Delaware
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52-2263942
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State or other jurisdiction of incorporation or organization
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IRS Employer Identification No.
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80 Blanchard Road
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Burlington, Massachusetts
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01803
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(Address of Principal Executive Offices)
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(Zip Code)
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(781) 376-5555
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(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
x
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Page
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Part I
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Financial Information
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||
Item 1.
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Financial Statements
|
||
Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2012 and September 30, 2011
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4
|
||
Condensed Consolidated Statements of Operations (unaudited) for the three and six months ended March 31, 2012 and 2011
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5
|
||
Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended March 31, 2012 and 2011
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6
|
||
Notes to Interim Condensed Consolidated Financial Statements (unaudited)
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7
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||
Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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18
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Item 3.
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Qualitative and Quantitative Disclosures About Market Risk
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31
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Item 4.
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Controls and Procedures
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31
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Part II
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Other Information
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||
Item 1.
Item 2.
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Legal Proceedings
Unregistered Sales of Equity Securities and Use of Proceeds
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32
32
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|
Item 5. | Other Information | 32 | |
Item 6.
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Exhibits
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33
|
|
Signatures
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34
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ASSETS
|
March 31,
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September 30,
|
||||||
2012
|
2011
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 1,352 | $ | 2,528 | ||||
Accounts receivable and unbilled receivables, net
|
3,672 | 4,274 | ||||||
Prepaid expenses and other current assets
|
846 | 494 | ||||||
Total current assets
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5,870 | 7,296 | ||||||
Equipment and improvements, net
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3,082 | 1,779 | ||||||
Intangible assets, net
|
