| | | | Sincerely, | | |||
| | | | | | |||
| | | | | | |||
| | | | /s/ Matthew Stecker Matthew Stecker | | |||
| | | | Chairman and Chief Executive Officer | |
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| | | Number of Securities Underlying Evolving Systems Unexercisable Stock Options | | | Option Exercise Price | | | Evolving Systems Unvested Restricted Stock (#) | | | Value ($) | | ||||||||||||
Executive Officers | | | | | | | | | | | | | | | | | | | | | | | | | |
Matthew Stecker | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mark P. Szynkowski | | | | | | | | | | | | | | | | | 938 | | | | | $ | 2,598.26 | | |
| | | 3,125 | | | | | $ | 4.60 | | | | | | — | | | | | $ | 0 | | |
Name | | | Transaction Bonus ($) | | |||
Matthew Stecker | | | | $ | 400,000.00 | | |
Mark P. Szynkowski | | | | $ | 75,000.00 | | |
Name | | Cash ($)(1) | | Equity ($)(2) | | Benefits ($)(3) | | Total ($) | | | Cash ($)(1) | | Equity ($)(2) | | Benefits ($)(3) | | Total ($) | | ||||||||||||||||||||||||||||||||
Matthew Stecker | | | $ | 1,236,500.00 | | | | | — | | | | $ | 1,220.06 | | | | $ | 1,237,720.06 | | | | | $ | 1,236,500.00 | | | | | — | | | | $ | 1,220.06 | | | | $ | 1,237,720.06 | | | ||||||||
Mark P. Szynkowski | | | $ | 459,500.00 | | | | $ | 2,598.26 | | | | $ | 892.44 | | | | $ | 462,990.70 | | |
Name | | | Cash ($)(1) | | | Equity ($)(2) | | | Benefits ($)(3) | | | Total ($) | | ||||||||||||
Mark P. Szynkowski | | | | $ | 459,500.00 | | | | | $ | 2,598.26 | | | | | $ | 892.44 | | | | | $ | 462,990.70 | | |
| | | Common Stock | | |||||||||
| | | High | | | Low | | ||||||
Fiscal Year 2021 | | | | ||||||||||
Quarter Ended: | | | | | | | | | | | | | |
September 30, 2021 | | | | $ | 2.68 | | | | | $ | 2.21 | | |
June 30, 2021 | | | | $ | 2.88 | | | | | $ | 1.74 | | |
March 31, 2021 | | | | $ | 3.94 | | | | | $ | 2.05 | | |
Fiscal Year 2020 | | | | ||||||||||
Quarter Ended: | | | | | | | | | | | | | |
December 31, 2020 | | | | $ | 2.48 | | | | | $ | 1.06 | | |
September 30, 2020 | | | | $ | 1.35 | | | | | $ | 0.98 | | |
June 30, 2020 | | | | $ | 1.27 | | | | | $ | 0.74 | | |
March 31, 2020 | | | | $ | 1.03 | | | | | $ | 0.60 | | |
| | | Shares of common stock beneficially owned | | |||||||||
Name of Beneficial Owner | | | Shares of common stock(1) | | | Percentage of total outstanding common stock (%) | | ||||||
5% Shareholder | | | | | | | | | | | | | |
Piton Capital Partners LLC(2) | | | | | 998,900 | | | | | | 8.1% | | |
Karen Singer, Trustee of the Singer Children’s Management Trust(3) | | | | | 2,545,638 | | | | | | 20.8% | | |
Renaissance Technologies LLC(4) | | | | | 1,001,710 | | | | | | 8.2% | | |
Named Executive Officers | | | | | | | | | | | | | |
Matthew Stecker(5) | | | | | 33,000 | | | | | | *% | | |
Mark Szynkowski(6) | | | | | 54,375 | | | | | | *% | | |
Directors | | | | | | | | | | | | | |
David J. Nicol(7) | | | | | 194,844 | | | | | | 1.6% | | |
David S. Oros(8) | | | | | 99,095 | | | | | | *% | | |
Julian D. Singer(9) | | | | | 448,138 | | | | | | 3.7% | | |
All current directors and executive officers as a group | | | | | 829,452 | | | | | | 6.8% | | |
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| BUYER: | | | ETI-NET Inc. | |
| SELLER: | | | EVOLVING SYSTEMS, INC. | |
| SELLERS: | | | EVOLVING SYSTEMS NC, INC. | |
| BUYER: | | | ETI-NET INC. | |
| SELLER: | | | EVOLVING SYSTEMS LIMITED | |
| PARENT: | | | EVOLVING SYSTEMS, INC. | |
| BUYER: | | | ETI-NET INC. | |
Description | | | Value | | | Reference | | |||
Post-Transaction Equity Value – Control, Marketable | | | | $ | 36,454,636 | | | | Schedule F | |
Pre-Transaction Equity Value – Minority, Marketable | | | | $ | 25,862,789 | | | | Schedule E.2 | |
Implied Control Premium | | | | | 41.0% | | | | | |
Description | | | Value | | | Reference | | |||
Median Control Premium | | | | | 24.5% | | | | Schedule G.2 | |
Regression Calculated Control Premium | | | | | 29.5% | | | | Schedule G.3 | |
Concluded Required Control Premium | | | | | 29.5% | | | | | |
| | | | | D-1 | | | |
| | | | | D-1 | | | |
| | | | | D-8 | | | |
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| | | | | D-24 | | | |
| | | | | D-24 | | | |
| | | | | D-27 | | | |
| | | | | D-27 | | | |
| | | | | D-28 | | | |
| | | | | D-29 | | | |
| | | | | D-30 | | | |
| | | | | D-31 | | | |
| | | | | D-32 | | |
Valuation Method | | | Indicated Value | | | Weight | | | Reference | | ||||||
Income Approach | | | | | | | | | | | | | | | | |
Discounted Cash Flow Method | | | | $ | 22,846,053 | | | | | | 50% | | | | Schedule B.9 | |
Market Approach | | | | | | | | | | | | | | | | |
Merger and Acquisition Method | | | | $ | 27,022,175 | | | | | | 50% | | | | Schedule C.3 | |
Concluded Equity Value – Minority, Marketable (Rounded) | | | | $ | 24,934,000 | | | | | | | | | | | |
Description | | | Value | | | Reference | | |||
Post-Transaction Equity Value – Control, Marketable | | | | $ | 36,454,636 | | | | Schedule F | |
Pre-Transaction Equity Value – Minority, Marketable | | | | $ | 25,862,789 | | | | Schedule E.2 | |
Implied Control Premium | | | | | 41.0% | | | | | |
Description | | | Value | | | Reference | | ||||||
Median Control Premium | | | | | 24.5% | | | | | | Schedule G.2 | | |
Regression Calculated Control Premium | | | | | 29.5% | | | | Schedule G.3 | | |||
Concluded Required Control Premium | | | | | 29.5% | | | | | | | | |
Description | | | Value | | | Reference | | |||
Post-Transaction Equity Value – Control, Marketable | | | | $ | 36,454,636 | | | | Schedule F | |
Pre-Transaction Equity Value – Minority, Marketable | | | | $ | 25,862,789 | | | | Schedule E.2 | |
Implied Control Premium | | | | | 41.0% | | | | | |
Description | | | Value | | | Reference | | |||
Median Control Premium | | | | | 24.5% | | | | Schedule G.2 | |
Regression Calculated Control Premium | | | | | 29.5% | | | | Schedule G.3 | |
Concluded Required Control Premium | | | | | 29.5% | | | | | |
| | | For the Twelve Months Ended: | | |||||||||||||||||||||||||||||||||||||||||||||
| | | 31-Dec-18 | | | 31-Dec-19 | | | 31-Dec-20 | | | 30-Jun-21 | | ||||||||||||||||||||||||||||||||||||
| | | Actual | | | % | | | Actual | | | % | | | Actual | | | % | | | Actual | | | % | | ||||||||||||||||||||||||
Revenue | | | | $ | 30,636 | | | | | | 100.0% | | | | | $ | 25,750 | | | | | | 100.0% | | | | | $ | 26,352 | | | | | | 100.0% | | | | | $ | 27,192 | | | | | | 100.0% | | |
Cost of sales (COS) | | | | | 10,349 | | | | | | 33.8% | | | | | | 8,685 | | | | | | 33.7% | | | | | | 8,837 | | | | | | 33.5% | | | | | | 8,938 | | | | | | 32.9% | | |
Gross Profit | | | | | 20,287 | | | | | | 66.2% | | | | | | 17,065 | | | | | | 66.3% | | | | | | 17,515 | | | | | | 66.5% | | | | | | 18,254 | | | | | | 67.1% | | |
Selling, general & administrative (SG&A) expenses | | | | | 17,439 | | | | | | 56.9% | | | | | | 17,144 | | | | | | 66.6% | | | | | | 15,379 | | | | | | 58.4% | | | | | | 15,961 | | | | | | 58.7% | | |
Earnings before interest, taxes, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
depreciation & amortization (EBITDA) | | | | | 2,848 | | | | | | 9.3% | | | | | | (79) | | | | | | -0.3% | | | | | | 2,136 | | | | | | 8.1% | | | | | | 2,293 | | | | | | 8.4% | | |
Depreciation expense | | | | | 121 | | | | | | 0.4% | | | | | | 190 | | | | | | 0.7% | | | | | | 216 | | | | | | 0.8% | | | | | | 242 | | | | | | 0.9% | | |
Amortization expense | | | | | 970 | | | | | | 3.2% | | | | | | 938 | | | | | | 3.6% | | | | | | 940 | | | | | | 3.6% | | | | | | 950 | | | | | | 3.5% | | |
Earnings before interest & taxes (EBIT) | | | | | 1,757 | | | | | | 5.7% | | | | | | (1,207) | | | | | | -4.7% | | | | | | 980 | | | | | | 3.7% | | | | | | 1,101 | | | | | | 4.0% | | |
Other income (expense) | | | | | (16,557) | | | | | | -54.0% | | | | | | (7,086) | | | | | | -27.5% | | | | | | 556 | | | | | | 2.1% | | | | | | 204 | | | | | | 0.8% | | |
Interest income | | | | | 65 | | | | | | 0.2% | | | | | | 15 | | | | | | 0.1% | | | | | | 5 | | | | | | 0.0% | | | | | | 6 | | | | | | 0.0% | | |
Interest (expense) | | | | | (478) | | | | | | -1.6% | | | | | | (314) | | | | | | -1.2% | | | | | | (70) | | | | | | -0.3% | | | | | | (6) | | | | | | 0.0% | | |
Other income, net | | | | | (16,970) | | | | | | -55.4% | | | | | | (7,385) | | | | | | -28.7% | | | | | | 491 | | | | | | 1.9% | | | | | | 204 | | | | | | 0.8% | | |
Pretax Income (EBT) | | | | | (15,213) | | | | | | -49.7% | | | | | | (8,592) | | | | | | -33.4% | | | | | | 1,471 | | | | | | 5.6% | | | | | | 1,305 | | | | | | 4.8% | | |
Provision (benefit) for income taxes | | | | | (426) | | | | | | -1.4% | | | | | | 1,103 | | | | | | 4.3% | | | | | | 828 | | | | | | 3.1% | | | | | | 545 | | | | | | 2.0% | | |
Net Income | | | | $ | (14,787) | | | | | | -48.3% | | | | | $ | (9,695) | | | | | | -37.7% | | | | | $ | 643 | | | | | | 2.4% | | | | | $ | 760 | | | | | | 2.8% | | |
Annualized Growth Rates | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||
Revenue | | | | | NA | | | | | | | | | | | | -15.9% | | | | | | | | | | | | 2.3% | | | | | | | | | | | | 6.5% | | | | | | | | |
Gross Profit | | | | | NA | | | | | | | | | | | | -15.9% | | | | | | | | | | | | 2.6% | | | | | | | | | | | | 8.7% | | | | | | | | |
EBITDA | | | | | NA | | | | | | | | | | | | NA | | | | | | | | | | | | NA | | | | | | | | | | | | 15.4% | | | | | | | | |
EBIT | | | | | NA | | | | | | | | | | | | NA | | | | | | | | | | | | NA | | | | | | | | | | | | 26.5% | | | | | | | | |
Net Income | | | | | NA | | | | | | | | | | | | NA | | | | | | | | | | | | NA | | | | | | | | | | | | 40.1% | | | |
| | | As of: | | |||||||||||||||||||||||||||||||||||||||||||||
| | | 31-Dec-18 | | | 31-Dec-19 | | | 31-Dec-20 | | | 30-Jun-21 | | ||||||||||||||||||||||||||||||||||||
| | | Actual | | | % | | | Actual | | | % | | | Actual | | | % | | | Actual | | | % | | ||||||||||||||||||||||||
Current Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash & cash equivalents | | | | $ | 6,732 | | | | | | 20.6% | | | | | $ | 3,076 | | | | | | 15.5% | | | | | $ | 2,763 | | | | | | 14.5% | | | | | $ | 4,896 | | | | | | 23.0% | | |
Accounts receivable, net | | | | | 11,938 | | | | | | 36.4% | | | | | | 8,790 | | | | | | 44.4% | | | | | | 9,316 | | | | | | 48.8% | | | | | | 9,661 | | | | | | 45.4% | | |
Prepaid expenses and other CA | | | | | 1,351 | | | | ��� | | 4.1% | | | | | | 1,594 | | | | | | 8.0% | | | | | | 1,828 | | | | | | 9.6% | | | | | | 1,550 | | | | | | 7.3% | | |
Total Current Assets | | | | | 20,021 | | | | | | 61.1% | | | | | | 13,460 | | | | | | 67.9% | | | | | | 13,907 | | | | | | 72.9% | | | | | | 16,107 | | | | | | 75.8% | | |
Fixed assets, net | | | | | 303 | | | | | | 0.9% | | | | | | 1,687 | | | | | | 8.5% | | | | | | 1,447 | | | | | | 7.6% | | | | | | 1,631 | | | | | | 7.7% | | |
Deferred tax asset | | | | | 1,140 | | | | | | 3.5% | | | | | | 1,000 | | | | | | 5.0% | | | | | | 953 | | | | | | 5.0% | | | | | | 954 | | | | | | 4.5% | | |
Other assets | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | 257 | | | | | | 1.2% | | |
Intangible assets, net | | | | | 4,550 | | | | | | 13.9% | | | | | | 3,665 | | | | | | 18.5% | | | | | | 2,769 | | | | | | 14.5% | | | | | | 2,310 | | | | | | 10.9% | | |
Goodwill | | | | | 6,738 | | | | | | 20.6% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | |
