Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
94-2790442
(I.R.S.
Employer
Identification
No.)
|
275
Shoreline Drive, Suite 500
Redwood Shores, California
(Address
of principal executive offices)
|
94065
(Zip
Code)
|
Page
|
|
PART
I
|
3
|
Item
1. Business
|
3
|
Item
1A. Risk Factors
|
8
|
Item
1B. Unresolved Staff Comments
|
10
|
Item
2. Properties
|
10
|
Item
3. Legal Proceedings
|
10
|
Item
4. Submission of Matters to a Vote of Security Holders
|
10
|
PART
II
|
10
|
Item
5. Market For Registrant's Common Equity and Related Stockholder
Matters
|
10
|
Item
6. Selected Financial Data
|
12
|
Item
7. Management's Discussion and Analysis of Financial
Condition
and
Results of Operations
|
12
|
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
|
25
|
Item
8. Consolidated Financial Statements and Supplementary
Data
|
26
|
Item
9. Changes in and Disagreements with Accountants on
Accounting
and
Financial Disclosures
|
26
|
Item
9A. Controls and Procedures
|
26
|
Item
9B. Other Information
|
27
|
PART
III
|
28
|
Item
10. Directors and Executive Officers of the Registrant
|
28
|
Item
11. Executive Compensation
|
30
|
Item
12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
38
|
Item
13. Certain Relationships and Related Transactions
|
40
|
Item
14. Principal Accountant Fees and Services
|
41
|
PART
IV
|
43
|
Item
15. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
|
43
|
SignatureOne
|
SignatureOne
Profile Server is the server compliment to CIC's Sign-it software, which
enables the real-time capture of electronic and digital signatures in
various application environments. All user enrollment, authentication and
transaction tracking in SignatureOne are based on data from the Sign-it
client software.
|
||
iSign
|
A
suite of application development tools for electronic signatures,
biometric signature verification and cryptography for custom developed
applications and web based development.
|
||
Sign-it
|
Multi-modal
electronic signature software for common applications including; Microsoft
Word, Adobe Acrobat, AutoDesk AutoCAD, web based applications using HTML,
XML, & XHTML, and custom applications for .NET, C# and similar
development environments for the enterprise market.
|
||
Jot
|
Multi-lingual
handwriting recognition software.
|
SignatureOne™
Sign-it® v6.2 for Acrobat®
|
SignatureOne™
Sign-it® v6.2 for Acrobat® (Viewer)
|
SignatureOne™
Sign-it® v6.04 for Word
|
SignatureOne™
Sign-it® Tools v3.03 for Word
|
SignatureOne™
Sign-it® v3.1.0.1 for AutoCAD®
|
SignatureOne™
Sign-it® v3.1.0.2 for AutoCAD®
|
SignatureOne™
Sign-it® v4.0 for AutoCAD®
|
SignatureOne™
Sign-it® Tools v 4.0 for AutoCAD®
|
iSign®
v4.3
|
SignatureOne™
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|
SignatureOne™
Sign-it® XF v1.3
|
SignatureOne™
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|
SignatureOne™
Sign-it® XF Runtime License
|
Patent
No.
|
Expiration
|
||
5049862
|
2008
|
||
5544255
|
2013
|
||
5647017
|
2014
|
||
5818955
|
2015
|
||
5933514
|
2016
|
||
6064751
|
2017
|
||
6091835
|
2017
|
||
6212295
|
2018
|
||
6381344
|
2019
|
||
6487310
|
2019
|
Item
5.
|
Market for Registrant's Common
Equity and Related Stockholder
Matters
|
Sale
Price
Per Share
|
|||||||||
Year
|
Period
|
High
|
Low
|
||||||
2006
|
First
Quarter
|
$ | 0.53 | $ | 0.40 | ||||
Second
Quarter
|
$ | 0.50 | $ | 0.39 | |||||
Third
Quarter
|
$ | 0.41 | $ | 0.24 | |||||
Fourth
Quarter
|
$ | 0.30 | $ | 0.18 | |||||
2007
|
First
Quarter
|
$ | 0.32 | $ | 0.20 | ||||
Second
Quarter
|
$ | 0.27 | $ | 0.13 | |||||
Third
Quarter
|
$ | 0.28 | $ | 0.15 | |||||
Fourth
Quarter
|
$ | 0.42 | $ | 0.20 |
Years
Ended December 31,
|
||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
(In
thousands, except per share amounts)
|
||||||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||
Revenues
|
$ | 2,145 | $ | 2,342 | $ | 3,121 | $ | 7,284 | $ | 3,034 | ||||||||||
Research
and development expenses(1)
|
476 | 817 | 1,144 | 1,187 | 1,302 | |||||||||||||||
Sales
and marketing expenses
|
1,276 | 1,658 | 1,240 | 1,306 | 905 | |||||||||||||||
General
and administrative expenses
|
2,061 | 2,174 | 2,173 | 2,483 | 2,219 | |||||||||||||||
Income
(loss) from operations
|
(2,193 | ) | (2,557 | ) | (1,584 | ) | 2,255 | (2,157 | ) | |||||||||||
Net
income (loss)
|
$ | (3,399 | ) | $ | (3,286 | ) | $ | (4,031 | ) | $ | 1,620 | $ | (2,345 | ) | ||||||
Basic
and diluted income (loss) per share
|
$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | 0.02 | $ | (0.02 | ) |
As
of December 31,
|
||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Balance
Sheet Data:
|
||||||||||||||||||||
Cash,
cash equivalents and restricted cash
|
$ | 1,144 | $ | 727 | $ | 2,849 | $ | 4,736 | $ | 1,039 | ||||||||||
Working
capital(2)
|
(867 | ) | (816 | ) | 2,258 | 4,068 | (2,895 | ) | ||||||||||||
Total
assets
|
6,475 | 6,126 | 8,466 | 10,819 | 7,215 | |||||||||||||||
Deferred
revenue
|
431 | 404 | 557 | 458 | 165 | |||||||||||||||
Long-term
obligations (3)
|
96 | 334 | 1,169 | 1,790 | 13 | |||||||||||||||
Stockholders'
equity (4)
|
3,781 | 3,584 | 5,856 | 7,531 | 2,187 |
(1)
|
Excludes
software development costs capitalized in accordance with Statement of
Financial Accounting Standards No. 86 of $788 at December 31, 2007, $510
at December 31, 2006, $299 at December 31, 2005, and $32 at December 31,
2004, respectively. No software development costs were capitalized in the
year ended December 31, 2003.
|
(2)
|
Current
liabilities used to calculate working capital at December 31, 2007, 2006,
2005, 2004, and 2003 include deferred revenue of $431, $404, $557, $458,
and $165, respectively.
|
(3)
|
Long-term
debt is net of the unamortized fair value assigned to warrants of $21 at
December 31, 2007 and $266 for related-party debt at December 31,
2006. Long-term debt is net of the unamortized debt discount
related to convertible debt of $674, and $2,410 at December 31, 2005 and
2004.
|
(4)
|
The
Company has never paid dividends to the holders of its common
stock.
|
·
|
whether
there are legal, regulatory or contractual provisions known to the Company
that limit the useful life of any patent to less than the assigned useful
life;
|
·
|
whether
the Company needs to incur material costs or make modifications in order
for it to continue to be able to realize the protection afforded by the
patents;
|
·
|
whether
any effects of obsolescence or significant competitive pressure on the
Company’s current or future products are expected to reduce the
anticipated cash flow from the products covered by the
patents;
|
·
|
whether
demand for products utilizing the patented technology will diminish,
remain stable or increase; and
|
·
|
whether
the current markets for the products based on the patented technology will
remain constant or will change over the useful lives assigned to the
patents.