1,270 | 1,527 | ||||||
Goodwill
|
20,809 | 20,122 | ||||||
Other assets
|
664 | 685 | ||||||
Total assets
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$ | 31,695 | $ | 31,409 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 987 | $ | 1,291 | ||||
Accrued liabilities
|
937 | 1,081 | ||||||
Accrued earnouts, current
|
527 | 295 | ||||||
Debt, current
|
1,366 | 1,750 | ||||||
Capital lease obligations, current
|
200 | 216 | ||||||
Deferred revenue
|
1,206 | 1,169 | ||||||
Total current liabilities
|
5,223 | 5,802 | ||||||
Accrued earnouts, net of current portion
|
923 | 772 | ||||||
Debt, net of current portion
|
3,344 | 3,017 | ||||||
Capital lease obligations, net of current portion
|
209 | 215 | ||||||
Other long term liabilities
|
1,206 | 395 | ||||||
Total liabilities
|
$ | 10,905 | $ | 10,201 | ||||
Commitments and contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Preferred stock - $0.001 par value; 1,000,000 shares authorized;
none issued and outstanding
|
- | - | ||||||
Common stock -$0.001 par value; 20,000,000 shares authorized;
12,606,511 and 12,306,207 shares issued and outstanding,
respectively
|
13 | 12 | ||||||
Additional paid-in capital
|
38,329 | 38,083 | ||||||
Accumulated deficit
|
(17,399 | ) | (16,770 | ) | ||||
Accumulated other comprehensive loss
|
(153 | ) | (117 | ) | ||||
Total stockholders’ equity
|
20,790 | 21,208 | ||||||
Total liabilities and stockholders’ equity
|
$ | 31,695 | $ | 31,409 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Revenue:
|
||||||||||||||||
Web application development services
|
$ | 5,441 | $ | 5,381 | $ | 10,749 | $ | 10,924 | ||||||||
Managed service hosting
|
611 | 501 | 1,227 | 968 | ||||||||||||
Subscription and perpetual licenses
|
620 | 731 | 1,213 | 1,250 | ||||||||||||
Total revenue
|
6,672 | 6,613 | 13,189 | 13,142 | ||||||||||||
Cost of revenue:
|
||||||||||||||||
Web application development services
|
2,771 | 2,963 | 5,626 | 5,976 | ||||||||||||
Managed service hosting
|
85 | 115 | 191 | 261 | ||||||||||||
Subscription and perpetual licenses
|
100 | 178 | 220 | 361 | ||||||||||||
Total cost of revenue
|
2,956 | 3,256 | 6,037 | 6,598 | ||||||||||||
Gross profit
|
3,716 | 3,357 | 7,152 | 6,544 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
1,846 | 1,779 | 3,561 | 3,422 | ||||||||||||
General and administrative
|
1,001 | 1,022 | 2,001 | 1,920 | ||||||||||||
Research and development
|
480 | 470 | 883 | 852 | ||||||||||||
Depreciation and amortization
|
435 | 333 | 850 | 681 | ||||||||||||
Impairment of intangible asset
|
---- | ---- | 281 | ---- | ||||||||||||
Total operating expenses
|
3,762 | 3,604 | 7,576 | 6,875 | ||||||||||||
Loss from operations
|
(46 | ) | (247 | ) | (424 | ) | (331 | ) | ||||||||
Interest income (expense), net
|
(72 | ) | (61 | ) | (136 | ) | (112 | ) | ||||||||
Loss before income taxes
|
(118 | ) | (308 | ) | (560 | ) | (443 | ) | ||||||||
Provision for income taxes
|
48 | 21 | 69 | 42 | ||||||||||||
Net loss
|
$ | (166 | ) | $ | (329 | ) | $ | (629 | ) | $ | (485 | ) | ||||
Net loss per share:
|
||||||||||||||||
Basic and diluted
|
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.04 | ) | ||||
Number of weighted average shares:
|
||||||||||||||||
Basic and diluted
|
12,338,156 | 12,254,793 | 12,328,899 | 12,069,326 |
Six Months Ended
|
||||||||
March 31,
|
||||||||
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (629 | ) | $ | (485 | ) | ||
Adjustments to reconcile net loss to net cash provided by
operating activities:
|
||||||||
Amortization of intangible assets
|
386 | 398 | ||||||
Impairment of intangible asset
|
281 | - | ||||||
Depreciation