Total Assets | | | | | 32,752 | | | | | | 100.0% | | | | | | 19,812 | | | | | | 100.0% | | | | | | 19,076 | | | | | | 100.0% | | | | | | 21,259 | | | | | | 100.0% | | |
Current Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | | | $ | 1,276 | | | | | | 3.9% | | | | | $ | 889 | | | | | | 4.5% | | | | | $ | 878 | | | | | | 4.6% | | | | | $ | 730 | | | | | | 3.4% | | |
Accrued expenses | | | | | 7,118 | | | | | | 21.7% | | | | | | 6,909 | | | | | | 34.9% | | | | | | 7,140 | | | | | | 37.4% | | | | | | 9,452 | | | | | | 44.5% | | |
Current portion long-term debt | | | | | 3,573 | | | | | | 10.9% | | | | | | 1,577 | | | | | | 8.0% | | | | | | 142 | | | | | | 0.7% | | | | | | — | | | | | | 0.0% | | |
Total Current Liabilities | | | | | 11,967 | | | | | | 36.5% | | | | | | 9,375 | | | | | | 47.3% | | | | | | 8,160 | | | | | | 42.8% | | | | | | 10,182 | | | | | | 47.9% | | |
Deferred tax liability | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | | | | | — | | | | | | 0.0% | | |
Capital lease obligation | | | | | — | | | | | | 0.0% | | | | | | 1,197 | | | | | | 6.0% | | | | | | 907 | | | | | | 4.8% | | | | | | 1,114 | | | | | | 5.2% | | |
Long-term debt, net of current | | | | | 2,365 | | | | | | 7.2% | | | | | | 122 | | | | | | 0.6% | | | | | | 319 | | | | | | 1.7% | | | | | | — | | | | | | 0.0% | | |
Total Long-term Liabilities | | | | | 2,365 | | | | | | 7.2% | | | | | | 1,319 | | | | | | 6.7% | | | | | | 1,226 | | | | | | 6.4% | | | | | | 1,114 | | | | | | 5.2% | | |
Total Liabilities | | | | | 14,332 | | | | | | 43.8% | | | | | | 10,694 | | | | | | 54.0% | | | | | | 9,386 | | | | | | 49.2% | | | | | | 11,296 | | | | | | 53.1% | | |
Common stock | | | | | 12 | | | | | | 0.0% | | | | | | 12 | | | | | | 0.1% | | | | | | 12 | | | | | | 0.1% | | | | | | 12 | | | | | | 0.1% | | |
Additional paid-in capital | | | | | 99,224 | | | | | | 303.0% | | | | | | 99,555 | | | | | | 502.5% | | | | | | 99,776 | | | | | | 523.0% | | | | | | 99,990 | | | | | | 470.3% | | |
Retained earnings | | | | | (79,563) | | | | | | -242.9% | | | | | | (89,196) | | | | | | -450.2% | | | | | | (88,845) | | | | | | -465.7% | | | | | | (88,786) | | | | | | -417.6% | | |
Treasury stock | | | | | (1,253) | | | | | | -3.8% | | | | | | (1,253) | | | | | | -6.3% | | | | | | (1,253) | | | | | | -6.6% | | | | | | (1,253) | | | | | | -5.9% | | |
Total Equity | | | | | 18,420 | | | | | | 56.2% | | | | | | 9,118 | | | | | | 46.0% | | | | | | 9,690 | | | | | | 50.8% | | | | | | 9,963 | | | | | | 46.9% | | |
Total Liabilities & Equity | | | | $ | 32,752 | | | | | | 100.0% | | | | | $ | 19,812 | | | | | | 100.0% | | | | | $ | 19,076 | | | | | | 100.0% | | | | | $ | 21,259 | | | | | | 100.0% | | |
| | | For the Twelve Months Ended: | | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | 31-Dec-18 | | | 31-Dec-19 | | | 31-Dec-20 | | | 30-Jun-21 | | | | | | | | ||||||||||||||||||||||||||||||||||||
DuPont Analysis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Asset turnover | | | | | | | | | | | | | | 93.5% | | | | | | | | | | | | 130.0% | | | | | | | | | | | | 138.1% | | | | | | | | | | | | 127.9% | | | | | | | | |
Operating margin | | | | | | | | | | | | | | 5.7% | | | | | | | | | | | | -4.7% | | | | | | | | | | | | 3.7% | | | | | | | | | | | | 4.0% | | | | | | | | |
Interest burden | | | | | | | | | | | | | | -865.9% | | | | | | | | | | | | 711.8% | | | | | | | | | | | | 150.1% | | | | | | | | | | | | 118.5% | | | | | | | | |
Tax retention rate | | | | | | | | x | | | | | | 97.2% | | | | | | x | | | | | | 112.8% | | | | | | x | | | | | | 43.7% | | | | | | x | | | | | | 58.2% | | | | | | | | |
Return on assets | | | | | | | | | | | | | | -45.1% | | | | | | | | | | | | -48.9% | | | | | | | | | | | | 3.4% | | | | | | | | | | | | 3.6% | | | | | | | | |
Financial leverage | | | | | | | | x | | | | | | 1.78 | | | | | | x | | | | | | 2.17 | | | | | | x | | | | | | 1.97 | | | | | | x | | | | | | 2.13 | | | | | | | | |
Return on book value of equity | | | | | | | | | | | | | | -80.3% | | | | | | | | | | | | -106.3% | | | | | | | | | | | | 6.6% | | | | | | | | | | | | 7.6% | | | | | | | | |
Short-term Liquidity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | |
Working capital, excluding short-term debt | | | | | | | | | | | | | $ | 11,627 | | | | | | | | | | | $ | 5,662 | | | | | | | | | | | $ | 5,889 | | | | | | | | | | | $ | 5,925 | | | | | | | | |
% revenue | | | | | | | | | | | | | | 38.0% | | | | | | | | | | | | 22.0% | | | | | | | | | | | | 22.3% | | | | | | | | | | | | 21.8% | | | | | | 26.0% | | |
Current ratio | | | | | | | | | | | | | | 1.7x | | | | | | | | | | | | 1.4x | | | | | | | | | | | | 1.7x | | | | | | | | | | | | 1.6x | | | | | | 1.6x | | |
Quick Ratio | | | Basis | | | | | | | | | | | 1.6x | | | | | | | | | | | | 1.3x | | | | | | | | | | | | 1.5x | | | | | | | | | | | | 1.4x | | | | | | 1.4x | | |
Days cash & equivalents | | | COS + SG&A | | | | | | | | | | | 88 | | | | | | | | | | | | 43 | | | | | | | | | | | | 42 | | | | | | | | | | | | 72 | | | | | | 61 | | |
Prepaid expenses | | | SG&A | | | | | | | | | | | 7.7% | | | | | | | | | | | | 9.3% | | | | | | | | | | | | 11.9% | | | | | | | | | | | | 9.7% | | | | | | 9.7% | | |
Days A/R | | | Revenue | | | | | | | | | | | 142.2 | | | | | | | | | | | | 124.6 | | | | | | | | | | | | 129.0 | | | | | | | | | | | | 129.7 | | | | | | 131.4 | | |
Days A/P | | | Cost of Sales | | | | | | | | | | | 45 | | | | | | | | | | | | 37 | | | | | | | | | | | | 36 | | | | | | | | | | | | 30 | | | | | | 37 | | |
Days accrued expenses | | | SG&A | | | | | | | | | | | 149 | | | | | | | | | | | | 147 | | | | | | | | | | | | 169 | | | | | | | | | | | | 216 | | | | | | 170 | | |
Fixed Asset Analysis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | |
Net fixed assets | | | | | | | | | | | | | $ | 303 | | | | | | | | | | | $ | 1,687 | | | | | | | | | | | $ | 1,447 | | | | | | | | | | | $ | 1,631 | | | | | | | | |
% revenue | | | | | | | | | | | | | | 1.0% | | | | | | | | | | | | 6.6% | | | | | | | | | | | | 5.5% | | | | | | | | | | | | 6.0% | | | | | | 4.8% | | |
Fixed asset utilization | | | | | | | | | | | | | | 101.1x | | | | | | | | | | | | 15.3x | | | | | | | | | | | | 18.2x | | | | | | | | | | | | 16.7x | | | | | | 37.8x | | |
Depreciation expense | | | | | | | | | | | | | $ | 121 | | | | | | | | | | | $ | 190 | | | | | | | | | | | $ | 216 | | | | | | | | | | | $ | 242 | | | | | | | | |
% Fixed assets | | | | | | | | | | | | | | 39.9% | | | | | | | | | | | | 11.3% | | | | | | | | | | | | 14.9% | | | | | | | | | | | | 14.8% | | | | | | 20.2% | | |
Remaining avg. life of fixed assets (years) | | | | | | | | | | | | | | 2.5 | | | | | | | | | | | | 8.9 | | | | | | | | | | | | 6.7 | | | | | | | | | | | | 6.7 | | | | | | 6.2 | | |
Solvency Ratios | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | |
Total Liabilities-to-Total Equity | | | | | | | | | | | | | | 0.8x | | | | | | | | | | | | 1.2x | | | | | | | | | | | | 1.0x | | | | | | | | | | | | 1.1x | | | | | | 1.0x | | |
Total Liabilities-to-Total Liabilities & Equity | | | | | | | | | | | | | | 0.4x | | | | | | | | | | | | 0.5x | | | | | | | | | | | | 0.5x | | | | | | | | | | | | 0.5x | | | | | | 0.5x | | |
Profit Margins | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | |
Gross margin | | | | | | | | | | | | | | 66.2% | | | | | | | | | | | | 66.3% | | | | | | | | | | | | 66.5% | | | | | | | | | | | | 67.1% | | | | | | 66.5% | | |
EBITDA margin | | | | | | | | | | | | | | 9.3% | | | | | | | | | | | | -0.3% | | | | | | | | | | | | 8.1% | | | | | | | | | | | | 8.4% | | | | | | 6.4% | | |
EBIT margin | | | | | | | | | | | | | | 5.7% | | | | | | | | | | | | -4.7% | | | | | | | | | | | | 3.7% | | | | | | | | | | | | 4.0% | | | | | | 2.2% | | |
Net income margin | | | | | | | | | | | | | | -48.3% | | | | | | | | | | | | -37.7% | | | | | | | | | | | | 2.4% | | | | | | | | | | | | 2.8% | | | | | | -20.2% | | |
Effective tax rate | | | | | | | | | | | | | | 2.8% | | | | | | | | | | | | -12.8% | | | | | | | | | | | | 56.3% | | | | | | | | | | | | 41.8% | | | | | | 22.0% | | |
| | | For the Projected Year Ending: | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | |||||||||||||||||||||||||||||||||
Inflation estimate | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | |
Real revenue growth rate | | | | | 3.2% | | | | | | 2.8% | | | | | | 2.3% | | | | | | 1.8% | | | | | | 1.4% | | | | | | 0.9% | | | | | | 0.5% | | | | | | 0.0% | | | | | | 0.0% | | | | | | 0.0% | | | | | | 0.0% | | |
Revenue growth rate | | | | | 5.5% | | | | | | 5.1% | | | | | | 4.6% | | | | | | 4.1% | | | | | | 3.7% | | | | | | 3.2% | | | | | | 2.7% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | |
COS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of revenue) | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | | | | | 34.4% | | |
Gross profit margin | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | |
SG&A expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(% of revenue) | | | | | 62.1% | | | | | | 61.2% | | | | | | 60.3% | | | | | | 59.3% | | | | | | 58.4% | | | | | | 57.4% | | | | | | 56.5% | | | | | | 55.6% | | | | | | 55.6% | | | | | | 55.6% | | | | | | 55.6% | | |
EBITDA margin | | | | | 3.4% | | | | | | 4.4% | | | | | | 5.3% | | | | | | 6.3% | | | | | | 7.2% | | | | | | 8.1% | | | | | | 9.1% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | |
Income tax rate | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | |
| | | For the Projected Year Ending: | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | |||||||||||||||||||||||||||||||||
Days cash & equivalents | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | | | | | 50.0 | | |
Basis: COS + SG&A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Days A/R | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | | | | | 130.0 | | |
Basis: Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prepaid expenses | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | |
Basis: SG&A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Days A/P | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | | | | | 40.0 | | |
Basis: Cost of Sales | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Days accrued expenses | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | | | | | 175.0 | | |
Basis: SG&A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Base Period | | | For the Projected Year Ending: | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | 31-Dec-20 | | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | ||||||||||||||||||||||||||||||||||||
Revenue | | | | $ | 26,352 | | | | | $ | 27,811 | | | | | $ | 29,220 | | | | | $ | 30,564 | | | | | $ | 31,825 | | | | | $ | 32,990 | | | | | $ | 34,042 | | | | | $ | 34,967 | | | | | $ | 35,754 | | | | | $ | 36,559 | | | | | $ | 37,381 | | | | | $ | 38,222 | | |
Annual Growth Rate | | | | | 2.3% | | | | | | 5.5% | | | | | | 5.1% | | | | | | 4.6% | | | | | | 4.1% | | | | | | 3.7% | | | | | | 3.2% | | | | | | 2.7% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | | | | | 2.3% | | |
COS | | | | | 8,837 | | | | | | 9,575 | | | | | | 10,060 | | | | | | 10,523 | | | | | | 10,957 | | | | | | 11,358 | | | | | | 11,720 | | | | | | 12,039 | | | | | | 12,310 | | | | | | 12,587 | | | | | | 12,870 | | | | | | 13,160 | | |
Gross Profit | | | | | 17,515 | | | | | | 18,236 | | | | | | 19,160 | | | | | | 20,041 | | | | | | 20,868 | | | | | | 21,632 | | | | | | 22,322 | | | | | | 22,929 | | | | | | 23,444 | | | | | | 23,972 | | | | | | 24,511 | | | | | | 25,063 | | |
