	)		(275	)		(52	)
Other income (expense), net		208			88			358			(26	)
Income before income taxes		3,594			2,650			4,725			2,759
Provision for income taxes		1,465			323			1,837			335
Net income	$	2,129		$	2,327		$	2,888		$	2,424
Net income per share, basic and diluted:
Net income per share, basic	$	0.14		$	0.15		$	0.19		$	0.16
Net income per share, diluted	$	0.12		$	0.14		$	0.16		$	0.15
Weighted average number of shares outstanding:
Basic		15,671			15,193			15,609			15,105
Diluted		18,335			16,702			18,155			16,581

See accompanying Notes to Condensed Consolidated Financial Statements.

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Applix, Inc.

Condensed Consolidated Statements of Cash Flows

	Six Months Ended
	June 30,
	2007			2006
	(in thousands)
Cash flows from operating activities:
Net income	$	2,888		$	2,424
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		349			239
Amortization		447			125
Provision for doubtful accounts		42			—
Stock-based compensation expense		1,588			1,045
Deferred income taxes		1,057			—
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		1,492			(172	)
Increase in prepaids and other assets		(512	)		(66	)
(Increase) decrease in other assets		(26	)		131
Increase in accounts payable		163			186
(Decrease) increase in accrued expenses		(784	)		723
Decrease in accrued restructuring expenses		(25	)		(23	)
Increase (decrease) in other liabilities		618			(58	)
Increase in deferred revenues		3,889			650
Cash provided by operating activities		11,186			5,204
Cash flows from investing activities:
Acquisition, net of cash acquired		(89	)		(11,138	)
Property and equipment additions		(270	)		(348	)
Decrease in restricted cash		—			100
Maturities of short-term investments		5,850			4,530
Purchases of short-term investments		(6,287	)		(5,198	)
Cash used in investing activities		(796	)		(12,054	)
Cash flows from financing activities:
Proceeds from issuance of common stock under stock plans		1,375			777
Proceeds from long-term debt, net of issuance costs		—			6,451
Principal payments on long-term debt		(1,084	)		—
Cash provided by financing activities		291			7,228
Effect of exchange rate changes on cash		(191	)		349
Increase in cash and cash equivalents		10,490			727
Cash and cash equivalents at beginning of period		23,487			20,740
Cash and cash equivalents at end of period	$	33,977		$	21,467
Supplemental disclosure of cash flow information
Cash paid for income taxes	$	463		$	266
Cash paid for interest	$	247		$	31
Supplemental disclosure of non-cash financing activity
In June 2006, the Company issued 330,252 shares of common stock valued at approximately $2.5 million in connection with the acquisition of Temtec International B.V. (Note 3).

See accompanying Notes to Condensed Consolidated Financial Statements.

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APPLIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. The Company

     Applix, Inc. (the “Company”) is a global provider of Business Analytics software solutions focusing on Business Performance Management (“BPM”) and Business Intelligence (“BI”) applications based on Applix’s TM1 technology. TM1 applications enable continuous strategic planning, management and monitoring of performance across the financial and operational functions within the enterprise. The Company’s products represent one principal business segment.

2. Summary of Significant Accounting Policies

Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) including instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the U.S. for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring entries) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.

Use of Estimates

     The preparation of financial statements and accompanying notes in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions in these financial statements relate to, among other items, the useful lives of property and equipment and intangible assets, domestic and foreign income tax liabilities, valuation of deferred tax assets, stock-based compensation, the allowance for doubtful accounts, impairment of goodwill and accrued liabilities.

Reclassifications

     Certain prior year financial statement items have been reclassified to conform to the current year presentation.

New Accounting Pronouncements

     In September 2006, the FASB issued Statement of Financial Accounting Standard No. 157, “Fair Value Measurement” (“SFAS 157”). SFAS 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating whether adoption of SFAS 157 will have an impact on its financial statements.

6

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is in the process of evaluating the effect of SFAS 159 on its consolidated results of operations and financial position.

3. Acquisition

     During the quarter ended June 30, 2007, the purchase price allocation for Temtec was adjusted for the release of approximately $55,000 in severance accruals after having completed all planned severance actions. The remaining fluctuation of goodwill during the six months ended June 30, 2007 was primarily due to foreign currency translation adjustments.

4. Stock-based Compensation

     The Company grants stock options and issues common stock to its employees and directors and also provides employees the right to purchase stock pursuant to stockholder approved stock option and employee stock purchase plans. Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standard No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). Under the provisions of SFAS 123R, the Company recognizes as compensation expense the fair value of share-based payment awards on a straight-line basis over the requisite service period of the individual award, which generally equals the vesting period. All of the Company’s share-based payment awards are accounted for as equity instruments, as there have been no liability awards granted.

     Under the provisions of SFAS 123R, the Company recorded $850,000 and $1,588,000 of stock-based compensation expense in its condensed consolidated statements of income for the three and six months ended June 30, 2007, respectively, which had the effect of reducing net income by $0.05 and $0.09 per diluted share, respectively. The Company recorded $550,000 and $1,045,000 of stock-based compensation expense in its condensed consolidated statements of income for the three and six months ended June 30, 2006, respectively, which had the effect of reducing net income by $0.03 and $0.06 per diluted share, respectively. Stock-based compensation expense was included in the following expense categories (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Cost of revenues	$	26	$	19	$	47	$	35
Sales and marketing		312		201		576		369
Product development		220		142		414		262
General and administrative		292		188		551		379
Total	$	850	$	550	$	1,588	$	1,045

     There was no income tax benefit recognized in the Company’s condensed consolidated statements of income for the three and six months ended June 30, 2007 and 2006 for stock-based payments. Total unrecognized stock-based compensation expense related to unvested stock options, expected to be recognized over a weighted average period of 1.4 years, amounted to approximately $5,596,000 at June 30, 2007. Total unrecognized stock-based compensation expense will be adjusted for any future changes in estimated forfeitures, if any.

     SFAS 123R requires the cash flows resulting from tax benefits relating to stock-based compensation to be classified as cash flows from financing activities. For the three and six months ended June 30, 2007 and 2006, there was no net tax benefit from the exercises of stock options.

     Information with respect to stock option activity under the various stock plans is as shown below:

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	Options Outstanding
				Weighted
				Average
	Number			Exercise Price
Options outstanding at January 1, 2007		3,997,791		$	4.29
Options granted		549,250		$	12.59
Options exercised		(175,920	)	$	3.62
Options cancelled		(45,983	)	$	12.71
Options outstanding at March 31, 2007		4,325,138		$	5.28
Options granted		15,000		$	16.30
Options exercised		(121,129	)	$	3.82
Options cancelled		(19,313	)	$	8.96
Options outstanding at June 30, 2007		4,199,696		$	5.35
Options exercisable at June 30, 2007		2,406,330		$	3.22

     The weighted average remaining contractual term and the aggregate intrinsic value for options outstanding at June 30, 2007 were 4.3 years and $46.6 million, respectively. The weighted average remaining contractual term and the aggregate intrinsic value for options exercisable at June 30, 2007 were 3.3 years and $31.8 million, respectively. The intrinsic value of options exercised during the three and six months ended June 30, 2007 was approximately $1,355,000 and $2,731,000, respectively.

     The Company utilizes the Black-Scholes valuation model for estimating the fair value of the stock-based compensation granted after the adoption of SFAS 123R. The weighted-average fair values of the options granted under the stock option plans and shares subject to purchase under the employee stock purchase plan were $7.87 and $2.58, respectively, for the three months ended June 30, 2007, and $4.11 and $2.11, respectively for the three months ended June 30, 2006, assuming no dividends and using the following assumptions:

	Three Months Ended						Three Months Ended
	June 30, 2007						June 30, 2006
	Stock Option			Purchase			Stock Option			Purchase
	Plans			Plan			Plans			Plan
Expected life (years)		4.6			.5			4.6			.5
Expected stock price volatility		50.9	%		29.2	%		56.4	%		32.5	%
Risk free interest rate		4.9	%		5.2	%		5.10	%		4.60	%

     Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is based on the U.S. Treasury rates on the date of grant for a term equivalent to the expected life of the options. The expected life was calculated using the method outlined in SEC Staff Accounting Bulletin Topic 14.D.2, “Expected Term,” as the Company’s historical experience does not provide a reasonable basis for the expected term of the option.

     Based on the Company’s historical employee turnover and stock option forfeitures rates, an annualized estimated forfeiture rate of 8.5% has been used in calculating the cost for stock options. Under the true-up provisions of SFAS 123R, additional expense will be recorded if the actual forfeiture rate is lower than estimated, and a recovery of prior expense will be recorded if the actual forfeiture is higher than estimated.

5. Earnings Per Share

     Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Dilutive net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect, if any, of potential incremental common shares, determined through the application of the treasury stock method under SFAS No. 128, “Earnings Per Share”, to the stock options and common stock equivalents outstanding during the period.

8

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
	(In thousands, except per share data)
Numerator:
Net income	$	2,129	$	2,327	$	2,888	$	2,424
Denominator:
Denominator for basic net income per share — Weighted average number of shares outstanding		15,671		15,193		15,609		15,105
Dilutive effect of assumed exercise of stock options and contingently returnable shares		2,664		1,509		2,546		1,476
Denominator for diluted net income per share		18,335		16,702		18,155		16,581
Basic net income per share	$	0.14	$	0.15	$	0.19	$	0.16
Diluted net income per share	$	0.12	$	0.14	$	0.16	$	0.15

     Common stock equivalents (stock options) of 1,874,281 and 2,299,743 were excluded from the calculation of diluted earnings per share for the three months ended June 30, 2007 and 2006, respectively, and 1,926,436 and 2,270,261 were excluded from the calculation of diluted earnings per share for the six months ended June 30, 2007 and 2006, respectively, because these options were anti-dilutive for the respective periods. However, these options could be dilutive in the future.

