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Delaware
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27-2992077
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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The NASDAQ Global Market
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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PART I
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PART II
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PART III
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PART IV
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our financial performance and our ability to achieve or sustain profitability or predict future results;
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our ability to attract and retain customers;
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our ability to deliver high-quality customer service;
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the growth of demand for enterprise work management applications;
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our plans regarding, and our ability to effectively manage, our growth;
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our plans regarding future acquisitions and our ability to consummate and integrate acquisitions;
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maintaining our senior management team and key personnel;
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our ability to maintain and expand our direct sales organization;
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the performance of our resellers;
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our ability to obtain financing in the future on acceptable terms or at all;
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our ability to adapt to changing market conditions and competition;
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our ability to successfully enter new markets and manage our international expansion;
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the operation and reliability of our third-party data centers;
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our ability to adapt to technological change and continue to innovate;
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economic and financial conditions;
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our ability to integrate our applications with other software applications;
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maintaining and expanding our relationships with third parties;
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costs associated with defending intellectual property infringement and other claims;
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our ability to maintain, protect and enhance our brand and intellectual property;
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our ability to comply with privacy laws and regulations;
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our expectations with respect to revenue, cost of revenue and operating expenses in future periods;
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our expectations with regard to trends, such as seasonality, which affect our business;
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our expectations as to the payment of dividends;
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our expectations with regard to revenue from perpetual licenses and professional services;
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our beliefs regarding the sufficient duration of our patents;
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our plans with respect to foreign currency exchange risk and inflation;
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our beliefs regarding how our applications benefit customers and what our competitive strengths are; and
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other risk factors included under “Risk Factors” in this Annual Report on Form 10-K.
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Project & Information Technology (IT) Management
. Enables users to manage their organization’s projects, professional workforce, and IT costs.
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Workflow Automation
. Enables users to automate document-intensive workflow business processes across their enterprise and supply chain.
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Digital Engagement
. Enables users to more effectively engage with their customers, prospects, and community via the web and mobile technologies.
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Information Technology
. Information technology departments use our applications to manage a variety of information technology activities and resources, such as projects and application portfolios. Our applications help information technology departments ensure they are delivering against the objectives of the business by helping to select and prioritize the right investments, gain greater control of resource demand and allocation, and track and report benefit realization. Our applications enable executives to gain better insight into information technology spending to help prevent cost overruns and understand the nature of consumption. By enabling information technology teams to make more informed decisions with real-time visibility across the complete information technology portfolio, our applications empower information technology departments to shift from a cost center to a more strategic enterprise function.
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Process Excellence and Operations
. Process excellence, Lean Six Sigma, and similar functional groups within customers use our applications to facilitate critical process improvement efforts. Our applications help provide high-level visibility and tracking of process excellence programs, automate processes and streamline workflows while improving process governance. Process improvement and similar business transformation initiatives continue to be a key driver of corporate performance, especially among large global corporations.
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Finance
. Finance departments use our applications as a cost allocation tool to assess and validate proposed investments and initiatives of a particular line-of-business, as well as increase the visibility and governance of capital expenditures and cost-cutting projects and deepen the understanding of actual resource utilization and costs. Our applications help improve collaboration between finance departments and particular lines of business, in addition to streamlining compliance and accounting workflows.
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Professional Services
. Professional services organizations, such as consulting or software development firms, employ our applications to streamline service delivery and optimize utilization of billable
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Marketing
. Marketing teams employ our applications to enhance their overall marketing effectiveness. We offer applications that help customers build their online and mobile brand presence, engage their target audiences, collaborate on the creation and publication of content, and gain increased control over marketing workflows, activities and budgets. Our applications empower marketing and communications organizations to more effectively manage the influx of projects, information, processes, and systems necessary to meet today’s modern marketing requirements.
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Our applications enable our customers to more effectively align programs, initiatives, investments, and projects with overall business objectives, helping ensure the right work is done at the right time. This alignment drives increased productivity and optimizes the allocation and utilization of people, time and money within organizations.
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Our applications help customers to more effectively manage projects and tasks by enabling real-time visibility, collaboration, structured workflows, and access to the right content and information. This provides teams of distributed workers with clarity into priorities and expectations as well as the tools to execute effectively, resulting in increased productivity, transparency, accountability, and the ability to respond rapidly to change.
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Our applications collect and make available real-time data regarding the planning, management, and execution of projects and work processes across teams and business units which enables a more complete view of teams, projects, and resources at anytime from anywhere.
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Our applications provide analytics and reporting capabilities that transform disparate data in real-time into actionable intelligence, enabling users to make better informed business decisions. Our applications enable customers to conduct dynamic and sophisticated “what-if” and scenario analyses that can improve their ability to respond effectively to changing business conditions.
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Customers can easily access our cloud-based applications with an Internet browser. Our applications do not require large up-front software expenditures or significant ongoing infrastructure or information technology support. In addition, our applications have a modern look and feel that helps provide a consistent user experience across our platform.
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Our applications are highly configurable, which provides us with flexibility to meet the unique business requirements of individual customers. Our applications are also scalable and are able to support large deployments while maintaining required performance levels. We provide tools to help our customers manage the critical elements of application security, including authentication, authorization, and regulatory compliance.
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Large, diversified customer base
. Our customer base is highly diverse and spans a broad array of industries, including financial services, retail, technology, manufacturing, education, consumer goods, media, telecommunications, government, food and beverage, healthcare and life sciences. We service customers of varying size, ranging from large global corporations and government agencies to small- and medium-sized businesses. We have over
2,500
customers, with no customer accounting for more than
3%
of our revenue.
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Diversified family of software applications
. We offer a family of software applications that addresses a broad range of enterprise needs. We believe this benefits our customers as compared to many of our cloud-based competitors who offer only a single point solution for a more limited and discrete need. Our current applications address the information technology, process excellence, finance, professional
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Recurring revenue model with high visibility
. We believe we have a an attractive operating model due to the recurring nature of our subscription revenue, which results in greater visibility and predictability of future revenue and enhances our ability to effectively manage our business. In addition, the cloud-based nature of our model accommodates significant additional business volume with limited incremental costs, providing us with opportunities to improve our operating margins.
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Proven M&A capability
. We have a proven ability to successfully identify, acquire and integrate complementary businesses to grow our company, as evidenced by the
twelve
acquisitions we have completed since the beginning of 2012, which excludes one additional acquisition closed in January 2017. We believe that our acquisition experience and strategy gives us a competitive advantage in identifying additional opportunities to expand our family of software applications to better serve our customers.
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Experienced, proven management team
. Our management team has significant operating experience and previously occupied key leadership roles at both private and public companies. In addition, our management’s extensive knowledge of the industry and experience in building businesses has enabled us to quickly establish a leading position within the enterprise software market.
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Cloud-based delivery
. We deliver our software applications and functionality primarily through the cloud, with no hardware or software installation required by our customers. This delivery model allows us to provide reliable, cost-effective applications to our customers, add subscribers with minimal incremental expense and deploy new functionality and upgrades quickly and efficiently. We believe our cloud-based delivery model provides us with a competitive advantage over legacy processes and on-premise systems.
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Commitment to customer success
. We have a dedicated customer success organization whose mission is to drive adoption, value realization, retention, and loyalty across our customer base. Our focus on enabling our customers’ success is a key reason our annual net dollar retention rate was
95%
as of
December 31, 2016
. Our commitment to customer success has enabled us to expand our footprint within customers and facilitate the ongoing adoption of our enterprise software applications. We utilize Net Promoter Score (NPS) methodology to track our progress and drive continuous improvement.
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Increase sales to existing customers
. We believe there is a significant opportunity to expand the adoption of our applications within existing customers, particularly within divisions or departments that have not previously used our applications. We also intend to cross-sell additional applications to our existing customers, as very few of our customers currently use more than one of our applications. In addition, we intend to add new applications to our family of applications that will address additional functions within the enterprise spectrum. We believe these initiatives will significantly increase the value of our platform to our customers, further strengthen our competitive position, and drive increased adoption of multiple applications by our customers.
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Add new customers
. We maintain direct sales and marketing capabilities in order to further grow our customer base. We also maintain indirect sales channels through alliances with strategic partners that can leverage our applications with complementary services and technologies they provide. In addition, we continue to expand the range of integrations between our software and third-party applications and platforms, which we believe make our applications more attractive to a broader audience of potential customers.
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Acquire complementary software businesses
. We intend to pursue acquisitions of complementary technologies, products, and businesses to expand our product families and customer base and provide access to new markets and increased benefits of scale. Our dedicated and experienced corporate
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Expand globally
. We believe there is an opportunity to grow sales of our applications globally. In fiscal
2016
,
2015
, and
2014
, approximately
16%
,
19%
, and
22%
, respectively, of our revenue was derived from sales outside the United States. Over the next several years, we plan to continue to evaluate growth opportunities outside the United States through selective acquisitions, the hiring of additional sales personnel, and entering into strategic partnerships.
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Improve and enhance applications
. We intend to continue to invest in research and development and work closely with our customers to identify and improve new applications, features and functionalities that address customer requirements across the enterprise spectrum. We also intend to continue to expand the breadth of our applications with additional analytics, third-party integrations, and social and mobile capabilities to meet the evolving needs of today’s knowledge workers.
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gather, develop, and assess ideas and proposed investments;
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prioritize and select projects and investments according to business value and strategic fit;
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more effectively allocate resources in alignment with business objectives;
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respond quickly to change with real-time visibility into status and the ability to evaluate the impact of potential changes; and
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gauge performance against strategic objectives, execution-level indicators, and financial metrics.
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create resource capacity plans;
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align available skills, expertise and capacity with project requirements;
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more efficiently plan and schedule projects;
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track resource and expense allocation for specific projects, activity types or budget categories;
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analyze workforce performance;
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streamline timesheet review, approval, and reporting processes;
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manage time, travel, and entertainment expenses; and
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streamline project cost reporting, billing, and revenue recognition processes.
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quantify and understand the total cost of ownership of information technology applications and services;
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establish product and unit-costing metrics for benchmarking and/or chargeback;
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provide information technology and finance departments with the ability to chargeback business units for applications and services, including cloud services, based on metered consumption;
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provide business managers with insights into their consumption of information technology services to better utilize information technology services with business goals and objectives;
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leverage utilization and capacity metrics for “what-if” analysis and modeling;
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analyze fixed versus variable information technology-related costs to identify opportunities for savings; and
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support demand-based budgeting and forecasting processes.
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empower organizations with one extensible, easy-to-use platform that takes documents and puts them into a single, highly-accessible archive;
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increase customer satisfaction and save time through automated processes, go digital with increased accessibility, allowing for better management of customer interactions and improve overall service response times;
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lower total costs by consolidating fax infrastructure by relying on Fax over IP technology that enables least cost routing;
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reduce risk though highly-scalable, reliable infrastructure that seamlessly supports a wide range of industries;
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streamline mission-critical document workflows such as, e-filing, scanning to document management systems (DMS), and managing sensitive intellectual property, while maintaining high levels of document integrity and security; and
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protect sensitive data thanks to the ability to set custom business rules, such as holding documents until authorized users can access them.
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empower collaboration by providing a way for employees, suppliers, and partners to access, share, and update content from anywhere;
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streamline workflows by creating custom rules to process and route content for approval;
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automatically capture, index, classify, and organize enterprise content in a secure, central repository with document retention policies to meet business and compliance requirements; and
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apply and enforce document retention policies to meet business and compliance requirements.
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acquire actionable business intelligence, collaboration, and execution for all aspects of supply chain operations;
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implement a seamless migration to pull-based replenishment resulting in reductions in stock-outs and expensive expediting costs, higher order fulfillment rates, and improved customer service levels; and
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enable a closed-loop manufacturing and supply chain management processes resulting in reductions in raw material, work-in-process and finished goods inventory and reductions to inventory carrying costs.
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streamline the process for creating and managing website content;
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deliver more relevant, personalized content to website visitors based on the tracking of individual visitor behavior;
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convert website visits to actionable sales leads;
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integrate user-generated content, such as polls, surveys, blogs, ratings, and comments, into their websites;
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engage entire target audiences with one-on-one text message conversations to achieve optimal results;
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reach the correct person at exactly the right moment through list segmentation and scheduling;
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provide timely alerts and reminders on important events based on user preferences;
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respond to users instantly, answering questions via text message;
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manage all mobile communications from a single place, keeping track of all users and actions;
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analyze campaign performance at all levels and every action;
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run surveys, polls, and quizzes to gather information and engage users; and
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ensure security and privacy of information through comprehensive policies, procedures, and technical controls.
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use of our website to provide information about us and our software applications, as well as educational opportunities for potential customers;
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field marketing events for customers and prospective customers;
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participation in, and sponsorship of, executive events, trade shows, and industry events;
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our online virtual user conferences;
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integrated digital marketing campaigns, including email, online advertising, blogs, and webinars;
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public relations, analyst relations, and social media initiatives; and
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sales representatives who respond to incoming leads to convert them into new sales opportunities.
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Customer Care
. Our customer care team assists customers throughout their lifecycle with the Upland family of applications by making service offerings available to all customers as part of their standard customer agreements, including webinars, virtual user conferences, and online community engagement.
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Professional Services
. Our professional services team is responsible for coordinating all activities relating to the implementation, transition, and on-boarding of new customers and assisting new customers with the addition of new applications to their accounts. Typical professional services engagements vary in length from a few weeks to several months depending on the size and scope of the engagement and are in addition to services provided under our standard customer agreement and are fee-based. In addition, our project managers and consultants work closely with our customers to provide services that help customers maximize the utility of our applications.
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Account Management
. We assign each customer an account team with a relationship manager who functions as the customer’s single point of contact and advocate within Upland. Our account management teams are trained on all of our applications and work closely with the relationship manager to ensure that our customers receive high-quality consultative service.
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Customer Support
. We offer support from all of our office locations to help our customers maximize the return on their investment in our applications. We provide 24/7 customer support around the world through our online customer support portal. In addition, our customer support team manages and administers the Upland customer community forum and knowledge base repository.
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Health Checks and Program Reviews
: Engages core users and business buyer sponsors to deliver a detailed scorecard and recommendation report.
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Advisory and Retained Services
: Provides access to a specific customer success contact with priority scheduling and periodic checkpoints.
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System Deployment and Adoption Analysis
: Analyzes system configuration and usage patterns, resulting in best practice recommendations on improving user adoption and compliance.
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Consumption Review and Recommendations
: Delivers best practice recommendations for implementation strategy and a roadmap proposal for aligning the system with customers’ evolving process maturity to increase application usage.
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Premier Success Plans
: Provides a bundled services, support, and product experience offering with three tiers (standard, gold and platinum) designed to provide maximum customer value.
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breadth and depth of application functionality;
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ease of deployment and use of applications;
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total cost of ownership;
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levels of customer support satisfaction;
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brand awareness and reputation;
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capability for configurability, integration, scalability, and reliability of applications;
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ability to innovate and respond to customer needs rapidly; and
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level of integration among applications and with other enterprise systems.
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Item 1A.
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Risk Factors
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we may not be able to identify suitable acquisition candidates or to consummate acquisitions on acceptable terms;
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we may pursue international acquisitions, which inherently pose more risks than domestic acquisitions;
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we compete with others to acquire complementary products, technologies and businesses, which may result in decreased availability of, or increased price for, suitable acquisition candidates;
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we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any or all of our potential acquisitions;
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we may ultimately fail to consummate an acquisition even if we announce that we plan to acquire a technology, product or business; and
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acquired technologies, products or businesses may not perform as we expect and we may fail to realize anticipated revenue and profits.