|
464 | 312 | ||||||
Other amortization
|
90 | 175 | ||||||
Stock-based compensation
|
155 | 187 | ||||||
Contingent earnout liability adjustment
|
(313 | ) | - | |||||
Changes in operating assets and liabilities, net of acquisitions:
|
||||||||
Accounts receivable and unbilled receivables
|
833 | (191 | ) | |||||
Prepaid expenses and other assets
|
(209 | ) | (308 | ) | ||||
Accounts payable and accrued liabilities
|
(745 | ) | (327 | ) | ||||
Deferred revenue
|
(134 | ) | 277 | |||||
Other liabilities
|
(139 | ) | (18 | ) | ||||
Total adjustments
|
669 | 505 | ||||||
Net cash provided by operating activities
|
40 | 20 | ||||||
Cash flows from investing activities:
|
||||||||
Equipment and improvements
|
(580 | ) | (213 | ) | ||||
Acquisitions, net of cash acquired
|
(33 | ) | - | |||||
Software development capitalization costs
|
(14 | ) | - | |||||
Contingent acquisition payments
|
(261 | ) | (413 | ) | ||||
Net cash used in investing activities
|
(888 | ) | (626 | ) | ||||
Cash flows from financing activities:
|
||||||||
Proceeds from sale of common stock, net of issuance costs
|
- | 857 | ||||||
Proceeds from exercise of employee stock options
|
20 | 121 | ||||||
Borrowings from bank line of credit
|
1,875 | 4,450 | ||||||
Payments on bank line of credit
|
(1,849 | ) | (4,625 | ) | ||||
Payments on acquired debt
|
(120 | ) | - | |||||
Payments on subordinated promissory notes
|
(83 | ) | (42 | ) | ||||
Principal payments on capital leases
|
(135 | ) | (82 | ) | ||||
Net cash (used in)/provided by financing activities
|
(292 | ) | 679 | |||||
Effect of exchange rate changes on cash and cash equivalents
|
(36 | ) | 7 | |||||
Net (decrease)/increase in cash and cash equivalents
|
(1,176 | ) | 80 | |||||
Cash and cash equivalents at beginning of period
|
2,528 | 3,045 | ||||||
Cash and cash equivalents at end of period
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$ | 1,352 | $ | 3,125 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for:
|
||||||||
Interest
|
$ | 130 | $ | 110 | ||||
Income taxes
|
$ | 34 | $ | 27 | ||||
Non cash activities:
|
||||||||
Equipment purchased under capital leases
|
$ | 104 | $ | 573 | ||||
Equipment and other assets included in accounts payable
|
$ | 237 | $ | 50 | ||||
Accrued contingent consideration (earnouts)
|
$ | 600 | $ | - | ||||
Common stock issued in connection with acquisition
|
$ | 150 | $ | - |
As of
March 31, 2012
|
As of
September 30, 2011
|
|||||||
Accounts receivable
|
$ | 3,448 | $ | 4,197 | ||||
Unbilled receivables
|
409 | 365 | ||||||
Subtotal
|
3,857 | 4,562 | ||||||
Allowance for doubtful accounts
|
(185 | ) | (288 | ) | ||||
Accounts receivable and unbilled receivables, net
|
$ | 3,672 | $ | 4,274 |
Net assets acquired:
|
Amount
|
|||
Cash
|
$ | 17 | ||
Accounts Receivable, net
|
139 | |||
Other Assets
|
103 | |||
Fixed Assets
|
57 | |||
Intangible Assets
|
410 | |||
Goodwill
|
522 | |||
Total Assets
|
1,248 | |||
Current Liabilities
|
448 | |||
Total liabilities assumed
|
448 | |||
Net assets acquired:
|
$ | 800 | ||
Purchase Price:
|
||||
Cash Paid
|
$ | 50 | ||
Contingent earnouts - payable in cash
|
600 | |||
Contingent earnouts - payable in common stock
|
150 | |||
$ | 800 |
Six Months
|
Six Months
|
|||||||
(in thousands, except per share data)
|
Ended
|
Ended
|
||||||
March 31, 2012
|
March 31, 2011
|
|||||||
Total revenue
|
$ | 13,189 | $ | 14,293 | ||||
Net loss
|
$ | (629 | ) | $ | (433 | ) | ||
Net loss per share:
|
||||||||
Basic and diluted
|
$ | (0.05 | ) | $ | (0.04 | ) | ||
Number of weighted average shares:
|
||||||||
Basic and diluted
|
12,329 | 12,069 |
As of March 31, 2012
|