6. Comprehensive Income

     Components of comprehensive income (loss) include net income and certain transactions that have generally been reported in the consolidated statements of stockholders’ equity. Other comprehensive income (loss) includes gains and losses from foreign currency translation adjustments and unrealized gains and losses on short-term investments.

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2007			2006		2007		2006
	(In thousands)					(In thousands)
Net income	$	2,129		$	2,327	$	2,888	$	2,424
Other comprehensive income (loss) items:
Foreign currency translation adjustments		46			46		140		217
Unrealized (gain) loss on short-term investments		(1	)		2		—		2
Other comprehensive income		45			48		140		219
Total comprehensive income	$	2,174		$	2,375	$	3,028	$	2,643

7. Income Taxes

     The provision for income taxes represents the Company’s federal and state income tax obligations as well as foreign tax provisions. The Company’s provision for income taxes was $1,465,000 and $1,837,000 for the three and six months ended June 30, 2007, respectively, and $323,000 and $335,000 for the three and six months ended June 30, 2006, respectively. During the three and six months ended June 30, 2006, the Company’s effective tax rate was affected by release of valuation allowance attributed to the realization of federal and state net operating loss carryforwards. The effective tax rate during the three and six months ended June 30, 2007 does not include any such benefits.

     The Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. The purpose of FIN 48 is to clarify and set forth consistent rules for accounting for uncertain tax positions in accordance with SFAS 109, “Accounting for Income Taxes” by requiring the application of a “more likely than not” threshold for the recognition and derecognition of tax positions. As a result of applying the provisions of FIN 48, the Company recognized an increase of approximately $80,000 in the liability for unrecognized tax benefits, which was recorded as an increase to accumulated deficit as of January 1, 2007. In addition, as a result of applying the provisions of FIN 48, the Company recorded a $1.8 million reduction to deferred tax assets, primarily federal and state research tax credits, as well as a corresponding $1.8 million reduction to the valuation allowance, as of January 1, 2007. The Company’s unrecognized tax benefits totaled approximately $2.3 million at January 1, 2007, of which $527,000 was included in other long-term liabilities and $1.8 million represented fully reserved deferred tax assets, primarily federal and state research tax credits. The Company’s unrecognized tax benefits included $88,000 of estimated interest and penalties at January 1, 2007, and also include approximately $527,000 of tax positions, the disallowance of which would affect the annual effective income tax rate.

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     The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters as a component of provision for income tax expense. During the three and six months ended June 30, 2007, potential interest and penalties associated with uncertain tax positions did not have a material impact of the Company’s financial statements.

     The Company files U.S., state and foreign income returns in jurisdictions with varying statutes of limitation. The 1999 through 2006 tax years generally remain subject to examination by federal and most state tax authorities. The 2002 through 2006 tax years generally remain subject to examination by the tax authorities in the Company’s major foreign tax jurisdictions.

8. Commitments and Contingencies

Contingencies

     From time to time, the Company is subject to routine litigation and proceedings in the ordinary course of business. The Company is not aware of any pending litigation to which the Company is or may become a party, that the Company believes could have a material adverse impact on its consolidated results of operations or financial condition.

9. Restructuring Expenses

     In the second quarter of 2004, the Company adopted a plan of restructuring to reduce operating costs. Under this plan, the Company made the determination that it had no future use for or benefit from, certain space pertaining to its UK office lease. In June 2004, the Company entered into a sublease agreement with a subtenant for a portion of the Company’s UK office lease. In July 2004, upon exiting the space, the Company recorded a restructuring charge of approximately $604,000. The restructuring charge was primarily comprised of the difference between the Company’s contractual lease rate for the subleased space and the anticipated sublease rate to be realized over the remaining term of the original lease, discounted by a credit adjusted risk rate of 8%. The restructuring charge also consisted of other related professional services, including legal fees, broker fees and certain build-out costs, incurred in connection with the exiting of the facility. The Company expects to make payments relating to this restructuring until the lease expires in March 2010.

     The following tables present the activity in the restructuring accrual for the six months ended June 30, 2007 and 2006, respectively. Restructuring charges accrued and unpaid at June 30, 2007, including current and non-current portions of $52,000 and $139,000, respectively, were as follows:

	Facility
	Exit Costs
Balance at January 1, 2007	$	212,000
Payments		(25,000	)
Foreign currency translation adjustments		4,000
Balance at June 30, 2007	$	191,000

	Facility
	Exit Costs
Balance at January 1, 2006	$	230,000
Payments		(23,000	)
Foreign currency translation adjustments		17,000
Balance at June 30, 2006	$	224,000

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10. Stockholders’ Equity

     On June 7, 2007, the stockholders approved an amendment to the Company’s Restated Articles of Organization, as amended, to increase the number of authorized shares of common stock from 30,000,000 shares to 50,000,000 shares.

     On June 7, 2007, the stockholders approved an amendment to the Company’s 2003 Director Equity Plan to increase the number of shares of common stock authorized for issuance thereunder from 300,000 to 600,000 shares.

11. Subsequent Events

     In July 2007, the Company paid the remaining principal and accrued interest obligations of approximately $4.9 million under its term loan (the “Term Loan”) with Silicon Valley Bank. In connection with the repayment of the Term Loan, the Company wrote-off approximately $34,000 of remaining capitalized debt issuance costs. There were no penalties or fees incurred by the Company for the prepayment of the Term Loan prior to its scheduled maturity date.

     In August 2007, the Company received notification from the Massachusetts Department of Revenue that the audit of its Massachusetts state income tax returns for 2002 and 2003 were closed with no assessment to the Company. There are no tax years currently undergoing an audit by the Massachusetts Department of Revenue.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW OF THE COMPANY’S OPERATIONS

     The Company is a global provider of Business Analytics software solutions focusing on Business Performance Management (“BPM”) and Business Intelligence (“BI”) applications based on Applix’s TM1 that enable continuous strategic planning, management and monitoring of performance across the financial and operational functions within the enterprise.

     The Company sells its products through both a direct sales force and an expanding network of partners, both domestically and internationally. These partners provide additional implementation resources, domain expertise and complementary applications using the Company’s software products. The Company continues to focus its efforts on selling and marketing the licensing and maintenance of its products while increasing the engagement of partners to provide consulting services on the implementation and integration of its products.

     On June 15, 2006, the Company completed the acquisition of Temtec International B.V. (“Temtec”), a privately-held Netherlands company that is a leading provider of self-service analytic software that empowers non-technical business users to analyze and report on business-critical information in real time. The acquisition of Temtec enables the Company to provide companies with a more powerful solution set for creating, managing and delivering compelling operational performance management applications throughout the enterprise. The Company accounted for the Temtec acquisition as a purchase, and accordingly, recorded the assets purchased and liabilities assumed at the purchase date based upon their estimated fair values.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and assumptions on expected or known trends or events, historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and

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liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

     Management believes the following critical accounting policies, among others, involve the more significant judgments and estimates used in the preparation of its consolidated financial statements.

• Revenue Recognition

• Allowance for Doubtful Accounts

• Goodwill and Other Intangible Assets and Related Impairment

• Stock-based Compensation

• Restructuring

• Income Taxes

     There have been no changes in our critical accounting policies or significant accounting estimates as disclosed in our 2006 Annual Report on Form 10-K other than the implementation of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (see Note 7 in the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q). For more information regarding the Company’s critical accounting policies, the Company refers the reader to the discussion contained in Item 7 under the heading “Critical Accounting Policies and Estimates” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, to Note 2 to the consolidated financial statements for the year ended December 31, 2006, contained within the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and to Note 2 to the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS

Three and Six Months Ended June 30, 2007 and 2006

Revenues

	(In thousands, except percentages)
	Three Months Ended June 30,										Six Months Ended June 30,
			Percent					Percent					Percent					Percent
			of					of					of					of
	2007		Revenue			2006		Revenue			2007		Revenue			2006		Revenue
Software License Revenues	$	9,424		54	%	$	8,192		62	%	$	16,529		53	%	$	12,619		57	%
Professional Services Revenues		1,234		7	%		592		4	%		2,309		7	%		1,023		4	%
Maintenance Revenues		6,782		39	%		4,536		34	%		12,497		40	%		8,671		39	%
Total Professional Services and Maintenance Revenues		8,016		46	%		5,128		38	%		14,806		47	%		9,694		43	%
Total Revenues	$	17,440		100	%	$	13,320		100	%	$	31,335		100	%	$	22,313		100	%

     Total revenues for the three months ended June 30, 2007 increased $4,120,000, or 31%, to $17,440,000 from $13,320,000 for the three months ended June 30, 2006. The increase in total revenues from the prior year period was comprised of increases of $1,232,000 in software license revenues and $2,888,000 in professional services and maintenance revenues. Total revenues for the six months ended June 30, 2007 increased 40% to $31,335,000, from $22,313,000 for the six months ended June 30, 2006. When expressed at constant foreign currency exchange rates, total revenues increased 25% and 34% for the three and six months ended June 30, 2007, respectively, compared to the same periods in the prior year.