|
Payments
due by period
|
||||||||||||||||||||||||||||
Contractual
obligations
|
Total
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
|||||||||||||||||||||
Short-term
debt related party (1)
|
$ | 1,720 | $ | 1,720 | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||||
Long-term
debt (2)
|
117 | – | 117 | – | – | – | – | |||||||||||||||||||||
Operating
lease commitments (3)
|
1,056 | 264 | 272 | 280 | 240 | – | – | |||||||||||||||||||||
Total
contractual cash obligations
|
$ | 2,893 | $ | 1,984 | $ | 389 | $ | 280 | $ | 240 | $ | – | $ | – |
1.
|
Short-term
debt reported on the balance sheet is net of approximately $350 in
discounts representing the fair value of warrants issued in connection
with the Company’s debt financings. Short-term debt includes $1,170 due to
a related party.
|
2.
|
Long-term
debt reported on the balance sheet is net of approximately $21 in
discounts representing the fair value of warrants issued to the
investors.
|
3.
|
The
operating lease commenced on November 1, 2002. The lease was renegotiated
in December 2005 and extended for an additional 60 months. The base rent
will increase approximately 3% per annum over the term of the lease, which
expires on October 31, 2011.
|
Name
|
Age
|
Year
First Elected
or Appointed
|
Guido
D. DiGregorio
|
69
|
1997
|
Garry
Meyer (5)
|
58
|
2007
|
Louis
P. Panetta (1), (2), (3), (4)
|
58
|
2000
|
Chien-Bor
Sung (1), (2), (3), (4)
|
82
|
1986
|
David
E. Welch (1), (4)
|
61
|
2004
|
Name
|
Age
|
Positions Currently Held
|
Guido
D. DiGregorio
|
69
|
Chairman
of the Board,
Chief
Executive Officer and President
|
Francis
V. Dane
|
56
|
Chief
Legal Officer,
Secretary
and Chief Financial Officer
|
Russel
L. Davis
|
43
|
Chief
Technology Officer & Vice President, Product Development
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
(2)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in
Pension
Value
And
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
Guido
DiGregorio
President
& CEO
|
2007
2006
2005
2004
|
200,000(1)
285,000(1)
322,875(1)
250,334(1)
|
−
−
−
−
|
−
−
−
−
|
−
−
502,732
−
|
−
−
−
−
|
−
−
−
−
|
9,486
9,072
8,885
9,037
|
209,486
294,072
834,492
259,371
|
Frank
Dane
CLO
& CFO
|
2007
2006
2005
2004
|
160,000
160,000
146,643
138,125
|
−
−
−
−
|
−
−
−
−
|
1,875
7,400
64,604
13,295
|
−
−
−
−
|
−
−
−
−
|
−
−
−
−
|
161,875
167,400
211,247
151,420
|
Russel
Davis
CTO
|
2007
2006
2005(3)
|
165,000
165,000
48,303
|
−
−
−
|
−
−
−
|
−
−
225,425
|
−
−
−
|
−
−
−
|
−
−
−
|
165,000
165,000
273,728
|
Name
and
Principal
Position
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($) (4)
|
Option
Expiration
Date
(5)
|
|
Guido
DiGregorio,
President
& CEO
(1)
|
250,000
425,000
1,275,000
|
−
−
−
|
$0.79
$0.39
$0.75
|
2009
2012
2012
|
|
Frank
Dane,
CLO & CFO
(2)
|
100,000
100,000
100,000
35,985
107,958
|
−
−
−
−
−
|
$0.79
$0.33
$0.55
$0.39
$0.75
|
2009
2010
2011
2012
2012
|
|
Russel
Davis,
CIO
(3)
|
125,000
375,000
|
−
−
|
$0.57
$0.75
|
2012
2012
|
Name
|
Fees
Earned
Or
Paid in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Change
in Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
Garry
Meyer (1)
|
$ | 1,000 | $ | − | $ | 8,170 | $ | − | $ | − | $ | − | $ | 9,170 | ||||||||||||||
Louis
P. Panetta (2)
|
$ | 3,000 | $ | − | $ | 10,173 | $ | − | $ | − | $ | − | $ | 13,173 | ||||||||||||||
C.
B. Sung (3)
|
$ | 3,000 | $ | − | $ | 2,898 | $ | − | $ | − | $ | − | $ | 5,898 | ||||||||||||||
David
E. Welch (4)
|
$ | 3,000 | $ | − | $ | 2,898 | $ | − | $ | − | $ | − | $ | 5,898 |
|
1.
Mr. Meyer holds options to acquire 50,000 shares of stock at December 31,
2007, all of which were vested.
|
|
2.
Mr. Panetta holds options to acquire 253,125 shares of stock at December
31, 2007, all of which were vested.
|
|
3.
Mr. Sung holds options to acquire 226,190 shares of stock at December 31,
2007, all of which were vested.
|
|
4.
Mr. Welch holds options to acquire 125,000 shares of stock at December 31,
2006, all of which were vested.
|
Common
Stock
|
|||
Name of Beneficial Owner
|
Number
of Shares**
|
Percent
of Class**
|
|
Guido
DiGregorio (1)
|
2,093,900
|
1.62%
|
|
C.
B. Sung (2)
|
1,860,610
|
1.44%
|
|
Louis
P. Panetta
(3)
|
253,125
|
*
|
|
David
E. Welch, (4)
|
150,000
|
*
|
|
Garry
Meyer (5)
|
50,000
|
*
|
|
Francis
V. Dane (6)
|
444,155
|
*
|
|
Russel
L. Davis (7)
|
500,000
|
*
|
|
All
directors and executive officers as a group (6 persons)
|
5,351,790
|
4.15%
|
|
5%
Shareholders
|
|||
Phoenix
Venture Fund LLC (8)
|
21,500,000
|
16.66%
|
|
Michael
W. Engmann (9)
|
7,178,098
|
5.56%
|
(1)
|
Represents
(a) 143,900 shares held by Mr. DiGregorio and (b) 1,950,000 shares,
issuable upon the exercise of stock options exercisable within 60 days
hereof.
|
(2)
|
Includes
(a) 1,631,051 shares held by the Sung Family Trust, of which Mr. Sung
is a trustee, (b) 3,369 shares held by the Sung-Kwok Foundation, of which
Mr. Sung is the Chairman, and (c) 226,190 shares of common stock issuable
upon the exercise of stock options, exercisable within 60 days
hereof. Mr. Sung may be deemed to beneficially own the shares
held by the Sung Family Trust and the Sung-Kwok Foundation. The business
address of Mr. Sung is, UNISON Group, 1001 Bayhill Dr., 2
nd
Floor, San Bruno, California 94066. See “Certain Relationships
and Related Transactions.”
|
(3)
|
Represents
253,125 shares issuable upon the exercise of options exercisable within 60
days hereof. Mr. Panetta’s business address is 827 Via Mirada,
Monterey, California 93940. See “Certain Relationships and
Related Transactions.”
|
(4)
|
Represents
150,000 shares issuable upon the exercise of stock options exercisable
within 60 days hereof. The business address of Mr. Welch is
1729 East Otero Avenue, Littleton, CO 80122. See “Certain
Relationships and Related
Transactions.”
|
(5)
|
Represents
50,000 shares issuable upon the exercise of stock options exercisable
within 60 days hereof. The business address of Mr. Meyer is 4 Nersesian
Way, Hampton, NH 03842.
|
(6)
|
Represents
(a) 212 shares held by Mr. Dane and (b) 443,943 shares issuable upon the
exercise of stock options exercisable within 60 days
hereof.
|
(7)
|
Represents
500,000 shares issuable upon the exercise of stock options within 60 days
hereof.
|
(8)
|
SG
Phoenix Ventures LLC is the Managing Member of Phoenix Venture Fund LLC
(the “Phoenix Fund”), with the power to vote and dispose of the shares of
common stock held by the Phoenix Fund. Accordingly, SG Phoenix Ventures
LLC may be deemed to be the beneficial owner of such shares. Andrea Goren
is the co-manager of SG Phoenix Ventures LLC, has the shared power to vote
and dispose of the shares of common stock held by the Phoenix Fund and, as
such, may be deemed to be the beneficial owner of the common shares owned
by the Phoenix Fund. Philip Sassower is the co-manager of SG Phoenix
Ventures LLC, has the shared power to vote and dispose of the shares of
common stock held by the Phoenix Fund and, as such, may be deemed to be
the beneficial owner of the common shares owned by the Phoenix Fund. SG
Phoenix Ventures LLC, Mr. Goren and Mr. Sassower each disclaim beneficial
ownership of the shares owned by the Phoenix Fund, except to the extent of
their respective pecuniary interests therein. The address of such
stockholder is 110 East 59th Street, Suite 1901, New York, NY
10022.
|
(9)
|
Represents
(a) 17,750 shares held by Mr. Engmann and (b)
7,160,348 warrants
beneficially owned by Mr. Engmann, of which 1,187,962 are held by
MDNH
Partners, L.P. and 1,659,200 are held by KENDU Partners Company of which
Mr. Engmann is a partner.