||||||||||||
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
||||||||||
Intangible assets:
|
||||||||||||
Domain and trade names
|
$ | 26 | $ | (26 | ) | $ | - | |||||
Customer related
|
3,747 | (2,631 | ) | 1,116 | ||||||||
Non-compete agreements
|
697 | (543 | ) | 154 | ||||||||
Acquired software
|
362 | (362 | ) | - | ||||||||
Total intangible assets
|
$ | 4,832 | $ | (3,562 | ) | $ | 1,270 | |||||
As of September 30, 2011
|
||||||||||||
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
||||||||||
Intangible assets:
|
||||||||||||
Domain and trade names
|
$ | 26 | $ | (26 | ) | $ | - | |||||
Customer related
|
3,397 | (2,032 | ) | 1,365 | ||||||||
Non-compete agreements
|
637 | (475 | ) | 162 | ||||||||
Acquired software
|
362 | (362 | ) | - | ||||||||
Total intangible assets
|
$ | 4,422 | $ | (2,895 | ) | $ | 1,527 |
Amortization expense charged to:
|
Three Months Ended
March 31,
|
Six Months Ended
March 31,
|
||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Operating expense *
|
$ | 191 | $ | 6 | $ | 667 | $ | 30 | ||||||||
Cost of revenue
|
- | 184 | - | 368 | ||||||||||||
Total
|
$ | 191 | $ | 190 | $ | 667 | $ | 398 |
As of
|
As of
|
|||||||
March 31,
2012
|
September 30,
2011
|
|||||||
Balance at beginning of period
|
$ | 20,122 | $ | 20,036 | ||||
Acquisitions
|
522 | - | ||||||
Contingent acquisition payments
|
165 | 86 | ||||||
Balance at end of period
|
$ | 20,809 | $ | 20,122 |
Level 1
|
Quoted prices in active markets for identical assets or liabilities; |
Level 2
|
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
As of
|
As of
|
|||||||
March 31,
2012
|
September 30,
2011
|
|||||||
Level 3:
|
||||||||
Contingent earnout liabilities
|
$ | 1,450 | $ | 1,067 |
Balance at September 30, 2011
|
$ | 1,067 | ||
Contingent earnout liability accruals
|
788 | |||
Contingent earnout liability payments
|
(261 | ) | ||
Contingent earnout liability valuation adjustment
|
(144 | ) | ||
Balance at March 31, 2012
|
$ | 1,450 |
As of
|
As of
|
|||||||
March 31, 2012
|
September 30, 2011
|
|||||||
Line of credit borrowings
|
$ | 2,418 | $ | 2,392 | ||||
Bank term loan
|
2,000 | 2,000 | ||||||
Subordinated promissory note
|
292 | 375 | ||||||
Total debt
|
$ | 4,710 | $ | 4,767 | ||||
Less current portion
|
$ | 1,366 | $ | 1,750 | ||||
Long term debt, net of current portion
|
$ | 3,344 | $ | 3,017 |
Stock Options
|
Stock Warrants
|
|||||||||||||||
Options
|
Weighted
Average
|
Warrants
|
Weighted
Average
|
|||||||||||||
Outstanding, September 30, 2011
|
2,280,204
|
$
|
1.00
|
207,000
|
$
|
4.13
|
||||||||||
Granted
|
1,737,667
|
0.68
|
—
|
—
|
||||||||||||
Exercised
|
(133,638
|
)
|
0.82
|
—
|
—
|
|||||||||||
Forfeited, cancelled or expired
|
(1,036,330
|
)
|
1.04
|
—
|
—
|
|||||||||||
Outstanding, March 31, 2012
|
2,847,903
|
$
|
0.79
|
207,000
|
$
|
4.13
|
Three Months Ended
March 31,
|
Six Months Ended
March 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net loss
|
$
|
(166)
|
$
|
(329)
|
$
|
(629)
|
$
|
(485)
|
||||||||
Net change in foreign currency translation adjustment
|
(30)
|
5
|
(36)
|
7
|
||||||||||||
Comprehensive loss
|
$
|
(196)
|
$
|
(324)
|
$
|
(665)
|
$
|
(478)
|
(in thousands, except per share data)
|
Three Months Ended
March 31,
|
Six Months Ended
March 31,
|
||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net loss
|
$ | (166 | ) | $ | (329 | ) | $ | (629 | ) | $ | (485 | ) | ||||
Weighted average common shares outstanding - basic
|
12,338 | 12,255 | 12,329 | 12,069 | ||||||||||||
Effect of dilutive securities (primarily stock options)
|
- | - | - | - | ||||||||||||
Weighted average common shares outstanding - diluted