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issues in integrating the target company’s technologies, products or businesses with ours;
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incompatibility of marketing and administration methods;
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maintaining employee morale and retaining key employees;
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integrating the cultures of both companies;
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preserving important strategic customer relationships;
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consolidating corporate and administrative infrastructures and eliminating duplicative operations; and
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coordinating and integrating geographically separate organizations.
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issue common stock that would dilute our current stockholders’ ownership percentage;
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use a substantial portion of our cash resources;
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increase our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition;
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assume liabilities for which we do not have indemnification from the former owners; further, indemnification obligations may be subject to dispute or concerns regarding the creditworthiness of the former owners;
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record goodwill and non-amortizable intangible assets that are subject to impairment testing and potential impairment charges;
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experience volatility in earnings due to changes in contingent consideration related to acquisition earn-out liability estimates;
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incur amortization expenses related to certain intangible assets;
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lose existing or potential contracts as a result of conflict of interest issues;
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become subject to adverse tax consequences or deferred compensation charges;
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incur large and immediate write-offs; or
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become subject to litigation.
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the extent to which our existing customers purchase additional seats or volume for our applications and the timing and terms of those purchases;
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the extent to which our existing customers renew their customer agreements for our applications and the timing and terms of those renewals;
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the extent to which we cross-sell additional applications to our existing customers and the timing and terms of such cross-selling;
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the addition or loss of customers, including through acquisitions or consolidations;
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the extent to which new customers are attracted to our applications to satisfy their enterprise work management needs;
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the rate of adoption and market acceptance of enterprise work management applications;
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the mix of our revenue, particularly between product and professional services revenue, for which the timing of revenue recognition is substantially different;
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changes in the gross profit we realize on our applications and professional services due to our differing revenue recognition policies applicable to subscription and product and professional services revenue and other variables;
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the extent to which we enter into multi-year contracts, in which the support fees are typically paid in advance;
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the number and size of new customers and the number and size of renewals in a particular period;
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changes in our pricing policies or those of our competitors;
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the mix of applications sold during a period;
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the timing and expenses related to the acquisition of technologies, products or businesses and potential future charges for impairment of goodwill from such acquisitions;
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the amount and timing of operating expenses, including those related to the maintenance and expansion of our business, operations and infrastructure;
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the amount and timing of expenses related to the development of new products and technologies, including enhancements to our applications;
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the amount and timing of commissions earned by our sales personnel;
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the timing and success of new applications introduced by us or new offerings offered by our competitors;
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the length of our sales cycles;
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changes in the competitive dynamics of our industry, including consolidation among competitors, customers or strategic collaborators;
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our ability to manage our existing business and future growth, including increases in the number of customers using our applications;
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the seasonality of our business or cyclical fluctuations in our industry;
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the timing and expenses related to any international expansion efforts we may undertake and the success of such efforts;
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various factors related to disruptions in access and delivery of our cloud-based applications, errors or defects in our applications, privacy and data security and exchange rate fluctuations, each of which is described elsewhere in these risk factors; and
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g
eneral economic, industry and market conditions.
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uncertain political and economic climates;
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lack of familiarity and burdens of complying with foreign laws, accounting and legal standards, regulatory requirements, tariffs and other barriers;
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unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;
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lack of experience in connection with the localization of our applications, including translation into foreign languages and adaptation for local practices, and associated expenses and regulatory requirements;
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difficulties in adapting to differing technology standards;
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longer sales cycles and accounts receivable payment cycles and difficulties in collecting accounts receivable;
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difficulties in managing and staffing international operations, including differing legal and cultural expectations for employee relationships and increased travel, infrastructure and legal compliance costs associated with international operations;
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fluctuations in exchange rates that may increase the volatility of our foreign-based revenue and expenses;
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potentially adverse tax consequences, including the complexities of foreign value-added tax, goods and services tax and other transactional taxes;
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reduced or varied protection for intellectual property rights in some countries;
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difficulties in managing and adapting to differing cultures and customs;
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data privacy laws which require that customer data be stored and processed in a designated territory subject to laws different than the United States;
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new and different sources of competition as well as laws and business practices favoring local competitors and local employees;
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compliance with anti-bribery laws, including compliance with the Foreign Corrupt Practices Act;
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increased financial accounting and reporting burdens and complexities; and
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restrictions on the repatriation of earnings.
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the need to educate potential customers about the uses and benefits of our applications;
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the duration of the commitment customers make in their agreements with us, which are typically one to three years;
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the discretionary nature of potential customers’ purchasing and budget cycles and decisions;
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the competitive nature of potential customers’ evaluation and purchasing processes;
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the functionality demands of potential customers;
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fluctuations in the enterprise work management needs of potential customers;
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the announcement or planned introduction of new products by us or our competitors; and
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the purchasing approval processes of potential customers.
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loss or delayed market acceptance and sales;
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breach of warranty or product liability claims;
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sales credits or refunds for prepaid amounts related to unused subscription services;
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canceled contracts and loss of customers;
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diversion of development and customer service resources; and
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injury to our reputation.
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cease selling or using applications that incorporate the intellectual property that we allegedly infringe;
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make substantial payments for legal fees, settlement payments or other costs or damages;
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obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or
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redesign the allegedly infringing applications to avoid infringement, which could be costly, time-consuming or impossible.
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actual or anticipated changes in the estimates of our operating results that we provide to the public, our failure to meet these projections or changes in recommendations by securities analysts that elect to follow our common stock;
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price and volume fluctuations in the overall equity markets from time to time;
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significant volatility in the market price and trading volume of comparable companies;
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changes in the market perception of enterprise work management software generally or in the effectiveness of our applications in particular;
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disruptions in our services due to computer hardware, software or network problems;
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announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors;
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announcements of new customer agreements or upgrades and customer downgrades or cancellations or delays in customer purchases;
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litigation involving us;
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our ability to successfully consummate and integrate acquisitions;
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investors’ general perception of us;
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recruitment or departure of key personnel;
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sales of our common stock by us or our stockholders;
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fluctuations in the trading volume of our shares or the size of our public float; and
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general economic, legal, industry and market conditions and trends unrelated to our performance.
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our certificate of incorporation provides for a classified board of directors with staggered three-year terms so that not all members of our board of directors are elected at one time;
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•
|
directors may be removed by stockholders only for cause;
|
•
|
our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
|
•
|
special meetings of our stockholders may be called only by our Chief Executive Officer, our board of directors or holders of not less than the majority of our issued and outstanding capital stock limiting the ability of minority stockholders to take certain actions without an annual meeting of stockholders;
|
•
|
our stockholders may not act by written consent unless the action to be effected and the taking of such action by written consent are approved in advance by our board of directors and, as a result, a holder,
|
•
|
our certificate of incorporation prohibits cumulative voting in the election of directors. This limits the ability of minority stockholders to elect director candidates;
|
•
|
stockholders must provide timely notice to nominate individuals for election to the board of directors or to propose matters that can be acted upon at an annual meeting of stockholders and, as a result, these provisions may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us; and
|
•
|
our board of directors may issue, without stockholder approval, shares of undesignated preferred stock, making it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 4.
|
Mine Safety Disclosures
|
|
Sales Price Per Share in 2016
|
||
Year Ended December 31, 2016
|
Low
|
|
High
|
Fourth quarter
|
$7.85
|
|
$9.74
|
Third Quarter
|
$7.44
|
|
$9.90
|
Second Quarter
|
$6.80
|
|
$7.77
|
First Quarter
|
$6.00
|
|
$7.19
|
|
Sales Price Per Share in 2015
|
||
Year Ended December 31, 2015
|
Low
|
|
High
|
Fourth quarter
|
$6.77
|
|
$8.12
|
Third Quarter
|
$7.59
|
|
$9.18
|
Second Quarter
|
$5.91
|
|
$9.22
|
First Quarter
|
$6.81
|
|
$10.05
|
Item 6.
|
Selected Financial Data
|
|
December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||
|
(dollars in thousands)
|
||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
28,758
|
|
|
$
|
18,473
|
|
|
$
|
30,988
|
|
|
4,703
|
|
|
3,892
|
|
Property and equipment, net
|
4,356
|
|
|
6,001
|
|
|
3,930
|
|
|
3,942
|
|
|
1,407
|
|
|||
Intangible assets, net
|
28,512
|
|
|
31,526
|
|
|
34,751
|
|
|
34,747
|
|
|
26,388
|
|
|||
Goodwill
|
69,097
|
|
|
47,422
|
|
|
45,146
|
|
|
33,630
|
|
|
21,093
|
|
|||
Total assets
|
150,588
|
|
|
122,414
|
|
|
135,686
|
|
|
94,847
|
|
|
67,808
|
|
|||
Deferred revenue
|
23,799
|
|
|
19,939
|
|
|
21,376
|
|
|
17,036
|
|
|
16,502
|
|
|||
Total liabilities
|
91,575
|
|
|
62,144
|
|
|
64,289
|
|
|
60,191
|
|
|
44,495
|
|
|||
Redeemable convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
50,538
|
|
|
27,492
|
|
|||
Total stockholders’ equity (deficit)
|
59,013
|
|
|
60,270
|
|
|
71,397
|
|
|
(15,882
|
)
|
|
(4,179
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands, except %)
|
||||||||||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annualized recurring revenue value at year-end
(1)
|
$
|
63,968
|
|
|
$
|
58,918
|
|
|
$
|
56,800
|
|
|
$
|
49,061
|
|
|
$
|
27,093
|
|
Annual net dollar retention rate
(2)
|
95
|
%
|
|
90
|
%
|
|
96
|
%
|
|
90
|
%
|
|
n/a
|
|
|||||
Adjusted EBITDA
(3)
|
$
|
12,616
|
|
|
$
|
4,143
|
|
|
$
|
4,213
|
|
|
$
|
3,576
|
|
|
$
|
3,998
|
|
(1)
|
Annualized recurring revenue value at year-end
. The value as of December 31 equals the monthly value of our recurring revenue contracts measured as of December 31 multiplied by 12.
This measure excludes the revenue value of certain uncontracted overage fees and on-demand service fees.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Key Metrics” for additional discussion of this key metric.
|
(2)
|
Annual net dollar retention rate
. We define annual net dollar retention rate as of December 31 as the aggregate annualized recurring revenue value at December 31 from those customers that were also customers as of December 31 of the prior fiscal year, divided by the aggregate annualized recurring revenue value from all customers as of December 31 of the prior fiscal year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Key Metrics” for additional discussion of this key metric.
|
(3)
|
Adjusted EBITDA
. We monitor our Adjusted EBITDA to help us evaluate the effectiveness and efficiency of our operations. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, plus net income (loss) from discontinued operations, depreciation and amortization expense, interest expense, net, other expense (income), net, provision for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, and
purchase accounting adjustments for deferred revenue
. Prior to the filing of this Annual Report on Form 10-K, we did not include purchase accounting adjustments for deferred revenue as a component of Adjusted EBITDA, and as such, the prior year Adjusted EBITDA amounts presented herein have been recast to reflect the inclusion of purchase accounting adjustments for deferred revenue.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Net Loss
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(20,117
|
)
|
|
$
|
(9,197
|
)
|
|
$
|
(2,507
|
)
|
Net income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
642
|
|
|
(1,791
|
)
|
|||||
Depreciation and amortization expense
|
9,794
|
|
|
8,451
|
|
|
7,457
|
|
|
5,310
|
|
|
2,472
|
|
|||||
Interest expense, net
|
2,781
|
|
|
1,858
|
|
|
1,951
|
|
|
2,797
|
|
|
528
|
|
|||||
Other expense (income), net
|
678
|
|
|
544
|
|
|
(101
|
)
|
|
431
|
|
|
65
|
|
|||||
Provision for (benefit from) income taxes
|
1,530
|
|
|
1,039
|
|
|
(78
|
)
|
|
708
|
|
|
(72
|
)
|
|||||
Stock-based compensation expense
|
4,333
|
|
|
2,741
|
|
|
1,077
|
|
|
498
|
|
|
92
|
|
|||||
Acquisition-related expense
|
5,583
|
|
|
2,455
|
|
|
2,186
|
|
|
1,461
|
|
|
1,933
|
|
|||||
Stock-based compensation expense - related party vendor
|
—
|
|
|
—
|
|
|
11,220
|
|
|
—
|
|
|
—
|
|
|||||
Nonrecurring litigation expense
|
25
|
|
|
406
|
|
|
256
|
|
|
—
|
|
|
—
|
|
|||||
Purchase accounting deferred revenue discount
|
1,405
|
|
|
313
|
|
|
362
|
|
|
926
|
|
|
3,278
|
|
|||||
Adjusted EBITDA
|
$
|
12,616
|
|
|
$
|
4,143
|
|
|
$
|
4,213
|
|
|
$
|
3,576
|
|
|
$
|
3,998
|
|
•
|
Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;
|
•
|
our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance because Adjusted EBITDA eliminates the impact of items that we do not consider indicative of our core operating performance; and
|
•
|
Adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
|
•
|
depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect cash requirements for such replacements; however, much of the depreciation and amortization currently reflected relates to amortization of acquired intangible assets as a result of business combination purchase accounting adjustments, which will not need to be replaced in the future;
|
•
|
Adjusted EBITDA may not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;
|
•
|
Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation;
|
•
|
Adjusted EBITDA does not reflect interest or tax payments that could reduce cash available for use; and
|
•
|
other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Stock-based compensation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of revenue
|
$
|
44
|
|
|
$
|
42
|
|
|
$
|
49
|
|
|
$
|
16
|
|
|
$
|
—
|
|
Research and development
|
204
|
|
|
203
|
|
|
61
|
|
|
12
|
|
|
—
|
|
|||||
Sales and marketing
|
105
|
|
|
65
|
|
|
39
|
|
|
15
|
|
|
—
|
|
|||||
General and administrative
|
3,980
|
|
|
2,431
|
|
|
928
|
|
|
455
|
|
|
92
|
|
|||||
Total
|
$
|
4,333
|
|
|
$
|
2,741
|
|
|
$
|
1,077
|
|
|
$
|
498
|
|
|
$
|
92
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Depreciation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of Revenue
|
$
|
2,030
|
|
|
$
|
1,800
|
|
|
$
|
1,303
|
|
|
$
|
455
|
|
|
$
|
—
|
|
General and administrative
|
657
|
|
|
452
|
|
|
987
|
|
|
348
|
|
|
325
|
|
|||||
Total
|
$
|
2,687
|
|
|
$
|
2,252
|
|
|
$
|
2,290
|
|
|
$
|
803
|
|
|
$
|
325
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of Revenue
|
$
|
2,473
|
|
|
$
|
2,116
|
|
|
$
|
1,185
|
|
|
$
|
1,185
|
|
|
$
|
662
|
|
General and administrative
|
4,634
|
|
|
4,083
|
|
|
3,322
|
|
|
3,322
|
|
|
1,487
|
|
|||||
Total
|
$
|
7,107
|
|
|
$
|
6,199
|
|
|
$
|
4,507
|
|
|
$
|
4,507
|
|
|
$
|
2,149
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Project & Information Technology (IT) Management
. Enables users to manage their organization’s projects, professional workforce and IT costs.
|
•
|
Workflow Automation
. Enables users to automate document-intensive workflow business processes across their enterprise and supply chain.
|
•
|
Digital Engagement
. Enables users to effectively engage with their customers, prospects and community via the web and mobile technologies.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands, except %)
|
||||||||||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Annualized recurring revenue value at year-end
(1)
|
$
|
63,968
|
|
|
$
|
58,918
|
|
|
$
|
56,800
|
|
|
$
|
49,061
|
|
|
$
|
27,093
|
|
Annual net dollar retention rate
(2)
|
95
|
%
|
|
90
|
%
|
|
96
|
%
|
|
90
|
%
|
|
n/a
|
|
|||||
Adjusted EBITDA
(3)
|
$
|
12,616
|
|
|
$
|
4,143
|
|
|
$
|
4,213
|
|
|
$
|
3,576
|
|
|
$
|
3,998
|
|
(1)
|
Annualized recurring revenue value at year-end
. The value as of December 31 equals the monthly value of our recurring revenue contracts measured as of December 31 multiplied by 12.