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Software License Revenues

     Software license revenues increased by $1,232,000 to $9,424,000 for the three months ended June 30, 2007 from $8,192,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, software license revenues increased by $3,910,000 to $16,529,000 from $12,619,000 for the same period in 2006. The increase in software license revenues was largely due to the Company expanding its customer base, domestically and internationally, and successfully competing in broader and higher value deals resulting from the strengthening of the Company’s worldwide field operations as well as the continued development and enhancements to the Company’s product offerings, including those obtained in the Temtec acquisition in June 2006. A measure the Company uses to evaluate revenue performance is deal size given the relative importance of gross margin within the software industry. The number of transactions resulting in software license revenue in excess of $100,000 was 23 and 35 for the three and six months ended June 30, 2007, respectively, compared to 16 and 25 in the same periods in 2006.

     Domestic software license revenue increased 4% to $3,743,000 for the three months ended June 30, 2007 from $3,592,000 for the three months ended June 30, 2006. International software license revenue increased 24% to $5,681,000 for the three months ended June 30, 2007 from $4,600,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, domestic license revenues increased by 16% to $6,235,000 from $5,361,000 for the same period in 2006. International license revenues increased by 42% to $10,294,000 for the six months ended June 30, 2006 from $7,258,000 for the six months ended June 30, 2006.

     The Company markets its products through its direct sales force and indirect partners. The Company continues to focus on complementing its direct sales force with indirect channel partners, which consist of value added resellers, independent distributors, sales agents and original equipment manufacturers.

Professional Services and Maintenance

     Professional services and maintenance revenues increased by 56% to $8,016,000 for the three months ended June 30, 2007 as compared to $5,128,000 for the three months ended June 30, 2006. During the three months ended June 30, 2007, maintenance revenues increased $2,246,000 to $6,782,000, compared to $4,536,000 for the three months ended June 30, 2006, and professional services revenues increased to $1,234,000 for the three months ended June 30, 2007, compared to $592,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, professional services and maintenance revenues increased by 53% to $14,806,000 as compared to $9,694,000 for the same period of 2006. During the six months ended June 30, 2007, maintenance revenues increased $3,826,000 to $12,497,000, compared to $8,671,000 for the six months ended June 30, 2006, and professional services revenues increased to $2,309,000 for the six months ended June 30, 2007, compared to $1,023,000 for the six months ended June 30, 2006. The increase in maintenance revenue was primarily attributable to the sale of software licenses to new customers coupled with high rates of renewals of annual maintenance contracts from the sale of licenses in prior periods. The increase in professional services revenues was primarily due to increased training and consulting revenues resulting from increased license revenues as well as the increase in number of professional service employees to moderately expand the Company’s capacity to deliver professional services. The Company expects maintenance revenues to continue to increase due to strong customer maintenance renewal rates.

Cost of Revenues

	(In thousands, except percentages)
	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
Cost of Software License Revenues	$	120	$	131	$	226	$	175
Cost of Professional Services Maintenance Revenues:
Cost of Professional Services Revenues		992		474		1,776		885

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	(In thousands, except percentages)
	Three Months Ended June 30,								Six Months Ended June 30,
	2007				2006				2007				2006
Cost of Maintenance Revenues		742				675				1,468				1,280
Total		1,734				1,149				3,244				2,165
Amortization of an acquired intangible asset		92				—				185				—
Total Cost of Revenues	$	1,946			$	1,280			$	3,655			$	2,340
Gross Margin (A):
Software License (B)	$	9,212	98	%	$	8,061	98	%	$	16,118	98	%	$	12,444	99	%
Professional Services and Maintenance:
Professional Services		242	20	%		118	20	%		533	23	%		138	13	%
Maintenance		6,040	89	%		3,861	85	%		11,029	88	%		7,391	85	%
Total		6,282	78	%		3,979	78	%		11,562	78	%		7,529	78	%
Total Gross Margin	$	15,494	89	%	$	12,040	90	%	$	27,680	88	%	$	19,973	90	%

(A)	Gross margin calculated as a percentage of related revenues.
(B)	Software license gross margin calculated net of cost of software license revenues and amortization of an acquired intangible asset.

Cost of Software License Revenues

     Cost of software license revenues consists primarily of third-party software royalties and the cost of product packaging and documentation material. Cost of software license revenues as a percentage of software license revenues was 2% for the three and six months ended June 30, 2007. Cost of software license revenues as a percentage of software license revenues was 2% and 1% for the three and six months ended June 30, 2006, respectively. The fluctuation in the cost of license revenues was primarily due to the change in third-party royalties associated with the sales of certain products.

Cost of Professional Services and Maintenance Revenues

     The cost of professional services and maintenance revenues consists primarily of personnel salaries and benefits, third-party consultants, facilities and information system costs incurred to provide consulting, training and customer support, and payments to indirect channel partners to provide first level support to end-user customers. Cost of professional services and maintenance revenues increased by $585,000 to $1,734,000 for the three months ended June 30, 2007 from $1,149,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, the cost of professional services and maintenance revenues increased by $1,079,000 to $3,244,000 from $2,165,000 for the same period of 2006. The increase in the cost of professional services and maintenance revenues was primarily due to an increase in professional services employees.

Amortization of an Acquired Intangible Asset

     Amortization expense for the acquired intangible asset, existing technology, associated with the Temtec acquisition in June 2006, was $92,000 and $185,000 for the three and six months ended June 30, 2007, respectively. The amortization expense of this intangible asset will continue to be ratably amortized through the second quarter of 2011.

Operating Expenses

	(In thousands, except percentages)
	Three Months Ended June 30,										Six Months Ended June 30,
			Percent of					Percent of					Percent of					Percent of
	2007		Revenues			2006		Revenues			2007		Revenues			2006		Revenues
Sales and marketing	$	7,706		44	%	$	5,707		43	%	$	14,249		46	%	$	10,280		46	%
Product development		2,446		14	%		1,739		13	%		4,733		15	%		3,307		15	%
General and administrative		2,081		12	%		2,205		17	%		4,454		14	%		3,929		18	%
Amortization of acquired intangible assets		100		1	%		62		—	%		262		1	%		125		1	%
Total operating expenses	$	12,333		71	%	$	9,713		73	%	$	23,698		76	%	$	17,641		79	%

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Sales and Marketing Expenses

     Sales and marketing expenses consist primarily of salaries and benefits, commissions and bonuses for the Company’s sales and marketing personnel, field office expenses, travel and entertainment, promotional and advertising expenses. Sales and marketing expenses increased $1,999,000 to $7,706,000 for the three months ended June 30, 2007 from $5,707,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, sales and marketing expenses increased $3,969,000 to $14,249,000 from $10,280,000 for the comparable period of 2006. The increase in sales and marketing expenses was primarily due to an increase in staffing in sales and marketing personnel, as well as higher sales commission expense based on increased revenues. These factors resulted in an increase of approximately $1,116,000 and $2,406,000 of employee compensation-related expenses in sales and marketing expenses for the three and six months ended June 30, 2007, respectively, compared to the same periods of 2006. In addition, the Company increased its investment in marketing programs, advertising and lead generation activities by approximately $277,000 and $568,000 for the three and six months ended June 30, 2007, respectively, compared to the same periods in the prior year.

Product Development Expenses

     Product development expenses include costs associated with the development of new products, enhancements of existing products and quality assurance activities, and consist primarily of employee salaries and benefits, consulting costs, as well as the cost of software development tools. Product development expenses increased $707,000 to $2,446,000 for the three months ended June 30, 2007 from $1,739,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, product development expenses increased $1,426,000 to $4,733,000 from $3,307,000 for the six months ended June 30, 2006. The increase in product development expenses was primarily due to an increase in headcount, including employees gained from the Company’s acquisition of Temtec in June 2006. The Company anticipates that it will continue to devote substantial resources to the development of new products and new versions of its existing products, including Applix TM1 and related applications.

General and Administrative Expenses

     General and administrative expenses consist primarily of salaries, benefits and occupancy costs for executive, administrative, finance, information technology, and human resource personnel, as well as accounting and legal costs. General and administrative expenses decreased $124,000 to $2,081,000 for the three months ended June 30, 2007 from $2,205,000 for the three months ended June 30, 2006. The decrease is primarily due to lower legal costs incurred by the Company partially offset by higher employee expenses, including employees gained from the acquisition of Temtec in June 2006. For the six months ended June 30, 2007, general and administrative expenses increased $525,000 to $4,454,000 from $3,929,000 for the six months ended June 30, 2006. The increase of general and administrative expenses was due to additional costs, including headcount and facilities, incurred related to the acquisition of Temtec in June 2006 as well as $172,000 of increased stock-based compensation expense for the six month ended June 30, 2007 compared to the same period of 2006. The Company will continue to closely monitor general and administrative costs.

Amortization of Acquired Intangible Assets

     Amortization expense for the acquired intangible asset, customer relationships, associated with the Dynamic Decisions acquisition in March 2001, was $0 and $63,000 for the three and six months ended June 30, 2007, respectively. The amortization expense relating to the Dynamic Decisions acquisition was ratably amortized through the first quarter of 2007. Amortization expense was $63,000 and $125,000 for the three and six months ended June 30, 2006, respectively.

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     Amortization expense for the acquired intangible asset, customer relationships, associated with the Temtec acquisition in June 2006, was $100,000 and $199,000 for the three and six months ended June 30, 2007, respectively. The amortization of this intangible asset will continue ratably through 2016.

Non-operating Income (Expense)

	(In thousands, except percentages)
	Three Months Ended June 30,												Six Months Ended June 30,
				Percent						Percent						Percent						Percent
				of						of						of						of
	2007			Revenue			2006			Revenue			2007			Revenue			2006			Revenue
Interest income	$	356			2	%	$	275			2	%	$	660			2	%	$	505			2	%
Interest income		(131	)		(1	%)		(40	)		—	%		(275	)		(1	%)		(52	)		—	%
Other income (expense), net		208			1	%		88			—	%		358			1	%		(26	)		—	%
Total	$	433			2	%	$	323			2	%	$	743			2	%	$	427			2	%

Interest Income

     Interest income increased to $356,000 for the three months ended June 30, 2007 from $275,000 for the three months ended June 30, 2006. For the six months ended June 30, 2007, interest income increased to $660,000 from $505,000 for the six months ended June 30, 2006. These increases in interest income were due to higher interest rates earned on higher average cash and short-term investments balances as compared to the same periods in 2006.