|
12,338 | 12,255 | 12,329 | 12,069 | ||||||||||||
Net loss per share - basic and diluted
|
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.04 | ) |
Revenue:
|
Three Months
Ended
|
Three Months
Ended
|
$
Change
|
%
Change
|
Six Months
Ended
|
Six Months
Ended
March 31,
2011
|
$
Change
|
%
Change
|
||||||||||||||||||||||||
Web application development services
|
||||||||||||||||||||||||||||||||
iAPPS application development services
|
$ | 3,524 | $ | 2,083 | 1,441 | 69 | % | $ | 6,539 | $ | 4,383 | 2,156 | 49 | % | ||||||||||||||||||
% of total revenue
|
53 | % | 31 | % | 50 | % | 33 | % | ||||||||||||||||||||||||
Other application development services
|
1,917 | 3,298 | (1,381 | ) | (42 | %) | 4,210 | 6,541 | (2,331 | ) | (36 | %) | ||||||||||||||||||||
% of total revenue
|
29 | % | 50 | % | 32 | % | 50 | % | ||||||||||||||||||||||||
Subtotal web application development services
|
5,441 | 5,381 | 60 | 1 | % | 10,749 | 10,924 | (175 | ) | (2 | %) | |||||||||||||||||||||
% of total revenue
|
82 | % | 81 | % | 81 | % | 83 | % | ||||||||||||||||||||||||
Managed service hosting
|
611 | 501 | 110 | 22 | % | 1,227 | 968 | 259 | 27 | % | ||||||||||||||||||||||
% of total revenue
|
9 | % | 8 | % | 9 | % | 7 | % | ||||||||||||||||||||||||
Subscription and perpetual licenses
|
620 | 731 | (111 | ) | (15 | %) | 1,213 | 1,250 | (37 | ) | (3 | %) | ||||||||||||||||||||
% of total revenue
|
9 | % | 11 | % | 9 | % | 10 | % | ||||||||||||||||||||||||
Total revenue
|
6,672 | 6,613 | 59 | 1 | % | 13,189 | 13,142 | 47 | 0 | % | ||||||||||||||||||||||
Cost of revenue:
|
||||||||||||||||||||||||||||||||
Web application development services
|
||||||||||||||||||||||||||||||||
iAPPS application development costs
|
1,692 | 993 | 699 | 70 | % | 3,139 | 2,105 | 1,034 | 49 | % | ||||||||||||||||||||||
% of iAPPS application development revenue
|
48 | % | 48 | % | 48 | % | 48 | % | ||||||||||||||||||||||||
Other application development costs
|
1,079 | 1,970 | (891 | ) | (45 | %) | 2,487 | 3,871 | (1,384 | ) | (36 | %) | ||||||||||||||||||||
% of other application development revenue
|
56 | % | 60 | % | 59 | % | 59 | % | ||||||||||||||||||||||||
Subtotal web application development costs
|
2,771 | 2,963 | (192 | ) | (6 | %) | 5,626 | 5,976 | (350 | ) | (6 | %) | ||||||||||||||||||||
% of web application development services revenue
|
51 | % | 55 | % | 52 | % | 55 | % | ||||||||||||||||||||||||
Managed service hosting
|
85 | 115 | (30 | ) | (26 | %) | 191 | 261 | (70 | ) | (27 | %) | ||||||||||||||||||||
% of managed service hosting revenue
|
14 | % | 23 | % | 16 | % | 27 | % | ||||||||||||||||||||||||
Subscription and perpetual licenses
|
100 | 178 | (78 | ) | (44 | %) | 220 | 361 | (141 | ) | (39 | %) | ||||||||||||||||||||
% of subscription and perpetual revenue
|
16 | % | 24 | % | 18 | % | 29 | % | ||||||||||||||||||||||||
Total cost of revenue
|
2,956 | 3,256 | (300 | ) | (9 | %) | 6,037 | 6,598 | (561 | ) | (9 | %) | ||||||||||||||||||||
Gross profit
|
3,716 | 3,357 | 359 | 11 | % | 7,152 | 6,544 | 608 | 9 | % | ||||||||||||||||||||||
Gross profit margin
|
56 | % | 51 | % | 54 | % | 50 | % | ||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||
Sales and marketing
|
1,846 | 1,779 | 67 | 4 | % | 3,561 | 3,422 | 139 | 4 | % | ||||||||||||||||||||||
% of total revenue
|
28 | % | 27 | % | 27 | % | 26 | % | ||||||||||||||||||||||||
General and administrative
|
1,001 | 1,022 | (21 | ) | (2 | %) | 2,001 | 1,920 | 81 | 4 | % | |||||||||||||||||||||
% of total revenue
|
15 | % | 15 | % | 15 | % | 15 | % | ||||||||||||||||||||||||
Research and development
|