Mr. Engmann was issued warrants to
purchase 2,333,250 shares of the Company’s common stock at $0.51 per
share,
and
warrants to purchase 1,979,936 shares of the Company’s common stock
at $0.25 per share.
MDNH Partners, L.P.
was issued
warrants to purchase
1,659,200
shares of the Company’s common stock at $0.51 per share, and
MDNH Partners, L.P.
was issued
warrants to purchase
1,187962
shares of the Company’s common stock at $0.25 per share. Such
warrants were issued in connection with a notes issued in 2006 and 2007
(See note 5 to the Consolidated Financial
Statements).
|
|
Number
of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants
and Rights
|
Weighted-Average
Exercise Price Of Outstanding Options, Warrants and Rights
|
Number
of Securities Remaining Available For Future Issuance Under Equity
Compensation Plans
|
Equity
Compensation Plans Approved by Security Holders
|
|||
1999
Stock Option Plan
|
3,747
|
$ 0.55
|
72
|
Equity
Compensation Plans Not Approved by Security Holders
|
2,289
|
$ 0.63
|
72
|
Total:
|
6,036
|
$ 0.59
|
72
|
Page
|
||
(a)(1)
|
Financial
Statements
|
|
Report
of GHP Horwath, P.C., Independent Registered Public Accounting
Firm
|
F-1
|
|
Report
of Stonefield Josephson, Inc., Independent Registered Public Accounting
Firm
|
F-2
|
|
Consolidated
Balance Sheets at December 31, 2007 and 2006
|
F-3
|
|
Consolidated
Statements of Operations for the years ended December 31, 2007, 2006,
and 2005
|
F-4
|
|
Consolidated
Statements of Changes in Stockholders' Equity for the years ended
December 31, 2007, 2006 and 2005
|
F-5
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2007, 2006
and 2005
|
F-6
|
|
Notes
to Consolidated Financial Statements
|
F-8
|
|
(a)(2)
|
Financial
Statement Schedule
|
|
Schedule
II Valuation and Qualifying Accounts and Reserves
|
S-1
|
1.
|
None
|
Exhibit
Number
|
Document
|
2.0
|
Second
Amended Plan of Reorganization of the Company, incorporated herein by
reference to the Company's Form 8-K filed October 24,
1994.
|
2.1
|
Orderly
Liquidation Valuation, Exhibit F to the Second Amended Plan of
Reorganization, incorporated herein by reference to the Company's
Form 8-K filed October 19, 1994.
|
2.2
|
Order
Confirming Plan of Reorganization, incorporated herein by reference to the
Company's Form 8-K filed November 14, 1994.
|
3.1
|
Certificate
of Incorporation of the Company, as amended, incorporated herein by
reference to Exhibits 3.1, 3.2, 3.3 and 3.4 to the Company's Registration
Statement on Form 10 (File No. 0-19301).
|
3.2
|
Certificate
of Amendment to the Company's Certificate of Incorporation (authorizing
the reclassification of the Class A Common Stock and Class B
Common Stock into one class of Common Stock) as filed with the Delaware
Secretary of State's office on November 1, 1991, incorporated herein
by reference to Exhibit 3 to Amendment 1 on Form 8 to the
Company's Form 8-A (File No. 0-19301).
|
3.3
|
Certificate
of Amendment to the Company’s Amended and Restated Certificate of
Incorporation dated June 12, 1998, incorporated herein by reference to
Exhibit 10.24 to the Company’s 1998 Form 10-K, filed April 6, 1999 (File
No. 0-19301).
|
3.4
|
By-laws
of the Company adopted on October 6, 1986, incorporated herein by
reference to Exhibit 3.5 to the Company's Registration Statement on
Form 10 (File No. 0-19301).
|
3.5
|
Certificate
of Amendment to the Company’s Amended and Restated Certificate of
Incorporation dated January 24, 2001, incorporated herein by reference to
Exhibit 3.5 to the Company’s Registration Statement on Form S/1, filed
December 28, 2007.
|
3.6
|
Certificate
of Elimination of the Company’s Certificate of Designation of the Series A
Preferred Stock dated August 17, 2001, incorporated herein by reference to
Exhibit 3.6 to the Company’s Registration Statement on Form S/1, filed
December 28, 2007.
|
Exhibit
Number
|
Document
|
3.7
|
Certificate
of Amendment to the Company’s Amended and Restated Certificate of
Incorporation dated August 17, 2007, incorporated herein by reference to
Exhibit 3.7 to the Company’s Registration Statement on Form S/1, filed
December 28, 2007.
|
4.1
|
1984
Stock Option Plan of the Company, as amended and restated as of
October 15, 1987 and as amended by resolutions of the stockholders of
the Company passed on August 15, 1989 and October 8, 1990 to
increase the aggregate shares covered thereby to 1,000,000, incorporated
herein by reference to Exhibit 4.4 to the Company's Registration
Statement on Form 10 (File No. 0-19301).
|
4.2
|
Form
of Stock Option Grant under 1984 Stock Option Plan, incorporated herein by
reference to Exhibit 4.5 to the Company's Registration Statement on
Form 10 (File No. 0-19301).
|
4.3
|
1991
Stock Option Plan of the Company, incorporated herein by reference to
Exhibit 4.5 of the Company's Form S-1 dated December 23,
1991 (Registration No. 33-43879).
|
4.4
|
1991
Non-Discretionary Stock Option Plan, incorporated herein by reference to
Exhibit 4.6 of the Company's Form S-1 dated December 23,
1991 (Registration No. 33-43879).
|
4.5
|
Form
of Incentive Stock Option Grant under 1991 Stock Option Plan, incorporated
herein by reference to Exhibit 4.7 of the Company's Form S-1
dated December 23, 1991 (Registration
No. 33-43879).
|
4.6
|
Form
of Non-Qualified Stock Option Grant under 1991 Stock Option Plan,
incorporated herein by reference to Exhibit 4.8 of the Company's
Form S-1 dated December 23, 1991 (Registration
No. 33-43879).
|
4.7
|
Form
of Stock Option Grant under 1991 Non-Discretionary Stock Option Plan,
incorporated herein by reference to Exhibit 4.9 of the Company's
Form S-1 dated December 23, 1991 (Registration
No. 33-43879).
|
4.8
|
1994
Stock Option Plan, incorporated herein by reference to Exhibit G of the
Company's Second Amended Disclosure Statement filed on Form 8-K dated
October 19, 1994 and approved by shareholders on November 14,
1994.
|
4.9
|
Form
of Warrant of the Company dated March 28, 1997 issued in connection
with the Waiver by and among the Company and the signatories thereto,
incorporated herein by reference to Exhibit 4.9 of the Company's 1996
Form 10-K (File No. 0-19301).
|
4.10
|
1999
Stock Option Plan, incorporated herein by reference to Exhibit A of the
Company's Definitive Proxy Statement filed on May 4, 1999 and approved by
shareholders on June 7, 1999. .
|
4.11
|
Form
of Convertible Promissory Note issued by Communication Intelligence
Corporation, incorporated herein by reference to Exhibit 10.3 to the
Company's Form 8-K dated November 3, 2004.