Interest Expense

     Interest expense increased to $131,000 for the three months ended June 30, 2007 from $40,000 from the three months ended June 30, 2006. For the six months ended June 30, 2007, interest expense increased to $275,000 from $52,000 for the six months ended June 30, 2006. These increases were primarily due to the interest expense resulting from the $6.5 million term loan entered into in June 2006 in connection with the Temtec acquisition. Due to the repayment of the Term Loan by the Company in July 2007, the Company expects interest expense to decline significantly.

Other Income (Expense), Net

     Other income (expense), net represents other non-operating income and expense items, primarily consisting of gains and losses on foreign currency exchange fluctuations. Other income (expense), net increased to income of $208,000 for the three months ended June 30, 2007 from income of $88,000 for the three months ended June 30, 2006. Other income (expense), net increased to income of $358,000 for the six months ended June 30, 2007 from an expense of $26,000 for the six months ended June 30, 2006. The change was mainly due to foreign currency exchange rate fluctuations, primarily the euro, the British pound, and the Australian dollar, on intercompany balances, which are considered short-term in nature and are denominated in the Company’s foreign subsidiaries’ local currencies.

Provision for Income Taxes

     The provision for income taxes represents the Company’s federal and state income tax obligations as well as foreign tax provisions. The Company’s provision for income taxes was $1,465,000 and $1,837,000 for the three and six months ended June 30, 2007, respectively, and $323,000 and $335,000 for the three and six months ended June 30, 2006, respectively. During the three and six months ended June 30, 2006, the Company’s effective tax rate was affected by release of valuation allowance attributed to the realization of federal and state net operating loss carryforwards. The effective tax rate during the three and six months ended June 30, 2007 does not include any such benefits.

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LIQUIDITY AND CAPITAL RESOURCES

     The Company currently derives its liquidity and capital resources primarily from the Company’s cash flow from operations. The Company’s cash and cash equivalents balances were $33,977,000 and $23,487,000 as of June 30, 2007 and December 31, 2006, respectively, which excludes restricted cash of $400,000. The Company’s days sales outstanding (“DSO”) in accounts receivable was 64 days as of June 30, 2007, compared with 75 days as of December 31, 2006.

     Cash provided by the Company’s operating activities was $11,186,000 for the six months ended June 30, 2007, compared to cash provided by operating activities of $5,204,000 for the six months ended June 30, 2006. The increase in cash provided by operating activities was primarily due, in addition to net income, to a decrease in accounts receivable of $1,492,000 resulting primarily from strong cash collections during the six months ended June 30, 2007, coupled with an increase in deferred revenue of $3,889,000.

     Cash used in investing activities totaled $796,000 for the six months ended June 30, 2007 compared to cash used in investing activities of $12,054,000 for the six months ended June 30, 2006. Cash used in investing activities consisted primarily of $437,000 of purchases, net of maturities, of short-term investments and $270,000 of property and equipment expenditures during the six months ended June 30, 2007. Cash used in investing activities during the six months ended June 30, 2006 consisted primarily of $11,138,000 of cash used in connection with the acquisition of Temtec, coupled with purchases, net of maturities, of approximately $668,000 of short-term investments.

     Cash provided by financing activities totaled $291,000 for the six months ended June 30, 2007, which consisted of proceeds of $1,375,000 received from the issuance of stock under the Company’s stock plans, partially offset by $1,084,000 of principal payments on the Company’s term loan. Cash provided by financing activities totaled $7,228,000 for the six months ended June 30, 2006, which consisted primarily of proceeds of $6,500,000 from a term loan, net of approximately $49,000 of debt issuance costs, used to partially finance the acquisition of Temtec.

     Cash paid for income taxes by the Company was $463,000 and $266,000 for the six months ended June 30, 2007 and 2006, respectively.

     In July 2007, the Company paid the remaining principal and accrued interest obligations of approximately $4.9 million under its term loan (the “Term Loan”) with Silicon Valley Bank. There were no penalties or fees incurred by the Company for the prepayment of the Term Loan prior to its scheduled maturity date.

     The Company has contractual obligations for capital leases, operating leases and purchase obligations that were summarized in a table of Contractual Obligations set forth in Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. There have been no material changes to the contractual obligations of the Company, outside of the ordinary course of the Company’s business, since December 31, 2006, except for the prepayment of the Term Loan as described above.

     The Company does not have any off-balance sheet financing or unconsolidated special purpose entities.

     The Company currently expects that the principal sources of funding for its operating expenses, capital expenditures and other liquidity needs will be a combination of its available cash and short-term investment balances and funds expected to be generated from operations. The Company believes that the sources of funds currently available will be sufficient to fund its operations for at least the next 12 months. However, there are a number of factors that may negatively impact the Company’s available sources of funds. The amount of cash generated from or used by operations will be dependent primarily upon the successful execution of the Company’s business plan, including increasing revenues and reinvesting into its sales and marketing and product development. If the Company does not meet its plans to generate sufficient revenue or positive cash flows, it may need to raise additional capital or reduce spending.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As a multinational corporation, the Company is exposed to market risk, primarily from changes in foreign currency exchange rates, in particular the British pound, the euro and the Australian dollar. These exposures may change over time and could have a material adverse impact on the Company’s financial results. Most of the Company’s international sales through its subsidiaries are denominated in foreign currencies. The Company’s primary foreign currency exposures relate to its short-term intercompany balances with its foreign subsidiaries, primarily its Australian subsidiary. The Company’s foreign subsidiaries have functional currencies denominated in the euro, Australian dollar, British pound and Swiss franc. Intercompany transactions denominated in these currencies are remeasured at each period end with any exchange gains or losses recorded in the Company’s consolidated statements of income. Although foreign currency exchange rates have fluctuated significantly in recent years, the Company’s exposure to changes in net income due to such fluctuations is mitigated to some extent because expenses are incurred by its foreign subsidiaries in the same functional currency as their income. During the three and six months ended June 30, 2007, the Company incurred net gains on foreign exchange of approximately $216,000 and $391,000, respectively, primarily due to favorable movements in the Australian dollar, euro and British pound exchange rates. Based on foreign currency exposures existing at June 30, 2007, a hypothetical 10% unfavorable movement in foreign exchange rates related to the British pound, euro, Australian dollar, and Swiss franc would result in an approximately $1,125,000 reduction to earnings. The Company is not engaged in activities to hedge these exposures.

     At June 30, 2007, the Company held $33,977,000 in cash and cash equivalents, excluding $400,000 of restricted cash, consisting primarily of money market funds and $4,160,000 in short-term investments. Cash equivalents and short-term investments are classified as available for sale and carried at fair value, which approximates amortized cost. A hypothetical 10% increase in interest rates would not have a material impact on the fair market value of these instruments due to their short maturity and the Company’s intention that all the securities will be sold within one year.

ITEM 4. CONTROLS AND PROCEDURES

     The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2007. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of the Company’s disclosure controls and procedures as of June 30, 2007, the Company’s chief executive officer and chief financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

     No change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended June 30, 2007 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

     Investors should carefully consider the risks described below before making an investment decision with respect to the common stock of the Company. There have been no material changes to the risk factors disclosed in the Company’s 2006 Annual Report on Form 10-K, except for the deletion of a risk factor relating to the integration of Temtec into the Company’s business.

OUR STOCK PRICE MAY BE ADVERSELY AFFECTED BY SIGNIFICANT FLUCTUATIONS IN OUR QUARTERLY RESULTS.

     We may experience significant fluctuations in our future results of operations due to a variety of factors, many of which are outside of our control, including:

• demand for and market acceptance of our products and services;

• the size and timing of customer orders, particularly large orders;

• introduction of products and services or enhancements by us and our competitors;

• competitive factors that affect our pricing;

• the mix of products and services we sell;

• the hiring and retention of key personnel;

• our expansion into international markets;

• the timing and magnitude of our capital expenditures, including costs relating to the expansion of our operations;

• the acquisition and retention of key partners;

• changes in generally accepted accounting policies, especially those related to the recognition of software revenue and the accounting for stock-based compensation; and

• new government legislation or regulation.

     We typically receive a majority of our orders in the last month of each fiscal quarter because our customers often delay purchases of products until the end of the quarter as our sales organization and our individual sales representatives strive to meet quarterly sales targets. As a result, any delay in anticipated sales is likely to result in the deferral of the associated revenue beyond the end of a particular quarter, which would have a significant effect on our operating results for that quarter. In addition, most of our operating expenses do not vary directly with net sales and are difficult to adjust in the short term. As a result, if net sales for a particular quarter were below expectations, we could not proportionately reduce operating expenses for that quarter, and, therefore, that revenue shortfall would have a disproportionate adverse effect on our operating results for that quarter. If our operating results are below the expectations of public market analysts and investors, the price of our common stock may fall significantly.

BECAUSE THE BUSINESS PERFORMANCE MANAGEMENT AND BUSINESS INTELLIGENCE MARKETS ARE HIGHLY COMPETITIVE, WE MAY NOT BE ABLE TO SUCCEED.

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     If we fail to compete successfully in the highly competitive and rapidly changing business performance management and business intelligence markets, we may not be able to succeed. We face competition primarily from business intelligence firms. We also face competition from large enterprise application software vendors, independent systems integrators, consulting firms and in-house IT departments. Because barriers to entry into the software market are relatively low, we expect to face additional competition in the future.