480 | 470 | 10 | 2 | % | 883 | 852 | 31 | 4 | % | ||||||||||||||||||||||
% of total revenue
|
7 | % | 7 | % | 7 | % | 6 | % | ||||||||||||||||||||||||
Depreciation and amortization
|
435 | 333 | 102 | 31 | % | 850 | 681 | 169 | 25 | % | ||||||||||||||||||||||
% of total revenue
|
7 | % | 5 | % | 13 | % | 5 | % | ||||||||||||||||||||||||
Impairment of intangible asset
|
- | - | - | - | 281 | - | 281 | (100 | %) | |||||||||||||||||||||||
% of total revenue
|
- | - | 6 | % | - | |||||||||||||||||||||||||||
Total operating expenses
|
3,762 | 3,604 | 158 | 4 | % | 7,576 | 6,875 | 701 | 10 | % | ||||||||||||||||||||||
Loss from operations
|
(46 | ) | (247 | ) | 201 | (81 | %) | (424 | ) | (331 | ) | (93 | ) | 28 | % | |||||||||||||||||
Interest income (expense) net
|
(72 | ) | (61 | ) | (11 | ) | 18 | % | (136 | ) | (112 | ) | (24 | ) | 21 | % | ||||||||||||||||
Loss before income taxes
|
(118 | ) | (308 | ) | 190 | (62 | %) | (560 | ) | (443 | ) | (117 | ) | 26 | % | |||||||||||||||||
Provision for income taxes
|
48 | 21 | 27 | 129 | % | 69 | 42 | 27 | 64 | % | ||||||||||||||||||||||
Net loss
|
$ | (166 | ) | $ | (329 | ) | $ | 163 | (50 | %) | $ | (629 | ) | $ | (485 | ) | $ | (144 | ) | 30 | % | |||||||||||
Adjusted EBITDA
|
$ | 524 | $ | 256 | $ | 268 | 105 | % | $ | 952 | $ | 741 | $ | 211 | 28 | % |
(in thousands)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
Net loss
|
$ | (166 | ) | $ | (329 | ) | $ | (629 | ) | $ | (485 | ) | ||||
Provision for income tax
|
48 | 21 | 69 | 42 | ||||||||||||
Interest expense (income), net
|
72 | 61 | 136 | 112 | ||||||||||||
Amortization of intangible assets
|
191 | 190 | 386 | 398 | ||||||||||||
Impairment of intangible asset
|
- | - | 281 | - | ||||||||||||
Depreciation
|
244 | 150 | 464 | 312 | ||||||||||||
EBITDA
|
389 | 93 | 707 | 379 | ||||||||||||
Other amortization
|
40 | 91 | 90 | 175 | ||||||||||||
Stock based compensation
|
95 | 72 | 155 | 187 | ||||||||||||
Adjusted EBITDA
|
$ | 524 | $ | 256 | $ | 952 | $ | 741 |
·
|
Revenue recognition;
|
·
|
Allowance for doubtful accounts;
|
·
|
Accounting for cost of computer software to be sold, leased or otherwise marketed;
|
·
|
Accounting for goodwill and other intangible assets; and
|
·
|
Accounting for stock-based compensation.
|
|
·
|
The Company’s performance since the last annual test has not deteriorated as both revenue and gross profit have increased and loss from operations was greater compared to fiscal 2010 due the Company’s decision to invest in its iAPPS product suite; and
|
|
·
|
The significant decrease in stock price is relatively recent as the stock price was $1.44 at December 31, 2010, $1.10 at March 31, 2011, and $0.95 at June 30, 2011 and is not related to a change in the market conditions that would affect the Company.
|
Item 1.
|
Legal Proceedings.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
Item 5.
|
Other Information
|
Exhibit No. |
Description of Document
|
||
10.1 | Sixth Loan Modification Agreement dated May 11, 2012 between Bridgeline Digital, Inc., Bridgeline Intelligence Group, Inc. and Silicon Valley Bank. | ||
31.1
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
||
31.2
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
||
32.1
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).
|
||
32.2
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).
|
||
101.INS* | XBRL Instance | ||
101.SCH* | XBRL Taxonomy Extension Schema | ||
101.CAL* | XBRL Taxonomy Extension Calculation | ||
101.DEF* | XBRL Taxonomy Extension Definition | ||
101.LAB* | XBRL Taxonomy Extension Labels | ||
101.PRE* | XBRL Taxonomy Extension Presentation |
Bridgeline Digital, Inc.