SG&A expenses | | | | | 15,379 | | | | | | 17,279 | | | | | | 17,881 | | | | | | 18,416 | | | | | | 18,878 | | | | | | 19,260 | | | | | | 19,555 | | | | | | 19,759 | | | | | | 19,869 | | | | | | 20,316 | | | | | | 20,773 | | | | | | 21,241 | | |
EBITDA | | | | | 2,136 | | | | | | 957 | | | | | | 1,279 | | | | | | 1,624 | | | | | | 1,990 | | | | | | 2,372 | | | | | | 2,766 | | | | | | 3,169 | | | | | | 3,575 | | | | | | 3,656 | | | | | | 3,738 | | | | | | 3,822 | | |
Depreciation expense | | | | | 216 | | | | | | 228 | | | | | | 249 | | | | | | 272 | | | | | | 296 | | | | | | 321 | | | | | | 347 | | | | | | 373 | | | | | | 193 | | | | | | 220 | | | | | | 248 | | | | | | 277 | | |
Amortization expense | | | | | 940 | | | | | | 923 | | | | | | 923 | | | | | | 923 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
EBIT | | | | | 980 | | | | | | (194) | | | | | | 107 | | | | | | 429 | | | | | | 1,693 | | | | | | 2,051 | | | | | | 2,420 | | | | | | 2,796 | | | | | | 3,383 | | | | | | 3,436 | | | | | | 3,490 | | | | | | 3,545 | | |
Other income, net | | | | | 491 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
EBT | | | | | 1,471 | | | | | | (194) | | | | | | 107 | | | | | | 429 | | | | | | 1,693 | | | | | | 2,051 | | | | | | 2,420 | | | | | | 2,796 | | | | | | 3,383 | | | | | | 3,436 | | | | | | 3,490 | | | | | | 3,545 | | |
Current income taxes | | | | | 828 | | | | | | 22 | | | | | | 85 | | | | | | 167 | | | | | | 252 | | | | | | 337 | | | | | | 483 | | | | | | 566 | | | | | | 634 | | | | | | 637 | | | | | | 644 | | | | | | 654 | | |
Deferred taxes | | | | | — | | | | | | (63) | | | | | | (63) | | | | | | (77) | | | | | | 104 | | | | | | 94 | | | | | | 26 | | | | | | 21 | | | | | | 76 | | | | | | 85 | | | | | | 89 | | | | | | 90 | | |
Total taxes | | | | | 828 | | | | | | (41) | | | | | | 22 | | | | | | 90 | | | | | | 356 | | | | | | 431 | | | | | | 508 | | | | | | 587 | | | | | | 710 | | | | | | 721 | | | | | | 733 | | | | | | 744 | | |
Net Income | | | | $ | 643 | | | | | $ | (153) | | | | | $ | 84 | | | | | $ | 339 | | | | | $ | 1,338 | | | | | $ | 1,620 | | | | | $ | 1,912 | | | | | $ | 2,209 | | | | | $ | 2,672 | | | | | $ | 2,714 | | | | | $ | 2,757 | | | | | $ | 2,801 | | |
Profit Margins | | | Projected Profit Margins | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | | | | | 66.5% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | | | | | 65.6% | | |
EBITDA margin | | | | | 8.1% | | | | | | 3.4% | | | | | | 4.4% | | | | | | 5.3% | | | | | | 6.3% | | | | | | 7.2% | | | | | | 8.1% | | | | | | 9.1% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | | | | | 10.0% | | |
EBIT margin | | | | | 3.7% | | | | | | -0.7% | | | | | | 0.4% | | | | | | 1.4% | | | | | | 5.3% | | | | | | 6.2% | | | | | | 7.1% | | | | | | 8.0% | | | | | | 9.5% | | | | | | 9.4% | | | | | | 9.3% | | | | | | 9.3% | | |
Net income margin | | | | | 2.4% | | | | | | -0.5% | | | | | | 0.3% | | | | | | 1.1% | | | | | | 4.2% | | | | | | 4.9% | | | | | | 5.6% | | | | | | 6.3% | | | | | | 7.5% | | | | | | 7.4% | | | | | | 7.4% | | | | | | 7.3% | | |
Effective tax rate | | | | | 56.3% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | | | | | 21.0% | | |
| | | Base Period | | | Projected As Of: | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | 31-Dec-20 | | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | ||||||||||||||||||||||||||||||||||||
Current Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash & cash equivalents | | | | $ | 2,763 | | | | | $ | 3,679 | | | | | $ | 3,828 | | | | | $ | 3,964 | | | | | $ | 4,087 | | | | | $ | 4,194 | | | | | $ | 4,284 | | | | | $ | 4,356 | | | | | $ | 4,408 | | | | | $ | 4,507 | | | | | $ | 4,609 | | | | | $ | 4,712 | | |
Accounts receivable, net | | | | | 9,316 | | | | | | 9,905 | | | | | | 10,407 | | | | | | 10,886 | | | | | | 11,335 | | | | | | 11,750 | | | | | | 12,124 | | | | | | 12,454 | | | | | | 12,734 | | | | | | 13,021 | | | | | | 13,314 | | | | | | 13,613 | | |
Prepaid expenses & other current asse | | | | | 1,828 | | | | | | 1,728 | | | | | | 1,788 | | | | | | 1,842 | | | | | | 1,888 | | | | | | 1,926 | | | | | | 1,956 | | | | | | 1,976 | | | | | | 1,987 | | | | | | 2,032 | | | | | | 2,077 | | | | | | 2,124 | | |
Total Current Assets | | | | | 13,907 | | | | | | 15,312 | | | | | | 16,023 | | | | | | 16,692 | | | | | | 17,310 | | | | | | 17,870 | | | | | | 18,364 | | | | | | 18,786 | | | | | | 19,129 | | | | | | 19,560 | | | | | | 20,000 | | | | | | 20,450 | | |
Fixed assets, net | | | | | 1,447 | | | | | | 1,637 | | | | | | 1,825 | | | | | | 2,011 | | | | | | 2,193 | | | | | | 2,366 | | | | | | 2,530 | | | | | | 2,682 | | | | | | 3,026 | | | | | | 3,354 | | | | | | 3,666 | | | | | | 3,962 | | |
Deferred tax asset | | | | | 953 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Other Assets | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Intangible assets | | | | | 2,769 | | | | | | 1,846 | | | | | | 923 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Goodwill | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total Assets | | | | $ | 19,076 | | | | | $ | 18,794 | | | | | $ | 18,771 | | | | | $ | 18,703 | | | | | $ | 19,503 | | | | | $ | 20,236 | | | | | $ | 20,895 | | | | | $ | 21,468 | | | | | $ | 22,155 | | | | | $ | 22,913 | | | | | $ | 23,666 | | | | | $ | 24,412 | | |
Current Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | | | $ | 878 | | | | | $ | 1,049 | | | | | $ | 1,102 | | | | | $ | 1,153 | | | | | $ | 1,201 | | | | | $ | 1,245 | | | | | $ | 1,284 | | | | | $ | 1,319 | | | | | $ | 1,349 | | | | | $ | 1,379 | | | | | $ | 1,410 | | | | | $ | 1,442 | | |
Accrued expenses | | | | | 7,140 | | | | | | 8,284 | | | | | | 8,573 | | | | | | 8,830 | | | | | | 9,051 | | | | | | 9,234 | | | | | | 9,376 | | | | | | 9,474 | | | | | | 9,526 | | | | | | 9,741 | | | | | | 9,960 | | | | | | 10,184 | | |
Current portion of long-term debt | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | | | | | 142 | | |
Total Current Liabilities | | | | | 8,160 | | | | | | 9,476 | | | | | | 9,817 | | | | | | 10,125 | | | | | | 10,394 | | | | | | 10,621 | | | | | | 10,802 | | | | | | 10,935 | | | | | | 11,017 | | | | | | 11,262 | | | | | | 11,512 | | | | | | 11,768 | | |
Deferred tax liability / (asset) | | | | | — | | | | | | (1,016) | | | | | | (1,079) | | | | | | (1,156) | | | | | | (1,052) | | | | | | (958) | | | | | | (933) | | | | | | (911) | | | | | | (835) | | | | | | (751) | | | | | | (661) | | | | | | (571) | | |
Capital lease obligation | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | | | | | 907 | | |
Long-term debt, net of current portion | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | | | | | 319 | | |
Total Liabilities | | | | | 9,386 | | | | | | 9,686 | | | | | | 9,965 | | | | | | 10,195 | | | | | | 10,568 | | | | | | 10,889 | | | | | | 11,096 | | | | | | 11,250 | | | | | | 11,408 | | | | | | 11,737 | | | | | | 12,077 | | | | | | 12,423 | | |
Total Capital | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning capital | | | | | 9,047 | | | | | | 9,690 | | | | | | 9,108 | | | | | | 8,806 | | | | | | 8,508 | | | | | | 8,934 | | | | | | 9,348 | | | | | | 9,799 | | | | | | 10,219 | | | | | | 10,747 | | | | | | 11,176 | | | | | | 11,589 | | |
Current period earnings (loss) | | | | | 643 | | | | | | (153) | | | | | | 84 | | | | | | 339 | | | | | | 1,338 | | | | | | 1,620 | | | | | | 1,912 | | | | | | 2,209 | | | | | | 2,672 | | | | | | 2,714 | | | | | | 2,757 | | | | | | 2,801 | | |
Net cash flow | | | | | NA | | | | | | 429 | | | | | | 386 | | | | | | 637 | | | | | | 912 | | | | | | 1,207 | | | | | | 1,460 | | | | | | 1,790 | | | | | | 2,144 | | | | | | 2,285 | | | | | | 2,344 | | | | | | 2,400 | | |
Ending Capital | | | | | 9,690 | | | | | | 9,108 | | | | | | 8,806 | | | | | | 8,508 | | | | | | 8,934 | | | | | | 9,348 | | | | | | 9,799 | | | | | | 10,219 | | | | | | 10,747 | | | | | | 11,176 | | | | | | 11,589 | | | | | | 11,989 | | |
Total Liabilities & Capital | | | | $ | 19,076 | | | | | $ | 18,794 | | | | | $ | 18,771 | | | | | $ | 18,703 | | | | | $ | 19,503 | | | | | $ | 20,236 | | | | | $ | 20,895 | | | | | $ | 21,468 | | | | | $ | 22,155 | | | | | $ | 22,913 | | | | | $ | 23,666 | | | | | $ | 24,412 | | |
Working capital (CA – CL) | | | | $ | 5,889 | | | | | $ | 5,978 | | | | | $ | 6,347 | | | | | $ | 6,709 | | | | | $ | 7,058 | | | | | $ | 7,391 | | | | | $ | 7,704 | | | | | $ | 7,993 | | | | | $ | 8,254 | | | | | $ | 8,440 | | | | | $ | 8,630 | | | | | $ | 8,824 | | |
WC balance as % revenue | | | | | 22.3% | | | | | | 21.5% | | | | | | 21.7% | | | | | | 21.9% | | | | | | 22.2% | | | | | | 22.4% | | | | | | 22.6% | | | | | | 22.9% | | | | | | 23.1% | | | | | | 23.1% | | | | | | 23.1% | | | | | | 23.1% | | |
Additions (subtractions) thereto | | | | | | | | | | | 89 | | | | | | 369 | | | | | | 361 | | | | | | 349 | | | | | | 333 | | | | | | 313 | | | | | | 289 | | | | | | 261 | | | | | | 186 | | | | | | 190 | | | | | | 194 | | |
| | | | | | | | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | |||||||||||||||||||||||||||||||||
Fixed asset utilization rate | | | | | | | | | | | 17.0x | | | | | | 16.0x | | | | | | 15.2x | | | | | | 14.5x | | | | | | 13.9x | | | | | | 13.5x | | | | | | 13.0x | | | | | | 11.8x | | | | | | 10.9x | | | | | | 10.2x | | | | | | 9.6x | | |
Required assets | | | | | | | | | | $ | 1,637 | | | | | $ | 1,825 | | | | | $ | 2,011 | | | | | $ | 2,193 | | | | | $ | 2,366 | | | | | $ | 2,530 | | | | | $ | 2,682 | | | | | $ | 3,026 | | | | | $ | 3,354 | | | | | $ | 3,666 | | | | | $ | 3,962 | | |
Beginning assets | | | | | | | | | | | 1,447 | | | | | | 1,637 | | | | | | 1,825 | | | | | | 2,011 | | | | | | 2,193 | | | | | | 2,366 | | | | | | 2,530 | | | | | | 2,682 | | | | | | 3,026 | | | | | | 3,354 | | | | | | 3,666 | | |
Depreciation | | | | | | | | | | | 228 | | | | | | 249 | | | | | | 272 | | | | | | 296 | | | | | | 321 | | | | | | 347 | | | | | | 373 | | | | | | 193 | | | | | | 220 | | | | | | 248 | | | | | | 277 | | |
Short-term capital expenditures | | | | | | | | | | | 375 | | | | | | 394 | | | | | | 413 | | | | | | 430 | | | | | | 445 | | | | | | 460 | | | | | | 472 | | | | | | 483 | | | | | | 494 | | | | | | 505 | | | | | | 516 | | |
Long-term capital expenditures | | | | | | | | | | | 42 | | | | | | 44 | | | | | | 46 | | | | | | 48 | | | | | | 49 | | | | | | 51 | | | | | | 52 | | | | | | 54 | | | | | | 55 | | | | | | 56 | | | | | | 57 | | |
Required capital expenditures | | | | | | | | | | $ | 417 | | | | | $ | 438 | | | | | $ | 458 | | | | | $ | 477 | | | | | $ | 495 | | | | | $ | 511 | | | | | $ | 525 | | | | | $ | 536 | | | | | $ | 548 | | | | | $ | 561 | | | | | $ | 573 | | |
As % revenue | | | | | | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | | | | | 1.5% | | |
Economic / Book Depreciation Schedule: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Existing assets, net | | | | | 1,447 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation life – existing assets | | | | | 7.0 | | | | | $ | 207 | | | | | $ | 207 | | | | | $ | 207 | | | | | $ | 207 | | | | | $ | 207 | | | | | $ | 207 | | | | | $ | 207 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Depreciation life – capital expenditures | | | | | 20.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures – 2021 | | | | $ | 417 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | | | | | 21 | | |