     Many of our competitors can devote significantly more resources to the development, promotion and sale of products than we can, and many of them can respond to new technologies and changes in customer preferences more quickly than we can. Further, other companies with resources greater than ours may attempt to gain market share in the customer analytics and business planning markets by acquiring or forming strategic alliances with our competitors.

WE MAY NOT SUSTAIN PROFITABILITY OR BE ABLE TO FULFILL ANY FUTURE CAPITAL NEEDS.

     We could incur operating losses and negative cash flows in the future because of costs and expenses relating to brand development, marketing and other promotional activities, continued development of our information technology infrastructure, expansion of product offerings and development of relationships with other businesses. There can be no assurance that we will continue to achieve a profitable level of operations in the future.

     We believe, based upon our current business plan, that our current cash, cash equivalents and short-term investments and funds expected to be generated from operations should be sufficient to fund our operations as planned for at least the next twelve months. However, we may need additional funds sooner than anticipated if our performance deviates significantly from our current business plan or if there are significant changes in competitive or other market factors. If we elect to raise additional operating funds, such funds, whether from equity or debt financing or other sources, may not be available, or available on terms acceptable to us.

IF WE DO NOT INTRODUCE NEW PRODUCTS AND SERVICES IN A TIMELY MANNER, OUR PRODUCTS AND SERVICES WILL BECOME OBSOLETE, AND OUR OPERATING RESULTS WILL SUFFER.

     The BPM and BI markets, including interactive planning, budgeting and analytics are characterized by rapid technological change, frequent new product enhancements, uncertain product life cycles, changes in customer demands and evolving industry standards. Our products could be rendered obsolete if products based on new technologies are introduced or new industry standards emerge.

     Enterprise computing environments are inherently complex. As a result, we cannot accurately estimate the life cycles of our products. New products and product enhancements can require long development and testing periods, which requires us to hire and retain technically competent personnel. Significant delays in new product releases or significant problems in installing or implementing new products could seriously damage our business. We have, on occasion, experienced delays in the scheduled introduction of new and enhanced products and may experience similar delays in the future.

     Our future success depends upon our ability to enhance existing products, develop and introduce new products, satisfy customer requirements and achieve market acceptance. We may not successfully identify new product opportunities and develop and bring new products to market in a timely and cost-effective manner.

ATTEMPTS TO EXPAND BY MEANS OF BUSINESS COMBINATIONS AND ACQUISITIONS MAY NOT BE SUCCESSFUL AND MAY DISRUPT OUR OPERATIONS OR HARM OUR REVENUES.

     We have in the past, and may in the future, buy businesses, products or technologies. In the event of any future purchases, we will face additional financial and operational risks, including:

• difficulty in assimilating the operations, technology and personnel of acquired companies;

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• disruption in our business because of the allocation of resources to consummate these transactions and the diversion of management’s attention from our core business;

• difficulty in retaining key technical and managerial personnel from acquired companies;

• dilution of our stockholders, if we issue equity to fund these transactions;

• assumption of increased expenses and liabilities;

• our relationships with existing employees, customers and business partners may be weakened or terminated as a result of these transactions; and

• additional ongoing expenses associated with write-downs of goodwill and other purchased intangible assets.

WE RELY HEAVILY ON KEY PERSONNEL.

     We rely heavily on key personnel throughout the organization. The loss of any of our members of management, or any of our staff of sales and development professionals, could prevent us from successfully executing our business strategies. Any such loss of technical knowledge and industry expertise could negatively impact our success. Moreover, the loss of any critical employees or a group thereof, particularly to a competing organization, could cause us to lose market share, and the Applix brand could be diminished.

WE MAY NOT BE ABLE TO MEET THE OPERATIONAL AND FINANCIAL CHALLENGES THAT WE ENCOUNTER IN OUR INTERNATIONAL OPERATIONS.

     Due to the Company’s significant international operations, we face a number of additional challenges associated with the conduct of business overseas. For example:

• we may have difficulty managing and administering a globally-dispersed business;

• fluctuations in exchange rates may negatively affect our operating results;

• we may not be able to repatriate the earnings of our foreign operations;

• we have to comply with a wide variety of foreign laws;

• we may not be able to adequately protect our trademarks overseas due to the uncertainty of laws and enforcement in certain countries relating to the protection of intellectual property rights;

• reductions in business activity during the summer months in Europe and certain other parts of the world could negatively impact the operating results of our foreign operations;

• export controls could prevent us from shipping our products into and from some markets;

• multiple and possibly overlapping tax structures could significantly reduce the financial performance of our foreign operations;

• changes in import/export duties and quotas could affect the competitive pricing of our products and services and reduce our market share in some countries; and

• economic or political instability in some international markets could result in the forfeiture of some foreign assets and the loss of sums spent developing and marketing those assets.

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BECAUSE WE DEPEND IN PART ON THIRD-PARTY SYSTEMS INTEGRATORS TO PROMOTE, SELL AND IMPLEMENT OUR PRODUCTS, OUR OPERATING RESULTS WILL LIKELY SUFFER IF WE DO NOT DEVELOP AND MAINTAIN THESE RELATIONSHIPS.

     We rely in part on systems integrators to promote, sell and implement our solutions. If we fail to maintain and develop relationships with systems integrators, our operating results will likely suffer. In addition, if we are unable to rely on systems integrators to install and implement our products, we will likely have to provide these services ourselves, resulting in increased costs. As a result, our results of operations may be harmed. In addition, systems integrators may develop, market or recommend products that compete with our products. Further, if these systems integrators fail to implement our products successfully, our reputation may be harmed.

BECAUSE THE SALES CYCLE FOR OUR PRODUCTS CAN BE LENGTHY, IT IS DIFFICULT FOR US TO PREDICT WHEN OR WHETHER A SALE WILL BE MADE.

     The timing of our revenue is difficult to predict in large part due to the length and variability of the sales cycle for our products. Companies often view the purchase of our products as a significant and strategic decision. As a result, companies tend to take significant time and effort evaluating our products. The amount of time and effort depends in part on the size and the complexity of the deployment. This evaluation process frequently results in a lengthy sales cycle, typically ranging from three to six months. During this time we may incur substantial sales and marketing expenses and expend significant management efforts. We do not recoup these investments if the prospective customer does not ultimately license our product.

OUR BUSINESS WILL BE HARMED IF WE ARE UNABLE TO PROTECT OUR TRADEMARKS FROM MISUSE BY THIRD PARTIES.

     Our collection of trademarks is important to our business. The protective steps we take or have taken may be inadequate to deter misappropriation of our trademark rights. We have filed applications for registration of some of our trademarks in the United States. Effective trademark protection may not be available in every country in which we offer or intend to offer our products and services. Failure to protect our trademark rights adequately could damage our brand identity and impair our ability to compete effectively. Furthermore, defending or enforcing our trademark rights could result in the expenditure of significant financial and managerial resources.

OUR PRODUCTS MAY CONTAIN DEFECTS THAT MAY BE COSTLY TO CORRECT, DELAY MARKET ACCEPTANCE OF OUR PRODUCTS AND EXPOSE US TO LITIGATION.

     Despite testing by Applix and our customers, errors may be found in our products after commencement of commercial shipments. If errors are discovered, we may have to make significant expenditures of capital to eliminate them and yet may not be able to successfully correct them in a timely manner or at all. Errors and failures in our products could result in a loss of, or delay in, market acceptance of our products and could damage our reputation and our ability to convince commercial users of the benefits of our products.

     In addition, failures in our products could cause system failures for our customers who may assert warranty and other claims for substantial damages against us. Although our license agreements with our customers typically contain provisions designed to limit our exposure to potential product liability claims, it is possible that these provisions may not be effective or enforceable under the laws of some jurisdictions. Our insurance policies may not adequately limit our exposure to this type of claim. These claims, even if unsuccessful, could be costly and time-consuming to defend.

OUR FINANCIAL RESULTS MAY BE ADVERSELY IMPACTED BY HIGHER THAN EXPECTED TAX RATES OR EXPOSURE TO ADDITIONAL INCOME TAX LIABILITIES.

     As a global company, our effective tax rate is highly dependent upon the geographic composition of worldwide earnings and tax regulations governing each region. Applix is subject to income taxes in both the U.S. and various foreign jurisdictions, and significant judgment is required to determine worldwide tax liabilities. Applix’s effective

22

tax rate could be adversely affected by changes in the distribution of earnings between countries with differing statutory tax rates, in the valuation of deferred tax assets, and in tax laws, which could adversely affect profitability. Further, the carrying value of deferred tax assets is dependent on Applix’s ability to generate future taxable income. In addition, the amount of income taxes paid is subject to ongoing audits in various jurisdictions, and a material assessment by a governing tax authority could affect profitability.

ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

     At the Company’s Annual Meeting of Stockholders held on June 7, 2007, the following proposals were adopted by the votes specified below:

1) Election of two Class I Directors for a term of three years:

	FOR		WITHHELD
Bradley D. Fire		14,107,442		350,541
John Loewenberg		14,106,692		351,291

Each of the following directors who were not up for reelection at the 2007 Annual Meeting of Stockholders continue to serve as directors since the 2007 Annual Meeting of Stockholders:

Peter Gyenes, Alain J. Hanover, Charles F. Kane and David C. Mahoney.