|
4.12
|
Form
of Warrant issued by Communication intelligence Corporation, incorporated
herein by reference to Exhibit 10.4 to the Company's Form 8-K dated
November 3, 2004.
|
4.13
|
Form
of Promissory Note issued by Communication Intelligence Corporation,
incorporated herein by reference to Exhibit 10.36 to the Company's Form
8-K dated August 12, 2006.
|
4.14
|
Form
of Warrant issued by Communication intelligence Corporation, incorporated
herein by reference to Exhibit 10.37 to the Company's Form 8-K dated
August 12, 2006.
|
4.15
|
Form
of Promissory Note issued by the Company, incorporated herein by reference
to Exhibit 10.36 to the Company’s Form 8-K, filed February 9,
2007.
|
4.16
|
Form
of Warrant issued by the Company, incorporated herein by reference to
Exhibit 10.37 to the Company’s Form 8-K, filed February 9,
2007.
|
4.17
|
Form
of Promissory Note issued by the Company, incorporated herein by reference
to Exhibit 10.36 to the Company’s Form 8-K, filed June 20,
2007.
|
4.18
|
Form
of Warrant issued the Company, incorporated herein by reference to Exhibit
10.37 to the Company’s Form 8-K, filed June 20, 2007.
|
†10.1
|
Licensing
and Development Agreement for Use and Marketing of Program Materials dated
September 25, 1992 between the Company and International Business
Machines Corporation, incorporated herein by reference to
Exhibit 10.13 of the Company's 1992 Form 10-K
(File No. 0-19301)
|
Exhibit
Number
|
Document
|
10.2
|
Standby
Stock Purchase Agreement between the Company and Philip Sassower dated
October 3, 1994, incorporated herein by reference to
Exhibit 10.13 of the Company's 1994 Form 10-K (File
No. 0-19301)
|
10.3
|
Form
of Subscription Agreement between the Company and the Purchasers, dated
November 28, 1995, incorporated herein by reference to Exhibit 1
of the Company's Form 8-K dated November 28,
1995.
|
10.4
|
Form
of Registration Rights Agreement between the Company and the Purchasers,
dated November 28, 1995, incorporated herein by reference to
Exhibit 1 of the Company's Form 8-K dated November 28,
1995.
|
10.5
|
Form
of Warrant of the Company issued to Libra Investments, Inc. on
November 28, 1995, incorporated herein by reference to Exhibit 1
of the Company's Form 8-K dated November 28,
1995.
|
10.6
|
Form
of Registration Rights Agreement between the Company and Libra
Investments, Inc., dated November 28, 1995, incorporated herein by
reference to Exhibit 1 of the Company's Form 8-K dated
November 28, 1995.
|
10.7
|
Form
of Subscription Agreement between the Company and various investors, dated
June 13, 1996, incorporated herein by reference to Exhibit 1 of
the Company's Form 8-K dated June 27, 1996.
|
10.8
|
Form
of Registration Rights Agreement between the Company and various
investors, dated June 13, 1996, incorporated herein by reference to
Exhibit 2 of the Company's Form 8-K dated June 27,
1996.
|
10.9
|
Form
of Preferred Stock Investment Agreement, dated as of December 31,
1996, between the Company and the investors listed on Schedule 1
thereto, incorporated herein by reference to Exhibit 1 of the
Company's Form 8-K dated December 31, 1996.
|
10.10
|
Form
of Registration Rights Agreement between the Company and the Investors
Listed on Schedule 1 thereto, incorporated herein by reference to
Exhibit 2 of the Company's Form 8-K dated December 31,
1996.
|
10.11
|
Form
of Certificate of Designation of the Company with respect to the 5%
Cumulative Convertible Preferred Stock, incorporated herein by reference
to Exhibit 3 of the Company's Form 8-K dated December 31,
1996.
|
10.12
|
Waiver,
dated March 26, 1997, effective December 31, 1996, by and among
the Company and the signatories thereto, incorporated herein by reference
to Exhibit 10.19 of the Company's 1996 Form 10-K (File
No. 0-19301).
|
10.13
|
Form
of Subscription Agreement between the Company and each subscriber, dated
as of November 25, 1997, incorporated herein by reference to Exhibit
10.1 of the Company's Form 8-K dated December 3,
1997.
|
10.14
|
Certificate
of Designations of the Company with respect to the Series B 5% Cumulative
Convertible Preferred Stock, incorporated herein by reference to Exhibit
10.2 of the Company's Form 8-K dated November 13,
1997.
|
10.15
|
Form
of Registration Rights Agreement, by and among the Company and the
signatories thereto, dated as of November 25, 1997, incorporated
herein by reference to Exhibit 10.3 to the Company's Form 8-K dated
November 13, 1997.
|
10.16
|
Amendment
to the Company’s Certificate of Designation with respect to the 5%
Cumulative Convertible Preferred Stock dated June 12, 1998, incorporated
herein by reference to Exhibit 10.23 of the Company's 1998
Form 10-K (File No. 0-19301).
|
10.17
|
Amendment
to the Company’s Amended and Restated Certificate of Incorporation dated
June 12, 1998 incorporated herein by reference to Exhibit 10.24 of
the Company's 1998 Form 10-K (File
No. 0-19301).
|
10.18
|
Employment
Agreement dated August 14, 1998 between James Dao and the Company
incorporated herein by reference to Exhibit 10.25 of the Company's
1998 Form 10-K (File No. 0-19301).
|
††10.19
|
Software
Development and License Agreement dated December 4, 1998 between Ericsson
Mobile Communications AB and the Company incorporated herein by reference
to Exhibit 10.26 of the Company's 1998 Form 10-K (File
No. 0-19301).
|
Exhibit
Number
|
Document
|
10.20
|
Loan
and Warrant Agreement dated October 20, 1999 between the Company and the
Philip S. Sassower 1996 Charitable Remainder Annuity
Trust.
|
10.21
|
Asset
Purchase Agreement between the Company and PenOp Ltd and PenOp Inc.
incorporated herein by reference to the Company’s Form 8-K dated October
6, 2000.
|
10.22
|
Loan
Agreement dated June 19, 2001 between the Company and the Philip S.
Sassower 1996 Charitable Remainder Annuity Trust.
|
10.23
|
Equity
Line of Credit Agreement between the Company and Cornell Capital Partners,
LP, incorporated by reference to the Company’s Registration Statement on
Form S-1 dated February 13, 2003 (File No. 333-103157)
|
10.24
|
Form
of Note and Warrant Purchase Agreement dated October 28, 2004, among
Communication Intelligence Corporation and the Purchasers identified
therein, incorporated herein by reference to Exhibit 10.1 to the Company's
Form 8-K dated November 3, 2004.
|
10.25
|
Form
of Registration Rights Agreement dated October 28, 2004, among
Communication Intelligence Corporation and the parties identified there
in, incorporated herein by reference to Exhibit 10.2 to the Company's Form
8-K dated November 3, 2004.
|
10.26
|
Form
of Note and Warrant Purchase Agreement dated August 10, 2006, among
Communication Intelligence Corporation and the Purchasers identified
therein, incorporated herein by reference to Exhibit 10.34 to the
Company's Form 8-K dated August 12, 2006.
|
10.27
|
Form
of Registration Rights Agreement dated August 10, 2006, among
Communication Intelligence Corporation and the parties identified there
in, incorporated herein by reference to Exhibit 10.35 to the Company's
Form 8-K dated August 12, 2006.
|
Xx
10.28
|
Amendment
dated May 31, 2005 to the License agreement dated December 22, 2000
between the Company and eCom Asia Pacific, Ltd. filed as Exhibit 10.26 of
the Company’s Form 10-K/A (file no. 0-19301) filed with the Commission on
September 15, 2005.
|
Xx
10.29
|
License
agreement dated June 2, 2005 between the Company and SnapOn Credit LLC.