Capital expenditures – 2022 | | | | | 438 | | | | | | | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | | | | | 22 | | |
Capital expenditures – 2023 | | | | | 458 | | | | | | | | | | | | | | | | | | 23 | | | | | | 23 | | | | | | 23 | | | | | | 23 | | | | | | 23 | | | | | | 23 | | | | | | 23 | | | | | | 23 | | | | | | 23 | | |
Capital expenditures – 2024 | | | | | 477 | | | | | | | | | | | | | | | | | | | | | | | | 24 | | | | | | 24 | | | | | | 24 | | | | | | 24 | | | | | | 24 | | | | | | 24 | | | | | | 24 | | | | | | 24 | | |
Capital expenditures – 2025 | | | | | 495 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25 | | | | | | 25 | | | | | | 25 | | | | | | 25 | | | | | | 25 | | | | | | 25 | | | | | | 25 | | |
Capital expenditures – 2026 | | | | | 511 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26 | | | | | | 26 | | | | | | 26 | | | | | | 26 | | | | | | 26 | | | | | | 26 | | |
Capital expenditures – 2027 | | | | | 525 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26 | | | | | | 26 | | | | | | 26 | | | | | | 26 | | | | | | 26 | | |
Capital expenditures – 2028 | | | | | 536 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 27 | | | | | | 27 | | | | | | 27 | | | | | | 27 | | |
Capital expenditures – 2029 | | | | | 548 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 27 | | | | | | 27 | | | | | | 27 | | |
Capital expenditures – 2030 | | | | | 561 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 28 | | | | | | 28 | | |
Capital expenditures – Residual | | | | | 573 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 29 | | |
Total | | | | $ | 6,987 | | | | | $ | 228 | | | | | $ | 249 | | | | | $ | 272 | | | | | $ | 296 | | | | | $ | 321 | | | | | $ | 347 | | | | | $ | 373 | | | | | $ | 193 | | | | | $ | 220 | | | | | $ | 248 | | | | | $ | 277 | | |
| | | | | | | | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | |||||||||||||||||||||||||||||||||
Tax Depreciation Schedule: Short-term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Existing assets, net | | | | | 1,447 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation life – existing assets | | | | | 5.0 | | | | | $ | 289 | | | | | $ | 289 | | | | | $ | 289 | | | | | $ | 289 | | | | | $ | 289 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | |
Depreciation life – capital expenditures | | | | | 5.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciable Capex – 2021 | | | | | — | | | | | | 375 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Depreciable Capex – 2022 | | | | | — | | | | | | | | | | | | 394 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Depreciable Capex – 2023 | | | | | 83 | | | | | | | | | | | | | | | | | | 347 | | | | | | 17 | | | | | | 17 | | | | | | 17 | | | | | | 17 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Depreciable Capex – 2024 | | | | | 172 | | | | | | | | | | | | | | | | | | | | | | | | 292 | | | | | | 34 | | | | | | 34 | | | | | | 34 | | | | | | 34 | | | | | | — | | | | | | — | | | | | | — | | |
Depreciable Capex – 2025 | | | | | 267 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 232 | | | | | | 53 | | | | | | 53 | | | | | | 53 | | | | | | 53 | | | | | | — | | | | | | — | | |
Depreciable Capex – 2026 | | | | | 368 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 165 | | | | | | 74 | | | | | | 74 | | | | | | 74 | | | | | | 74 | | | | | | — | | |
Depreciable Capex – 2027 | | | | | 472 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 94 | | | | | | 94 | | | | | | 94 | | | | | | 94 | | | | | | 94 | | |
Depreciable Capex – 2028 | | | | | 483 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 97 | | | | | | 97 | | | | | | 97 | | | | | | 97 | | |
Depreciable Capex – 2029 | | | | | 494 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 99 | | | | | | 99 | | | | | | 99 | | |
Depreciable Capex – 2030 | | | | | 505 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 101 | | | | | | 101 | | |
Depreciable Capex – Residual | | | | | 516 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 103 | | |
Total | | | | $ | 4,805 | | | | | $ | 665 | | | | | $ | 684 | | | | | $ | 636 | | | | | $ | 598 | | | | | $ | 572 | | | | | $ | 270 | | | | | $ | 272 | | | | | $ | 352 | | | | | $ | 417 | | | | | $ | 464 | | | | | $ | 494 | | |
Tax Depreciation Schedule: Long-term | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation life – capital expenditures | | | | | 20.0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciable Capex – 2021 | | | | | 42 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | |
Depreciable Capex – 2022 | | | | | 44 | | | | | | | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | |
Depreciable Capex – 2023 | | | | | 46 | | | | | | | | | | | | | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | |
Depreciable Capex – 2024 | | | | | 48 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | |
Depreciable Capex – 2025 | | | | | 49 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | |
Depreciable Capex – 2026 | | | | | 51 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | |
Depreciable Capex – 2027 | | | | | 52 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | |
Depreciable Capex – 2028 | | | | | 54 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | |
Depreciable Capex – 2029 | | | | | 55 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | | | | | 3 | | |
Depreciable Capex – 2030 | | | | | 56 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | |
Depreciable Capex – Residual | | | | | 57 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | |
Total | | | | $ | 554 | | | | | $ | 2 | | | | | $ | 4 | | | | | $ | 7 | | | | | $ | 9 | | | | | $ | 11 | | | | | $ | 14 | | | | | $ | 17 | | | | | $ | 19 | | | | | $ | 22 | | | | | $ | 25 | | | | | $ | 28 | | |
| | | | | | | | | | | | | | | For the Projected Year Ending: | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | | | |||||||||||||||||||||||||||||||||||||
Deferred Taxes | | | | | | | | | | | | | | | | | 1 | | | | | | 2 | | | | | | 3 | | | | | | 4 | | | | | | 5 | | | | | | 6 | | | | | | 7 | | | | | | 8 | | | | | | 9 | | | | | | 10 | | | | | | 11 | | | | | | | | |
| | | | | Depreciable/ Amortizable | | | | Estimated Life | | | Annual Depreciation & Amortization Expense | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Economic / Book Basis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Fixed assets | | | Y | | | See B.4 | | | | | 228 | | | | | | 249 | | | | | | 272 | | | | | | 296 | | | | | | 321 | | | | | | 347 | | | | | | 373 | | | | | | 193 | | | | | | 220 | | | | | | 248 | | | | | | 277 | | | | | ||||||||||
Intangible assets | | | Y | | | | | 3 | | | | | | 923 | | | | | | 923 | | | | | | 923 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |||||||
Goodwill | | | N | | | | | 10 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |||||||
Total Economic / Book Basis | | | | | | | | | | | | | | | | $ | 1,151 | | | | | $ | 1,172 | | | | | $ | 1,195 | | | | | $ | 296 | | | | | $ | 321 | | | | | $ | 347 | | | | | $ | 373 | | | | | $ | 193 | | | | | $ | 220 | | | | | $ | 248 | | | | | $ | 277 | | | | | | | | |
Income Tax Basis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Fixed assets | | | Y | | | | | SeeB.4 | | | | | | 667 | | | | | | 688 | | | | | | 643 | | | | | | 607 | | | | | | 583 | | | | | | 284 | | | | | | 289 | | | | | | 372 | | | | | | 439 | | | | | | 489 | | | | | | 521 | | | | | |||||||
Intangible assets | | | Y | | | | | 15 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | | 185 | | | | | |||||||
Goodwill | | | Y | | | | | 15 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | |||||||
Total Tax Basis | | | | | | | | | | | | | | | | $ | 852 | | | | | $ | 873 | | | | | $ | 827 | | | | | $ | 792 | | | | | $ | 768 | | | | | $ | 468 | | | | | $ | 473 | | | | | $ | 556 | | | | | $ | 623 | | | | | $ | 674 | | | | | $ | 706 | | | | | | | | |
Increase / (Decrease) in deferred tax liabilit | | | | | | | | | 21.0% | | | | | (63) | | | | | | (63) | | | | | | (77) | | | | | | 104 | | | | | | 94 | | | | | | 26 | | | | | | 21 | | | | | | 76 | | | | | | 85 | | | | | | 89 | | | | | | 90 | | | | | | | |||||
(Increase) / Decrease in deferred tax assets | | | | | | | | | 21.0% | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | |||||
Deferred tax expense | | | | | | | | | | | | | | | | $ | (63) | | | | | $ | (63) | | | | | $ | (77) | | | | | $ | 104 | | | | | $ | 94 | | | | | $ | 26 | | | | | $ | 21 | | | | | $ | 76 | | | | | $ | 85 | | | | | $ | 89 | | | | | $ | 90 | | | | | | | | |
Total deferred tax liability (asset), net | | | | | | | | | $(953) | | | | $ | (1,016) | | | | | $ | (1,079) | | | | | $ | (1,156) | | | | | $ | (1,052) | | | | | $ | (958) | | | | | $ | (933) | | | | | $ | (911) | | | | | $ | (835) | | | | | $ | (751) | | | | | $ | (661) | | | | | $ | (571) | | | | | | | |||||
Income Taxes and Net Operating Losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Pretax income | | | | | | | | | | | | | | | | | (194) | | | | | | 107 | | | | | | 429 | | | | | | 1,693 | | | | | | 2,051 | | | | | | 2,420 | | | | | | 2,796 | | | | | | 3,383 | | | | | | 3,436 | | | | | | 3,490 | | | | | | 3,545 | | | | | | | | |
Excess Interest Expense Adjustment | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
Tax depreciation adjustment | | | | | | | | | | | | | | | | | (299) | | | | | | (300) | | | | | | (368) | | | | | | 495 | | | | | | 447 | | | | | | 122 | | | | | | 101 | | | | | | 363 | | | | | | 403 | | | | | | 425 | | | | | | 429 | | | | | | | | |
Earnings before taxes and NOL utilization | | | | | | | | | | | | | | | | | 105 | | | | | | 407 | | | | | | 797 | | | | | | 1,198 | | | | | | 1,604 | | | | | | 2,298 | | | | | | 2,696 | | | | | | 3,019 | | | | | | 3,033 | | | | | | 3,065 | | | | | | 3,116 | | | | | | | | |
Net operating loss utilization | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
Earnings before taxes | | | | | | | | | | | | | | | | | 105 | | | | | | 407 | | | | | | 797 | | | | | | 1,198 | | | | | | 1,604 | | | | | | 2,298 | | | | | | 2,696 | | | | | | 3,019 | | | | | | 3,033 | | | | | | 3,065 | | | | | | 3,116 | | | | | | | | |
Income taxes @ | | | 21.0% | | | | | | | | | | $ | 22 | | | | | $ | 85 | | | | | $ | 167 | | | | | $ | 252 | | | | | $ | 337 | | | | | $ | 483 | | | | | $ | 566 | | | | | $ | 634 | | | | | $ | 637 | | | | | $ | 644 | | | | | $ | 654 | | | | | | |
Capital Asset Pricing Model (CAPM) Inputs | | |||||||||
Description | | | Value | | | Source | | |||
Unlevered beta | | | | | 1.22 | | | | EVOL’s 5-year monthly beta (S&P Capital IQ) | |
Target debt/equity | | | | | 0.00% | | | | The Company’s only debt consisted of a capital lease, which was minimal. For modeling | |
Pretax cost of debt | | | | | NA | | | | purposes, we assumed a 0% debt/equity ratio. | |
Effective tax rate | | | | | 21.00% | | | | Reflects a C Corporation status for valuation purposes | |
Risk-free rate (Rf) | | | | | 2.00% | | | | 20-Year United States Treasury rate as of June 30, 2021 | |
Equity Risk Premium (ERP) | | | | | 6.00% | | | | Supply-side long-term equity risk premium (Duff & Phelps Cost of Capital Navigator) | |
| Capital Asset Pricing Model (CAPM) Calculations | | | | | ||||||
| Relevered beta | | | | | 1.22 | | | | ||
| | | | Ke = Rf + (Levered Beta x ERP) | | | |||||