This measure excludes the revenue value of certain uncontracted overage fees and on-demand service fees.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Key Metrics” for additional discussion of this key metric.
|
(2)
|
Annual net dollar retention rate
. We define annual net dollar retention rate as of December 31 as the aggregate annualized recurring revenue value at December 31 from those customers that were also customers as of December 31 of the prior fiscal year, divided by the aggregate annualized recurring revenue value from all customers as of December 31 of the prior fiscal year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Key Metrics” for additional discussion of this key metric.
|
(3)
|
Adjusted EBITDA
. We monitor our Adjusted EBITDA to help us evaluate the effectiveness and efficiency of our operations. Adjusted EBITDA is a non-GAAP financial measure. We define Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, plus net income (loss) from discontinued operations, depreciation and amortization expense, interest expense, net, other expense (income), net, provision for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, and
purchase accounting adjustments for deferred revenue
. Prior to the filing of this Annual Report on Form 10-K, we did not include purchase accounting adjustments for deferred revenue as a component of Adjusted EBITDA, and as such, the prior year Adjusted EBITDA amounts presented herein have been recast to reflect the inclusion of purchase accounting adjustments for deferred revenue.
|
|
Year Ended December 31,
|
|
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(dollars in thousands)
|
|
|
||||||||||||||||
Net loss
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(20,117
|
)
|
|
$
|
(9,197
|
)
|
|
$
|
(2,507
|
)
|
Income (loss) from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
642
|
|
|
(1,791
|
)
|
|||||
Depreciation and amortization expense
|
9,794
|
|
|
8,452
|
|
|
7,457
|
|
|
5,310
|
|
|
2,472
|
|
|||||
Interest expense, net
|
2,781
|
|
|
1,858
|
|
|
1,951
|
|
|
2,797
|
|
|
528
|
|
|||||
Other expense (income), net
|
678
|
|
|
544
|
|
|
(101
|
)
|
|
431
|
|
|
65
|
|
|||||
Provision for income taxes
|
1,530
|
|
|
1,039
|
|
|
(78
|
)
|
|
708
|
|
|
(72
|
)
|
|||||
Stock-based compensation expense
|
4,333
|
|
|
2,741
|
|
|
1,077
|
|
|
498
|
|
|
92
|
|
|||||
Acquisition-related expenses
|
5,583
|
|
|
2,455
|
|
|
2,186
|
|
|
1,461
|
|
|
1,933
|
|
|||||
Stock-based compensation expense --- related party vendor
|
—
|
|
|
—
|
|
|
11,220
|
|
|
—
|
|
|
—
|
|
|||||
Non-recurring litigation costs
|
25
|
|
|
406
|
|
|
256
|
|
|
—
|
|
|
—
|
|
|||||
Purchase accounting deferred revenue discount
|
1,405
|
|
|
313
|
|
|
362
|
|
|
926
|
|
|
3,278
|
|
|||||
Adjusted EBITDA
|
$
|
12,616
|
|
|
$
|
4,144
|
|
|
$
|
4,213
|
|
|
$
|
3,576
|
|
|
$
|
3,998
|
|
•
|
Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon their financing, capital structures and the method by which assets were acquired;
|
•
|
our management uses Adjusted EBITDA in conjunction with GAAP financial measures for planning purposes, in the preparation of our annual operating budget, as a measure of our operating performance, to assess the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance because Adjusted EBITDA eliminates the impact of items that we do not consider indicative of our core operating performance;
|
•
|
Adjusted EBITDA provides more consistency and comparability with our past financial performance, facilitates period-to-period comparisons of our operations and also facilitates comparisons with other companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and
|
•
|
Adjusted EBITDA should not be considered as an alternative to net loss or any other measure of financial performance calculated and presented in accordance with GAAP. The use of Adjusted EBITDA as an analytical tool has limitations such as:
|
•
|
depreciation and amortization are non-cash charges, and the assets being depreciated or amortized will often have to be replaced in the future and Adjusted EBITDA does not reflect cash requirements for such replacements; however, much of the depreciation and amortization currently reflected relates to amortization of acquired intangible assets as a result of business combination purchase accounting adjustments, which will not need to be replaced in the future;
|
•
|
Adjusted EBITDA may not reflect changes in, or cash requirements for, our working capital needs or contractual commitments;
|
•
|
Adjusted EBITDA does not reflect the potentially dilutive impact of stock-based compensation;
|
•
|
Adjusted EBITDA does not reflect interest or tax payments that could reduce cash available for use; and,
|
•
|
other companies, including companies in our industry, might calculate Adjusted EBITDA or similarly titled measures differently, which reduces their usefulness as comparative measures.
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||||||||
|
Amount
|
Percent of Revenue
|
|
Amount
|
Percent of Revenue
|
|
Amount
|
Percent of Revenue
|
|||||||||
|
(dollars in thousands, except share and per share data)
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Subscription and support
|
$
|
65,552
|
|
|
88%
|
|
$
|
57,193
|
|
|
82%
|
|
$
|
48,625
|
|
|
75%
|
Perpetual license
|
1,650
|
|
|
2%
|
|
2,805
|
|
|
4%
|
|
2,787
|
|
|
4%
|
|||
Total product revenue
|
67,202
|
|
|
90%
|
|
59,998
|
|
|
86%
|
|
51,412
|
|
|
79%
|
|||
Professional services
|
7,565
|
|
|
10%
|
|
9,913
|
|
|
14%
|
|
13,162
|
|
|
21%
|
|||
Total revenue
|
74,767
|
|
|
100%
|
|
69,911
|
|
|
100%
|
|
64,574
|
|
|
100%
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Subscription and support
(1)(2)
|
22,734
|
|
|
30%
|
|
19,586
|
|
|
28%
|
|
14,042
|
|
|
22%
|
|||
Professional services
|
4,831
|
|
|
7%
|
|
7,085
|
|
|
10%
|
|
9,079
|
|
|
14%
|
|||
Total cost of revenue
|
27,565
|
|
|
37%
|
|
26,671
|
|
|
38%
|
|
23,121
|
|
|
36%
|
|||
Gross profit
|
47,202
|
|
|
63%
|
|
43,240
|
|
|
62%
|
|
41,453
|
|
|
64%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales and marketing
(1)
|
12,160
|
|
|
16%
|
|
12,965
|
|
|
19%
|
|
14,670
|
|
|
23%
|
|||
Research and development
(1)
|
14,919
|
|
|
20%
|
|
15,778
|
|
|
23%
|
|
26,165
|
|
|
41%
|
|||
Refundable Canadian tax credits
|
(513
|
)
|
|
(1)%
|
|
(470
|
)
|
|
(1)%
|
|
(1,094
|
)
|
|
(2)%
|
|||
General and administrative
(1)
|
18,286
|
|
|
24%
|
|
18,201
|
|
|
26%
|
|
13,561
|
|
|
21%
|
|||
Depreciation and amortization
|
5,291
|
|
|
7%
|
|
4,534
|
|
|
6%
|
|
4,310
|
|
|
7%
|
|||
Acquisition-related expenses
|
5,583
|
|
|
9%
|
|
2,455
|
|
|
3%
|
|
2,186
|
|
|
3%
|
|||
Total operating expenses
|
55,726
|
|
|
75%
|
|
53,463
|
|
|
76%
|
|
59,798
|
|
|
93%
|
|||
Loss from operations
|
(8,524
|
)
|
|
(12)%
|
|
(10,223
|
)
|
|
(14)%
|
|
(18,345
|
)
|
|
(29)%
|
|||
Other Expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
(2,781
|
)
|
|
(4)%
|
|
(1,858
|
)
|
|
(3)%
|
|
(1,951
|
)
|
|
(3)%
|
|||
Other expense, net
|
(678
|
)
|
|
(1)%
|
|
(544
|
)
|
|
—%
|
|
101
|
|
|
—%
|
|||
Total other expense
|
(3,459
|
)
|
|
(5)%
|
|
(2,402
|
)
|
|
(3)%
|
|
(1,850
|
)
|
|
(3)%
|
|||
Loss before provision for income taxes
|
(11,983
|
)
|
|
(17)%
|
|
(12,625
|
)
|
|
(17)%
|
|
(20,195
|
)
|
|
(32)%
|
|||
Provision for income taxes
|
(1,530
|
)
|
|
(1)%
|
|
(1,039
|
)
|
|
(3)%
|
|
78
|
|
|
1%
|
|||
Loss from continuing operations
|
(13,513
|
)
|
|
(18)%
|
|
(13,664
|
)
|
|
(20)%
|
|
(20,117
|
)
|
|
(31)%
|
|||
Income (loss) from discontinued operations
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|||
Net loss
|
$
|
(13,513
|
)
|
|
(18)%
|
|
$
|
(13,664
|
)
|
|
(20)%
|
|
$
|
(20,117
|
)
|
|
(31)%
|
Preferred stock dividends and accretion
|
—
|
|
|
—%
|
|
—
|
|
|
—%
|
|
(1,524
|
)
|
|
(3)%
|
|||
Net loss attributable to common shareholders
(3)
|
$
|
(13,513
|
)
|
|
(18)%
|
|
$
|
(13,664
|
)
|
|
(20)%
|
|
$
|
(21,641
|
)
|
|
(34)%
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loss from continuing operations per common share, basic and diluted
|
$
|
(0.82
|
)
|
|
|
|
$
|
(0.91
|
)
|
|
|
|
$
|
(4.43
|
)
|
|
|
Loss from discontinued operations per common share, basic and diluted
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Loss per common share, basic and diluted
|
$
|
(0.82
|
)
|
|
|
|
$
|
(0.91
|
)
|
|
|
|
$
|
(4.43
|
)
|
|
|
Weighted-average common shares outstanding, basic and diluted
(3)
|
16,472,799
|
|
|
|
|
14,939,601
|
|
|
|
|
4,889,901
|
|
|
|
(1)
|
Includes stock-based compensation.
|
(2)
|
Includes depreciation and amortization of $3,916,000, $3,147,000, and $1,640,000 in 2015, 2014, and 2013, respectively.
|
(3)
|
See Note
8
to our consolidated financial statements included elsewhere in this 10-K for a discussion and reconciliation of historical net loss attributable to common stockholders and weighted average shares outstanding for historical basic and diluted net loss per share calculations.
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Subscription and support
|
$
|
65,552
|
|
|
88%
|
|
$
|
57,193
|
|
|
82%
|
|
$
|
8,359
|
|
|
15%
|
Perpetual license
|
1,650
|
|
|
2%
|
|
2,805
|
|
|
4%
|
|
(1,155
|
)
|
|
(41)%
|
|||
Total product revenue
|
67,202
|
|
|
90%
|
|
59,998
|
|
|
86%
|
|
7,204
|
|
|
12%
|
|||
Professional services
|
7,565
|
|
|
10%
|
|
9,913
|
|
|
14%
|
|
(2,348
|
)
|
|
(24)%
|
|||
Total revenue
|
$
|
74,767
|
|
|
100%
|
|
$
|
69,911
|
|
|
100%
|
|
$
|
4,856
|
|
|
7%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
12,160
|
|
|
16%
|
|
$
|
12,965
|
|
|
19%
|
|
$
|
(805
|
)
|
|
(6)%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Research and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
|
$
|
14,919
|
|
|
20%
|
|
$
|
15,778
|
|
|
23%
|
|
$
|
(859
|
)
|
|
(5)%
|
Refundable Canadian tax credits
|
(513
|
)
|
|
(1)%
|
|
(470
|
)
|
|
(1)%
|
|
(43
|
)
|
|
9%
|
|||
Total research and development
|
$
|
14,406
|
|
|
19%
|
|
$
|
15,308
|
|
|
22%
|
|
$
|
(902
|
)
|
|
(6)%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
General and administrative
|
$
|
18,286
|
|
|
24%
|
|
$
|
18,201
|
|
|
26%
|
|
$
|
85
|
|
|
—%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation
|
$
|
657
|
|
|
1%
|
|
$
|
452
|
|
|
1%
|
|
$
|
205
|
|
|
45%
|
Amortization
|
4,634
|
|
|
6%
|
|
4,082
|
|
|
6%
|
|
552
|
|
|
14%
|
|||
Total depreciation and amortization
|
$
|
5,291
|
|
|
7%
|
|
$
|
4,534
|
|
|
7%
|
|
$
|
757
|
|
|
17%
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
|
(dollars in thousands)
|
||||||||||
Acquisition-related expense
|
$5,583
|
|
7%
|
|
$2,455
|
|
4%
|
|
$3,128
|
|
127%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Other Expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
$
|
(2,781
|
)
|
|
(4)%
|
|
$
|
(1,858
|
)
|
|
(3)%
|
|
$
|
(923
|
)
|
|
50%
|
Other income (expense), net
|
(678
|
)
|
|
(1)%
|
|
(544
|
)
|
|
—%
|
|
(134
|
)
|
|
25%
|
|||
Total other expense
|
$
|
(3,459
|
)
|
|
(5)%
|
|
$
|
(2,402
|
)
|
|
(3)%
|
|
$
|
(1,057
|
)
|
|
44%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
(Provision for) Benefit from Income Taxes
|
$
|
(1,530
|
)
|
|
(2)%
|
|
$
|
(1,039
|
)
|
|
(1)%
|
|
$
|
(491
|
)
|
|
47%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Subscription and support
|
$
|
57,193
|
|
|
82%
|
|
$
|
48,625
|
|
|
75%
|
|
$
|
8,568
|
|
|
18%
|
Perpetual license
|
2,805
|
|
|
4%
|
|
2,787
|
|
|
4%
|
|
18
|
|
|
1%
|
|||
Total product revenue
|
59,998
|
|
|
86%
|
|
51,412
|
|
|
79%
|
|
8,586
|
|
|
17%
|
|||
Professional services
|
9,913
|
|
|
14%
|
|
13,162
|
|
|
21%
|
|
(3,249
|
)
|
|
(25)%
|
|||
Total revenue
|
$
|
69,911
|
|
|
100%
|
|
$
|
64,574
|
|
|
100%
|
|
$
|
5,337
|
|
|
8%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Research and development:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Research and development
|
$
|
15,778
|
|
|
23%
|
|
$
|
26,165
|
|
|
41%
|
|
$
|
(10,387
|
)
|
|
(40)%
|
Refundable Canadian tax credits
|
(470
|
)
|
|
(1)%
|
|
(1,094
|
)
|
|
(2)%
|
|
624
|
|
|
(57)%
|
|||
Total research and development
|
$
|
15,308
|
|
|
22%
|
|
$
|
25,071
|
|
|
39%
|
|
$
|
(9,763
|
)
|
|
(39)%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
General and administrative
|
$
|
18,201
|
|
|
26%
|
|
$
|
13,561
|
|
|
21%
|
|
$
|
4,640
|
|
|
34%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation
|
$
|
452
|
|
|
1%
|
|
$
|
987
|
|
|
2%
|
|
$
|
(535
|
)
|
|
(54)%
|
Amortization
|
4,083
|
|
|
5%
|
|
3,323
|
|
|
5%
|
|
760
|
|
|
23%
|
|||
Total depreciation and amortization
|
$
|
4,534
|
|
|
6%
|
|
$
|
4,310
|
|
|
7%
|
|
$
|
224
|
|
|
5%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
Other Expense:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net
|
$
|
(1,858
|
)
|
|
(3)%
|
|
$
|
(1,951
|
)
|
|
(3)%
|
|
$
|
93
|
|
|
(5)%
|
Other income (expense), net
|
(544
|
)
|
|
—%
|
|
101
|
|
|
—%
|
|
(645
|
)
|
|
(639)%
|
|||
Total other expense
|
$
|
(2,402
|
)
|
|
(3)%
|
|
$
|
(1,850
|
)
|
|
(3)%
|
|
$
|
(552
|
)
|
|
30%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2015
|
|
2014
|
|
Change
|
||||||||||||
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
Percent of Revenue
|
|
Amount
|
|
% Change
|
||||||
|
(dollars in thousands)
|
||||||||||||||||
(Provision for) Benefit from Income Taxes
|
$
|
(1,039
|
)
|
|
(1)%
|
|
$
|
78
|
|
|
—%
|
|
$
|
(1,117
|
)
|
|
(1,432)%
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(dollars in thousands)
|
||||||||||
Consolidated Statements of Cash Flow Data:
|
|
|
|
|
|
||||||
Net cash provided by (used in) operating activities
|
$
|
3,875
|
|
|
$
|
(1,503
|
)
|
|
$
|
1,177
|
|
Net cash used in investing activities
|
(13,229
|
)
|
|
(9,411
|
)
|
|
(7,078
|
)
|
|||
Net cash provided by (used in) financing activities
|
19,525
|
|
|
(1,221
|
)
|
|
32,384
|
|
|||
Effect of exchange rate fluctuations on cash
|
114
|
|
|
(380
|
)
|
|
(198
|
)
|
|||
Change in cash and cash equivalents
|
10,285
|
|
|
(12,515
|
)
|
|
26,285
|
|
|||
Cash and cash equivalents, beginning of period
|
18,473
|
|
|
30,988
|
|
|
4,703
|
|
|||
Cash and cash equivalents, end of period
|
$
|
28,758
|
|
|
$
|
18,473
|
|
|
$
|
30,988
|
|
•
|
Incur additional indebtedness or guarantee indebtedness of others;
|
•
|
Create liens on their assets;
|
•
|
Make investments, including certain acquisitions;
|
•
|
Enter into mergers or consolidations;
|
•
|
Dispose of assets;
|
•
|
Pay dividends and make other distributions on the Company’s capital stock, and redeem and repurchase the Company’s capital stock;
|
•
|
Enter into transactions with affiliates; and
|
•
|
Prepay indebtedness or make changes to certain agreements.