filed as Exhibit 10.27 of the Company’s Form 10-K/A (file no. 0-19301)
filed with the Commission on September 15, 2005.
|
10.30
|
Amendment
to employment agreement with Guido DiGregorio, incorporated herein by
reference to the Company's Form 8-K dated September 21,
2005.
|
10.31
|
Amendment
to employment agreement with Frank V. Dane, incorporated herein by
reference to the Company's Form 8-K dated September 21,
2005.
|
10.32
|
Form
of stock option agreement dated August 31, 2005 with Russel L. Davis -
incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A
(file no. 0-19301) filed with the Commission on September 15,
2006.
|
10.33
|
Form
of stock option agreement dated December 19, 2005 with Guido DiGregorio -
incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A
(file no. 0-19301) filed with the Commission on September 15,
2006.
|
10.34
|
Form
of stock option agreement dated August 31, 2005 with Francis V. Dane -
incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A
(file no. 0-19301) filed with the Commission on September 15,
2006.
|
10.35
|
Form
of stock option agreement dated August 31, 2005 with C. B. Sung -
incorporated by reference to Exhibit 10.30 of the Company’s Form 10-K/A
(file no. 0-19301) filed with the Commission on September 15,
2006.
|
10.36
|
Form
of Note and Warrant Purchase Agreement dated February 5, 2007, among
Communication Intelligence Corporation and the Purchasers identified
therein, incorporated herein by reference to Exhibit 10.34 to the
Company's Form 8-K dated February 5, 2007.
|
10.37
|
Form
of Registration Rights Agreement dated February 5, 2007, among
Communication Intelligence Corporation and the parties identified there
in, incorporated herein by reference to Exhibit 10.35 to the Company's
Form 8-K dated February 5, 2007.
|
10.38
|
Amendment
to the Note and Warrant Purchase Agreement dated February 5, 2007, among
Communication Intelligence Corporation and the parties identified there
in, incorporated herein by reference to Exhibit 99.1 to the Company's Form
8-K dated March 15, 2007.
|
†
|
Confidential
treatment of certain portions of this exhibit have been previously granted
pursuant to a request for confidentiality dated March 29, 1993, filed
pursuant to the Securities Exchange Act of 1934.
|
*
|
Filed
herewith.
|
††
|
Confidential
treatment of certain portions of this exhibit have been requested from the
SEC pursuant to a request for confidentiality dated March 30, 1999, filed
pursuant to the Securities and Exchange Act of 1934.
|
†††
|
Confidential
treatment of certain portions of this exhibit have been requested from the
SEC pursuant to a request for confidentiality dated March 10,2008, filed
pursuant to the Securities and Exchange Act of 1934.
|
Xx
|
Confidential
treatment of certain portions of this exhibit have been requested from the
SEC pursuant to a request for confidentiality dated March 30, 2006 filed
pursuant to the Securities and Exchange Act of 1934.
|
Communication
Intelligence Corp.
|
||
By:
|
/s/ Francis V. Dane
Francis
V. Dane
(Principal
Financial Officer and Officer Duly Authorized to Sign on Behalf of the
Registrant)
|
Signature
|
Title
|
/s/ Guido DiGregorio
Guido
DiGregorio
|
Chairman,
President and Chief Executive Officer
(Principal
Executive Officer)
|
/s/ Francis V. Dane
Francis
V. Dane
|
Chief
Legal Officer and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
/s/ Garry Meyer
Garry
Meyer
|
Director
|
/s/ Louis P. Panetta
Louis
P. Panetta
|
Director
|
/s/ Chien Bor Sung
Chien
Bor Sung
|
Director
|
/s/ David Welch
David
Welch
|
Director
|
December
31,
|
||||||||
2007
|
2006
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash and cash
equivalents
|
$ | 1,144 | $ | 727 | ||||
Accounts receivable, net of
allowances of $117 and $397 at December 31, 2007 and 2006,
respectively
|
452 | 487 | ||||||
Prepaid expenses and other
current assets
|
135 | 105 | ||||||
Total current
assets
|
1,731 | 1,319 | ||||||
Property
and equipment, net
|
77 | 140 | ||||||
Patents
|
3,528 | 3,906 | ||||||
Capitalized
software development costs
|
1,109 | 656 | ||||||
Deferred
financing costs (Note 3)
|
− | 75 | ||||||
Other
assets
|
30 | 30 | ||||||
Total assets
|
$ | 6,475 | $ | 6,126 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Convertible notes, net of
unamortized fair value assigned to beneficial conversion feature and
warrants of $228 at December 31, 2006 (Note 3)
|
$ | − | $ | 1,154 | ||||
Short-term debt –net of
unamortized fair value assigned to warrants of $350 including related
party debt of $1,170, net of $247 of unamortized fair value assigned to
warrants (Note 4)
|
1,370 | – | ||||||
Accounts payable
|
135 | 72 | ||||||
Accrued
compensation
|
364 | 236 | ||||||
Other accrued
liabilities
|
298 | 269 | ||||||
Deferred revenue
|
431 | 404 | ||||||
Total current
liabilities
|
2,598 | 2,135 | ||||||
Long-term
debt –net of unamortized fair value assigned to warrants of $266,
including related party debt of $450, net of $199 of unamortized fair
value assigned to warrants (Note 4)
|
− | 334 | ||||||
Long-
term debt – other, net of unamortized fair value assigned to warrants of
$21 at December 31, 2007 (Note 3)
|
96 | |||||||
Minority
interest
|
– | 73 | ||||||
Commitments
and contingencies (Note 7)
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred stock, $.01 par value;
10,000 shares authorized; 0 outstanding at December 31, 2007 and 2006,
respectively
|
– | – | ||||||
Common stock, $.01 par value;
155,000 shares authorized; 129,057 and 107,557 shares issued and
outstanding at December 31, 2007 and 2006, respectively
|
1,291 | 1,076 | ||||||
Additional paid-in
capital
|
93,785 | 90,497 | ||||||
Accumulated
deficit
|
(91,260 | ) | (87,861 | ) | ||||
Accumulated other comprehensive
loss
|
(35 | ) | (128 | ) | ||||
Total
stockholders' equity
|
3,781 | 3,584 | ||||||
Total
liabilities and stockholders' equity
|
$ | 6,475 | $ | 6,126 | ||||
Years
ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Revenues:
|
||||||||||||
Product
|
$ | 1,448 | $ | 1,427 | $ | 2,256 | ||||||
Maintenance
|
697 | 915 | 865 | |||||||||
2,145 | 2,342 | 3,121 | ||||||||||
Operating
costs and expenses:
|
||||||||||||
Cost of sales:
|
||||||||||||
Product
|
367 | 101 | 109 | |||||||||
Maintenance
|
158 | 149 | 39 | |||||||||
Research and
development
|
476 | 817 | 1,144 | |||||||||
Sales and
marketing
|
1,276 | 1,658 | 1,240 | |||||||||
General and
administrative
|
2,061 | 2,174 | 2,173 | |||||||||
4,338 | 4,899 | 4,705 | ||||||||||
Loss
from operations
|
(2,193 | ) | (2,557 | ) | (1,584 | ) | ||||||
Interest
income and other income (expense), net
|
(26 | ) | 43 | 17 | ||||||||
Interest
expense:
|
||||||||||||
Related
party (Note 4)
|
(135 | ) | (11 | ) | – | |||||||
Other
(Note 3)
|
(149 | ) | (105 | ) | (208 | ) | ||||||
Amortization
of loan discount and deferred financing cost:
|
||||||||||||
Related
party (Note 4)
|
(305 | ) | (70 | ) | – | |||||||
Other
(Note 3)
|
(664 | ) | (591 | ) | (2,275 | ) | ||||||