| CAPM Cost of Equity (k e ) | | | | | 9.3% | | | | ||
| After-tax cost of debt | | | | | NA | | | | ||
| Debt/capital ratio | | | | | 0.0% | | | | ||
| Weighted Average Cost of Capital (WACC) | | | | | 9.3% | | | |
| | | 6 Months: | | | 6 Months: | | | 12 Months: | | |||||||||
Income Statement Items: | | | 30-Jun-21 | | | 31-Dec-21 | | | 31-Dec-21 | | |||||||||
| | | Historical | | | Projected | | | Projected | | |||||||||
Revenue | | | | $ | 13,454 | | | | | $ | 14,357 | | | | | $ | 27,811 | | |
COS | | | | | 4,425 | | | | | | 5,150 | | | | | | 9,575 | | |
Gross Profit | | | | | 9,029 | | | | | | 9,207 | | | | | | 18,236 | | |
SG&A expenses | | | | | 8,184 | | | | | | 9,095 | | | | | | 17,279 | | |
EBITDA | | | | | 845 | | | | | | 112 | | | | | | 957 | | |
Depreciation expense | | | | | 126 | | | | | | 102 | | | | | | 228 | | |
Amortization expense | | | | | 478 | | | | | | 445 | | | | | | 923 | | |
EBIT | | | | | 241 | | | | | | (435) | | | | | | (194) | | |
Allocated total taxes | | | | | (58) | | | | | | 17 | | | | | | (41) | | |
Net Income | | | | $ | 299 | | | | | $ | (452) | | | | | | (153) | | |
| | | As of: | | | 6 Month : | | | As of: | | |||||||||||||||
Balance Sheet Items | | | 31-Dec-20 | | | 30-Jun-21 | | | 31-Dec-21 | | | 31-Dec-21 | | ||||||||||||
Current Assets | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash & cash equivalents | | | | $ | 2,763 | | | | | $ | 4,896 | | | | | $ | (1,217) | | | | | $ | 3,679 | | |
Accounts receivable, net | | | | | 9,316 | | | | | | 9,661 | | | | | | 244 | | | | | | 9,905 | | |
Prepaid expenses and other CA | | | | | 1,828 | | | | | | 1,550 | | | | | | 178 | | | | | | 1,728 | | |
Total WC related CA | | | | $ | 13,907 | | | | | $ | 16,107 | | | | | $ | (795) | | | | | $ | 15,312 | | |
Current Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable | | | | $ | 878 | | | | | $ | 730 | | | | | $ | 319 | | | | | $ | 1,049 | | |
Accrued expenses | | | | | 7,140 | | | | | | 9,452 | | | | | | (1,168) | | | | | | 8,284 | | |
Total WC Related CL | | | | $ | 8,018 | | | | | $ | 10,182 | | | | | $ | (848) | | | | | $ | 9,334 | | |
Additions to Working Capital | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Working Capital Balance | | | | | 5,889 | | | | | | 5,925 | | | | | | 53 | | | | | | 5,978 | | |
Change in Working Capital | | | | | | | | | | $ | 36 | | | | | $ | 53 | | | | | $ | 89 | | |
Capital Expenditures | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed Assets, Net | | | | | 1,447 | | | | | | 1,631 | | | | | | 6 | | | | | | 1,637 | | |
Change in Fixed Assets, Net | | | | | | | | | | | 184 | | | | | | 6 | | | | | | 190 | | |
Addback: Depreciation | | | | | | | | | | | 126 | | | | | | 102 | | | | | | 228 | | |
Capital Expenditures | | | | | | | | | | | 310 | | | | | | 107 | | | | | | 417 | | |
| | | 6 Months: | | | 6 Months: | | | 12 Months: | | |||||||||
Cash Flow Calculation: | | | 30-Jun-21 | | | 31-Dec-21 | | | 31-Dec-21 | | |||||||||
Sources of Cash Flow: | | | | | | | | | | | | | | | | | | | |
Net Income | | | | | 299 | | | | | | (452) | | | | | | (153) | | |
Plus: Depreciation & amortization | | | | | 604 | | | | | | 547 | | | | | | 1,151 | | |
Plus: Increase in deferred taxes | | | | | (30) | | | | | | (32) | | | | | | (63) | | |
Total Sources of Cash Flow | | | | $ | 873 | | | | | $ | 62 | | | | | $ | 935 | | |
Uses of Cash Flow: | | | | | | | | | | | | | | | | | | | |
Additions to working capital | | | | | 36 | | | | | | 53 | | | | | | 89 | | |
Capital expenditures | | | | | 310 | | | | | | 107 | | | | | | 417 | | |
Net cash flow | | | | | 527 | | | | | | (98) | | | | | | 429 | | |
Total Uses of Cash Flow | | | | $ | 873 | | | | | $ | 62 | | | | | $ | 935 | | |
Free Cash Flow | | | | $ | 527 | | | | | $ | (98) | | | | | $ | 429 | | |
| | | | | | | | | For the Projected Year Ending: | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | 31-Dec-21 | | | 31-Dec-22 | | | 31-Dec-23 | | | 31-Dec-24 | | | 31-Dec-25 | | | 31-Dec-26 | | | 31-Dec-27 | | | 31-Dec-28 | | | 31-Dec-29 | | | 31-Dec-30 | | | Residual | | |||||||||||||||||||||||||||||||||
Sources of Cash Flow: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | (153) | | | | | | 84 | | | | | | 339 | | | | | | 1,338 | | | | | | 1,620 | | | | | | 1,912 | | | | | | 2,209 | | | | | | 2,672 | | | | | | 2,714 | | | | | | 2,757 | | | | | | 2,801 | | |
Depreciation | | | | | | | | | | | 228 | | | | | | 249 | | | | | | 272 | | | | | | 296 | | | | | | 321 | | | | | | 347 | | | | | | 373 | | | | | | 193 | | | | | | 220 | | | | | | 248 | | | | | | 277 | | |
Amortization | | | | | | | | | | | 923 | | | | | | 923 | | | | | | 923 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Increase in deferred taxes | | | | | | | | | | | (63) | | | | | | (63) | | | | | | (77) | | | | | | 104 | | | | | | 94 | | | | | | 26 | | | | | | 21 | | | | | | 76 | | | | | | 85 | | | | | | 89 | | | | | | 90 | | |
Total Sources of Cash Flow | | | | | | | | | | | 935 | | | | | | 1,194 | | | | | | 1,457 | | | | | | 1,738 | | | | | | 2,035 | | | | | | 2,284 | | | | | | 2,603 | | | | | | 2,941 | | | | | | 3,019 | | | | | | 3,095 | | | | | | 3,168 | | |
Uses of Cash Flow: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Additions to working capital | | | | | | | | | | | 89 | | | | | | 369 | | | | | | 361 | | | | | | 349 | | | | | | 333 | | | | | | 313 | | | | | | 289 | | | | | | 261 | | | | | | 186 | | | | | | 190 | | | | | | 194 | | |
Capital expenditures | | | | | | | | | | | 417 | | | | | | 438 | | | | | | 458 | | | | | | 477 | | | | | | 495 | | | | | | 511 | | | | | | 525 | | | | | | 536 | | | | | | 548 | | | | | | 561 | | | | | | 573 | | |
Net cash flow | | | | | | | | | | | 429 | | | | | | 386 | | | | | | 637 | | | | | | 912 | | | | | | 1,207 | | | | | | 1,460 | | | | | | 1,790 | | | | | | 2,144 | | | | | | 2,285 | | | | | | 2,344 | | | | | | 2,400 | | |
Total Uses of Cash Flow | | | | | | | | | | | 935 | | | | | | 1,194 | | | | | | 1,457 | | | | | | 1,738 | | | | | | 2,035 | | | | | | 2,284 | | | | | | 2,603 | | | | | | 2,941 | | | | | | 3,019 | | | | | | 3,095 | | | | | | 3,168 | | |
Less: Stub period cash flow | | | | | | | | | | | 527 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Flow | | | | | | | | | | $ | (98) | | | | | $ | 386 | | | | | $ | 637 | | | | | $ | 912 | | | | | $ | 1,207 | | | | | $ | 1,460 | | | | | $ | 1,790 | | | | | $ | 2,144 | | | | | $ | 2,285 | | | | | $ | 2,344 | | | | | $ | 2,400 | | |
Period (Mid – Period) | | | | | | | | | | | 0.25 | | | | | | 1.00 | | | | | | 2.00 | | | | | | 3.00 | | | | | | 4.00 | | | | | | 5.00 | | | | | | 6.00 | | | | | | 7.00 | | | | | | 8.00 | | | | | | 9.00 | | | | | | | | |
PV Factor @ WACC = | | | | | 9.3% | | | | | | 0.9780 | | | | | | 0.9149 | | | | | | 0.8371 | | | | | | 0.7658 | | | | | | 0.7007 | | | | | | 0.6411 | | | | | | 0.5865 | | | | | | 0.5366 | | | | | | 0.4910 | | | | | | 0.4492 | | | | | | | | |
Present Value (PV) Net Cash Flow | | | | | | | | | | $ | (96) | | | | | $ | 353 | | | | | $ | 533 | | | | | $ | 698 | | | | | $ | 846 | | | | | $ | 936 | | | | | $ | 1,050 | | | | | $ | 1,150 | | | | | $ | 1,122 | | | | | $ | 1,053 | | | | | | | | |
| PV net cash flow | | | | $ | 7,646 | | |
| PV residual value | | | | | 15,293 | | |
| Non-operating assets | | | | | — | | |
| PV remaining tax | | | | | 67 | | |
| Market Value of Invested Capital | | | | $ | 23,006 | | |
| Less: total debt | | | | | (160) | | |
| Value of Equity | | | | $ | 22,846 | | |
| Residual Value – Gordon Growth Model | | | | | | | |
| Residual net cash flow : | | | | $ | 2,400 | | |
| Residual discount rate (k) : | | | | | 9.3% | | |
| Residual growth rate (g) : | | | | | 2.3% | | |
| x Gordon multiple [1 / (k-g)] : | | | | | 14.2x | | |
| Residual value : | | | | $ | 34,047 | | |
| x PV factor : | | | | | 0.4492 | | |
| PV residual value : | | | | $ | 15,293 | | |
Industry Transactions | | |||||||||||||||||||||||||||||||||||||||
# | | | Target Name | | | Announce Date | | | Revenue ($mm) | | | EBITDA ($mm) | | | EBITDA Margin (%) | | | Enterprise Value ($mm) | | | EV/Sales | | ||||||||||||||||||
1 | | | Electra Information Systems, Inc. | | | | | 28-May-21 | | | | | | 14.4 | | | | | | 3.4 | | | | | | 23.7% | | | | | | 38.6 | | | | | | 2.7 | | |
2 | | | DivvyPay, Inc. | | | | | 6-May-21 | | | | | | 100.0 | | | | | | — | | | | | | — | | | | | | 2,500.0 | | | | | | 25.0 | | |
3 | | | Voyant, Inc. | | | | | 1-Mar-21 | | | | | | 11.8 | | | | | | — | | | | | | — | | | | | | 143.5 | | | | | | 12.2 | | |
4 | | | QUANTICMIND, INC. | | | | | 24-Feb-21 | | | | | | 10.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
5 | | | rfxcel Corporation | | | | | 16-Feb-21 | | | | | | 17.0 | | | | | | — | | | | | | — | | | | | | 150.0 | | | | | | 8.8 | | |
6 | | | StarBlue Inc. | | | | | 29-Jan-21 | | | | | | 79.4 | | | | | | 14.7 | | | | | | 18.5% | | | | | | 438.0 | | | | | | 5.5 | | |
7 | | | Charge Savvy, LLC | | | | | 25-Jan-21 | | | | | | 30.0 | | | | | | 14.0 | | | | | | 46.7% | | | | | | 10.5 | | | | | | 0.3 | | |
8 | | | Reflektive, Inc. | | | | | 20-Jan-21 | | | | | | 14.0 | | | | | | (7.0) | | | | | | -50.0% | | | | | | 14.2 | | | | | | 1.0 | | |
9 | | | Altitude Software Inc. | | | | | 30-Dec-20 | | | | | | 30.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
10 | | | Operation Technology, Inc. | | | | | 16-Nov-20 | | | | | | 50.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
11 | | | CGTech, Inc. | | | | | 19-Oct-20 | | | | | | 53.4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
12 | | | Helix TCS, Inc. (nka:Helix Technologies, Inc.) | | | | | 17-Oct-20 | | | | | | 16.3 | | | | | | (2.4) | | | | | | -14.9% | | | | | | — | | | | | | — | | |
13 | | | Reflexis Systems, Inc. | | | | | 28-Jul-20 | | | | | | 66.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
14 | | | Otelco Inc. | | | | | 27-Jul-20 | | | | | | 62.2 | | | | | | 21.4 | | | | | | 34.4% | | | | | | 103.1 | | | | | | 1.7 | | |
15 | | | Delphi Technology, Inc. | | | | | 27-Jul-20 | | | | | | 15.0 | | | | | | — | | | | | | — | | | | | | 19.6 | | | | | | 1.3 | | |
16 | | | GlobalSCAPE, Inc. | | | | | 20-Jul-20 | | | | | | 40.4 | | | | | | 16.1 | | | | | | 39.8% | | | | | | 219.7 | | | | | | 5.4 | | |
17 | | | Mobile Posse, Inc. | | | | | 10-Feb-20 | | | | | | 59.1 | | | | | | 12.8 | | | | | | 21.7% | | | | | | 66.0 | | | | | | 1.1 | | |
18 | | | InsPro Technologies Corporation | | | | | 30-Jan-20 | | | | | | 14.9 | | | | | | 0.0 | | | | | | 0.1% | | | | | | — | | | | | | — | | |
19 | | | Stratus Video, LLC | | | | | 29-Jan-20 | | | | | | 94.5 | | | | | | 15.4 | | | | | | 16.3% | | | | | | 579.2 | | | | | | 6.1 | | |
Summary Statistics | | ||||||||||||||||||||||||||||||
Measure | | | Revenue | | | EBITDA | | | EBITDA % | | | Enterprise Value | | | EV/S | | |||||||||||||||
Number of Data Points | | | | | 19 | | | | | | 10 | | | | | | 10 | | | | | | 12 | | | | | | 12 | | |
High | | | | | 100.0 | | | | | | 21.4 | | | | | | 46.7% | | | | | | 2,500.0 | | | | | | 25.0 | | |
75th % | | | | | 60.7 | | | | | | 15.2 | | | | | | 31.7% | | | | | | 274.3 | | | | | | 6.8 | | |
Mean | | | | | 41.0 | | | | | | 8.8 | | | | | | 13.6% | | | | | | 356.9 | | | | | | 5.9 | | |
Median | | | | | 30.0 | | | | | �� | 13.4 | | | | | | 20.1% | | | | | | 123.3 | | | | | | 4.1 | | |
25th % | | | | | 14.9 | | | | | | 0.9 | | | | | | 4.2% | | | | | | 33.8 | | | | | | 1.3 | | |