|
Contractual Obligations
|
Payment Due by Period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
>3-5 Years
|
|
More Than 5 Years
|
||||||||||
Debt Obligations
|
$
|
49,370
|
|
|
$
|
2,519
|
|
|
$
|
7,556
|
|
|
$
|
39,295
|
|
|
$
|
—
|
|
Capital Lease Obligations
|
$
|
3,599
|
|
|
$
|
1,645
|
|
|
$
|
1,954
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating Lease Obligations
|
$
|
3,257
|
|
|
$
|
1,181
|
|
|
$
|
2,076
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Purchase Commitments
|
$
|
2,471
|
|
|
$
|
2,471
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total
|
$
|
58,697
|
|
|
$
|
7,816
|
|
|
$
|
11,586
|
|
|
$
|
39,295
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
||||
|
2016
|
|
2015
|
|
2014
|
Weighted average grant-date fair value of options
|
$3.23
|
|
$3.01
|
|
$3.76
|
Expected volatility
|
42.5%
|
|
42.5% - 44.0%
|
|
54.1% - 55.2%
|
Risk-free interest rate
|
1.2%
|
|
1.7% - 1.9%
|
|
1.6% - 1.9%
|
Expected life in years
|
5.93
|
|
5.93
|
|
6.29
|
Dividend yield
|
—
|
|
—
|
|
—
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
(in thousands, except share and per share amounts)
|
December 31,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
28,758
|
|
|
$
|
18,473
|
|
Accounts receivable (net of allowance of $658 and $581 at December 31, 2016 and December 31, 2015, respectively)
|
15,254
|
|
|
13,972
|
|
||
Prepaid and other
|
3,287
|
|
|
2,603
|
|
||
Total current assets
|
47,299
|
|
|
35,048
|
|
||
Canadian tax credits receivable
|
978
|
|
|
2,018
|
|
||
Property and equipment, net
|
4,356
|
|
|
6,001
|
|
||
Intangible assets, net
|
28,512
|
|
|
31,526
|
|
||
Goodwill
|
69,097
|
|
|
47,422
|
|
||
Other assets
|
346
|
|
|
399
|
|
||
Total assets
|
$
|
150,588
|
|
|
$
|
122,414
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,268
|
|
|
$
|
2,548
|
|
Accrued compensation
|
2,541
|
|
|
2,441
|
|
||
Accrued expenses and other
|
5,505
|
|
|
5,173
|
|
||
Deferred revenue
|
23,552
|
|
|
19,931
|
|
||
Due to sellers
|
4,642
|
|
|
2,409
|
|
||
Current maturities of notes payable (includes unamortized discount of $329 and $250 at December 31, 2016 and December 31, 2015, respectively)
|
2,190
|
|
|
1,500
|
|
||
Total current liabilities
|
39,698
|
|
|
34,002
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Canadian tax credit liability to sellers
|
361
|
|
|
368
|
|
||
Notes payable, less current maturities (includes unamortized discount of $1,113 and $758 at December 31, 2016 and December 31, 2015, respectively
|
45,739
|
|
|
22,366
|
|
||
Deferred revenue
|
247
|
|
|
8
|
|
||
Noncurrent deferred tax liability, net
|
3,404
|
|
|
2,818
|
|
||
Other long-term liabilities
|
2,126
|
|
|
2,582
|
|
||
Total liabilities
|
91,575
|
|
|
62,144
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.0001 par value; 50,000,000 shares authorized: 17,785,288
and 15,746,288 shares issued and outstanding as of December 31, 2016 and December 31, 2015 respectively |
2
|
|
|
2
|
|
||
Additional paid-in capital
|
124,566
|
|
|
112,447
|
|
||
Accumulated other comprehensive loss
|
(3,152
|
)
|
|
(3,289
|
)
|
||
Accumulated deficit
|
(62,403
|
)
|
|
(48,890
|
)
|
||
Total stockholders’ equity
|
59,013
|
|
|
60,270
|
|
||
Total liabilities and stockholders’ equity
|
$
|
150,588
|
|
|
$
|
122,414
|
|
(in thousands, except share and per share amounts)
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Subscription and support
|
$
|
65,552
|
|
|
$
|
57,193
|
|
|
$
|
48,625
|
|
Perpetual license
|
1,650
|
|
|
2,805
|
|
|
2,787
|
|
|||
Total product revenue
|
67,202
|
|
|
59,998
|
|
|
51,412
|
|
|||
Professional services
|
7,565
|
|
|
9,913
|
|
|
13,162
|
|
|||
Total revenue
|
74,767
|
|
|
69,911
|
|
|
64,574
|
|
|||
Cost of revenue:
|
|
|
|
|
|
||||||
Subscription and support
|
22,734
|
|
|
19,586
|
|
|
14,042
|
|
|||
Professional services
|
4,831
|
|
|
7,085
|
|
|
9,079
|
|
|||
Total cost of revenue
|
27,565
|
|
|
26,671
|
|
|
23,121
|
|
|||
Gross profit
|
47,202
|
|
|
43,240
|
|
|
41,453
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
12,160
|
|
|
12,965
|
|
|
14,670
|
|
|||
Research and development
|
14,919
|
|
|
15,778
|
|
|
26,165
|
|
|||
Refundable Canadian tax credits
|
(513
|
)
|
|
(470
|
)
|
|
(1,094
|
)
|
|||
General and administrative
|
18,286
|
|
|
18,201
|
|
|
13,561
|
|
|||
Depreciation and amortization
|
5,291
|
|
|
4,534
|
|
|
4,310
|
|
|||
Acquisition-related expenses
|
5,583
|
|
|
2,455
|
|
|
2,186
|
|
|||
Total operating expenses
|
55,726
|
|
|
53,463
|
|
|
59,798
|
|
|||
Loss from operations
|
(8,524
|
)
|
|
(10,223
|
)
|
|
(18,345
|
)
|
|||
Other expense:
|
|
|
|
|
|
||||||
Interest expense, net
|
(2,781
|
)
|
|
(1,858
|
)
|
|
(1,951
|
)
|
|||
Other income (expense), net
|
(678
|
)
|
|
(544
|
)
|
|
101
|
|
|||
Total other expense
|
(3,459
|
)
|
|
(2,402
|
)
|
|
(1,850
|
)
|
|||
Loss before provision for income taxes
|
(11,983
|
)
|
|
(12,625
|
)
|
|
(20,195
|
)
|
|||
Provision for income taxes
|
(1,530
|
)
|
|
(1,039
|
)
|
|
78
|
|
|||
Net loss
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(20,117
|
)
|
Preferred stock dividends and accretion
|
—
|
|
|
—
|
|
|
(1,524
|
)
|
|||
Net loss attributable to common shareholders
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(21,641
|
)
|
Net loss per common share:
|
|
|
|
|
|
||||||
Net loss per common share, basic and diluted
|
$
|
(0.82
|
)
|
|
$
|
(0.91
|
)
|
|
$
|
(4.43
|
)
|
Weighted-average common shares outstanding, basic and diluted
|
16,472,799
|
|
|
14,939,601
|
|
|
4,889,901
|
|
(in thousands)
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net loss
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(20,117
|
)
|
Foreign currency translation adjustment
|
137
|
|
|
(1,573
|
)
|
|
(943
|
)
|
|||
Comprehensive loss
|
$
|
(13,376
|
)
|
|
$
|
(15,237
|
)
|
|
$
|
(21,060
|
)
|
(in thousands, except share amounts)
|
Common Stock
|
|
|
|
Additional
Paid-In Capital |
|
Accumulated
Other Comprehensive Loss |
|
Accumulated
Deficit |
|
Total
Stockholders’ Equity (Deficit) |
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2013
|
1,851,319
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(773
|
)
|
|
$
|
(15,109
|
)
|
|
$
|
(15,882
|
)
|
Issuance of common stock upon conversion of preferred stock
|
6,834,476
|
|
|
1
|
|
|
52,312
|
|
|
—
|
|
|
—
|
|
|
52,313
|
|
|||||
Issuance of common stock in initial public offering
|
3,846,154
|
|
|
1
|
|
|
38,845
|
|
|
—
|
|
|
—
|
|
|
38,846
|
|
|||||
Issuance of common stock to related party (Note 16)
|
1,803,574
|
|
|
—
|
|
|
11,219
|
|
|
—
|
|
|
—
|
|
|
11,219
|
|
|||||
Issuance of common stock in business combination
|
577,486
|
|
|
—
|
|
|
6,146
|
|
|
—
|
|
|
—
|
|
|
6,146
|
|
|||||
Issuance of restricted stock
|
335,673
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Exercise of stock options
|
436
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Accretion of preferred stock
|
—
|
|
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
(70
|
)
|
|||||
Preferred stock dividends
|
—
|
|
|
—
|
|
|
(1,454
|
)
|
|
—
|
|
|
—
|
|
|
(1,454
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
729
|
|
|
—
|
|
|
—
|
|
|
729
|
|
|||||
Conversion of warrants from preferred to common
|
—
|
|
|
—
|
|
|
609
|
|
|
—
|
|
|
—
|
|
|
609
|
|
|||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(943
|
)
|
|
—
|
|
|
(943
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,117
|
)
|
|
(20,117
|
)
|
|||||
Balance at December 31, 2014
|
15,249,118
|
|
|
$
|
2
|
|
|
$
|
108,337
|
|
|
$
|
(1,716
|
)
|
|
$
|
(35,226
|
)
|
|
$
|
71,397
|
|
Issuance of common stock in business combination
|
233,679
|
|
|
—
|
|
|
1,386
|
|
|
—
|
|
|
—
|
|
|
1,386
|
|
|||||
Issuance of stock under Company plans, net of shares withheld for tax
|
263,491
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|||||
Issuance of stock, net of issuance costs
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,741
|
|
|
—
|
|
|
—
|
|
|
2,741
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,573
|
)
|
|
—
|
|
|
(1,573
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,664
|
)
|
|
(13,664
|
)
|
|||||
Balance at December 31, 2015
|
15,746,288
|
|
|
$
|
2
|
|
|
$
|
112,447
|
|
|
$
|
(3,289
|
)
|
|
$
|
(48,890
|
)
|
|
$
|
60,270
|
|
Issuance of common stock in business combination
|
1,344,463
|
|
|
—
|
|
|
8,300
|
|
|
—
|
|
|
—
|
|
|
8,300
|
|
|||||
Issuance of stock under Company plans, net of shares withheld for tax
|
694,537
|
|
|
—
|
|
|
(514
|
)
|
|
—
|
|
|
—
|
|
|
(514
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
4,333
|
|
|
—
|
|
|
—
|
|
|
4,333
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
137
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,513
|
)
|
|
(13,513
|
)
|
|||||
Balance at December 31, 2016
|
17,785,288
|
|
|
$
|
2
|
|
|
$
|
124,566
|
|
|
$
|
(3,152
|
)
|
|
$
|
(62,403
|
)
|
|
$
|
59,013
|
|
(in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(20,117
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
9,794
|
|
|
8,451
|
|
|
7,457
|
|
|||
Deferred income taxes
|
|
529
|
|
|
207
|
|
|
(295
|
)
|
|||
Foreign currency re-measurement (gain) loss
|
|
(64
|
)
|
|
981
|
|
|
—
|
|
|||
Non-cash interest and other expense
|
|
327
|
|
|
376
|
|
|
589
|
|
|||
Non-cash stock compensation expense
|
|
4,333
|
|
|
2,741
|
|
|
1,077
|
|
|||
Stock-based compensation—related party vendor
|
|
—
|
|
|
—
|
|
|
11,220
|
|
|||
Loss on disposal of business
|
|
746
|
|
|
—
|
|
|
—
|
|
|||
Non-cash loss on retirement of fixed assets
|
|
276
|
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of purchase business combinations:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(361
|
)
|
|
741
|
|
|
(1,579
|
)
|
|||
Prepaids and other
|
|
648
|
|
|
1,873
|
|
|
484
|
|
|||
Accounts payable
|
|
(1,453
|
)
|
|
157
|
|
|
639
|
|
|||
Accrued expenses and other liabilities
|
|
413
|
|
|
(2,796
|
)
|
|
(924
|
)
|
|||
Deferred revenue
|
|
2,200
|
|
|
(570
|
)
|
|
2,626
|
|
|||
Net cash provided by (used in) operating activities
|
|
3,875
|
|
|
(1,503
|
)
|
|
1,177
|
|
|||
Investing activities
|
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
|
(670
|
)
|
|
(956
|
)
|
|
(861
|
)
|
|||
Purchase of customer relationships
|
|
(408
|
)
|
|
(791
|
)
|
|
—
|
|
|||
Purchase business combinations, net of cash acquired
|
|
(12,151
|
)
|
|
(7,664
|
)
|
|
(6,217
|
)
|
|||
Net cash used in investing activities
|
|
(13,229
|
)
|
|
(9,411
|
)
|
|
(7,078
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
||||||
Payments on capital leases
|
|
(1,683
|
)
|
|
(1,020
|
)
|
|
(541
|
)
|
|||
Proceeds from notes payable, net of issuance costs
|
|
30,992
|
|
|
24,083
|
|
|
5,685
|
|
|||
Payments on notes payable
|
|
(7,190
|
)
|
|
(23,907
|
)
|
|
(10,910
|
)
|
|||
Issuance of preferred stock, net of issuance costs
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|||
Issuance of common stock, net of issuance costs
|
|
(515
|
)
|
|
(18
|
)
|
|
38,846
|
|
|||
Additional consideration paid to sellers of businesses
|
|
(2,079
|
)
|
|
(359
|
)
|
|
(599
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
19,525
|
|
|
(1,221
|
)
|
|
32,384
|
|
|||
Effect of exchange rate fluctuations on cash
|
|
114
|
|
|
(380
|
)
|
|
(198
|
)
|
|||
Change in cash and cash equivalents
|
|
10,285
|
|
|
(12,515
|
)
|
|
26,285
|
|
|||
Cash and cash equivalents, beginning of period
|
|
18,473
|
|
|
30,988
|
|
|
4,703
|
|
|||
Cash and cash equivalents, end of period
|
|
$
|
28,758
|
|
|
$
|
18,473
|
|
|
$
|
30,988