|
||
(Registrant)
|
||
May 14, 2012
|
/s/ Thomas L. Massie
|
|
Date
|
Thomas L. Massie
President and Chief Executive Officer
(Principal Executive Officer)
|
|
May 14, 2012
|
/s/ Michael D. Prinn
|
|
Date
|
Michael D. Prinn
Senior Vice President Finance and Chief Accounting Officer
(Principal Financial and Accounting Officer)
|
Exhibit No. |
Description of Document
|
||
10.1 | Sixth Loan Modification Agreement dated May 11, 2012 between Bridgeline Digital, Inc., Bridgeline Intelligence Group, Inc. and Silicon Valley Bank. | ||
31.1
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
||
31.2
|
Certification required by Rule 13a-14(a) or Rule 15d-14(a).
|
||
32.1
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).
|
||
32.2
|
Certification required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).
|
||
101.INS* | XBRL Instance | ||
101.SCH* | XBRL Taxonomy Extension Schema | ||
101.CAL* | XBRL Taxonomy Extension Calculation | ||
101.DEF* | XBRL Taxonomy Extension Definition | ||
101.LAB* | XBRL Taxonomy Extension Labels | ||
101.PRE* | XBRL Taxonomy Extension Presentation |
|
A.
|
Modifications to Loan Agreement.
|
|
1.
|
The Loan Agreement shall be amended by deleting the following text appearing as Section 2.1.5(c) and Section 2.1.5(d) thereof:
|
|
2.
|
The Loan Agreement shall be amended by deleting the following text appearing as Section 6.2(a)(i) thereof:
|
|
3.
|
The Loan Agreement shall be amended by deleting the following text appearing at the end of Section 6.2(a) thereof:
|
|
4.
|
The Loan Agreement shall be amended by deleting the following text appearing as Section 6.9(b) thereof:
|
|
5.
|
The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:
|
|
6.
|
The Loan Agreement shall be amended by deleting the following text appearing as clause (e) of the definition of “Eligible Accounts” in Section 13.1 thereof:
|
|
7.
|
The Loan Agreement shall be amended by inserting the following new definitions in Section 13.1 thereof, each in its appropriate alphabetical order:
|
|
8.
|
The Loan Agreement shall be amended by deleting the following definition appearing in Section 13.1 thereof:
|
|
9.
|
The Compliance Certificate attached as
Exhibit B
to the Loan Agreement is hereby deleted and replaced with
Exhibit B
attached hereto.
|
|
A.
|
copies, certified by a duly authorized officer of each Borrower, to be true and complete as of the date hereof, of each of (i) the governing documents of each Borrower, respectively, as in effect on the date hereof (but only to the extent modified since last delivered to the Bank), (ii) the resolutions of each Borrower, respectively, authorizing the execution and delivery of this Loan Modification Agreement, the other documents executed in connection herewith and each Borrower’s respective performance of all of the transactions contemplated hereby (but only to the extent required since last delivered to Bank), and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized (but only to the extent any signatories have changed since such incumbency certificate was last delivered to Bank);
|
|
B.
|
a certificate of the Secretary of State (or similar entity) of the applicable jurisdiction of organization of a recent date as to each Borrower’s respective existence and good standing;
|
|
C.
|
results of UCC searches and other searches as necessary with respect to the Collateral indicating no Liens (other than the Liens of Bank or Permitted Liens) and otherwise in form and substance satisfactory to the Bank;
|
|
D.
|
updated/ supplements to the Perfection Certificate for each Borrower, as necessary; and
|
|
E.
|
such other documents as Bank may reasonably request.
|
BORROWER:
|
BANK:
|
BRIDGELINE DIGITAL, INC.
By: /s/Michael Prinn
Name: Michael D. Prinn
Title: Chief Accounting Officer
|
SILICON VALLEY BANK
By: /s/ Steve Lyons
Name: Steve Lyons
Title: Relationship Manager
|
BRIDGELINE INTELLIGENCE GROUP, INC.