Low | | | | | 10.0 | | | | | | (7.0) | | | | | | -50.0% | | | | | | 10.5 | | | | | | 0.3 | | |
| | | EV/Sales | | |||
Mean | | | | | 5.9 | | |
Median | | | | | 4.1 | | |
25th % | | | | | 1.3 | | |
TTM Base Period | | | | $ | 27,192 | | |
Implied Enterprise Value – Mean | | | | $ | 161,325 | | |
Implied Enterprise Value – Median | | | | $ | 110,453 | | |
Implied Enterprise Value – 25th % | | | | $ | 34,240 | | |
Indicated Enterprise Value | | | | $ | 34,240 | | |
Plus: Cash and equivalents | | | | $ | 4,896 | | |
Less: Total debt | | | | $ | (160) | | |
Concluded Equity Value – Controlling | | | | $ | 38,976 | | |
Less: Discount for Lack of Control @ 22.8% | | | | $ | (8,876) | | |
Concluded Equity Value – Minority | | | | $ | 30,100 | | |
Industry Transactions | | |||||||||||||||||||||||||||||||||||||||
# | | | Target Name (or Business Description) | | | Sale Date | | | Revenue ($mm) | | | EBITDA ($mm) | | | EBITDA Margin (%) | | | Enterprise Value ($mm) | | | EV/Sales | | ||||||||||||||||||
1 | | | BT Intermediate, LLC | | | | | 15-Jun-21 | | | | | | 51.65 | | | | | | 21.08 | | | | | | 40.8% | | | | | | 506.59 | | | | | | 9.81 | | |
2 | | | Punchh, Inc. | | | | | 8-Apr-21 | | | | | | 27.23 | | | | | | (12.56) | | | | | | -46.1% | | | | | | 510.26 | | | | | | 18.74 | | |
3 | | | Synacor, Inc. | | | | | 1-Apr-21 | | | | | | 81.36 | | | | | | (0.36) | | | | | | -0.4% | | | | | | 94.07 | | | | | | 1.16 | | |
4 | | | CounterPath Corporation | | | | | 1-Mar-21 | | | | | | 12.10 | | | | | | (0.73) | | | | | | -6.0% | | | | | | 26.81 | | | | | | 2.22 | | |
5 | | | ShopKeep Inc. | | | | | 25-Nov-20 | | | | | | 54.27 | | | | | | 1.94 | | | | | | 3.6% | | | | | | 554.93 | | | | | | 10.23 | | |
6 | | | R-Squared Bidco Limited | | | | | 23-Sep-20 | | | | | | 25.32 | | | | | | 5.51 | | | | | | 21.8% | | | | | | 52.56 | | | | | | 2.08 | | |
7 | | | GlobalSCAPE, Inc. | | | | | 28-Aug-20 | | | | | | 40.34 | | | | | | 17.24 | | | | | | 42.7% | | | | | | 263.62 | | | | | | 6.53 | | |
8 | | | Finjan Holdings, Inc. | | | | | 24-Jul-20 | | | | | | 13.15 | | | | | | (20.37) | | | | | | -154.9% | | | | | | 43.90 | | | | | | 3.34 | | |
9 | | | Software Developer focused on Video and Photograph | | | | | 1-Jul-20 | | | | | | 20.00 | | | | | | — | | | | | | | | | | | | 16.00 | | | | | | 0.80 | | |
10 | | | Frankly Inc. | | | | | 8-May-20 | | | | | | 23.68 | | | | | | (5.48) | | | | | | -23.1% | | | | | | 18.15 | | | | | | 0.77 | | |
11 | | | Telaria, Inc. | | | | | 1-Apr-20 | | | | | | 68.04 | | | | | | (11.43) | | | | | | -16.8% | | | | | | 286.61 | | | | | | 4.21 | | |
12 | | | Inspro Technologies Corporation | | | | | 1-Apr-20 | | | | | | 14.89 | | | | | | (0.40) | | | | | | -2.7% | | | | | | 11.46 | | | | | | 0.77 | | |
13 | | | Clearsight Intermediate Holdings, Inc. | | | | | 1-Apr-20 | | | | | | 29.05 | | | | | | 5.61 | | | | | | 19.3% | | | | | | 193.60 | | | | | | 6.66 | | |
14 | | | Mobile Posse, Inc. | | | | | 3-Mar-20 | | | | | | 59.13 | | | | | | 12.82 | | | | | | 21.7% | | | | | | 46.75 | | | | | | 0.79 | | |
15 | | | Shape Security, Inc. | | | | | 24-Jan-20 | | | | | | 45.85 | | | | | | (30.76) | | | | | | -67.1% | | | | | | 1,013.61 | | | | | | 22.11 | | |
16 | | | Intrinsyc Technologies Corporation | | | | | 16-Jan-20 | | | | | | 25.68 | | | | | | 1.48 | | | | | | 5.8% | | | | | | 27.09 | | | | | | 1.05 | | |
17 | | | CareCloud Corporation | | | | | 8-Jan-20 | | | | | | 33.35 | | | | | | (14.83) | | | | | | -44.5% | | | | | | 31.23 | | | | | | 0.94 | | |
18 | | | Pixia Corp. | | | | | 6-Jan-20 | | | | | | 25.83 | | | | | | 13.20 | | | | | | 51.1% | | | | | | 243.70 | | | | | | 9.44 | | |
Summary Statistics | | ||||||||||||||||||||||||||||||
Measure | | | Revenue | | | EBITDA | | | EBITDA % | | | Enterprise Value | | | EV/Sales | | |||||||||||||||
Number of Data Points | | | | | 18 | | | | | | 18 | | | | | | 17 | | | | | | 18 | | | | | | 18 | | |
High | | | | | 81.36 | | | | | | 21.08 | | | | | | 51.1% | | | | | | 1,013.61 | | | | | | 22.1 | | |
75th % | | | | | 50.20 | | | | | | 5.58 | | | | | | 21.7% | | | | | | 280.86 | | | | | | 8.7 | | |
Mean | | | | | 36.16 | | | | | | (1.00) | | | | | | -9.1% | | | | | | 218.94 | | | | | | 5.6 | | |
Median | | | | | 28.14 | | | | | | (0.18) | | | | | | -0.4% | | | | | | 73.32 | | | | | | 2.8 | | |
25th % | | | | | 24.09 | | | | | | (9.94) | | | | | | -23.1% | | | | | | 28.13 | | | | | | 1.0 | | |
Low | | | | | 12.10 | | | | | | (30.76) | | | | | | -154.9% | | | | | | 11.46 | | | | | | 0.8 | | |
Transaction Selection Criteria | | | ||
Industry Classification: NAICS 511210 – Software Publishing | | | | |
Geographic Region: United States of America | | | | |
Revenue: $10 to $100 million | | | | |
Transaction Dates: January 2020 – June 2021 | | | | |
Source: DealStats | | | | |
| | | EV/Sales | | |||
Mean | | | | | 5.6 | | |
Median | | | | | 2.8 | | |
25th% | | | | | 1.0 | | |
TTM Base Period | | | | $ | 27,192 | | |
Implied Enterprise Value – Mean | | | | $ | 153,527 | | |
Implied Enterprise Value – Median | | | | $ | 75,509 | | |
Implied Enterprise Value – 25th% | | | | $ | 26,268 | | |
Indicated Enterprise Value | | | | $ | 26,268 | | |
Plus: Cash and equivalents | | | | $ | 4,896 | | |
Less: Total debt | | | | $ | (160) | | |
Concluded Equity Value – Controlling | | | | $ | 31,004 | | |
Less: Discount for Lack of Control @ 22.8% | | | | ($ | 7,060) | | |
Concluded Equity Value – Minority | | | | $ | 23,944 | | |
SummaryMerger and Acquisition Method | | | | | | | | | | | |||||||||||||||
Source | | | Value | | | Weight | | | Reference | | | | | ||||||||||||
Capital IQ | | | | $ | 30,100 | | | | | | 50% | | | | Schedule C.1 | | | | | ||||||
DealStats | | | | $ | 23,944 | | | | | | 50% | | | | Schedule C.2 | | | | | ||||||
Indicated Equity Value – Minority, Marketable | | | | $ | 27,022 | | | | | | | | | | | | | | |
Summary—Evolving Systems, Inc. Equity Value | | |||||||||||||||
Valuation Method | | | Indicated Value | | | Weight | | | Reference | | ||||||
Income Approach | | | | | | | | | | | | | | | | |
Discounted Cash Flow Method | | | | $ | 22,846,053 | | | | | | 50% | | | | Schedule B.9 | |
Market Approach | | | | | | | | | | | | | | | | |
Merger and Acquisition Method | | | | $ | 27,022,175 | | | | | | 50% | | | | Schedule C.3 | |
Concluded Equity Value – Minority, Marketable (Rounded) | | | | $ | 24,934,000 | | | | | | | | | | | |
Dates | | | Volume | | | Share Price | | | Shares Outstanding | | | Market Capitalization | | ||||||||||||
Sep-01-2021 | | | | | 10,352 | | | | | $ | 2.22 | | | | | | 12.26mm | | | | | | 27.21mm | | |
Sep-02-2021 | | | | | 14,271 | | | | | $ | 2.23 | | | | | | 12.26mm | | | | | | 27.33mm | | |
Sep-03-2021 | | | | | 19,029 | | | | | $ | 2.25 | | | | | | 12.26mm | | | | | | 27.58mm | | |
Sep-07-2021 | | | | | 25,990 | | | | | $ | 2.25 | | | | | | 12.26mm | | | | | | 27.58mm | | |
Sep-08-2021 | | | | | 21,392 | | | | | $ | 2.22 | | | | | | 12.26mm | | | | | | 27.21mm | | |
Sep-09-2021 | | | | | 243,720 | | | | | $ | 2.23 | | | | | | 12.26mm | | | | | | 27.33mm | | |
Sep-10-2021 | | | | | 60,832 | | | | | $ | 2.19 | | | | | | 12.26mm | | | | | | 26.84mm | | |
Sep-13-2021 | | | | | 26,181 | | | | | $ | 2.16 | | | | | | 12.26mm | | | | | | 26.48mm | | |
Sep-14-2021 | | | | | 10,837 | | | | | $ | 2.14 | | | | | | 12.26mm | | | | | | 26.17mm | | |
Sep-15-2021 | | | | | 26,857 | | | | | $ | 2.16 | | | | | | 12.26mm | | | | | | 26.48mm | | |
Sep-16-2021 | | | | | 28,523 | | | | | $ | 2.13 | | | | | | 12.26mm | | | | | | 26.11mm | | |
Sep-17-2021 | | | | | 18,877 | | | | | $ | 2.14 | | | | | | 12.26mm | | | | | | 26.23mm | | |
Sep-20-2021 | | | | | 109,972 | | | | | $ | 2.06 | | | | | | 12.26mm | | | | | | 25.25mm | | |
Sep-21-2021 | | | | | 70,862 | | | | | $ | 2.00 | | | | | | 12.26mm | | | | | | 24.51mm | | |
Sep-22-2021 | | | | | 57,538 | | | | | $ | 2.07 | | | | | | 12.26mm | | | | | | 25.37mm | | |
Sep-23-2021 | | | | | 33,395 | | | | | $ | 2.03 | | | | | | 12.26mm | | | | | | 24.88mm | | |
Sep-24-2021 | | | | | 8,970 | | | | | $ | 2.08 | | | | | | 12.26mm | | | | | | 25.43mm | | |
Sep-27-2021 | | | | | 12,120 | | | | | $ | 2.05 | | | | | | 12.26mm | | | | | | 25.13mm | | |
Sep-28-2021 | | | | | 35,570 | | | | | $ | 2.10 | | | | | | 12.26mm | | | | | | 25.74mm | | |
Sep-29-2021 | | | | | 107,412 | | | | | $ | 2.11 | | | | | | 12.26mm | | | | | | 25.86mm | | |
Min | | | | | 8,970 | | | | | $ | 2.00 | | | | | | 12.26mm | | | | | | 24.51mm | | |
Median | | | | | 26,519 | | | | | $ | 2.14 | | | | | | 12.26mm | | | | | | 26.20mm | | |
Average | | | | | 47,135 | | | | | $ | 2.14 | | | | | | 12.26mm | | | | | | 26.24mm | | |
Max | | | | | 243,720 | | | | | $ | 2.25 | | | | | | 12.26mm | | | | | | 27.58mm | | |
Pre-Transaction Equity Value – Minority, Marketable | | | | | | | | | | | | | | | | | | | | | | $ | 25,862,789 | | |
| | | As of: | | |||||||||
| | | Post Transaction | | |||||||||
| | | Actual | | | % | | ||||||
Current Assets | | | | | | | | | | | | | |
Cash & cash equivalents | | | | $ | 40,000 | | | | | | 94.0% | | |
Prepaid expenses and other CA | | | | | 320 | | | | | | 0.8% | | |
Total Current Assets | | | | | 40,320 | | | | | | 94.8% | | |
Fixed assets, net | | | | | 3 | | | | | | 0.0% | | |
Deferred tax asset | | | | | 2,216 | | | | | | 5.2% | | |
Total Assets | | | | | 42,538 | | | | | | 100.0% | | |
Current Liabilities | | | | | | | | | | | | | |
Accounts payable | | | | $ | 213 | | | | | | 0.5% | | |
Accrued expenses | | | | | 5,871 | | | | | | 13.8% | | |
Total Current Liabilities | | | | | 6,084 | | | | | | 14.3% | | |
Long-term debt, net of current | | | | | — | | | | | | 0.0% | | |
Total Long-term Liabilities | | | | | — | | | | | | 0.0% | | |
Total Liabilities | | | | | 6,084 | | | | | | 14.3% | | |
Total Equity | | | | | 36,455 | | | | | | 85.7% | | |
Total Liabilities & Equity | | | | $ | 42,538 | | | | | | 100.0% | | |
Post-Transaction Equity Value – Control, Marketable | | | | $ | 36,455 | | | | | | | | |
Industry Transactions | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
# | | | Target Name (or Business Description) | | | Announce Date | | | 2 Month Equity Premium | | | 1 Month Equity Premium | | | 1 Week Equity Premium | | | 1 Day Equity Premium | | | Equity Control Premium | | | Net Sales ($mm) | | | EBITDA ($mm) | | | Price/Sales | | | Price/ Income | | | Price/ Book Value | | | Deal Value ($mm) | | ||||||||||||||||||||||||||||||||||||
1 | | | SharpSpring, Inc. | | | | | 06/22/2021 | | | | | | 13.2% | | | | | | 13.2% | | | | | | 23.7% | | | | | | 21.2% | | | | | | 21.2% | | | | | | 30.22 | | | | | | (5.18) | | | | | | 7.25x | | | | | | | | | | | | 9.23x | | | | | | 220.36 | | |
2 | | | GlobalSCAPE, Inc. | | | | | 07/20/2020 | | | | | | 3.3% | | | | | | -7.2% | | | | | | 22.6% | | | | | | 16.0% | | | | | | 16.0% | | | | | | 40.40 | | | | | | 17.29 | | | | | | 4.41x | | | | | | 13.61x | | | | | | | | | | | | 178.43 | | |
3 | | | Finjan Holdings, Inc. | | | | | 06/10/2020 | | | | | | 29.2% | | | | | | 25.0% | | | | | | 21.1% | | | | | | 16.5% | | | | | | 16.5% | | | | | | 16.95 | | | | | | 2.69 | | | | | | 2.53x | | | | | | | | | | | | 1.33x | | | | | | 43.14 | | |
4 | | | MAM Software Group, Inc. | | | | | 09/03/2019 | | | | | | 14.4% | | | | | | 11.2% | | | | | | 14.2% | | | | | | 15.4% | | | | | | 15.4% | | | | | | 37.71 | | | | | | 5.47 | | | | | | 4.05x | | | | | | | | | | | | | | | | | | 153.02 | | |