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$
|
2,455
|
|
|
$
|
1,523
|
|
|
$
|
1,382
|
|
Cash paid for taxes
|
|
$
|
488
|
|
|
$
|
314
|
|
|
$
|
252
|
|
Noncash investing and financing activities:
|
|
|
|
|
|
|
||||||
Equipment acquired pursuant to capital lease obligations
|
|
$
|
1,293
|
|
|
$
|
3,428
|
|
|
$
|
1,572
|
|
Issuance of common stock in business combination
|
|
$
|
8,300
|
|
|
$
|
1,386
|
|
|
$
|
6,146
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of year
|
$
|
581
|
|
|
$
|
890
|
|
|
$
|
454
|
|
Provision
|
863
|
|
|
412
|
|
|
829
|
|
|||
Acquisitions
|
—
|
|
|
—
|
|
|
400
|
|
|||
Divestitures
|
(230
|
)
|
|
—
|
|
|
—
|
|
|||
Writeoffs, net of recoveries
|
(556
|
)
|
|
(721
|
)
|
|
(793
|
)
|
|||
Balance at end of year
|
$
|
658
|
|
|
$
|
581
|
|
|
$
|
890
|
|
Computer hardware and equipment
|
3 - 5 years
|
Purchased software and licenses
|
3 - 5 years
|
Furniture and fixtures
|
7 years
|
Leasehold improvements
|
Lesser of estimated useful life or lease term
|
|
Year Ended December 31,
|
||||
|
2016
|
|
2015
|
|
2014
|
Weighted average grant-date fair value of options
|
$3.23
|
|
$3.01
|
|
$3.76
|
Expected volatility
|
42.5%
|
|
42.5% - 44.0%
|
|
54.1% - 55.2%
|
Risk-free interest rate
|
1.2%
|
|
1.7% - 1.9%
|
|
1.6% - 1.9%
|
Expected life in years
|
5.93
|
|
5.93
|
|
6.29
|
Dividend yield
|
—
|
|
—
|
|
—
|
|
API
|
|
LeadLander
|
|
HipCricket
|
|
Ultriva
|
||||||||
Year Acquired or Divested
|
2016
|
|
2016
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
125
|
|
|
$
|
365
|
|
|
$
|
—
|
|
|
$
|
372
|
|
Accounts receivable
|
821
|
|
|
199
|
|
|
1,226
|
|
|
689
|
|
||||
Other current assets
|
54
|
|
|
55
|
|
|
273
|
|
|
52
|
|
||||
Canadian tax credit receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Property and equipment
|
68
|
|
|
5
|
|
|
—
|
|
|
16
|
|
||||
Customer relationships
|
1,420
|
|
|
970
|
|
|
1,000
|
|
|
1,820
|
|
||||
Trade name
|
40
|
|
|
70
|
|
|
70
|
|
|
140
|
|
||||
Technology
|
810
|
|
|
1,410
|
|
|
900
|
|
|
960
|
|
||||
Goodwill
|
3,420
|
|
|
13,104
|
|
|
8,531
|
|
|
4,739
|
|
||||
Other assets
|
89
|
|
|
6
|
|
|
—
|
|
|
32
|
|
||||
Total assets acquired
|
6,847
|
|
|
16,184
|
|
|
12,000
|
|
|
8,820
|
|
||||
Accounts payable
|
(11
|
)
|
|
—
|
|
|
(44
|
)
|
|
(196
|
)
|
||||
Accrued expense and other
|
(137
|
)
|
|
(254
|
)
|
|
—
|
|
|
(284
|
)
|
||||
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Deferred revenue
|
(1,699
|
)
|
|
(910
|
)
|
|
(356
|
)
|
|
(760
|
)
|
||||
Canadian tax credit liability to seller
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities assumed
|
(1,847
|
)
|
|
(1,164
|
)
|
|
(400
|
)
|
|
(1,240
|
)
|
||||
Total consideration
|
$
|
5,000
|
|
|
$
|
15,020
|
|
|
$
|
11,600
|
|
|
$
|
7,580
|
|
|
Fair Value Measurements at December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Earnout consideration liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
500
|
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Earnout consideration liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
Ending balance at December 31, 2014
|
$
|
500
|
|
Ending balance at December 31, 2015
|
500
|
|
|
Additions - stock earnouts
|
2,400
|
|
|
Additions - cash earnouts
|
2,500
|
|
|
Settlements - stock earnouts
|
(2,400
|
)
|
|
Settlements - cash earnouts
|
(500
|
)
|
|
Ending balance at December 31, 2016
|
$
|
2,500
|
|
Balance at December 31, 2013
|
$
|
33,630
|
|
Acquired in business combinations
|
12,313
|
|
|
Finalization of 2013 business combination
|
—
|
|
|
Foreign currency translation adjustment
|
(797
|
)
|
|
Balance at December 31, 2014
|
45,146
|
|
|
Acquired in business combinations
|
4,700
|
|
|
Adjustment due to finalization of 2014 business combination
|
(120
|
)
|
|
Foreign currency translation adjustment
|
(2,304
|
)
|
|
Balance at December 31, 2015
|
47,422
|
|
|
Acquired in business combinations
|
25,037
|
|
|
Divestiture of business
|
(3,775
|
)
|
|
Adjustment due to prior year business combinations
|
57
|
|
|
Foreign currency translation adjustment
|
356
|
|
|
Balance at December 31, 2016
|
$
|
69,097
|
|
|
Estimated Useful
Life (Years) |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net Carrying
Amount |
||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
1-10
|
|
$
|
32,703
|
|
|
$
|
12,418
|
|
|
$
|
20,285
|
|
Trade name
|
1.5-3
|
|
2,636
|
|
|
2,462
|
|
|
174
|
|
|||
Developed technology
|
4-7
|
|
15,228
|
|
|
7,175
|
|
|
8,053
|
|
|||
Total intangible assets
|
|
|
$
|
50,567
|
|
|
$
|
22,055
|
|
|
$
|
28,512
|
|
|
Estimated Useful
Life (Years)
|
|
Gross
Carrying Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||
Customer relationships
|
1-10
|
|
$
|
31,848
|
|
|
$
|
9,054
|
|
|
$
|
22,794
|
|
Trade name
|
1-3
|
|
2,909
|
|
|
2,476
|
|
|
433
|
|
|||
Developed technology
|
4-7
|
|
13,808
|
|
|
5,509
|
|
|
8,299
|
|
|||
Total intangible assets
|
|
|
$
|
48,565
|
|
|
$
|
17,039
|
|
|
$
|
31,526
|
|
|
2016
|
|
2015
|
Customer relationships
|
9.3
|
|
9.3
|
Trade name
|
2.8
|
|
2.9
|
Developed technology
|
6.3
|
|
6.4
|
Total weighted-average amortization period
|
8.0
|
|
8.1
|
|
2016
|
|
2015
|
|
2014
|
||||||
Income (loss) before provision for income taxes:
|
|
|
|
|
|
||||||
United States
|
$
|
(14,242
|
)
|
|
$
|
(13,254
|
)
|
|
$
|
(18,455
|
)
|
Foreign
|
2,259
|
|
|
629
|
|
|
(1,740
|
)
|
|||
|
$
|
(11,983
|
)
|
|
$
|
(12,625
|
)
|
|
$
|
(20,195
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
37
|
|
|
(100
|
)
|
|
54
|
|
|||
Foreign
|
964
|
|
|
932
|
|
|
163
|
|
|||
Total Current
|
$
|
1,001
|
|
|
$
|
832
|
|
|
$
|
217
|
|
|
|
|
|
|
|
||||||
Deferred
|
|
|
|
|
|
||||||
Federal
|
$
|
727
|
|
|
$
|
293
|
|
|
$
|
300
|
|
State
|
131
|
|
|
31
|
|
|
10
|
|
|||
Foreign
|
(329
|
)
|
|
(117
|
)
|
|
(605
|
)
|
|||
Total Deferred
|
529
|
|
|
207
|
|
|
(295
|
)
|
|||
|
$
|
1,530
|
|
|
$
|
1,039
|
|
|
$
|
(78
|
)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Deferred tax assets:
|
|
|
|
|
|
||||||
Accrued expenses and allowances
|
$
|
993
|
|
|
$
|
793
|
|
|
$
|
733
|
|
Deferred revenue
|
573
|
|
|
671
|
|
|
549
|
|
|||
Stock compensation
|
1,054
|
|
|
582
|
|
|
350
|
|
|||
Net operating loss and tax credit carryforwards
|
24,895
|
|
|
20,871
|
|
|
16,755
|
|
|||
Capital expenses
|
307
|
|
|
—
|
|
|
—
|
|
|||
Other
|
176
|
|
|
196
|
|
|
123
|
|
|||
Valuation allowance for noncurrent deferred tax assets
|
(24,588
|
)
|
|
(18,507
|
)
|
|
(13,107
|
)
|
|||
Net deferred tax assets
|
$
|
3,410
|
|
|
$
|
4,606
|
|
|
$
|
5,403
|
|
|
|
|
|
|
|
||||||
Deferred tax liabilities:
|
|
|
|
|
|
||||||
Capital expenses
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(202
|
)
|
Prepaid expenses
|
(31
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Intangible assets
|
(5,718
|
)
|
|
(6,481
|
)
|
|
(7,217
|
)
|
|||
Goodwill
|
(1,029
|
)
|
|
(561
|
)
|
|
(252
|
)
|
|||
Tax credit carryforwards
|
(38
|
)
|
|
(379
|
)
|
|
(737
|
)
|
|||
Net deferred tax liabilities
|
$
|
(6,816
|
)
|
|
$
|
(7,424
|
)
|
|
$
|
(8,409
|
)
|
Net deferred taxes
|
$
|
(3,406
|
)
|
|
$
|
(2,818
|
)
|
|
$
|
(3,006
|
)
|
|
2016
|
|
2015
|
|
2014
|
|||
Federal statutory rate
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
State taxes, net of federal benefit
|
1.2
|
%
|
|
3.5
|
%
|
|
3.5
|
%
|
Tax credits
|
(0.1
|
)%
|
|
(0.2
|
)%
|
|
(1.1
|
)%
|
Effect of foreign operations
|
1.1
|
%
|
|
(2.2
|
)%
|
|
0.1
|
%
|
Stock compensation
|
(1.7
|
)%
|
|
(2.9
|
)%
|
|
—
|
%
|
Permanent items and other
|
(1.6
|
)%
|
|
(3.3
|
)%
|
|
(1.7
|
)%
|
Tax carryforwards not benefited
|
(45.7
|
)%
|
|
(37.1
|
)%
|
|
(34.4
|
)%
|
|
(12.8
|
)%
|
|
(8.2
|
)%
|
|
0.4
|
%
|
Balance at December 31, 2014
|
$
|
53
|
|
Additional based on tax positions related to the current year
|
—
|
|
|
Additions for tax positions of prior years
|
568
|
|
|
Reductions for tax positions of prior years
|
—
|
|
|
Settlements
|
—
|
|
|
Balance at December 31, 2015
|
$
|
621
|
|
Additional based on tax positions related to the current year
|
—
|
|
|
Additions for tax positions of prior years
|
84
|
|
|
Reductions for tax positions of prior years
|
—
|
|
|
Settlements
|
—
|
|
|
Balance at December 31, 2016
|
$
|
705
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Senior secured loans (includes unamortized discount of $1,442 and $1,008 at December 31, 2016 and December 31, 2015, respectively, based on imputed interest rate of 6.6%)
|
$
|
47,929
|
|
|
$
|
23,366
|
|
Seller notes due 2016
|
—
|
|
|
500
|
|
||
|
47,929
|
|
|
23,866
|
|
||
Less current maturities
|
(2,190
|
)
|
|
(1,500
|
)
|
||
Total long-term debt
|
$
|
45,739
|
|
|
$
|
22,366
|
|
•
|
Incur additional indebtedness or guarantee indebtedness of others;
|
•
|
Create liens on their assets;
|
•
|
Make investments, including certain acquisitions;
|
•
|
Enter into mergers or consolidations;
|
•
|
Dispose of assets;
|
•
|
Pay dividends and make other distributions on the Company’s capital stock, and redeem and repurchase the Company’s capital stock;
|
•
|
Enter into transactions with affiliates; and
|
•
|
Prepay indebtedness or make changes to certain agreements.
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Numerators:
|
|
|
|
|
|
||||||
Loss from continuing operations attributable to common stockholders
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(20,117
|
)
|
Preferred stock dividends and accretion
|
—
|
|
|
—
|
|
|
(1,524
|
)
|
|||
Net loss attributable to common stockholders
|
$
|
(13,513
|
)
|
|
$
|
(13,664
|
)
|
|
$
|
(21,641
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted–average common shares outstanding, basic and diluted
|
16,472,799
|
|
|
14,939,601
|
|
|
4,889,901
|
|
|||
Loss from continuing operations per share, basic and diluted
|
$
|
(0.82
|
)
|
|
$
|
(0.91
|
)
|
|
$
|
(4.43
|
)
|
Loss from discontinued operations per share, basic and diluted
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net loss per common share, basic and diluted
|
$
|
(0.82
|
)
|
|
$
|
(0.91
|
)
|
|
$
|
(4.43
|
)
|
|
Capital
Leases |
|
Operating
Leases |
|
Purchase Commitments
|
||||||
2017
|
$
|
1,644
|
|
|
$
|
1,182
|
|
|
$
|
2,471
|
|
2018
|
1,249
|
|
|
900
|
|
|
—
|
|
|||
2019
|
628
|
|
|
916
|
|
|
—
|
|
|||
2020
|
78
|
|
|
259
|
|
|
—
|
|
|||
2021
|
—
|
|
|
—
|
|
|
—
|
|
|||
Thereafter
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total minimum lease payments
|
3,599
|
|
|
$
|
3,257
|
|
|
$
|
2,471
|
|
|
Less amount representing interest
|
(418
|
)
|
|
|
|
|
|||||
Present value of capital lease obligations
|
3,181
|
|
|
|
|
|
|||||
Less current portion of capital lease obligations
|
(1,644
|
)
|
|
|
|
|
|||||
Long-term capital lease obligations
|
$
|
1,537
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Equipment (including equipment under capital lease of $6,087 and $6,199 at December 31, 2016 and 2015, respectively)
|
$
|
11,317
|
|
|
$
|
11,599
|
|
Furniture and fixtures (including furniture under capital lease of $0 and $143 at December 31, 2016 and 2015, respectively)
|
205
|
|
|
484
|
|
||
Leasehold improvements
|
729
|
|
|
819
|
|
||
Accumulated depreciation (including for equipment and furniture under capital lease of $2,961 and $2,218 at December 31, 2016 and 2015, respectively)
|
(7,895
|
)
|
|
(6,901
|
)
|
||
Property and equipment, net
|
$
|
4,356
|
|
|
$
|
6,001
|
|
•
|
In January 2014, the Company issued
1,803,574
shares of common stock to this company in connection with the amendment of such technology services agreement and took a noncash charge of
$11.2 million
recorded in research and development expenses.