Minority
interest
|
73 | 5 | 19 | |||||||||
Net
loss
|
$ | (3,399 | ) | $ | (3,286 | ) | $ | (4,031 | ) | |||
Basic
and diluted loss per share
|
$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.04 | ) | |||
Basic
and diluted weighted average shares
|
113,960 | 107,374 | 104,189 | |||||||||
Common
Shares
|
Common
Stock
|
Additional
Paid-In
Capital
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Total
|
|||||||||||||||||||
Balances
as of December 31, 2004
|
101,412 | $ | 1,014 | $ | 87,231 | $ | (80,544 | ) | $ | (170 | ) | $ | 7,531 | |||||||||||
Shares
of Common Stock issued on conversion of long-term notes
|
5,092 | 51 | 2,271 | 2,322 | ||||||||||||||||||||
Shares
issued for services
|
24 | 10 | 10 | |||||||||||||||||||||
Shares
issued on exercise of stock options
|
14 | 5 | 5 | |||||||||||||||||||||
Comprehensive
(loss):
Net
loss
|
(4,031 | ) | (4,031 | ) | ||||||||||||||||||||
Foreign
currency translation adjustment
|
19 | 19 | ||||||||||||||||||||||
Total
comprehensive loss
|
(4,012 | ) | ||||||||||||||||||||||
Balances
as of December 31, 2005
|
106,542 | 1,065 | 89,517 | (84,575 | ) | (151 | ) | 5,856 | ||||||||||||||||
Shares
of Common Stock issued on conversion of long-term notes
|
996 | 11 | 449 | 460 | ||||||||||||||||||||
Shares
issued for services
|
19 | 6 | 6 | |||||||||||||||||||||
Stock
based employee compensation
|
189 | 189 | ||||||||||||||||||||||
Fair
value of warrants issued to the investors in connection with long –term
debt, related party
|
336 | 336 | ||||||||||||||||||||||
Comprehensive
(loss):
Net
loss
|
(3,286 | ) | (3,286 | ) | ||||||||||||||||||||
Foreign
currency translation adjustment
|
23 | 23 | ||||||||||||||||||||||
Total
comprehensive loss
|
(3,263 | ) | ||||||||||||||||||||||
Balances
as of December 31, 2006
|
107,557 | 1,076 | 90,497 | (87,861 | ) | (128 | ) | 3,584 | ||||||||||||||||
Fair
value of warrants issued in connection with
short-term
debt
|
546 | 546 | ||||||||||||||||||||||
Fair
value of warrants issued in connection with long-term
debt
|
23 | 23 | ||||||||||||||||||||||
Stock
based employee compensation
|
130 | 130 | ||||||||||||||||||||||
Adjustment
to the fair value of beneficial conversion feature associated with the
convertible notes (Note 5)
|
202 | 202 | ||||||||||||||||||||||
Sale
of common stock at approximately $0.14 per share net of related costs of
$398
|
21,500 | 215 | 2,387 | 2,602 | ||||||||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||||
Net
loss
|
(3,399 | ) | (3,399 | ) | ||||||||||||||||||||
Foreign
currency translation adjustment
|
93 | 93 | ||||||||||||||||||||||
Total
comprehensive loss
|
(3,306 | ) | ||||||||||||||||||||||
Balances
as of December 31, 2007
|
129,057 | $ | 1,291 | $ | 93,785 | $ | (91,260 | ) | $ | (35 | ) | $ | 3,781 |
2007
|
2006
|
2005 | |||||||||||
Cash
flows from operating activities:
|
|||||||||||||
Net
loss
|
$ | (3,399 | ) | $ |
(3,286
|
) | $ | (4,031 | ) | ||||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||||||||
Depreciation and
amortization
|
857 | 623 | 466 | ||||||||||
Amortization of convertible note
discount
|
589 | 445 | 1,706 | ||||||||||
Amortization of warrant costs on
long-term debt - related party
|
305 | 70 | – | ||||||||||
Deferred financing
costs
|
75 | 146 | 553 | ||||||||||
Loss on disposal of property and
equipment
|
3 | – | 43 | ||||||||||
Provision for doubtful
accounts
|
– | – | 4 | ||||||||||
Stock issued for
services
|
– | 6 | 10 | ||||||||||
Stock based employee
compensation
|
130 | 189 | – | ||||||||||
Minority
interest
|
(73 | ) | (5 | ) | – | ||||||||
Changes in operating assets and
liabilities:
|
|||||||||||||
Accounts
receivable
|
35 | (4 | ) | (131 | ) | ||||||||
Prepaid expenses and other
current assets
|
(30 | ) | 63 | (63 | ) | ||||||||
Accounts
payable
|
63 | (218 | ) | 47 | |||||||||
Accrued
compensation
|
128 | 1 | (23 | ) | |||||||||
Other accrued
liabilities
|
29 | (18 | ) | (108 | ) | ||||||||
Deferred
revenue
|
27 | (153 | ) | 99 | |||||||||
Net
cash used in operating activities
|
(1,261 | ) | (2,141 | ) | (1,428 | ) | |||||||
Cash
flows from investing activities:
|
|||||||||||||
Acquisition
of property and equipment
|
(26 | ) | (93 | ) | (107 | ) | |||||||
Capitalization
of software development costs
|
(788 | ) | (510 | ) | (299 | ) | |||||||
Net
cash used in investing activities
|
(814 | ) | (603 | ) | (406 | ) | |||||||
Cash
flows from financing activities:
|
|||||||||||||
Proceeds
from issuance of long-term debt – related party
|
1,120 | 600 | – | ||||||||||
Proceeds
from issuance of common stock net of related expenses
|
2,602 | – | – | ||||||||||
Principal
payments on short-term debt
|
(1,265 | ) | – | (36 | ) | ||||||||
Principal
payments on long-term debt – related party
|
– | – | (13 | ) | |||||||||
Principal
payments on capital lease obligations
|
(5 | ) | (8 | ) | (9 | ) | |||||||
Proceeds
from exercise of stock options
|
– | – | 5 | ||||||||||
Net
cash provided by (used in) financing activities
|
2,452 | 592 | (53 | ) | |||||||||
Effect
of exchange rate changes on cash
|
40 | 30 | – | ||||||||||
Net
increase (decrease) in cash and cash equivalents
|
417 | (2,122 | ) | (1,887 | ) | ||||||||
Cash
and cash equivalents at beginning of year
|
727 | 2,849 | 4,736 | ||||||||||
Cash
and cash equivalents at end of year
|
$ | 1,144 | $ | 727 | $ | 2,849 | |||||||
December
31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Interest paid
|
$ | 244 | $ | 109 | $ | 237 | ||||||
Schedule
of non-cash transactions:
|
||||||||||||
Fair
value of warrants issued to the investors in connection with long –term
debt
|
$ | 23 | $ | – | $ | – | ||||||
Fair
value of warrants issued to the investors in connection with long –term
debt
|
$ | 546 | $ | 336 | – | |||||||
Fair
value of the adjustment to the beneficial conversion feature associated
with the convertible notes
|
$ | 202 | $ | – | $ | – | ||||||
Common
stock issued upon the conversion of long-term debt, net
|
$ | – | $ | 460 | $ | 2,322 | ||||||
Issuance
of common stock for services
|
$ | – | $ | 6 | $ | 10 |
2007
|
2006
|
|||||||
Cash
in bank
|
$ | 89 | $ | 533 | ||||
Money
market funds
|
1,055 | 194 | ||||||
Cash and cash
equivalents
|
$ | 1,144 | $ | 727 |
2007
|
2006
|
|||||||
Machinery
and equipment
|
$ | 1,179 | $ | 1,216 | ||||
Office
furniture and fixtures
|
435 | 483 | ||||||
Leasehold
improvements
|
90 | 90 | ||||||
Purchased
software
|
319 | 315 | ||||||
2,023 | 2,104 | |||||||
Less
accumulated depreciation and amortization
|
(1,946 | ) | (1,964 | ) | ||||
$ | 77 | $ | 140 |
·
|
Patent
numbers 5544255, 5647017, 5818955 and 6064751 involve (a) the electronic
capture of a handwritten signature utilizing an electronic tablet device
on a standard computer system within an electronic document, (b) the
verification of the identity of the person providing the electronic
signature through comparison of stored signature measurements, and (c) a
system to determine whether an electronic document has been modified after
signature.