2) Amend the Company’s Restated Articles of Organization, as amended, to increase the number of authorized shares of common stock from 30,000,000 shares to 50,000,000 shares:

FOR	AGAINST	ABSTAIN	NON-VOTES
13,847,427	591,661	18,895	0

3) Amend the Company’s 2003 Director Equity Plan to increase the number of shares of common stock authorized for issuance thereunder from 300,000 shares to 600,000 shares:

FOR	AGAINST	ABSTAIN	NON-VOTES
6,628,184	3,448,534	43,670	4,337,505

4) Ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2007:

FOR	AGAINST	ABSTAIN	NON-VOTES
14,255,014	138,736	64,233	0

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit
Number	Description
3.1	Restated Articles of Organization, as amended.
10.1	Applix, Inc. 2003 Director Equity Plan, as amended.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities

23

Exhibit
Number	Description
	Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	APPLIX, INC.
Date: August 9, 2007	/s/ Milton A. Alpern
	Milton A. Alpern
	Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit
Number	Description
3.1	Restated Articles of Organization, as amended.
10.1	Applix, Inc. 2003 Director Equity Plan, as amended.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

26

EX-3.1

MICHAEL JOSEPH CONNOLLY Secretary of State ONE ASHBURTON PLACE, BOSTON, MASS: 02108	FEDERAL IDENTIFICATION
	NO.	04-2781676
		04-2671676

RESTATED ARTICLES OF ORGANIZATION

General Laws, Chapter 156B, Section 74

     This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the restated articles of organization. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the Commonwealth of Massachusetts.

We,    Patrick J. Scannell, Jr.
            Patrick J. Rondeau , President/Vice President, and
        , Clerk/Assistant Clerk of

Applix, Inc. (Name of Corporation)

located at 112 Turnpike Road, Westboro, MA 01581 do hereby certify that the following restatement of the articles of organization of the corporation was duly adopted at a meeting held on November 4,1994, by vote of
1,108,768 shares of Common Stock out of 1,596,973 shares outstanding.
582,002 shares of Series A Convertible Preferred out of 589,288 shares outstanding,
1,637,894 shares of Series B Convertible Preferred out of, 1,656,842 shares outstanding,
1,577,497 shares of Series C Convertible Preferred out of 1,764,700 shares outstanding,
and 937,794 shares, of Series D Convertible Preferred out of 996,879 shares outstanding.

(Class of Stock)

being at least two-thirds of each class of stock outstanding and entitled to vote and of each class or series of stock adversely affected thereby:-

1. The name by which the corporation shall be known is: -

Applix, Inc.

2. The purposes for which the corporation is formed are as follows: -

     (a) To engage in the business of designing, developing, manufacturing, marketing, selling and licensing computers and computer software and components and subassemblies thereof.

     (b) To carry on any business or other activity which may lawfully be carried on by a corporation organized under the Business Corporation Law of the Commonwealth of Massachusetts, whether or not related to those referred to in the preceding paragraph.

Note: If the space provided under any article or item on this form is insufficient, additions shall be set forth on separate 8¹/2 x 11 sheets of paper leaving a left hand margin of at least 1 inch for binding. Additions to more than one article may be continued on a single sheet so long as each article requiring each such addition is clearly indicated.

3. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue is as follows:

	WITHOUT PAR VALUE	WITH PAR VALUE
CLASS OF STOCK	NUMBER OF SHARES	NUMBER OF SHARES		PAR VALUE
Preferred			1,000,000		.01
Common			15,000,000		.0025

*4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, classifications, special or relative rights or privileges as to each class thereof and any series now established:

SEE ATTACHMENT 4A

*5. The restrictions, if any, imposed by the articles of organization upon the transfer of shares of stock of any class are as follows:

NONE

*6. Other lawful provisions, if any for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining, or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders:

SEE ATTACHMENT 6A

* If there are no such provisions, state “None”.

ATTACHMENT 4A

Preferred Stock.

     Up to 1,000,000 shares of Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of Applix, Inc. (“the Company”) as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Company may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for purposes of voting by classes unless expressly provided.

     Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemptions privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the fullest extent now or hereafter permitted by Chapter 156B of the Massachusetts General Laws. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. No vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of the Articles of Organization, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Company.

ATTACHMENT 6A

     (a) The directors may make, amend, or repeal the by-laws in whole or in part, except with respect to any provision of such by-laws which by-law or these Articles or the by-laws requires action by the stockholders.

     (b) Meetings of the stockholders of the Company may be held anywhere in the United States.

     (c) The Company shall have the power to be a partner in any business enterprise which the Company would have the power to conduct by itself.

     (d) Except as provided in Item 4 of these Articles of Organization (and the Attachment 4A referred therein), the Company, by vote of a majority of the stock outstanding and entitled to vote thereon (or if there are two or more classes of stock entitled to vote as separate classes, then by vote of a majority of each such class of stock outstanding), may (i) authorize any amendment to its Articles of Organization pursuant to Section 71 of Chapter 156B of the Massachusetts General Laws, as amended from time to time, (ii) authorize the sale, lease or exchange of all or substantially all of its property and assets, including its goodwill, pursuant to Section 75 of Chapter 156B of the Massachusetts General Laws, as amended from time to time, and (iii) approve an agreement of merger or consolidation pursuant to Section 78 of Chapter 156B of the Massachusetts General Laws, as amended from time to time.

     (e) Except to the extent that Chapter 156B of the Massachusetts General Laws prohibits such elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this

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provision shall apply to or have any effect on the liability or alleged liability of any director of the Company for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

     (f) Chapter 110F of the Massachusetts General Laws, as it may be amended from time to time, shall apply to the Company from and after such time as the Company’s common stock shall be registered under Section 12 of the Securities and Exchange Act of 1934.

     (g) INDEMNIFICATION

     1. Actions, Suits and Proceedings. The Company shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of the Company, or is or was serving, or has agreed to serve, at the request of the Company, as a director or officer of, or in a similar capacity with, another organization or in any capacity with respect to any employee benefit plan of the Company (all such persons being referred to hereafter as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments and fines incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, unless the Indemnitee shall be finally adjudicated in such action, suit or proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the Company or, to the extent such matter relates to service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan. Notwithstanding anything to the contrary in this Article, except as set forth in Section 6 below, the Company shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the Company. Notwithstanding anything to the contrary in this Article, the Company shall not indemnify an Indemnites to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Company makes any indemnification payments to an Indemnitee and the Indemnitee is subsequently reimbursed from the proceeds of insurance,

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such Indemnitee shall promptly refund such indemnification payments to the Company to the extent of such insurance reimbursement.

     2. Settlements. The right to indemnification conferred in this Article shall include the right to be paid by the Company for amounts paid in settlement of any such action, suit or proceeding and any appeal therefrom, and all expenses (including attorneys’ fees) incurred in connection with such settlement, pursuant to a consent decree or otherwise, unless and to the extent it is determined pursuant to Section 5 below that the Indemnitee did not act in good faith in the reasonable belief that his action was in the best interests of the Company or, to the extent such matter relates to service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan.

     3. Notification and Defense of Claim. As a condition precedent to his right to be indemnified, the Indemnitee must notify the Company in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Company is so notified, the Company will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the Company to the Indemnitee of its election so to assume such defense, the Company shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 3. The Indemnitee shall have the right to employ his own counsel in connection with such claim, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Company and the Indemnitee in the conduct of the defense of such action or (iii) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the Company, except as otherwise expressly provided by this

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Article. The Company shall not be entitled, without the consent of the Indemnitee, to assume the defense of any claim brought by or in the right of the Company or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above.

     4. Advance of Expenses. Subject to the provisions of Section 5 below, in the event that the Company does not assume the defense pursuant to Section 3 of this Article of any action, suit, proceeding or investigation of which the Company receives notice under this Article, any expenses (including attorneys’ fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the Company in advance of the final disposition of such matter, provided, however, that the payment of such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Company as authorized in this Article. Such undertaking may be accepted without reference to the financial ability of the Indemnitee to make such repayment.

     5. Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2 or 4 of this Article, the Indemnitee shall submit to the Company a written request, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall he made promptly, and in any event within 60 days after receipt by the Company of the written request of the Indemnitee, unless the Company determines within such 60-day period that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of a quorum of the directors of the Company, (b) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (c) independent legal counsel (who

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may be regular legal counsel to the Company), or (d) a court of competent jurisdiction.

     6. Remedies. The right to indemnification or advances as granted by this Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the Company denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in Section 5. Unless otherwise required by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the Company. Neither the failure of the Company to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company pursuant to Section 5 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee’s expenses (including attorneys’ fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Company.

     7. Subsequent Amendment. No amendment, termination or repeal of this Article or of the relevant provisions of Chapter 156B of the Massachusetts General Laws or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.

     8. Other Rights. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the Company, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to

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prohibit, and the Company is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the Company may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Company or other persons serving the Company and such rights may be equivalent to, or greater or less than, those set forth in this Article.

     9. Partial Indemnification. If an Indemnitee is entitled under any provision of this Article to indemnification by the Company for some or a portion of the expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys’ fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled.

     10. Insurance. The Company may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another organization or employee benefit plan against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under Chapter 156B of the Massachusetts General Laws.

     11. Merger or Consolidation. If the Company is merged into or consolidated with another Company and the Company is not the surviving Company, the surviving Company shall assume the obligations of the Company under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation.

     12. Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys’ fees), judgments, fines and amounts

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paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Company, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.

     13. Subsequent Legislation. If the Massachusetts General Laws are amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the Company shall indemnify such persons to the fullest extent permitted by the Massachusetts General Laws, as so amended.

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     “We further certify that the foregoing restated articles of organization effect no amendments to the articles of organization of the corporation as heretofore amended, except amendments to the following articles 3 4 + 6

(“If there are no such amendments, state “None”.)

Briefly describe amendments in space below:

     The previous Attachment 4A is deleted in its entirety and replaced by the attached Attachment 4A.

     IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this 15^th day of December, in the year 1994.

/s/ Patrick J. Scannell, Jr.	(Illegible)/Vice President
Patrick J. Scannell, Jr.
/s/ Patrick J. Rondeau	(Illegible) Assistant Clerk
Patrick J. Rondeau

 

THE COMMONWEALTH OF MASSACHUSETTS

RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter (Illegible), Section 74)

     I hereby approve the within restated articles of organization and, the filing fee in the amount of $500.00 having been paid, said articles are deemed to have been filed with me this 15^th day of DECEMBER, 1994.

 

MICHAEL JOSEPH CONNOLLY  

Secretary of State 

 

TO BE FILLED IN BY CORPORATION

PHOTO COPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT

TO:

Pntrick J. Rondeau, Esq.
HALE AND DORR
60 STATE STREET
BOSTON, MA J2109

Telephone (617) 526-6000

Copy Mailed

FEDERAL IDENTIFICATION

NO. 04-2781676
         042671676

William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512

ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)

     We, Patrick J. Scannell, Jr. Vice President, and Patrick J. Rondeau clerk/ of Applix, Inc.

(Exact name of corporation)

located at 112 Turnpike Road, Westboro, Massachusetts 01581

(Street address of corporation in Massachusetts)

certify that these Articles of Amendment affecting articles numbered:

3

(Number those articles 1,2,3, 4, 5 and/or 6 being amended)

of the Articles of Organization were duly adopted at a meeting held on May 10, 1996, by vote of: 6,876,197 shares of Common Stock of 9,507,376 shares outstanding.

(type, class & series, if any)

                                shares of                                           of               shares outstanding, and

(type, class & series, if any)

                                shares of                                           of                shares outstanding,

(type, class & series, if any)

1 being at least a majority of each type, class or series outstanding and entitled to vote thereon:

*	Delete the inapplicable words.
**	Delete the inapplicable clause.
1	For amendments adopted pursuant in Chapter 156B, Section 70
2	For amendment adopted purusuant in Chapter 156B, Section 71.

Note: If the space provided under any article or item on this form is insufficient additions shall be set forth on one ride only of seperate 8 1/2 x 11 sheets of paper with a left margin of at least 1 such. Additions to more than one article may be made on a single seet so long as such article requiring each addition is clearly indicated.

(Illegible) of shares and the par value (if any) of any type, class or scries of stock which the corporation is (Illegible) the following:

(Illegible) authorized is:

WITHOUT PAR VALUE STOCKS		WITH PAR VALUE STOCKS
TYPE	NUMBER OF SHARES	TYPE	NUMBER OF SHARES		PAR VALUE
Common:		Common:		15,000,000	$	.0025
Preferred:		Preferred:		1,000,000	$	.01

Change the total authorized to:

WITHOUT PAR VALUE STOCKS		WITH PAR VALUE STOCKS
TYPE	NUMBER OF SHARES	TYPE	NUMBER OF SHARES		PAR VALUE
Common:		Common:		30,000,000	$	.0025
Preferred:		Preferred:		1,000,000	$	.01

The foregoing amendment(s) will become effective when these Articles of Amendment are filed in accordance with General Laws, Chapter 156B, Section 6 unless these articles specify in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date.

Later effective date:                                         .

SIGNED UNDER THE PENALTIES OF PERJURY, this 7^th day of June, 1996.

/s/ Patrick J. Scannell. Jr.	*(Illegbile)/Vice President,
Patrick J. Scannell, Jr.
/s/ Patrick J. Rondeau	*Clerk /(Illegible)
Patrick J. Rondeau

* Delete the inapplicable words.

THE COMMONWEALTH OF MASSACHUSETTS

ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)

I hereby approve the within Articles of Amendment and, the filing fee in the amount of $15,000 having been paid, said articles are deemed to have been filed with me this 13th day of June 1996.

Effective date:                                         

WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth

TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:

Kathleen F. Burke, Esq.

Hale and Dorr

60 State Street, Boston, MA 02109

D

PC

The Commonwealth of Massachusetts

William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512

FORM MUST BE TYPED Articles of Amendment FORM MUST BE TYPED

(General Laws Chapter 156D, Section 10.06; 950 CMR 113.34)

(1) Exact name of corporation:  Applix, Inc.                                                                                                          

(2) Registered office address:   289 Turnpike Road, Westborough, MA 01581-2831                                           

(number, street, city or town, state, zip code)

(3) These articles of amendment affect article(s):   Article III                                                                               

(specify the number(s) of article(s) being amended (I-VI))

(4) Date adopted:  June 7, 2007                                                                                                                              

(month, day, year)

(5) Approved by:

(check appropriate box)
o	the incorporators.
o	the board of directors without shareholder approval and shareholder approval was not required.
þ	the board of directors and the shareholders in the manner required by law and the articles of organization.

(6) State the article number and the text of the amendment. Unless contained in the text of the amendment, state the provisions for implementing the exchange, reclassification or cancellation of issued shares.

P.C.

c156ds1006950c11334 01/13/05

To change the number of shares and the par value, * if any, of any type, or to designate a class or series, of stock, or change a designation of class or series of stock, which the corporation is authorized to issue, complete the following:

Total authorized prior to amendment:

WITHOUT PAR VALUE			WITH PAR VALUE
TYPE	NUMBER OF SHARES	TYPE	NUMBER OF SHARES	PAR VALUE
		Common	30,000,000	$0.00250
		Preferred	1,000,000	$0.01000

Total authorized after amendment:

WITHOUT PAR VALUE			WITH PAR VALUE
TYPE	NUMBER OF SHARES	TYPE	NUMBER OF SHARES	PAR VALUE
		Common	50,000,000	$0.00250
		Preferred	1,000,000	$0.01000

(7) The amendment shall be effective at the time and on the date approved by the Division, unless a later effective date not more than 90 days from the date and time of filing is specified:  upon filing                                                                                                                   

*G.L. Chapter 156D eliminates the concept of par value, however a corporation may specify par value in Article III. See G.L. Chapter 156D, Section 6.21, and the comments relative thereto.

Signed by:    /s/ Milton A. Alpern                                                                                                                                                                        ,

(signature of authorized individual)

o Chairman of the board of directors,

o President,

þ Other officer,

o Court-appointed fiduciary,

on this     7             day of June                                                         , 2007                               .

COMMONWEALTH OF MASSACHUSETTS

William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512

Articles of Amendment
(General Laws Chapter 156D, Section 10.06; 950 CMR 113.34)

I hereby certify that upon examination of these articles of amendment, it appears that the provisions of the General Laws relative thereto have been complied with, and the filing fee in the amount of $_______ having been paid, said articles are deemed to have been filed with me this ___________ day of ______________, 20______ , at ________a.m./p.m.

                           time

Effective date:____________________________________________________________________________________

(must be within 90 days of date submitted)

WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth

Filing fee: Minimum filing fee $100 per article amended, stock increases $100 per 100,000 shares, plus $100 for each additional 100,000 shares or any fraction thereof.

                              
Examiner

                              
Name approval

                              
C

                              
M

TO BE FILLED IN BY CORPORATION
Contact Information:

Sheila M. Morabito, Paralegal                                                                                                                        

Wilmer Cutler Pickering Hale and Dorr LLP                                                                                                 

60 State Street, Boston, MA 02109                                                                                                                

Telephone: (617) 526-5134                                                                                                                            

Email: sheila.morabito@wilmerhale.com                                                                                                      

Upon filing, a copy of this filing will be available at www.sec.state.ma.us/cor. If the document is rejected, a copy of the rejection sheet and rejected document will be available in the rejected queue.

EX-10.1

EXHIBIT 10.1

APPLIX, INC.

2003 DIRECTOR EQUITY PLAN

1. Purpose.

The purpose of this 2003 Director Equity Plan (the “Plan”) of Applix, Inc. (the “Company”) is to compensate non-employee directors for their services and participation in the meetings of the Board of Directors and any committees on which such director served in the prior year, to encourage ownership in the Company by non-employee directors of the Company whose services are considered essential to the Company’s future progress and to provide them with a further incentive to remain as directors of the Company.

2. Administration.

The Board of Directors shall supervise and administer the Plan. All questions concerning interpretation of the Plan or any stock awards or options granted under it shall be resolved by the Board of Directors and such resolution shall be final and binding upon all persons having an interest in the Plan. The Board of Directors may, to the full extent permitted by or consistent with applicable laws or regulations, delegate any or all of its powers under the Plan to a committee appointed by the Board of Directors, and if a committee is so appointed, all references to the Board of Directors in the Plan shall mean and relate to such committee.

3. Participation in the Plan; Eligibility.

Directors of the Company who are not employees of the Company or any subsidiary of the Company (“non-employee directors”) shall be eligible to receive stock awards and options under the Plan, provided he or she attended (including by telephone or teleconference) at least 75% of the meetings of the Board of Directors and any committees on which he or she served in the preceding year, except that such attendance requirement shall not apply to Election Grants (as defined below).

4. Stock Subject to the Plan.

(a) The maximum number of shares of the Company’s Common Stock, par value $.0025 per share (“Common Stock”), which may be issued under the Plan shall be 600,000 shares, subject to adjustment as provided in Section 9.

(b) If any outstanding option under the Plan for any reason expires or is terminated without having been exercised in full, the shares covered by the unexercised portion of such option shall again become available for issuance pursuant to the Plan.