|
•
|
In September 2014, the Company granted
294,010
shares of restricted stock with a grant-date fair value of
$8.73
. The restricted stock has restrictions which vest over
three years
from date of grant for
40,990
shares and over
four years
from the date of grant for
253,020
shares. The grant-date fair value of the shares is recognized over the requisite vesting pe
riod. If vesting periods are not achieved, the shares will be forfeited by the employee.
|
•
|
In November 2014, the Company granted
41,664
shares of restricted stock with a grant-date fair value of
$12.00
to members of the Board of Directors. The restricted stock has restrictions which vest fully after twelve months from date of grant. The grant-date fair value of the shares is recognized over the requisite vesting pe
riod. If vesting periods are not achieved, the shares will be forfeited by the respective Director.
|
•
|
In November, 2014, the Company issued
3,846,154
shares of common stock, at a price of
$12.00
per share, before underwriting discounts and commissions. The IPO generated net proceeds of approximately
$42.9 million
, after deducting underwriting discounts and commissions. Expenses incurred by us for the IPO were approximately
$4.1 million
and will be recorded against the proceeds received from the IPO.
|
•
|
In November 2014, the Company issued
6,834,476
share of common stock for conversion of all outstanding shares of preferred stock
on a one-to-one basis in connection with the Company's IPO.
|
•
|
In November 2014, the Company issued
150,977
shares of common stock valued at
$1.6 million
in connection with the acquisition of Solution Q. In addition, the company issued
65,570
shares of common stock to two employees valued at
$0.7 million
. The restricted stock has restrictions which vest fully
two years
from date of grant. The grant-date fair value of the shares is recognized over the requisite vesting pe
riod. If vesting periods are not achieved, the shares will be forfeited by the respective employee.
|
•
|
In December 2014, the Company agreed to issue
386,253
shares of common stock valued at
$4.5
million in connection with the acquisition of Mobile Commons. As of December 31, 2014,
316,747
shares of common stock were issued to certain former shareholders of Mobile Commons,
44,192
shares were being held in escrow for eighteen (
18
) months and subject to indemnification claims by the Company and an additional
25,314
shares were reserved for issuance upon the completion of certain documentation by certain former shareholders of Mobile Commons.
|
•
|
In November 2015, the Company agreed to issue
179,298
shares of common stock valued at approximately
$1,388,000
in connection with the acquisition of Ultriva.
In addition, the company issued
45,767
shares of common stock to an employee valued at approximately
$0.4 million
. The restricted stock has restrictions which vest at three different events during the year following the acquisition. The grant-date fair value of the shares is recognized over the requisite vesting pe
riod, which occurred during 2016.
|
•
|
In March 2016, the Company issued
1,000,000
shares of common stock valued at approximately
$5,700,000
in connection with the acquisition of HipCricket, Inc.
|
•
|
In July, 2016, the Company issued
318,302
shares of common stock valued at approximately
$2,400,000
in connection with the acquisition of LeadLander, Inc.
|
•
|
In November, 2016, the Company issued
24,587
shares of common stock valued at approximately
$200,000
in connection with the acquisition of Ultriva, Inc.
|
|
|
Number of
Options Outstanding |
|
Weighted–
Average Exercise Price |
|
Weighted–
Average Remaining Contractual Life (In Years) |
|
Weighted-
Average Fair Value per Share |
|||||
Outstanding at December 31, 2013
|
|
357,991
|
|
|
$
|
1.40
|
|
|
9.16
|
|
$
|
0.79
|
|
Options granted
|
|
386,797
|
|
|
7.03
|
|
|
|
|
3.76
|
|
||
Options exercised
|
|
(435
|
)
|
|
1.77
|
|
|
|
|
0.93
|
|
||
Options forfeited
|
|
(79,143
|
)
|
|
3.87
|
|
|
|
|
2.09
|
|
||
Outstanding at December 31, 2014
|
|
665,210
|
|
|
$
|
4.39
|
|
|
8.78
|
|
$
|
2.37
|
|
Options granted
|
|
420,616
|
|
|
6.93
|
|
|
|
|
6.93
|
|
||
Options exercised
|
|
(106,338
|
)
|
|
2.17
|
|
|
|
|
2.24
|
|
||
Options forfeited
|
|
(201,100
|
)
|
|
5.62
|
|
|
|
|
4.99
|
|
||
Outstanding at December 31, 2015
|
|
778,388
|
|
|
$
|
5.75
|
|
|
8.39
|
|
$
|
5.75
|
|
Options granted
|
|
137,586
|
|
|
7.74
|
|
|
|
|
3.23
|
|
||
Options exercised
|
|
(43,101
|
)
|
|
4.93
|
|
|
|
|
2.54
|
|
||
Options forfeited
|
|
(75,251
|
)
|
|
7.01
|
|
|
|
|
3.69
|
|
||
Options expired
|
|
(37,903
|
)
|
|
4.94
|
|
|
|
|
4.90
|
|
||
Outstanding at December 31, 2016
|
|
759,719
|
|
|
$
|
6.06
|
|
|
7.73
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|||||
Options vested and expected to vest at December 31, 2014
|
|
149,907
|
|
|
$
|
1.58
|
|
|
7.81
|
|
|
||
Options vested and exercisable at December 31, 2014
|
|
149,907
|
|
|
$
|
1.58
|
|
|
7.81
|
|
|
||
Options vested and expected to vest at December 31, 2015
|
|
769,142
|
|
|
$
|
5.72
|
|
|
8.37
|
|
|
||
Options vested and exercisable at December 31, 2015
|
|
244,631
|
|
|
$
|
3.78
|
|
|
6.91
|
|
|
||
Options vested and expected to vest at December 31, 2016
|
|
747,736
|
|
|
$
|
6.04
|
|
|
7.70
|
|
|
||
Options vested and exercisable at December 31, 2016
|
|
482,731
|
|
|
$
|
5.41
|
|
|
7.25
|
|
|
|
Number of
Restricted Shares Outstanding |
Unvested balances at December 31, 2013
|
240,279
|
Awards granted
|
401,244
|
Awards vested
|
(202,584)
|
Unvested balances at December 31, 2014
|
438,939
|
Awards granted
|
242,500
|
Awards vested
|
(144,268)
|
Awards forfeited
|
(23,228)
|
Unvested balances at December 31, 2015
|
513,943
|
Awards granted
|
778,097
|
Awards vested
|
(385,895)
|
Awards forfeited
|
(66,668)
|
December 31, 2016
|
839,477
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cost of subscription and support revenue
|
$
|
43
|
|
|
$
|
47
|
|
|
$
|
30
|
|
Cost of professional services revenue
|
1
|
|
|
(5
|
)
|
|
19
|
|
|||
Sales and marketing
|
105
|
|
|
65
|
|
|
39
|
|
|||
Research and development
|
204
|
|
|
203
|
|
|
61
|
|
|||
General and administrative
|
3,980
|
|
|
2,431
|
|
|
928
|
|
|||
Total
|
$
|
4,333
|
|
|
$
|
2,741
|
|
|
$
|
1,077
|
|
▪
|
In 2011, the Company issued
2,652,110
shares of Series A redeemable convertible preferred stock for aggregate proceeds of
$16.0 million
, net of issuance costs of
$199,000
.
|
▪
|
In January 2012, the Company issued
169,054
shares of Series A redeemable convertible preferred stock for aggregate proceeds of
$1.0 million
, net of issuance costs of
$24,000
.
|
▪
|
In January 2012, the Company issued
1,701,909
shares of Series B redeemable convertible preferred stock for aggregate proceeds of
$10.4 million
, net of issuance costs of
$22,000
.
|
▪
|
In November 2012, the Company issued
131,168
shares of Series B-1 redeemable convertible preferred stock valued at
$800,000
in connection with the acquisition of EPM Live. Such shares are subject to forfeiture obligations based upon continued employment over a
24
-month period. The Company is accounting for such shares as compensation as the shares vest. At December 31, 2014, all shares are now fully amortized.
|
▪
|
In May 2013, the Company issued
106,572
shares of B-1 redeemable convertible preferred stock valued at
$624,000
in connection with the acquisition of FileBound.
|
▪
|
In November 2013, the Company issued
155,598
shares of Series B-2 redeemable convertible preferred stock valued at
$949,000
in connection with the acquisition of ComSci.
|
▪
|
In December 2013, the Company issued
1,918,048
shares of Series C redeemable convertible preferred stock for aggregate proceeds of
$19.7 million
, net of issuance costs of
$82,000
. The proceeds from the issuance of Series C preferred stock included the conversion of
$4.9 million
of convertible promissory bridge notes and accrued interest payable.
|
▪
|
In November 2014, all of the shares of preferred stock were converted into
6,834,476
shares of common stock on a
one
-to-one basis in connec
tion with the Company's IPO.
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
||||||
U.S.
|
$
|
62,534
|
|
|
$
|
56,778
|
|
|
$
|
50,661
|
|
Canada
|
4,090
|
|
|
4,280
|
|
|
3,713
|
|
|||
Other International
|
8,143
|
|
|
8,853
|
|
|
10,200
|
|
|||
Total Revenues
|
$
|
74,767
|
|
|
$
|
69,911
|
|
|
$
|
64,574
|
|
|
December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Identifiable long-lived assets:
|
|
|
|
|
|
||||||
U.S.
|
$
|
4,054
|
|
|
$
|
5,501
|
|
|
$
|
3,330
|
|
Canada
|
284
|
|
|
469
|
|
|
600
|
|
|||
Other International
|
18
|
|
|
31
|
|
|
—
|
|
|||
Total identifiable long-lived assets
|
$
|
4,356
|
|
|
$
|
6,001
|
|
|
$
|
3,930
|
|
•
|
During the fiscal
years ended December 31, 2016, 2015, and 2014
, the Company purchased software development services pursuant to a technology services agreement with DevFactory FZ-LLC, in the amount of
$2.3 million
,
$2.1 million
, and
$2.1 million
, respectively. In January 2014, the Company issued
1,803,574
shares of common stock to this company in connection with the amendment of such technology services agreement and took a noncash charge of
$11.2 million
recorded in research and development expenses. The Company has an outstanding purchase commitment in
2017
for software development services pursuant to a technology services agreement in the amount of
$2.5 million
. The agreement has an initial term that expires on December 31, 2017, with an option for either party to renew annually for up to
five
years. For years after
2017
, the purchase commitment amount for software development services will be equal to the prior year purchase commitment increased (decreased) by the percentage change in total revenue for the prior year as compared to the preceding year. For example, if
2017
total revenues increase by 10% as compared to
2016
total revenues, then the
2018
purchase commitment will increase by approximately
$250,000
from the
2017
purchase commitment amount to approximately
$2.8 million
. At
December 31, 2016 and 2015
, amounts included in accounts payable owed to this company totaled
$0.6 million
and
$0.7 million
, respectively.
|
•
|
In 2016, the Company purchased approximately
$1.8 million
in services from Crossover, Inc. While there are
no
purchase commitments with this company, the Company continues to use their services in
2017
.
|
•
|
On March 14, 2016, Upland completed its purchase of substantially all of the assets of HipCricket, Inc., a cloud-based mobile messaging software provider, and completed the transfer of its EPM Live product business. Prior to the transaction, HipCricket was owned by an affiliate of ESW Capital, LLC, which is a shareholder of Upland. Raymond James & Co. provided a fairness opinion to Upland in connection with
|
|
3/31/15
|
|
6/30/15
|
|
9/30/15
|
|
12/31/15
|
|
3/31/16
|
|
6/30/16
|
|
9/30/16
|
|
12/31/16
|
||||||||||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Consolidated Statements of Operations Data:
|
|
||||||||||||||||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription and support
|
$
|
14,322
|
|
|
$
|
14,023
|
|
|
$
|
14,129
|
|
|
$
|
14,719
|
|
|
$
|
15,241
|
|
|
$
|
16,220
|
|
|
$
|
17,029
|
|
|
$
|
17,062
|
|
Perpetual license
|
811
|
|
|
846
|
|
|
540
|
|
|
608
|
|
|
318
|
|
|
458
|
|
|
332
|
|
|
542
|
|
||||||||
Total product revenue
|
15,133
|
|
|
14,869
|
|
|
14,669
|
|
|
15,327
|
|
|
15,559
|
|
|
16,678
|
|
|
17,361
|
|
|
17,604
|
|
||||||||
Professional services
|
2,395
|
|
|
2,809
|
|
|
2,436
|
|
|
2,273
|
|
|
2,023
|
|
|
1,892
|
|
|
1,880
|
|
|
1,770
|
|
||||||||
Total revenue
|
17,528
|
|
|
17,678
|
|
|
17,105
|
|
|
17,600
|
|
|
17,582
|
|
|
18,570
|
|
|
19,241
|
|
|
19,374
|
|
||||||||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Subscription and support
(1)(2)
|
4,732
|
|
|
4,841
|
|
|
4,771
|
|
|
5,242
|
|
|
5,226
|
|
|
5,634
|
|
|
5,747
|
|
|
6,127
|
|
||||||||
Professional services
(1)
|
1,908
|
|
|
1,732
|
|
|
1,677
|
|
|
1,768
|
|
|
1,624
|
|
|
1,106
|
|
|
1,045
|
|
|
1,056
|
|
||||||||
Total cost of revenue
|
6,640
|
|
|
6,573
|
|
|
6,448
|
|
|
7,010
|
|
|
6,850
|
|
|
6,740
|
|
|
6,792
|
|
|
7,183
|
|
||||||||
Gross profit
|
10,888
|
|
|
11,105
|
|
|
10,657
|
|
|
10,590
|
|
|
10,732
|
|
|
11,830
|
|
|
12,449
|
|
|
12,191
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing
(1)
|
3,532
|
|
|
3,446
|
|
|
2,929
|
|
|
3,058
|
|
|
3,069
|
|
|
2,953
|
|
|
3,097
|
|
|
3,041
|
|
||||||||
Research and development
(1)
|
3,926
|
|
|
4,152
|
|
|
3,852
|
|
|
3,848
|
|
|
3,910
|
|
|
4,054
|
|
|
3,737
|
|
|
3,218
|
|
||||||||
Refundable Canadian tax credits
|
(121
|
)
|
|
(122
|
)
|
|
(115
|
)
|
|
(112
|
)
|
|
(109
|
)
|
|
(116
|
)
|
|
(115
|
)
|
|
(173
|
)
|
||||||||
General and administrative
(1)
|
5,119
|
|
|
4,714
|
|
|
4,494
|
|
|
3,874
|
|
|
4,123
|
|
|
4,547
|
|
|
4,670
|
|
|
4,946
|
|
||||||||
Depreciation and amortization
|
1,014
|
|
|
1,063
|
|
|
1,130
|
|
|
1,327
|
|
|
1,472
|
|
|
1,476
|
|
|
1,322
|
|
|
1,021
|
|
||||||||
Acquisition-related expenses
|
545
|
|
|
360
|
|
|
176
|
|
|
1,374
|
|
|
2,428
|
|
|
1,380
|
|
|
1,047
|
|
|
728
|
|
||||||||
Total operating expenses
|
14,015
|
|
|
13,613
|
|
|
12,466
|
|
|
13,369
|
|
|
14,893
|
|
|
14,294
|
|
|
13,758
|
|
|
12,781
|
|
||||||||
Income (loss) from operations
|
(3,127
|
)
|
|
(2,508
|
)
|
|
(1,809
|
)
|
|
(2,779
|
)
|
|
(4,161
|
)
|
|
(2,464
|
)
|
|
(1,309
|
)
|
|
(590
|
)
|
||||||||
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest expense, net
|
(347
|
)
|
|
(576
|
)
|
|
(462
|
)
|
|
(473
|
)
|
|
(561
|
)
|
|
(662
|
)
|
|
(709
|
)
|
|
(849
|
)
|
||||||||
Other expense, net
|
(512
|
)
|
|
(12
|
)
|
|
137
|
|
|
(157
|
)
|
|
(748
|
)
|
|
(293
|
)
|
|
(64
|
)
|
|
427
|
|
||||||||
Total other expense
|
(859
|
)
|
|
(588
|
)
|
|
(325
|
)
|
|
(630
|
)
|
|
(1,309
|
)
|
|
(955
|
)
|
|
(773
|
)
|
|
(422
|
)
|
||||||||
Loss before provision for income taxes
|
(3,986
|
)
|
|
(3,096
|
)
|
|
(2,134
|
)
|
|
(3,409
|
)
|
|
(5,470
|
)
|
|
(3,419
|
)
|
|
(2,082
|
)
|
|
(1,012
|
)
|
||||||||
Provision for income taxes
|
243
|
|
|
(238
|
)
|
|
(190
|
)
|
|
(854
|
)
|
|
(103
|
)
|
|
(158
|
)
|
|
(308
|
)
|
|
(961
|
)
|
||||||||
Net income (loss)
|
$
|
(3,743
|
)
|
|
$
|
(3,334
|
)
|
|
$
|
(2,324
|
)
|
|
$
|
(4,263
|
)
|
|
$
|
(5,573
|
)
|
|
$
|
(3,577
|
)
|
|
$
|
(2,390
|
)
|
|
$
|
(1,973
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loss from continuing operations per common share, basic and diluted
|
$
|
(0.25
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.36
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.12
|
)
|
(1) includes stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
(2) Includes depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships, and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
|
Upland Software, Inc.