|
·
|
Patent
number 6091835 involves all of the foregoing and the recording of the
electronic execution of a document regardless of whether execution occurs
through a handwritten signature, voice pattern, fingerprint or other
identifiable means.
|
·
|
Patent
numbers 5933514, 6212295, 6381344, and 6487310 involve methods and
processes related to handwriting recognition developed by the Company over
the years. Legal fees associated with these patents were
immaterial and expensed as the fees were
incurred.
|
Expiration
|
Estimated Original
Life
|
2007
|
2006
|
||||||||||||
Patent
(Various)
|
Various
|
5 | $ | 9 | $ | 9 | |||||||||
Patent
(Various)
|
Various
|
7 | 476 | 476 | |||||||||||
5544255 |
2013
|
13 | 93 | 93 | |||||||||||
5647017 |
2014
|
14 | 187 | 187 | |||||||||||
5818955 |
2015
|
15 | 373 | 373 | |||||||||||
6064751 |
2017
|
17 | 1,213 | 1,213 | |||||||||||
6091835 |
2017
|
17 | 4,394 | 4,394 | |||||||||||
6,745 | 6,745 | ||||||||||||||
Less
accumulated amortization
|
(3,217 | ) | (2,839 | ) | |||||||||||
$ | 3,528 | $ | 3,906 | ||||||||||||
·
|
The
estimated cash flow from products based upon each patent are expected to
exceed the value assigned to each
patent;
|
·
|
There
are no legal, regulatory or contractual provisions known to the Company
that limit the useful life of each patent to less than the assigned useful
life;
|
·
|
No
additional material costs need to be incurred or modifications made in
order for the Company to continue to be able to realize the protection
afforded by the patents; and
|
·
|
The
Company, does not foresee any effects of obsolescence or significant
competitive pressure on its current or future products, anticipates
increasing demand for products utilizing the patented technology, and
believes that the current markets for its products based on the patented
technology will remain constant or will grow over the useful lives
assigned to the patents because of a legal, regulatory and business
environment encouraging the use of electronic
signatures.
|
2007
|
2006
|
|||||||
Accrued
professional services
|
$ | 134 | $ | 125 | ||||
Refundable
deposits
|
− | 48 | ||||||
Rents
|
43 | − | ||||||
Interest
|
66 | 27 | ||||||
Other
|
55 | 69 | ||||||
Total
|
$ | 298 | $ | 269 |
Payments
due by period
|
||||||||||||||||||||||||||||
Contractual
obligations
|
Total
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
|||||||||||||||||||||
Short-term
debt related party (1)
|
$ | 1,720 | $ | 1,720 | $ | – | $ | – | $ | – | $ | – | $ | – | ||||||||||||||
Long-term
debt (2)
|
117 | – | 117 | – | – | – | – | |||||||||||||||||||||
Operating
lease commitments (3)
|
1,056 | 264 | 272 | 280 | 240 | – | – | |||||||||||||||||||||
Total
contractual cash obligations
|
$ | 2,893 | $ | 1,984 | $ | 389 | $ | 280 | $ | 240 | $ | – | $ | – |
1.
|
Short-term
debt reported on the balance sheet is net of approximately $350 in
discounts representing the fair value of warrants issued in connection
with the Company’s debt financings. Short-term debt includes $1,170 due to
a related party.
|
2.
|
Long-term
debt reported on the balance sheet is net of approximately $21 in
discounts representing the fair value of warrants issued to the
investors.
|
3.
|
The
operating lease commenced on November 1, 2002. The lease was renegotiated
in December 2005 and extended for an additional 60 months. The base rent
will increase approximately 3% per annum over the term of the lease, which
expires on October 31, 2011.
|
2005
|
||||
Net
income (loss) as reported
|
$ | (4,031 | ) | |
Add:
Stock-based employee compensation expense included in reported results of
operations, net of related tax effects
|
- | |||
Deduct:
Total stock-based employee compensation expense determined under fair
value-based method for all awards, net of related tax
effects
|
(1,298 | ) | ||
Pro forma net
loss
|
$ | (5,329 | ) | |
Basic
and diluted net loss per share available to stockholders:
|
||||
As reported
|
$ | (0.04 | ) | |
Pro forma
|
$ | (0.05 | ) |
Year
Ended
December
31, 2007
|
Year
Ended
December
31, 2006
|
||
Risk
free interest rate
|
3.32%
- 5.11%
|
4.60%
- 5.11%
|
|
Expected
life (years)
|
3.21
– 6.83
|
3.46
-5.02
|
|
Expected
volatility
|
80.96%
- 104.57%
|
80.92%
- 104.57%
|
|
Expected
dividends
|
None
|
None
|
Year
Ended
December
31, 2007
|
Year
Ended
December
31, 2006
|
|||
Research
and development
|
$
18
|
$
54
|
||
Sales
and marketing
|
66
|
92
|
||
General
and administrative
|
13
|
22
|
||
Director
options
|
33
|
21
|
||
Stock-based
compensation expense included in operating expenses
|
$
130
|
$
189
|
December
31, 2007
|
December
31, 2006
|
|||||||
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic Value
|
Weighted
Average Remaining Contractual Life
|
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic Value
|
Weighted
Average Remaining Contractual Life
|
|
Outstanding
at beginning of period
|
5,893
|
$0.69
|
8,591
|
$0.75
|
||||
Granted
|
870
|
$0.21
|
1,764
|
$0.44
|
||||
Exercised
|
−
|
$0.00
|
(19)
|
$0.42
|
||||
Forfeited
|
(727)
|
$0.98
|
(4,443)
|
$0.72
|
||||
Outstanding
at period end
|
6,036
|
$0.59
|
4.7
|
5,893
|
$0.69
|
5.4
|
||
Options
vested and exercisable at period end
|
5,364
|
$0.62
|
4.5
|
5,066
|
$0.74
|
5.2
|
||
Weighted
average grant-date fair value of options granted during the
period
|
$0.14
|
$0.24
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||
Range
of Exercise Prices
|
Options
Outstanding
|
Weighted
Average Remaining Contractual Life(in years)
|
Weighted
Average Exercise Price
|
Number
Outstanding
|
Weighted
Average Exercise Price
|
|||||||||||||||||
$ | 0.00 – $0.50 | 2,504 | 5.3 | $ | 0.32 | 1,832 | $ | 0.34 | ||||||||||||||
$ | 0.51 – $1.00 | 3,341 | 4.3 | $ | 0.73 | 3,341 | $ | 0.73 | ||||||||||||||
$ | 1.01 – $2.00 | 176 | 2.0 | $ | 1.31 | 176 | $ | 1.31 | ||||||||||||||
$ | 2.01 – $2.99 | − | 0.0 | $ | 0.00 | − | $ | 0.00 | ||||||||||||||
$ | 3.00 – $7.50 | 15 | 2.5 | $ | 3.56 | 15 | $ | 3.56 | ||||||||||||||
6,036 | 5,364 |
Nonvested
Shares
|
Shares
|
Weighted
Average
Grant-Date
Fair
Value
|
||||||
Nonvested
at January 1, 2007
|
827 | $ | 0.36 | |||||
Granted
|
870 | $ | 0.14 | |||||
Forfeited
|
(727 | ) | $ | 0.29 | ||||
Vested
|
(298 | ) | $ | 0.26 | ||||
Nonvested
|
672 | $ | 0.22 |
2007
|
2006
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating loss carryforwards
|
$ | 28,987 | $ | 28,182 | ||||
Credit
carryforwards
|
315 | 315 | ||||||
Deferred
income
|
172 | 162 | ||||||
Other,
net
|
317 | 213 | ||||||
Total
deferred tax assets
|
29,791 | 28,872 | ||||||
Valuation
allowance
|
(29,791 | ) | (28,872 | ) | ||||
Net
deferred tax assets
|
$ | - | $ | - |
2007
|
2006
|
2005
|
||||||||||
Expected
income tax benefit
|
$ | (1,157 | ) | $ | (1,085 | ) | $ | (1,327 | ) | |||
State
income tax benefit
|
(204 | ) | (291 | ) | 234 | |||||||
Expired
net operating loss
|
1,512 | 1,471 | 2,268 | |||||||||
Change
in valuation allowance and other
|
(151 | ) | (95 | ) | (1,175 | ) | ||||||
Income
tax expense (benefit)
|
$ | – | $ | – | $ | – |
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
||||||||||||||||
2007
Unaudited
|
||||||||||||||||||||
Net
sales
|
$ | 334 | $ | 555 | $ | 456 | $ | 800 | $ | 2,145 | ||||||||||
Gross
profit
|
$ | 276 | $ | 393 | $ | 356 | $ | 595 | $ | 1,620 | ||||||||||
Loss
before income taxes, and minority interest
|
$ | (810 | ) | $ | (845 | ) | $ | (1,107 | ) | $ | (710 | ) | $ | (3,472 | ) | |||||
Net
loss
|
$ | (807 | ) | $ | (843 | ) | $ | (1,105 | ) | $ | (644 | ) | $ | (3,399 | ) | |||||
Basic
and diluted loss per share
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | |||||
2006
Unaudited
|