5 | | | Amber Road, Inc. | | | | | 05/13/2019 | | | | | | 44.2% | | | | | | 45.5% | | | | | | 35.7% | | | | | | 26.7% | | | | | | 26.7% | | | | | | 86.20 | | | | | | (6.98) | | | | | | 4.33x | | | | | | | | | | | | | | | | | | 378.70 | | |
6 | | | ARI Network Services, Inc. | | | | | 06/21/2017 | | | | | | 38.9% | | | | | | 45.2% | | | | | | 15.3% | | | | | | 2.0% | | | | | | 2.0% | | | | | | 51.16 | | | | | | 8.85 | | | | | | 2.43x | | | | | | | | | | | | | | | | | | 123.33 | | |
7 | | | Yodlee, Inc. | | | | | 08/10/2015 | | | | | | 19.1% | | | | | | 19.7% | | | | | | 45.6% | | | | | | 39.6% | | | | | | 39.6% | | | | | | 98.58 | | | | | | (5.39) | | | | | | 5.33x | | | | | | | | | | | | 6.61x | | | | | | 542.10 | | |
8 | | | Rally Software Development Corp. | | | | | 05/27/2015 | | | | | | 31.0% | | | | | | 27.5% | | | | | | 43.5% | | | | | | 42.9% | | | | | | 42.9% | | | | | | 92.52 | | | | | | (28.27) | | | | | | 5.38x | | | | | | | | | | | | | | | | | | 500.13 | | |
9 | | | Mediware Information Systems, Inc. | | | | | 09/12/2012 | | | | | | 51.7% | | | | | | 56.9% | | | | | | 49.2% | | | | | | 39.7% | | | | | | 39.7% | | | | | | 64.60 | | | | | | 17.68 | | | | | | 2.79x | | | | | | 23.85x | | | | | | 6.31x | | | | | | 185.61 | | |
10 | | | SRS Labs, Inc. | | | | | 04/17/2012 | | | | | | 14.4% | | | | | | 11.8% | | | | | | 14.0% | | | | | | 13.7% | | | | | | 13.7% | | | | | | 33.65 | | | | | | 2.52 | | | | | | 3.32x | | | | | | | | | | | | 2.17x | | | | | | 112.58 | | |
11 | | | Vital Images, Inc. | | | | | 04/27/2011 | | | | | | 25.3% | | | | | | 41.9% | | | | | | 41.5% | | | | | | 31.5% | | | | | | 31.5% | | | | | | 59.80 | | | | | | 3.11 | | | | | | 4.40x | | | | | | | | | | | | 1.94x | | | | | | 263.03 | | |
12 | | | Ulticom, Inc. | | | | | 10/12/2010 | | | | | | -7.2% | | | | | | 7.5% | | | | | | 4.9% | | | | | | 4.9% | | | | | | 4.9% | | | | | | 39.70 | | | | | | (5.44) | | | | | | 2.27x | | | | | | | | | | | | 1.01x | | | | | | 89.84 | | |
13 | | | ActivIdentity, Inc. | | | | | 10/11/2010 | | | | | | 72.9% | | | | | | 51.9% | | | | | | 47.7% | | | | | | 43.2% | | | | | | 43.2% | | | | | | 57.71 | | | | | | (2.82) | | | | | | 2.66x | | | | | | | | | | | | 2.13x | | | | | | 153.62 | | |
14 | | | Salary.com, Inc. | | | | | 09/01/2010 | | | | | | 57.8% | | | | | | 38.4% | | | | | | 40.8% | | | | | | 42.3% | | | | | | 42.3% | | | | | | 44.10 | | | | | | (12.00) | | | | | | 1.59x | | | | | | | | | | | | | | | | | | 72.59 | | |
15 | | | Phoenix Technologies Ltd. | | | | | 08/17/2010 | | | | | | 58.5% | | | | | | 40.9% | | | | | | 34.6% | | | | | | 37.3% | | | | | | 37.3% | | | | | | 60.45 | | | | | | 5.24 | | | | | | 2.44x | | | | | | 35.30x | | | | | | | | | | | | 148.05 | | |
16 | | | DivX LLC | | | | | 06/02/2010 | | | | | | 31.8% | | | | | | 15.3% | | | | | | 40.3% | | | | | | 38.9% | | | | | | 38.9% | | | | | | 75.18 | | | | | | (0.31) | | | | | | 4.22x | | | | | | | | | | | | 2.01x | | | | | | 320.50 | | |
17 | | | Double-Take Software, Inc. | | | | | 05/17/2010 | | | | | | 16.2% | | | | | | -3.4% | | | | | | 12.6% | | | | | | 9.2% | | | | | | 9.2% | | | | | | 83.95 | | | | | | 13.81 | | | | | | 2.71x | | | | | | 17.16x | | | | | | 2.73x | | | | | | 223.15 | | |
18 | | | PLATO Learning, Inc. | | | | | 03/26/2010 | | | | | | 40.4% | | | | | | 40.0% | | | | | | 16.7% | | | | | | 14.1% | | | | | | 14.1% | | | | | | 64.73 | | | | | | 14.66 | | | | | | 2.10x | | | | | | | | | | | | | | | | | | 136.70 | | |
19 | | | Chordiant Software, Inc. | | | | | 03/15/2010 | | | | | | 40.1% | | | | | | 44.5% | | | | | | 37.7% | | | | | | 31.2% | | | | | | 65.0% | | | | | | 76.31 | | | | | | (1.55) | | | | | | 1.98x | | | | | | | | | | | | 5.18x | | | | | | 151.82 | | |
20 | | | AMICAS, Inc. | | | | | 02/22/2010 | | | | | | 86.7% | | | | | | 31.8% | | | | | | 41.4% | | | | | | 36.9% | | | | | | 36.9% | | | | | | 73.65 | | | | | | 2.09 | | | | | | 2.92x | | | | | | | | | | | | 5.95x | | | | | | 223.97 | | |
21 | | | Goldleaf Financial Solutions, Inc. | | | | | 08/17/2009 | | | | | | 30.7% | | | | | | 78.2% | | | | | | 48.5% | | | | | | 40.0% | | | | | | 40.0% | | | | | | 76.52 | | | | | | 7.27 | | | | | | 0.25x | | | | | | | | | | | | | | | | | | 19.07 | | |
22 | | | Catapult Communications Corp. | | | | | 05/11/2009 | | | | | | 43.0% | | | | | | 35.0% | | | | | | 23.8% | | | | | | 9.5% | | | | | | 9.5% | | | | | | 39.58 | | | | | | 1.36 | | | | | | 2.65x | | | | | | | | | | | | 2.77x | | | | | | 104.54 | | |
Industry Transactions | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
# | | | Target Name (or Business Description) | | | Announce Date | | | 2 Month Equity Premium | | | 1 Month Equity Premium | | | 1 Week Equity Premium | | | 1 Day Equity Premium | | | Equity Control Premium | | | Net Sales ($mm) | | | EBITDA ($mm) | | | Price/Sales | | | Price/ Income | | | Price/ Book Value | | | Deal Value ($mm) | | ||||||||||||||||||||||||||||||||||||
23 | | | Entrust, Inc. | | | | | 04/13/2009 | | | | | | 22.0% | | | | | | 36.1% | | | | | | 25.0% | | | | | | 19.8% | | | | | | 19.8% | | | | | | 96.46 | | | | | | 7.19 | | | | | | 1.27x | | | | | | | | | | | | | | | | | | 123.13 | | |
24 | | | Hi/Fn, Inc. | | | | | 02/23/2009 | | | | | | 65.9% | | | | | | 19.7% | | | | | | 25.0% | | | | | | 44.9% | | | | | | 44.9% | | | | | | 36.45 | | | | | | (5.33) | | | | | | 1.47x | | | | | | | | | | | | 1.33x | | | | | | 56.83 | | |
25 | | | Intraware, Inc. | | | | | 10/20/2008 | | | | | | 11.4% | | | | | | 10.5% | | | | | | 15.3% | | | | | | 29.0% | | | | | | 29.0% | | | | | | 12.93 | | | | | | (0.52) | | | | | | 1.95x | | | | | | | | | | | | 6.13x | | | | | | 25.22 | | |
26 | | | Tumbleweed Communications Corp. | | | | | 06/06/2008 | | | | | | 92.9% | | | | | | 100.0% | | | | | | 45.9% | | | | | | 52.5% | | | | | | 52.5% | | | | | | 57.70 | | | | | | (7.80) | | | | | | 2.39x | | | | | | | | | | | | | | | | | | 143.54 | | |
27 | | | Moldflow Corp. | | | | | 05/01/2008 | | | | | | 31.1% | | | | | | 27.9% | | | | | | 22.3% | | | | | | 13.2% | | | | | | 13.2% | | | | | | 61.83 | | | | | | 10.23 | | | | | | 4.19x | | | | | | 35.23x | | | | | | 2.99x | | | | | | 267.25 | | |
28 | | | Synplicity, Inc. | | | | | 03/20/2008 | | | | | | 44.4% | | | | | | 90.5% | | | | | | 54.4% | | | | | | 52.1% | | | | | | 52.1% | | | | | | 71.17 | | | | | | 7.20 | | | | | | 2.98x | | | | | | 16.19x | | | | | | 4.18x | | | | | | 215.71 | | |
29 | | | Document Sciences Corp. | | | | | 12/27/2007 | | | | | | 44.0% | | | | | | 72.3% | | | | | | 75.8% | | | | | | 79.0% | | | | | | 79.0% | | | | | | 38.73 | | | | | | (0.40) | | | | | | 1.52x | | | | | | | | | | | | | | | | | | 59.29 | | |
30 | | | EasyLink Services Corp. | | | | | 05/03/2007 | | | | | | 16.0% | | | | | | 14.2% | | | | | | 13.9% | | | | | | 11.5% | | | | | | 11.5% | | | | | | 74.32 | | | | | | 5.10 | | | | | | | | | | | | | | | | | | | | | | | | 64.07 | | |
31 | | | Quovadx, Inc. | | | | | 04/01/2007 | | | | | | 20.8% | | | | | | 21.2% | | | | | | 27.5% | | | | | | 25.5% | | | | | | 25.5% | | | | | | 77.20 | | | | | | 1.16 | | | | | | 1.73x | | | | | | | | | | | | 2.87x | | | | | | 135.16 | | |
32 | | | Corillian Corp. | | | | | 02/14/2007 | | | | | | 51.5% | | | | | | 43.1% | | | | | | 60.4% | | | | | | 49.3% | | | | | | 49.3% | | | | | | 60.96 | | | | | | 1.78 | | | | | | 3.81x | | | | | | | | | | | | 8.41x | | | | | | 233.41 | | |
33 | | | Netsmart Technologies, Inc. | | | | | 11/20/2006 | | | | | | 20.2% | | | | | | 23.9% | | | | | | 26.7% | | | | | | 12.2% | | | | | | 12.2% | | | | | | 57.81 | | | | | | 9.13 | | | | | | 1.87x | | | | | | | | | | | | | | | | | | 108.41 | | |
34 | | | MetaSolv, Inc. | | | | | 10/23/2006 | | | | | | 31.8% | | | | | | 36.7% | | | | | | 19.5% | | | | | | 23.5% | | | | | | 23.5% | | | | | | 95.60 | | | | | | 4.35 | | | | | | 2.17x | | | | | | | | | | | | 3.74x | | | | | | 213.55 | | |
35 | | | Click Commerce, Inc. /Old/ | | | | | 09/05/2006 | | | | | | 12.9% | | | | | | 60.8% | | | | | | 32.2% | | | | | | 26.7% | | | | | | 26.7% | | | | | | 73.87 | | | | | | 23.36 | | | | | | 3.71x | | | | | | 13.87x | | | | | | | | | | | | 277.52 | | |
36 | | | JAMDAT Mobile, Inc. | | | | | 12/08/2005 | | | | | | 54.5% | | | | | | 52.5% | | | | | | 13.9% | | | | | | 20.9% | | | | | | 20.9% | | | | | | 66.22 | | | | | | 13.51 | | | | | | 9.57x | | | | | | | | | | | | | | | | | | 670.81 | | |
37 | | | Captiva Software Corp. | | | | | 10/20/2005 | | | | | | 10.6% | | | | | | 10.2% | | | | | | 32.1% | | | | | | 24.5% | | | | | | 24.5% | | | | | | 79.28 | | | | | | 14.99 | | | | | | 3.68x | | | | | | | | | | | | | | | | | | 298.20 | | |
38 | | | Centra Software, Inc. | | | | | 10/06/2005 | | | | | | 22.4% | | | | | | 31.6% | | | | | | 25.5% | | | | | | 22.4% | | | | | | 22.4% | | | | | | 39.16 | | | | | | (0.36) | | | | | | 1.75x | | | | | | | | | | | | 4.65x | | | | | | 68.41 | | |
39 | | | BindView Development Corp. | | | | | 10/03/2005 | | | | | | 34.2% | | | | | | 15.6% | | | | | | 14.3% | | | | | | 14.3% | | | | | | 14.3% | | | | | | 72.77 | | | | | | (0.85) | | | | | | 2.61x | | | | | | | | | | | | 8.41x | | | | | | 194.97 | | |
40 | | | CyberGuard Corp. | | | | | 08/18/2005 | | | | | | 42.5% | | | | | | 46.0% | | | | | | 23.7% | | | | | | 22.8% | | | | | | 22.8% | | | | | | 66.10 | | | | | | 6.44 | | | | | | 4.51x | | | | | | | | | | | | | | | | | | 296.60 | | |
41 | | | InteliData Technologies Corp. | | | | | 03/31/2005 | | | | | | -7.6% | | | | | | -5.3% | | | | | | 26.3% | | | | | | 22.2% | | | | | | 22.2% | | | | | | 13.09 | | | | | | (6.43) | | | | | | 1.48x | | | | | | | | | | | | | | | | | | 19.37 | | |
42 | | | Blue Martini Software, Inc. | | | | | 03/01/2005 | | | | | | 46.5% | | | | | | 55.6% | | | | | | 80.2% | | | | | | 63.3% | | | | | | 63.3% | | | | | | 28.29 | | | | | | (10.74) | | | | | | 1.77x | | | | | | | | | | | | 1.87x | | | | | | 52.30 | | |
43 | | | IMPAC Medical Systems, Inc. | | | | | 01/18/2005 | | | | | | 50.2% | | | | | | 25.7% | | | | | | 20.3% | | | | | | 21.5% | | | | | | 21.5% | | | | | | 71.13 | | | | | | 7.48 | | | | | | 3.35x | | | | | | | | | | | | 6.70x | | | | | | 238.81 | | |
Descriptive Statistics for Control Premium Transactions | | |||||||||||||||||||||
Statistic | | | Count | | | Min | | | 25th Percentile | | | Median | | | 75th Percentile | | | Max | | | Mean | |
Announce Date | | | 43 | | | 1/18/2005 | | | 1/2/2007 | | | 5/11/2009 | | | 1/18/2011 | | | 6/22/2021 | | | 5/17/2010 | |
Revenue ($mm) | | | 43 | | | $12.9 | | | $39.6 | | | $61.8 | | | $74.8 | | | $98.6 | | | $59.4 | |
EBITDA ($mm) | | | 43 | | | -$28.3 | | | -$2.2 | | | $2.5 | | | $7.4 | | | $23.4 | | | $2.6 | |
Deal Value ($mm) | | | 43 | | | $19.1 | | | $97.2 | | | $153.0 | | | $236.1 | | | $670.8 | | | $188.5 | |
Price/Sales | | | 42 | | | 0.2x | | | 2.0x | | | 2.7x | | | 4.0x | | | 9.6x | | | 3.1x | |
Price/Income | | | 7 | | | 13.6x | | | 15.0x | | | 17.2x | | | 29.5x | | | 35.3x | | | 22.2x | |
Price/Book Value | | | 24 | | | 1.0x | | | 2.1x | | | 3.4x | | | 6.2x | | | 9.2x | | | 4.2x | |
2 Month Equity Premium | | | 43 | | | -7.6% | | | 17.6% | | | 31.8% | | | 45.5% | | | 92.9% | | | 34.3% | |
1 Month Equity Premium | | | 43 | | | -7.2% | | | 15.5% | | | 31.8% | | | 45.3% | | | 100.0% | | | 33.9% | |
1 Week Equity Premium | | | 43 | | | 4.9% | | | 19.9% | | | 26.3% | | | 41.4% | | | 80.2% | | | 31.5% | |