|
|
|
|
|
|
By:
|
/s/ John T. McDonald
|
|
|
John T. McDonald
|
|
|
Chief Executive Officer and Chairman
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ John T. McDonald
|
|
Chief Executive Officer and Chairman
|
|
March 30, 2017
|
John T. McDonald
|
|
(
Principal Executive Officer
)
|
|
|
|
|
|
|
|
/s/ Michael D. Hill
|
|
Chief Financial Officer, Secretary and Treasurer
|
|
March 30, 2017
|
Michael D. Hill
|
|
(
Principal Financial Officer and Principal Accounting Officer
)
|
|
|
|
|
|
|
|
/s/ John D. Thornton
|
|
Director
|
|
March 30, 2017
|
John D. Thornton
|
|
|
|
|
|
|
|
|
|
/s/ David May
|
|
Director
|
|
March 30, 2017
|
David May
|
|
|
|
|
|
|
|
|
|
/s/ Stephen E. Courter
|
|
Director
|
|
March 30, 2017
|
Stephen E. Courter
|
|
|
|
|
|
|
|
|
|
/s/ Rodney C. Favaron
|
|
Director
|
|
March 30, 2017
|
Rodney C. Favaron
|
|
|
|
|
|
|
Incorporated by Reference
|
|||
10.7+
|
Form of Restricted Stock Purchase Agreement under 2014 Equity Incentive Plan
|
S-1
|
333-198574
|
10.8
|
October 27, 2014
|
10.7.1+
|
Form of Restricted Stock Purchase Agreement under 2014 Equity Incentive Plan (Executive)
|
S-1
|
333-198574
|
10.8.1
|
October 27, 2014
|
10.8+
|
Form of Restricted Stock Unit Award Agreement under 2014 Equity Incentive Plan
|
S-1
|
333-198574
|
10.9
|
October 27, 2014
|
10.8.1+
|
Form of Restricted Stock Unit Award Agreement under 2014 Equity Incentive Plan (Executive)
|
S-1
|
333-198574
|
10.9.1
|
October 27, 2014
|
10.9+
|
Employment Agreement between the Registrant and John T. McDonald, dated May 9, 2014
|
S-1
|
333-198574
|
10.12
|
September 4, 2014
|
10.10+
|
Offer of Employment between the Registrant and Timothy Mattox, dated July 7, 2014
|
10-K
|
001-36720
|
10.13
|
March 31, 2015
|
10.11
|
Office Lease between the Registrant and TPG-401 Congress LLC, dated February 27, 2014
|
S-1
|
333-198574
|
10.17
|
September 4, 2014
|
10.11.1
|
First Amendment to Office Lease between Registrant and TPG-401 Congress LLC
|
S-1
|
333-198574
|
10.17.1
|
September 4, 2014
|
10.12
|
Lease Agreement between Tenrox Inc. and A.R.E. Quebec, dated November 5, 2012, as amended
|
S-1
|
333-198574
|
10.18
|
September 4, 2014
|
10.13
|
Sublease Agreement between Marex Properties, LLC and Marex Group Inc., dated May 10, 2013
|
S-1
|
333-198574
|
10.19
|
September 4, 2014
|
10.14
|
Amended and Restated Technology Services Agreement between the Registrant and DevFactory FZ-LLC, dated January 1, 2014
|
S-1
|
333-198574
|
10.37
|
October 27, 2014
|
10.14.1*
|
Second Amended and Restated Technology Services Agreement between the Registrant and DevFactory FZ-LLC, dated January 1, 2017
|
|
|
|
|
10.15
|
Letter Agreement between the Registrant and DevFactory FZ-LLC, dated January 1, 2014
|
S-1
|
333-198574
|
10.38
|
September 4, 2014
|
10.16
|
Stock Purchase Agreement between the Registrant and DevFactory FZ-LLC, dated January 27, 2014
|
S-1
|
333-198574
|
10.39
|
September 4, 2014
|
10.17
|
Lease by and between Lincoln One, LLC and the Registrant dated June 19, 2015
|
8-K
|
001-36720
|
10.1
|
June 22, 2015
|
10.18
|
Credit Agreement by and between the Registrant and Wells Fargo Finance, dated May 14, 2015
|
10-Q
|
001-36720
|
10.1
|
August 14, 2015
|
10.18.1*
|
First Amendment to Credit Agreement, among the Registrant, Wells Fargo Bank, N.A. and the other parties thereto, dated September 23, 2015.
|
|
|
|
|
10.18.2*
|
Second Amendment to Credit Agreement, among the Registrant, Wells Fargo Bank, N.A. and the other parties thereto, dated April 25, 2016.
|
|
|
|
|
10.18.3*
|
Third Amendment to Credit Agreement, among the Registrant, Wells Fargo Bank, N.A. and the other parties thereto, dated November 15, 2016.
|
|
|
|
|
10.19
|
Guaranty and Security Agreement by and between the Registrant and Wells Fargo Capital Finance, dated May 14, 2015
|
10-Q
|
001-36720
|
10.2
|
August 14, 2015
|
10.20
|
Canadian Guarantee and Security Agreement by and between the Registrant and Wells Fargo Capital Finance, dated May 14, 2015
|
10-Q
|
001-36720
|
10.3
|
August 14, 2015
|
10.21*+
|
Employment Agreement between the Registrant and Michael D. Hill, dated March 28, 2017
|
|
|
|
|
10.22*+
|
Employment Agreement between the Registrant and Timothy Mattox, dated March 28, 2017
|
|
|
|
|
10.23*+
|
Employment Agreement between the Registrant and John T. McDonald, dated March 28, 2017
|
|
|
|
|
21.1*
|
List of subsidiaries of Upland Software, Inc.
|
|
|
|
|
By:
|
/s/ John T. McDonald
|
|
John T. McDonald,
|
|
Chief Executive Officer
|
ARTICLE I - CORPORATE OFFICES
|
||
1.1
|
REGISTERED OFFICE
|
|
1.2
|
OTHER OFFICES
|
|
ARTICLE II - MEETINGS OF STOCKHOLDERS
|
||
2.1
|
PLACE OF MEETING
|
|
2.2
|
ANNUAL MEETING
|
|
2.3
|
SPECIAL MEETING
|
|
2.4
|
ADVANCE NOTICE PROCEDURES
|
|
2.5
|
NOTICE OF STOCKHOLDERS' MEETINGS
|
|
2.6
|
QUORUM
|
|
2.7
|
ADJOURNED MEETING; NOTICE
|
|
2.8
|
CONDUCT OF BUSINESS
|
|
2.9
|
VOTING
|
|
2.10
|
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
|
2.11
|
RECORD DATES
|
|
2.12
|
PROXIES
|
|
2.13
|
LIST OF STOCKHOLDERS ENTITLED TO VOTE
|
|
2.14
|
INSPECTORS OF ELECTION
|
|
ARTICLE III - DIRECTORS
|
||
3.1
|
POWERS
|
|
3.2
|
NUMBER OF DIRECTORS
|
|
3.3
|
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
|
|
3.4
|
RESIGNATION AND VACANCIES
|
|
3.5
|
PLACE OF MEETINGS; MEETINGS BY TELEPHONE
|
|
3.6
|
REGULAR MEETINGS
|
|
3.7
|
SPECIAL MEETINGS; NOTICE
|
|
3.8
|
QUORUM; VOTING
|
|
3.9
|
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
|
3.10
|
FEES AND COMPENSATION OF DIRECTORS
|
|
3.11
|
REMOVAL OF DIRECTORS
|
ARTICLE IV - COMMITTEES
|
||
4.1
|
COMMITTEES OF DIRECTORS
|
|
4.2
|
COMMITEE MINUTES
|
|
4.3
|
MEETINGS AND ACTION OF COMMITTEES
|
|
4.4
|
SUBCOMMITTEES
|
|
ARTICLE V - OFFICERS
|
||
5.1
|
OFFICERS
|
|
5.2
|
APPOINTMENT OF OFFICERS
|
|
5.3
|
SUBORDINATE OFFICERS
|
|
5.4
|
REMOVAL AND RESIGNATION OF OFFICERS
|
|
5.5
|
VACANCIES IN OFFICES
|
|
5.6
|
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
|
|
5.7
|
AUTHORITY AND DUTIES OF OFFICERS
|
|
ARTICLE VI - STOCK
|
||
6.1
|
STOCK CERTIFICATES; PARTLY PAID SHARES
|
|
6.2
|
SPECIAL DESIGNATION ON CERTIFICATES
|
|
6.3
|
LOST CERTIFICATES
|
|
6.4
|
DIVIDENDS
|
|
6.5
|
TRANSFER OF STOCK
|
|
6.6
|
STOCK TRANSFER AGREEMENTS
|
|
6.7
|
REGISTERED STOCKHOLDERS
|
|
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER
|
||
7.1
|
NOTICE OF STOCKHOLDERS' MEETINGS
|
|
7.2
|
NOTICE BY ELECTRONIC TRANSMISSION
|
|
7.3
|
NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
|
|
7.4
|
NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
|
|
7.5
|
WAIVER OF NOTICE
|
|
ARTICLE VIII - INDEMNIFICIATION
|
||
8.1
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
|
|
8.2
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTION BY OR IN THE RIGHT OF THE CORPORATION
|
|
8.3
|
SUCCESSFUL DEFENSE
|
8.4
|
INDEMNIFICATION OF OTHERS
|
|
8.5
|
ADVANCED PAYMENT OF EXPENSES
|
|
8.6
|
LIMITATION ON INDEMNIFICATION
|
|
8.7
|
DETERMINATION; CLAIM
|
|
8.8
|
NON-EXCLUSIVITY OF RIGHTS
|
|
8.9
|
INSURANCE
|
|
8.10
|
SURVIVAL
|
|
8.11
|
EFFECT OF REPEAL OR MODIFICATION
|
|
8.12
|
CERTAIN DEFINITIONS
|
|
ARTICLE IX - GENERAL MATTERS
|
||
9.1
|
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
|
|
9.2
|
FISCAL YEAR
|
|
9.3
|
SEAL
|
|
9.4
|
CONSTRUCTION; DEFINITIONS
|
|
ARTICLE X - AMENDMENTS
|
|
/s/ Robert V. Housley
|
|
Robert V. Housley, Secretary
|
1
|
Scope of Services
|
(a)
|
Specific changes may be proposed by Client’s business team members.
|
(b)
|
Proposed changes will be reviewed by DevFactory and a report of the scope, schedule, resource and budget impact (“Impact Report”) will be prepared and delivered to Client management.
|
(c)
|
Client management reviews the Impact Report and approves by signature or denies changes in scope, schedule, resources and/or budget.
|
(d)
|
DevFactory receives the signed, approved Impact Report and creates. for Client’s approval, an additional Statement of Work with a copy of the Impact Report attached.
|
(e)
|
Client approves by signature such Statement of Work and delivers such Statement of Work to DevFactory for DevFactory’s signature.
|
(f)
|
DevFactory begins work on specific changes defined in the signed, approved Impact Report only upon the mutual execution of the new Statement of Work referenced above.
|
2
|
Subcontractors
|
3
|
Term
|
4
|
Price and Payment
|
5
|
Confidential/Proprietary Information
|
6
|
Client’s Support
|
7
|
Warranties
|
8
|
Limitation of Liability
|
9
|
Termination
|
9.1.1
|
By DevFactory
by giving prior written notice to Client if Client fails to perform any material obligation required of it hereunder, and such failure is not cured within thirty (30) days of Client’s receipt of DevFactory’s notice to cure such non-performance of material obligation.
|
9.1.2
|
By Client
by giving prior written notice to DevFactory if DevFactory fails to perform any material obligation required of it hereunder, and such failure is not cured within thirty (30) days from DevFactory’s receipt of Client’s notice to cure such non-performance of material obligation.
|
9
|
Ownership
|
10
|
Indemnification
|
11
|
General Terms and Conditions
|
On behalf of Upland Software, Inc.
|
On behalf of DevFactory FZ-LLC
|
By: /s/ John T. McDonald
|
By: /s/ Rahul Subramaniam
|
Print Name: John T. McDonald
|
Print Name: Rahul Subramaniam
|
Title: CEO
|
Title: CEO
|
Date: March 28, 2017
|
Date: March 22, 2017
|
1.
|
GENERALLY
|
2.
|
PROVISION OF SERVICES BY DEVFACTORY
|
1)
|
Access to Aline services including:
|
a.
|
Source code analysis and developer productivity suite
|
2)
|
Automated code compilation, builds and deployments
|
3)
|
Services to onboard source code, migrate code repositories and created automated builds
|
4)
|
Code cleanup service
|
5)
|
Unit test development service
|
6)
|
Source code safekeeping and hosted source code repository
|
7)
|
Application hosting for software sold to clients on a “software-as-a-service” basis, including:
|
a.
|
Port software to Amazon’s EC2
|
b.
|
Hosting at Amazon EC2
|
c.
|
Hosting operations
|
8)
|
Automated testcase development
|
9)
|
Functional testcase automation platform and services
|
10)
|
24/7/365 Level 1 and Level 2 Support of Client including email and phone
|
11)
|
High performance (1:3:1) teams
|
12)
|
Client may designate a mutually agreed amount of the Minimum Fee (as defined below) towards spending on Crossover services. If no such amount is agreed, then the amount shall be deemed to be zero dollars.
|
3.
|
TECHNOLOGY SERVICES FEES AND EXPENSES
|
4.
|
PRIORITY AND PRICING
|
On behalf of Upland Software, Inc.
|
On behalf of DevFactory FZ-LLC
|
By: /s/ Jack McDonald
|
By: /s/ Rahul Subramaniam
|
Print Name: John T. McDonald
|
Print Name: Rahul Subramaniam
|
Title: CEO
|
Title: CEO
|
Date: March 28, 2017
|
Date: March 22, 2017
|
1.