||||||||||||||||||||
Net
sales
|
$ | 701 | $ | 448 | $ | 701 | $ | 492 | $ | 2,342 | ||||||||||
Gross
profit
|
$ | 634 | $ | 419 | $ | 645 | $ | 394 | $ | 2,092 | ||||||||||
Loss
before income taxes, and minority interest
|
$ | (813 | ) | $ | (928 | ) | $ | (672 | ) | $ | (878 | ) | $ | (3,291 | ) | |||||
Net
loss
|
$ | (811 | ) | $ | (925 | ) | $ | (669 | ) | $ | (881 | ) | $ | (3,286 | ) | |||||
Basic
and diluted loss per share
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | |||||
Balance
At
Beginning
Of Period
|
Charged
to
Costs
and
Expense
|
Deductions
|
Balance
At
End
Of Period
|
|||||||||||||
Year
ended December 31, 2005:
|
||||||||||||||||
Accounts
receivable reserves
|
$ | 404 | $ | 4 | $ | (21 | ) | $ | 387 | |||||||
Year
ended December 31, 2006:
|
||||||||||||||||
Accounts
receivable reserves
|
$ | 387 | $ | 10 | $ | - | $ | 397 | ||||||||
Year
ended December 31, 2007:
|
||||||||||||||||
Accounts
receivable reserves
|
$ | 397 | $ | 123 | $ | (403 | ) | $ | 117 | |||||||
Consulting
Agreement
|
|
Name:
GSMeyer & Associates LLC
|
|
Address:4
Nerseian Way
|
|
City/State/Zip:
Hampton, NH 03842
|
|
Telephone:
(603) 502 7978
|
|
1.Communication
Intelligence Corporation (the "Company" or “CIC”) wishes to obtain your
services as a consultant on projects agreed by you and the Company in
writing. The initial project on which you are to work is
described in Exhibit A attached hereto. This letter shall
constitute an agreement ("the Agreement") between you and the Company and
contains all the terms and conditions relating to the services you are to
provide. All work shall be work made for hire.
|
|
2.Either
you or the Company may terminate this Agreement at any time by at least
thirty (30) days prior written notice.
|
|
3.As
consideration for your services and other obligations you will be paid at
the rate set forth on Exhibit A attached hereto for work on the project.
|
|
4.
It is agreed that you will use your own office space, supplies, tools,
materials and office supplies.
|
|
5.You
shall be reimbursed for reasonable travel and other out-of-pocket expenses
incurred by you in connection with your services under this Agreement,
provided that you provide receipts and obtain prior approval of the
officer of the Company named on Exhibit A (the "Responsible Officer") for
such expenses. Expenses including, but not limited to, professional
association membership fees, education, compensation to subcontractors and
the cost of appropriate business insurance are not reimbursable by the
Company as they are considered expenses incurred in maintaining a
consulting business.
|
|
6.Your
relationship with the Company shall be that of an independent contractor
and not that of an employee. You will not be eligible for any employee
benefits, nor will the Company make deductions from your fees nor make
payment for social security, state or federal income tax, state or federal
unemployment insurance, or disability insurance, all of which shall be
your responsibility. The Company will not obtain workers' compensation
insurance for you. You shall have no authority to enter into contracts
which bind the company or create obligations on the part of the Company
without the express prior written authorization of the Company.
|
|
7.All
services to be performed by you will be as agreed between you and the
Responsible Officer of the Company. There will be no supervision exercised
over the details, means or process of your work and the Company does not
retain the right to control these details. You shall report to the
Responsible Officer concerning your services performed under this
Agreement. The nature and frequency of these reports will be left to the
discretion of the Responsible Officer. This Agreement will have no formal
reporting requirements except as to the progress of the project, which may
be subject to a deadline.
|
|
8.Consultant
acknowledges that in connection with this Agreement it will receive
information confidential and proprietary to CIC. Consultant agrees not to
use such information except in the performance of this Agreement, and not
to disclose such information to any other party except for the purposes
hereof and only to a party bound by like obligations of confidentiality.
|
|
9.Neither
Consultant nor any of its Associates shall remove any CIC property from
CIC's premises without the prior written consent of CIC. All Deliverables,
established by this agreement, shall be the sole property of CIC, and
Consultant hereby assigns to CIC all right, titles and interest in and to
the Deliverables, including but not limited to all patent rights,
copyrights (including audio-visual copyrights), trade secret rights and
copyrights to future projects. During and after the term of this
Agreement, Consultant shall assist CIC and its nominees in every
reasonable way, at CIC's expense, to document, secure, maintain and defend
for CIC's own benefit in any and all countries all copyrights (including
audio-visual copyrights), patent rights, trade secret rights and other
proprietary rights in and to the Deliverables. Consultant at CIC's request
will execute whatever documents are necessary to secure CIC's rights in
proprietary information including copyrights.
|
|
10.The
Company understands that you do not presently perform or intend to
perform, during the term of this Agreement, consulting or other services
for any other companies where your service might represent a conflict of
interest to CIC (except for the companies, if any, listed in Exhibit B
attached hereto). If, however, you decide to do so, you agree to notify
the Company in writing in advance (specifying the organization with which
you propose to consult) and provide information sufficient to allow the
Company to determine if such consulting would conflict with areas of
interest to the Company or further services which the Company might
request of you pursuant to this Agreement.
|
|
11.Provided
it does not materially interfere with your performance under this
Agreement, and subject to the notice provision of paragraph 10, you may,
during the term of this Agreement, render services on your own account or
for any other person or entity as a consultant.
|
|
12.You
shall obtain business liability insurance and workers' compensation
insurance, if required by law, covering yourself and/or your employees
during the term of this Agreement. You may select the carrier for these
insurance policies. You shall pay the premiums for these insurance
policies and these premiums shall not be reimbursable by the Company.
|
|
13.You
are advised to seek independent tax and legal advice concerning this
Agreement and are not relying on any tax, legal or other advice concerning
this Agreement from the Company or from any other firms providing
professional services for the Company.
|
|
14.Any
amendment to this Agreement must be in writing signed by you and the
Company.
|
|
15.All
notices, requests and other communications called for by this Agreement
shall be deemed to have been given if made in writing and mailed, postage
prepaid if to you at the address set forth above and if to the Company to
Communication Intelligence Corporation, 275 Shoreline Drive, Suite 500,
Redwood Shores, CA 94065, or to such other addresses as either party shall
specify to the other.
|
|
16.The
validity, performance and construction of this Agreement shall be governed
by the laws of the State of California, without regard to those provisions
related to choice of laws.
|
|
17.This
Agreement supersedes any prior consulting or other agreements between you
and the Company.
|