By: /s/Michael Prinn
Name: Michael D. Prinn
Title: Treasurer
|
TO: | SILICON VALLEY BANK | Date: |
FROM: | BRIDGELINE DIGITAL, INC. | |
BRIDGELINE INTELLIGENCE GROUP, INC. |
Reporting Covenant
|
Required
|
Complies
|
Monthly financial statements with
Compliance Certificate
|
Monthly within 30 days
|
Yes No
|
Annual financial statement (CPA Audited)
|
FYE within 150 days
|
Yes No
|
10-Q, 10-K and 8-K
|
Within 5 days after filing with SEC
|
Yes No
|
A/R & A/P Agings, Transaction Reports and
Deferred Revenue reports*
|
Monthly within 30 days
|
Yes No
|
Board-approved projections
|
Annually, w/in 45 days of approval and
as amended
|
Yes No
|
Borrowing Base Certificate*
|
Monthly within 30 days and with each
request for a Credit Extension
|
Yes No
|
Financial Covenant
|
Required
|
Actual
|
Complies
|
Maintain at all times:
|
|||
Minimum EBITDA (tested quarterly, on a
trailing three-month basis)
|
*
|
_________:1.00
|
Yes No
|
March 31, 2011
|
$200,000
|
$_________
|
Yes No
|
June 30, 2011
|
$300,000
|
$_________
|
Yes No
|
September 30, 2011 and thereafter
|
$400,000
|
$_________
|
Yes No
|
Minimum Liquidity (certified monthly)
|
**
|
$_________
|
Yes No
|
BRIDGELINE DIGITAL, INC.
BRIDGELINE INTELLIGENCE GROUP, INC.
By:
Name:
Title:
|
BANK USE ONLY
Received by: _____________________
authorized signer
Date: ______________________
Verified: ________________________
authorized signer
Date: ______________________
Compliance Status: Yes No
|
Quarterly Period Ending
|
Minimum EBITDA
|
March 31, 2011
|
$200,000
|
June 30, 2011
|
$300,000
|
September 30, 2011, and as of the last day of each quarterly period ending thereafter
|
$400,000”
|
A.
|
Net Income
|
$________
|
B.
|
Interest Expense
|
$________
|
C.
|
To the extent deducted from the calculation of Net Income, non-cash stock compensation expense, depreciation expense and amortization expense (including, without limitation, goodwill)
|
$________
|
D.
|
Other one-time non-cash expenses approved by Bank, on a case-by-case basis, in its sole discretion
|
$________
|
E.
|
EBITDA (line A plus line B plus line C plus line D)
|
$________
|
A.
|
Unrestricted Cash at Bank (excluding drawn Non-formula Advances held at Bank)
|
$________
|
B.
|
unused Availability Amount (but excluding any undrawn availability with respect to Non-formula Advances)
|
$________
|
C.
|
Liquidity (line A
plus
line B)
|
$________
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Bridgeline Digital, 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 Company as of, and for, the periods presented in this report;
|
|
4.
|
The Company’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 Company 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 Company, 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 Company’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 Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’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 Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’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 Company’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 Company’s internal control over financial reporting.
|
|
/s/ Thomas L. Massie
|
|
Name:
|
Thomas L. Massie
|
|
Title:
|
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Bridgeline Digital, 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 Company as of, and for, the periods presented in this report;
|
|
4.
|
The Company’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 Company 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 Company, 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 Company’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;
|
|
(d)
|
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
|
|
5.
|
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’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 Company’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 Company’s internal control over financial reporting.
|
/s/ Michael D. Prinn
|
||
Name:
|
Michael D. Prinn
|
|
Title:
|
Senior Vice President Finance and Chief Accounting Officer
(Principal Financial and Accounting Officer)
|
Date: May 14, 2012
|
/s/ Thomas L. Massie
|
|
Name:
|
Thomas L. Massie
|
|
Title:
|
President and Chief Executive Officer
(Principal Executive Officer)
|
Date: May 14, 2012
|
/s/ Michael D. Prinn
|
|
Name:
|
Michael D. Prinn
|
|
Title:
|
Senior Vice President Finance and Chief Accounting Officer
(Principal Financial and Accounting Officer)
|