|
Application Administration
. DevFactory will make commercially reasonable efforts to provide the following during the applicable subscription term of the Application under the Agreement in accordance with this SLA:
|
2.
|
Service Measures
|
2.
|
Exceptions to Service Levels
. The Availability of the Application and DevFactory’s obligations with respect to the other service measures set forth herein may be subject to limitations, delays, and other problems inherent to the general use of the internet and other public networks or caused by the Client, authorized users or third parties. DevFactory is not responsible for any delays or other damage resulting from problems outside of DevFactory’s control. Without limiting the foregoing, the following are exceptions to DevFactory’s obligations under this SLA:
|
(i)
|
a failure or malfunction resulting from scripts, data, applications, equipment, or services provided and/or administered by the Client;
|
(ii)
|
outages initiated by DevFactory or its third party suppliers at the request or direction of the Client for maintenance, back up, or other purposes;
|
(iii)
|
outages occurring as a result of any actions or omissions taken by DevFactory or its third party suppliers at the request or direction of the Client;
|
(iv)
|
outages resulting from the Client’s equipment and/or third party equipment not within the sole control of DevFactory;
|
(v)
|
events resulting from an interruption or shut down of the Application due to circumstances reasonably believed by DevFactory to be a significant threat to the normal operation of the Application, the facility from which the Application is provided, or access to or integrity of data (e.g., a hacker or a virus attack);
|
(vi)
|
outages due to system administration, commands, file transfers performed by the Client’s representatives;
|
(vii)
|
other activities the Client directs, denial of service attacks, natural disasters, power and other utility outages, internet service outages, changes resulting from government, political, or other regulatory actions or court orders, strikes or labor disputes, acts of civil disobedience, acts of war, or other events caused by circumstances beyond DevFactory’s reasonable control;
|
(viii)
|
The Client’s negligence or breach of its material obligations under this SLA, the Agreement, or any other agreement between the Client and DevFactory; and
|
(ix)
|
lack of availability or untimely response time of the Client to respond to incidents that require its participation for source identification and/or resolution.
|
3.
|
Priority Levels
. If the Application is not accessible as specified in Section 2.1 (an “
Issue
”), DevFactory will use commercially reasonable endeavors to correct the Issue with a level of effort commensurate with the severity of the Issue. DevFactory and the Client will comply with the following resolution procedures for all Issues reported by the Client:
|
1.
|
Notice of Issue
. If the Client encounters an Issue, the Client must sufficiently define the Issue in a written notice to DevFactory. After receipt of written notice of an Issue from the Client via the ticketing system, DevFactory will notify the Client if DevFactory cannot identify the cause of the Issue. If DevFactory cannot identify the cause of the Issue, the Client will provide additional information regarding the Issue as DevFactory may request in order to assist DevFactory with identifying the cause of the Issue. The Client will provide a separate written notice for each Issue encountered by the Client. All notices pursuant to this SLA may be provided via email.
|
2.
|
Issue Classification
. In its notice of an Issue, the Client will reasonably classify for DevFactory the initial priority of the Issue. Client will use the nature of the Issue and Client's business situation to initially classify each Issue. Client will classify each Issue in accordance with the severity classification table below. To the extent that DevFactory disagrees with any Issue classification provided by Client, DevFactory will promptly advise Client of the revised classification of any Issue.
|
3.
|
Response Time
. DevFactory will respond to each of Client's written notices of an Issue within the period set forth in the severity classification table below. Response time is the elapsed time between Client's first report of an identified Issue and the provision of a plan for resolution by a DevFactory technical contact.
|
4.
|
Downtime/Maintenance
. DevFactory periodically adds, repairs, and upgrades the data center network, hardware and the Application and shall use commercially reasonable efforts to accomplish this without affecting the Client’s access to the Application; however, repairs of an emergency or critical nature may result in the Application not being available for the Client’s usage during the course of such repairs. DevFactory reserves the right to take down the server(s) at the data center in order to conduct routine maintenance to both software and hardware according to the following protocols.
|
Item
|
Description
|
Commitment
|
Standard Maintenance Window
|
As communicated to the Client by DevFactory, not to exceed 20 hours per month.
|
N/A
|
Scheduled Updates
|
Regular planned updates of new functionality will take place during the standard maintenance window.
|
Minimum of 5 days’ notice prior to the upload going into the production environment. The notice will be displayed on the main site where the Application is accessible.
|
Scheduled Maintenance
|
Routine, scheduled maintenance will be performed inside the maintenance window.
|
A message will be displayed on the main site stating Application will be down.
|
Non-Scheduled/ Emergency Maintenance
|
May be performed outside the maintenance window and will be counted as unscheduled downtime.
|
Client will be notified via a message on the main site stating the Application will be down.
|
5.
|
Uptime & Incident Reports
. DevFactory will provide an uptime report on monthly basis for all aLine components including SCM/Code Repository Service.
|
◦
|
How long was the outage?
|
◦
|
Root cause of the outage?
|
◦
|
What action(s) are taken to mitigate/prevent future incidents?
|
3.
|
Client Obligations
|
4.
|
Disclaimers
|
PARENT AND A US BORROWER:
|
UPLAND SOFTWARE, INC.,
a Delaware corporation
By:
Name: John T. McDonald
Title: Chairman and Chief Executive Officer |
US BORROWERS:
|
UPLAND SOFTWARE I, INC.,
a Delaware corporation
By:
Name: John T. McDonald
Title: President |
|
UPLAND SOFTWARE II, INC.,
a Delaware corporation
By:
Name: John T. McDonald
Title: President |
|
UPLAND SOFTWARE III, LLC,
a Delaware limited liability company
By:
Name: John T. McDonald
Title: President |
|
UPLAND SOFTWARE IV, LLC,
a Nebraska corporation
By:
Name: John T. McDonald
Title: President |
|
UPLAND SOFTWARE V, LLC,
a Delaware corporation
By:
Name: John T. McDonald
Title: President |
|
UPLAND SOFTWARE VI, LLC,
a New Jersey limited liability company
By:
Name: John T. McDonald
Title: President |
|
UPLAND SOFTWARE VII, LLC,
a Delaware corporation
By:
Name: John T. McDonald
Title: President |
|
UPLAND IX, LLC,
a Delaware limited liability company
By:
Name: John T. McDonald
Title: President and Chairman |
CANADIAN BORROWERS:
|
UPLAND SOFTWARE, INC.,
a Canadian federal corporation
By:
Name: John T. McDonald
Title: President |
|
SOLUTION Q INC.,
an Ontario corporation
By:
Name: John T. McDonald
Title: Chief Executive Officer and President |
|
WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association, as Agent and as a Lender
By:
Name:
Title:
|
|
WELLS FARGO CAPITAL FINANCE CORPORATION CANADA
, an Ontario corporation, as a Lender
By:
Name:
Title:
|
PARENT AND A US BORROWER:
|
|
UPLAND SOFTWARE, INC.,
A Delaware corporation
By:
Name: Michael D. Hill
Title: Chief Financial Officer, Treasurer, Secretary
|
|
|
|
US BORROWERS:
|
|
UPLAND SOFTWARE I, INC.,
a Delaware corporation
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE II, INC.,
a Delaware corporation
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE III, LLC,
a Delaware limited liability company
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE IV, INC.,
a Nebraska corporation
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE V, INC.,
a Delaware corporation
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE VI, LLC,
a New Jersey limited liability company
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE VII, INC.,
a Delaware corporation
By:
Name: Michael D. Hill
Title: Assistant Secretary
|
|
|
|
|
|
UPLAND SOFTWARE IX, LLC,
a Delaware limited liability company
By:
Name: Michael D. Hill
Title: Secretary
|
|
|
|
|
|
ULTRIVA, INC.,
a California corporation
By:
Name: Michael D. Hill
Title: Secretary
|
|
|
|
CANADIAN BORROWER:
|
|
UPLAND SOFTWARE, INC.,
a Canadian federal corporation
By:
Name: Michael D. Hill
Title: Secretary
|
|
|
|
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, a national banking association, as Agent, US Agent and as a Lender
By:
Name: Tiffany Ormon
Title: Director
|
|
|
|
|
|
WELLS FARGO CAPITAL FINANCE CORPORATION CANADA
, an Ontario corporation, as Canadian Agent and as a Lender
By:
Name:
Title:
|
|
|
|
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, a national banking association, as Agent, US Agent and as a Lender
By:
Name: Tiffany Ormon
Title: Director
|
|
|
|
|
|
WELLS FARGO CAPITAL FINANCE CORPORATION CANADA
, an Ontario corporation, as Canadian Agent and as a Lender
By:
Name:
Title:
|
Date
|
Installment Amount
|
December 31, 2016
|
$554,687.50
|
March 31, 2017
|
$554,687.50
|
June 30, 2017
|
$554,687.50
|
September 30, 2017
|
$554,687.50
|
December 31, 2017
|
$554,687.50
|
March 31, 2018
|
$554,687.50
|
June 30, 2018
|
$554,687.50
|
September 30, 2018
|
$554,687.50
|
December 31, 2018
|
$554,687.50
|
March 31, 2019
|
$554,687.50
|
June 30, 2019
|
$554,687.50
|
September 30, 2019
|
$554,687.50
|
December 31, 2019
|
$554,687.50
|
March 31, 2020
|
$554,687.50
|
June 30, 2020
|
$554,687.50
|
September 30, 2020
|
$554,687.50
|
December 31, 2020
|
$554,687.50
|
March 31, 2021
|
$554,687.50
|
June 30, 2021
|
$554,687.50
|
September 30, 2021
|
$554,687.50
|
Date
|
Installment Amount
|
December 31, 2016
|
$75,000
|
March 31, 2017
|
$75,000
|
June 30, 2017
|
$75,000
|
September 30, 2017
|
$75,000
|
December 31, 2017
|
$75,000
|
March 31, 2018
|
$75,000
|
June 30, 2018
|
$75,000
|
September 30, 2018
|
$75,000
|
December 31, 2018
|
$75,000
|
March 31, 2019
|
$75,000
|
June 30, 2019
|
$75,000
|
September 30, 2019
|
$75,000
|
December 31, 2019
|
$75,000
|
March 31, 2020
|
$75,000
|
June 30, 2020
|
$75,000
|
September 30, 2020
|
$75,000
|
December 31, 2020
|
$75,000
|
March 31, 2021
|
$75,000
|
June 30, 2021
|
$75,000
|
September 30, 2021
|
$75,000
|
Applicable Date
|
Applicable Ratio
|
December 31, 2016
|
4.50 to 1.00
|
March 31, 2017
|
4.25 to 1.00
|
June 30, 2017
|
4.00 to 1.00
|
September 30, 2017
|
3.75 to 1.00
|
December 31, 2017
|
3.50 to 1.00
|
March 31, 2018
|
3.25 to 1.00
|
June 30, 2018
|
3.00 to 1.00
|
September 30, 2018
|
3.00 to 1.00
|
December 31, 2018
|
3.00 to 1.00
|
March 31, 2019
|
2.85 to 1.00
|
June 30, 2019
|
2.50 to 1.00
|
September 30, 2019
|
2.50 to 1.00
|
December 31, 2019
|
2.25 to 1.00
|
March 31, 2020
|
2.25 to 1.00
|
June 30, 2020 and each September 30, December 31 and March 31 thereafter
|
2.00 to 1.00
|
Applicable Period
|
Applicable Credit
Amount Percentage |
From the Third Amendment Closing Date through December 30, 2016
|
100.00%
|
December 31, 2016 through March 30, 2017
|
98.80%
|
March 31, 2017 through June 29, 2017
|
97.50%
|
June 30, 2017 through September 29, 2017
|
96.30%
|
September 30, 2017 through December 30, 2017
|
95.00%
|
December 31, 2017 through March 30, 2018
|
93.80%
|
March 31, 2018 through June 29, 2018
|
92.50%
|
June 30, 2018 through September 29, 2018
|
91.30%
|
September 30, 2018 through December 30, 2018
|
90.00%
|
December 31, 2018 through March 30, 2019
|
88.80%
|
March 31, 2019 through June 29, 2019
|
87.50%
|
June 30, 2019 through September 29, 2019
|
86.30%
|
September 30, 2019 through December 30, 2019
|
85.00%
|
December 31, 2019 through March 30, 2020
|
83.80%
|
March 31, 2020 through the June 29, 2020
|
82.50%
|
June 30, 2020 through September 29, 2020
|
81.30%
|
September 30, 2020 through the Maturity Date
|
80.00%
|
PARENT AND A US BORROWER
:
|
UPLAND SOFTWARE, INC.
,
a Delaware corporation By: Name:
Title:
|
US BORROWERS:
|
UPLAND SOFTWARE I, INC.,
a Delaware corporation By: Name:
Title:
|
|
UPLAND SOFTWARE II, INC.
,
a Delaware corporation By: Name:
Title:
|
|
UPLAND SOFTWARE III, LLC
,
a Delaware limited liability company By: Name:
Title:
|
|
UPLAND SOFTWARE IV, INC.
,
a Nebraska corporation By: Name:
Title:
|
|
UPLAND SOFTWARE V, INC.
,
a Delaware corporation By: Name:
Title:
|
|
UPLAND SOFTWARE VI, LLC
,
a New Jersey limited liability company By: Name:
Title:
|
|
UPLAND SOFTWARE VII, INC.
,
a Delaware corporation By: Name:
Title:
|
|
UPLAND IX, LLC
,
a Delaware limited liability company By: Name:
Title:
|
|
ULTRIVA, INC.
,
a California corporation By: Name:
Title:
|
|
ADVANCED PROCESSING & IMAGING, INC.
,
a Florida corporation By: Name:
Title:
|
CANADIAN BORROWER
:
|
UPLAND SOFTWARE INC. / LOGICIELS UPLAND INC.
,
a Canadian federal corporation By: Name:
Title:
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION
, a national banking association, as Agent, US Agent and as a Lender
By: Name:
Title:
|
|
WELLS FARGO CAPITAL FINANCE CORPORATION CANADA
, an Ontario corporation, as Canadian Agent and as a Lender
By: Name:
Title:
|
|
CIT BANK, N.A.
, a national banking association, as a Lender
By: Name: Title:_________________________ |
Lender
|
Canadian Revolver Commitment
|
US Revolver Commitment
|
Canadian Term Loan Commitment
|
US Term Loan Commitment
|
Delayed Draw Term Loan Commitment
|
Total Commitments
|
Wells Fargo Bank, National Association
|
$0
|
$6,142,857.14
|
$0
|
$30,089,285.71
|
$7,142,857.14
|
$43,375,000
|
Wells Fargo Capital Finance Corporation Canada
|
$1,000,000
|
$0
|
$5,625,000
|
$0
|
$0
|
$6,625,000
|
CIT Bank, N.A.
|
$0
|
$2,857,142.86
|
$0
|
$14,285,714.29
|
$2,857,142.86
|
$20,000,000
|
TOTAL
|
$1,000,000
|
$9,000,000
|
$5,625,000
|
$44,375,000
|
$10,000,000
|
$70,000,000
|
1.
|
I have reviewed this Annual Report on Form 10-K of Upland Software, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
March 30, 2017
|
/s/ John T. McDonald
|
John T. McDonald
|
Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Upland Software, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Michael D. Hill
|
Michael D. Hill
|
Chief Financial Officer
|
(Principal Financial Officer)
|
/s/ John T. McDonald
|
John T. McDonald
|
Chief Executive Officer
(Principal Executive Officer)
|
/s/ Michael D. Hill
|
Michael D. Hill
|
Chief Financial Officer
(Principal Financial Officer)
|