(c) Shares of Common Stock issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

5. Stock Options.

All options granted under the Plan shall be non-statutory options not entitled to special tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Each option granted under the Plan shall be evidenced by a written agreement in such form as the Company shall from time to time approve, which agreements shall comply with and be subject to the following terms and conditions:

(a) Option Grant Dates. Options shall automatically be granted to the non-employee directors as follows:

(i) each person who first becomes a non-employee director on or following the date that the Plan is approved by the stockholders of the Company shall be granted an option to purchase 10,000 shares of Common Stock on the date of his or her election to the Board of Directors (an “Election Grant”); and

(ii) each non-employee director shall be granted an option to purchase 10,000 shares of Common Stock on January 1 of each year, beginning January 1, 2004.

Each date of grant of an option pursuant to this Section 5(a) is hereinafter referred to as an “Option Grant Date.”

(b) Option Exercise Price. The option exercise price per share for each option granted under the Plan shall equal (i) the closing price on any national securities exchange on which the Common Stock is listed, (ii) the closing price of the Common Stock on the Nasdaq National Market or (iii) the average of the closing bid and asked prices in the over-the-counter market, whichever is applicable, as published in The Wall Street Journal, on the Option Grant Date. If no sales of Common Stock were made on the Option Grant Date, the price of the Common Stock for purposes of clauses (i) and (ii) above shall be the reported price for the next preceding day on which sales were made.

(c) Transferability of Options. Except as the Board may otherwise determine or provide in an option granted under the Plan, any option granted under the Plan to an optionee shall not be transferable by the optionee other than by will or the laws of descent and distribution, and shall be exercisable during the optionee’s lifetime only by the optionee or the optionee’s guardian or legal representative. References to an optionee, to the extent relevant in the context, shall include references to authorized transferees.

(d) Vesting Period.

(i) General. Each option granted under the Plan shall, in the case of an Election Grant, become exercisable in two equal annual installments on the first and second anniversaries of the Option Grant Date, and, in the case of all other option grants, become exercisable in full on the first

anniversary of the Option Grant Date; in each case provided that the optionee is serving as a director of the Company on such anniversary.

(ii) Acceleration Upon a Change In Control. Notwithstanding the foregoing, each outstanding option granted under the Plan shall immediately become exercisable in full upon the occurrence of a Change in Control (as defined in Section 10) with respect to the Company.

(iii) Right to Receive Restricted Stock. Notwithstanding the provisions of Section 5(d)(i) above, the Board shall have the authority to grant options pursuant to Section 5(a) above which are immediately exercisable subject to the Company’s right to repurchase any unvested shares of stock acquired by the optionee on exercise of an option in the event such optionee’s service as a director terminates for any reason.

(iv) Termination. Each option shall terminate, and may no longer be exercised, on the earlier of (i) the date seven years after the Option Grant Date of such option or (ii) the date 90 days after the optionee ceases to serve as a director of the Company.

(e) Exercise Procedure. An option may be exercised only by written notice to the Company at its principal office accompanied by (i) payment in cash or by certified or bank check of the full consideration for the shares as to which they are exercised, (ii) delivery of outstanding shares of Common Stock (provided such shares of Common Stock, if acquired directly from the Company, were owned by the exercising non-employee director, and not subject to repurchase by the Company, for at least six months prior to such delivery) having a fair market value on the last business day preceding the date of exercise equal to the option exercise price, or (iii) an irrevocable undertaking by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price or delivery of irrevocable instructions to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price.

(f) Exercise by Representative Following Death of Director. An optionee, by written notice to the Company, may designate one or more persons (and from time to time change such designation), including his or her legal representative, who, by reason of the optionee’s death, shall acquire the right to exercise all or a portion of the option. If the person or persons so designated wish to exercise any portion of the option, they must do so within the term of the option as provided herein. Any exercise by a representative shall be subject to the provisions of the Plan.

6. Stock Awards.

(a) Date and Amount of Stock Grant. Each non-employee director shall receive a grant of Common Stock on (1) the date that the Plan is first approved by the stockholders of the Company and (2) thereafter, on January 1 of each year, beginning January 1, 2004, as follows:

(i) $5,000 worth of Common Stock to each non-employee director serving as a director on such date;

(ii) an additional $10,000 worth of Common Stock to the non-employee director serving as Chairman of the Board of Directors on such date;

(iii) an additional $2,500 worth of Common Stock to each non-employee director serving on the Audit Committee on such date;

(iv) an additional $5,000 worth of Common Stock to the non-employee director serving as the Chairman of the Audit Committee on such date;

(v) an additional $2,500 worth of Common Stock to each non-employee director serving on the Compensation Committee on such date;

(vi) an additional $2,500 worth of Common Stock to the non-employee director serving as the Chairman of the Compensation Committee on such date;

(vii) an additional $2,500 worth of Common Stock to each non-employee director serving on the Nominating and Corporate Governance Committee on such date; and

(viii) an additional $2,500 worth of Common Stock to each non-employee director serving on the Strategic Planning Committee on such date.

(b) Valuation of Stock Granted. The calculation of the number of shares of Common Stock to be granted pursuant to Section 6(a) above shall be based upon the average of (i) the closing price on any national securities exchange on which the Common Stock is listed, (ii) the closing price of the Common Stock on the Nasdaq National Market or (iii) the average of the closing bid and asked prices in the over-the-counter market, whichever is applicable, as published in The Wall Street Journal, on the five consecutive trading days ending two days prior to the Option Grant Date.

7. Withholding. Each non-employee director shall pay to the Company, or make provision satisfactory to the Board of Directors for payment of, any taxes required by law to be withheld in connection with stock awards or options to such non-employee director no later than the date of the event creating the tax liability. Except as the Board of Directors may otherwise provide, so long as the Common Stock is registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), non-employee directors may satisfy such tax obligations in whole or in part by delivery of shares of Common Stock, including shares issued pursuant to the stock award or option creating the tax obligation, valued at their fair market value; provided, however, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). The Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a non-employee director.

8. Limitation of Rights.

(a) No Right to Continue as a Director. Neither the Plan, nor the granting of an option or stock award hereunder, nor any other action taken pursuant to the Plan, shall constitute or be evidence

of any agreement or understanding, express or implied, that the Company will retain the optionee as a director for any period of time.

(b) No Stockholders’ Rights for Options. An optionee shall have no rights as a stockholder with respect to the shares covered by his or her option until the date of the issuance to him or her of a stock certificate therefor, and no adjustment will be made for dividends or other rights (except as provided in Section 9) for which the record date is prior to the date such certificate is issued. Notwithstanding the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to stock options are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

(c) Compliance with Securities Laws. Each stock award and option shall be subject to the requirement that if, at any time, counsel to the Company shall determine that the listing, registration or qualification of the shares subject to such stock award or option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of shares pursuant to such stock award or option, the such stock award may not be issued, and such option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification, or to satisfy such condition.

9. Adjustment Provisions for Mergers, Recapitalizations and Related Transactions.

If, through or as a result of any merger, consolidation, reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar transaction, (i) the outstanding shares of Common Stock are exchanged for a different number or kind of securities of the Company or of another entity, or (ii) additional shares or new or different shares or other securities of the Company or of another entity are distributed with respect to such shares of Common Stock, the Board of Directors shall make an appropriate and proportionate adjustment in (w) the maximum number and kind of shares reserved for issuance under the Plan, (x) the number and kind of shares or other securities subject to then outstanding options under the Plan, (y) the number and kind of shares or other securities issuable pursuant to stock options to be granted pursuant to Section 5(a) hereof, and (z) the price for each share subject to any then outstanding options under the Plan (without changing the aggregate purchase price for such options), to the end that each option shall be exercisable, for the same aggregate exercise price, for such securities as such optionholder would have held immediately following such event if he had exercised such option immediately prior to such event. No fractional shares will be issued under the Plan on account of any such adjustments.

10. Definition of “Change in Control”.

“Change in Control” means an event or occurrence set forth in any one or more of subsections (a) through (d) below (including an event or occurrence that constitutes a Change in Control under one of such subsections but is specifically exempted from another such subsection):

(a) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial ownership of any capital stock of the Company after the date of adoption of this Plan by the Board of Directors if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (x) and (y) of subsection (c) of this Section 10; or

(b) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (x) who was a member of the Board on the date of the initial adoption of this Plan by the Board or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(c) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company in one or a series of transactions (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the

then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, and (y) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

(d) approval by the stockholders of a complete liquidation or dissolution of the Company.

11. Termination and Amendment of the Plan.

The Board of Directors may suspend or terminate the Plan or amend it in any respect whatsoever.

12. Notice.

Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the Treasurer of the Company and shall become effective when it is received.

13. Governing Law.

The Plan and all determinations made and actions taken pursuant hereto shall be governed by the internal laws of the Commonwealth of Massachusetts (without regard to any applicable conflicts of laws or principles).

14. Effective Date.

The Plan shall become effective on the date it is adopted by the stockholders of the Company.

Adopted by the Board of Directors on March 25, 2003. Approved by the stockholders on June 12, 2003. Amendment adopted by the Board of Directors on February 7, 2007. Amendment approved by the stockholders on June 7, 2007.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, David C. Mahoney, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Applix, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ David C. Mahoney
Date: August 9, 2007	David C. Mahoney
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Milton A. Alpern, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Applix, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Milton A. Alpern
Date: August 9, 2007	Milton A. Alpern
	Chief Financial Officer and Treasurer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q of Applix, Inc. (the “Company”) for the period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David C. Mahoney, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

     (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ David C. Mahoney
Date: August 9, 2007	David C. Mahoney
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q of Applix, Inc. (the “Company”) for the period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Milton A. Alpern, Chief Financial Officer and Treasurer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

     (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Milton A. Alpern
Date: August 9, 2007	Milton A. Alpern
	Chief Financial Officer and Treasurer