1 Day Equity Premium | | | 43 | | | 2.0% | | | 15.7% | | | 24.5% | | | 39.6% | | | 79.0% | | | 28.5% | |
Equity Control Premium | | | 43 | | | 2.0% | | | 15.7% | | | 24.5% | | | 39.8% | | | 79.0% | | | 29.2% | |
| Regression Statistics | | ||||||
| Multiple R | | | | | 0.3793 | | |
| R Square | | | | | 0.1439 | | |
| Adjusted R Square | | | | | 0.1230 | | |
| Standard Error | | | | | 0.1612 | | |
| Observations | | | | | 43 | | |
ANOVA | | ||||||||||||||||||||||||||||||
| | | df | | | SS | | | MS | | | F | | | F Stat | | |||||||||||||||
Regression | | | | | 1 | | | | | | 0.1789 | | | | | | 0.1789 | | | | | | 6.8906 | | | | | | 1.2121E-02 | | |
Residual | | | | | 41 | | | | | | 1.0648 | | | | | | 0.0260 | | | | | | | | | | | | | | |
Total | | | | | 42 | | | | | | 1.2437 | | | | | | | | | | | | | | | | | | | | |
Regression Coefficients | | ||||||||||||||||||||||||||||||||||||
| | | Coefficients | | | Std Error | | | t Stat | | | P-value | | | Lower 95% | | | Upper 95% | | ||||||||||||||||||
Intercept | | | | | 0.31090 | | | | | | 0.02556 | | | | | | 12.16240 | | | | | | 0.00000 | | | | | | 0.25927 | | | | | | 0.36252 | | |
EBITDA ($mm) | | | | | -0.00699 | | | | | | 0.00266 | | | | | | -2.62500 | | | | | | 0.01212 | | | | | | -0.01237 | | | | | | -0.00161 | | |
EVOL EBITDA ($mm) | | | | $ | 2.29 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Indicated Control Premium | | | | | 29.5% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Implied DLOC | | | | | 22.8% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transaction Implied Control Premium | | |||||||||
Description | | | Value | | | Reference | | |||
Post-Transaction Equity Value – Control, Marketable | | | | $ | 36,454,636 | | | | Schedule F | |
Pre-Transaction Equity Value – Minority, Marketable | | | | $ | 25,862,789 | | | | Schedule E.2 | |
Implied Control Premium | | | | | 41.0% | | | | | |
Market Required Control Premium | | |||||||||
Description | | | Value | | | Reference | | |||
Median Control Premium | | | | | 24.5% | | | | Schedule G.2 | |
Regression Calculated Control Premium | | | | | 29.5% | | | | Schedule G.3 | |
Concluded Required Control Premium | | | | | 29.5% | | | | | |
| Delaware | | | 84-1010843 | |
| (State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) | |
| 9800 Pyramid Court, Suite 400 Englewood, Colorado | | | 80112 | |
| (Address of principal executive offices) | | | (Zip Code) | |
| Title of each class | | | Trading Symbol(s) | | | Name of each exchange on which registered | |
| Common Stock, par value $0.001 per share | | | EVOL | | | Nasdaq Capital Market | |
| Large accelerated filer ☐ | | | Accelerated filer ☐ | |
| Non-accelerated filer ☒ | | | Smaller reporting company ☒ | |
| | | | Emerging growth company ☐ | |
| | | Page | | |||
| | | | E-4 | | | |
| | | | E-4 | | | |
| | | | E-12 | | | |
| | | | E-29 | | | |
| | | | E-29 | | | |
| | | | E-30 | | | |
| | | | E-30 | | | |
| | | | E-31 | | | |
| | | | E-31 | | | |
| | | | E-31 | | | |
| | | | E-32 | | | |
| | | | E-42 | | | |
| | | | E-43 | | | |
| | | | E-43 | | | |
| | | | E-46 | | | |
| | | | E-47 | | | |
| | | | E-48 | | | |
| | | | E-49 | | | |
| | | | E-50 | | | |
| | | | E-51 | | | |
| | | | E-73 | | | |
| | | | E-73 | | | |
| | | | E-73 | | | |
| | | | E-74 | | | |
| | | | E-74 | | | |
| | | | E-74 | | | |
| | | | E-74 | | | |
| | | | E-74 | | | |
| | | | E-74 | | | |
| | | | E-75 | | | |
| | | | E-75 | | | |
| | | | E-78 | | | |
| | | | E-79 | | |
Location | | | Square Footage | | | Lease Expiration | |
Englewood, Colorado | | | 400 | | | 05/31/21 | |
New York, New York | | | 391 | | | 01/31/21 | |
London, England | | | 376 | | | 09/30/21 | |
Bangalore, India | | | 12,429 | | | 08/18/23 | |
Kolkata, India | | | 5,638 | | | 07/31/26 | |
Johannesburg, South Africa | | | 130 | | | 09/30/21 | |
Kuala Lumpur, Malaysia | | | 1,042 | | | 07/31/23 | |
Grenoble, France | | | 3,767 | | | 03/21/21 | |
Cluj-Napoca, Romania | | | 7,793 | | | 12/31/22 | |
Madrid, Spain | | | 215 | | | month-to-month | |
| | | For the Years Ended December 31, 2020 vs. 2019 | | |||
Changes in: | | | | | | | |
Revenue | | | | $ | 186 | | |
Costs of revenue and operating expenses | | | | | 156 | | |
Income from operations | | | | $ | 30 | | |
| | | For the Years Ended December 31, | | |||||||||||||||||||||
| | | 2020 | | | 2019 | | | Change | | | % Change | | ||||||||||||
| | | (in thousands, except percentages) | | |||||||||||||||||||||
REVENUE | | | | | | | | | | | | | | | | | | | | | | | | | |
License fees | | | | $ | 745 | | | | | $ | 1,245 | | | | | $ | (500) | | | | | | (40)% | | |
Services | | | | | 25,607 | | | | | | 24,505 | | | | | | 1,102 | | | | | | 4% | | |
Total revenue | | | | | 26,352 | | | | | | 25,750 | | | | | | 602 | | | | | | 2% | | |
COSTS OF REVENUE AND OPERATING EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | |
Costs of revenue, excluding depreciation and amortization | | | | | 8,837 | | | | | | 8,685 | | | | | | 152 | | | | | | 2% | | |
Sales and marketing | | | | | 6,000 | | | | | | 7,459 | | | | | | (1,459) | | | | | | (20)% | | |
General and administrative | | | | | 5,052 | | | | | | 5,091 | | | | | | (39) | | | | | | (1)% | | |
Product development | | | | | 4,327 | | | | | | 4,594 | | | | | | (267) | | | | | | (6)% | | |
Depreciation | | | | | 216 | | | | | | 190 | | | | | | 26 | | | | | | 14% | | |
Amortization | | | | | 940 | | | | | | 938 | | | | | | 2 | | | | | | — | | |
Goodwill impairment loss | | | | | — | | | | | | 6,687 | | | | | | (6,687) | | | | | | (100)% | | |
Total costs of revenue and operating expenses | | | | | 25,372 | | | | | | 33,644 | | | | | | (8,272) | | | | | | (25)% | | |
Income (loss) from operations | | | | | 980 | | | | | | (7,894) | | | | | | 8,874 | | | | | | 112% | | |
Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest income | | | | | 5 | | | | | | 15 | | | | | | (10) | | | | | | (67)% | | |
Interest expense | | | | | (70) | | | | | | (314) | | | | | | 244 | | | | | | 78% | | |
Other income | | | | | 186 | | | | | | 56 | | | | | | 130 | | | | | | 232% | | |
Foreign currency exchange income (loss) | | | | | 370 | | | | | | (455) | | | | | | 825 | | | | | | 181% | | |
Other income (expense), net | | | | | 491 | | | | | | (698) | | | | | | 1,189 | | | | | | 170% | | |
Income (loss) from operations before income taxes | | | | | 1,471 | | | | | | (8,592) | | | | | | 10,063 | | | | | | 117% | | |
Income tax expense | | | | | 828 | | | | | | 1,103 | | | | | | (275) | | | | | | (25)% | | |
Net income (loss) | | | | $ | 643 | | | | | $ | (9,695) | | | | | $ | 10,338 | | | | | | 107% | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
REVENUE | | | | | | | | | | | | | |
License fees | | | | | 3% | | | | | | 5% | | |
Services | | | | | 97% | | | | | | 95% | | |
Total revenue | | | | | 100% | | | | | | 100% | | |
COSTS OF REVENUE AND OPERATING EXPENSES | | | | | | | | | | | | | |
Costs of revenue, excluding depreciation and amortization | | | | | 34% | | | | | | 34% | | |
Sales and marketing | | | | | 23% | | | | | | 29% | | |
General and administrative | | | | | 19% | | | | | | 20% | | |
Product development | | | | | 16% | | | | | | 18% | | |
Depreciation | | | | | 1% | | | | | | 1% | | |
Amortization | | | | | 4% | | | | | | 4% | | |
Goodwill impairment loss | | | | | — | | | | | | 26% | | |
Total costs of revenue and operating expenses | | | | | 97% | | | | | | 132% | | |
Income (loss) from operations | | | | | 3% | | | | | | (32)% | | |
Other income (expense) | | | | | | | | | | | | | |
Interest income | | | | | — | | | | | | — | | |
Interest expense | | | | | — | | | | | | (1)% | | |
Other income | | | | | 1% | | | | | | — | | |
Foreign currency exchange income (loss) | | | | | 1% | | | | | | (2)% | | |
Other income (expense), net | | | | | 2% | | | | | | (3)% | | |
Income (loss) from operations before income taxes | | | | | 5% | | | | | | (35)% | | |
Income tax expense | | | | | 3% | | | | | | 4% | | |
Net income (loss) | | | | | 2% | | | | | | (39)% | | |
| | | December 31, 2020 | | | December 31, 2019 | | ||||||
ASSETS | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents | | | | $ | 2,763 | | | | | $ | 3,076 | | |
Contract receivables, net of allowance for doubtful accounts of $780 and $710 at December 31, 2020 and 2019, respectively | | | | | 5,681 | | | | | | 6,732 | | |
Unbilled work-in-progress | | | | | 3,365 | | | | | | 1,105 | | |
Prepaid and other current assets | | | | | 1,828 | | | | | | 1,594 | | |
Income taxes receivable | | | | | 270 | | | | | | 953 | | |
Total current assets | | | | | 13,907 | | | | | | 13,460 | | |
Property and equipment, net | | | | | 532 | | | | | | 482 | | |
Amortizable intangible assets, net | | | | | 2,769 | | | | | | 3,665 | | |
Operating leases – right of use assets, net | | | | | 915 | | | | | | 1,205 | | |
Deferred income taxes | | | | | 953 | | | | | | 1,000 | | |
Total assets | | | | $ | 19,076 | | | | | $ | 19,812 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Term loans – current portion | | | | $ | 142 | | | | | $ | 1,577 | | |
Accounts payable and accrued liabilities | | | | | 4,305 | | | | | | 3,827 | | |
Lease obligations – operating leases | | | | | 294 | | | | | | 321 | | |
Unearned revenue | | | | | 3,713 | | | | | | 3,971 | | |
Total current liabilities | | | | | 8,454 | | | | | | 9,696 | | |
Long-term liabilities: | | | | | | | | | | | | | |
Term loans, net of current portion | | | | | 319 | | | | | | 122 | | |
Lease obligations – operating leases, net of current portion | | | | | 613 | | | | | | 876 | | |
Total liabilities | | | | | 9,386 | | | | | | 10,694 | | |
Commitments and contingencies (Note 10) | | | | | — | | | | | | — | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Preferred stock, $0.001 par value; 2,000,000 shares authorized; no shares issued and outstanding as of December 31, 2020 and 2019, respectively | | | | | — | | | | | | — | | |
Common stock, $0.001 par value; 40,000,000 shares authorized; 12,374,798 shares issued and 12,195,909 outstanding as of December 31, 2020 and 12,342,723 shares issued and 12,163,834 outstanding as of December 31, 2019 | | | | | 12 | | | | | | 12 | | |
Additional paid-in capital | | | | | 99,776 | | | | | | 99,555 | | |
Treasury stock, 178,889 shares as of December 31, 2020 and 2019, at cost | | | | | (1,253) | | | | | | (1,253) | | |
Accumulated other comprehensive loss | | | | | (10,345) | | | | | | (10,053) | | |
Accumulated deficit | | | | | (78,500) | | | | | | (79,143) | | |
Total stockholders’ equity | | | | | 9,690 | | | | | | 9,118 | | |
Total liabilities and stockholders’ equity | | | | $ | 19,076 | | | | | $ | 19,812 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
REVENUE | | | | | | | | | | | | | |
License fees | | | | $ | 745 | | | | | $ | 1,245 | | |
Services | | | | | 25,607 | | | | | | 24,505 | | |
Total revenue | | | | | 26,352 | | | | | | 25,750 | | |
COSTS OF REVENUE AND OPERATING EXPENSES | | | | | | | | | | | | | |
Costs of revenue, excluding depreciation and amortization | | | | | 8,837 | | | | | | 8,685 | | |
Sales and marketing | | | | | 6,000 | | | | | | 7,459 | | |
General and administrative | | | | | 5,052 | | | | | | 5,091 | | |
Product development | | | | | 4,327 | | | | | | 4,594 | | |
Depreciation | | | | | 216 | | | | | | 190 | | |
Amortization | | | | | 940 | | | | | | 938 | | |
Goodwill impairment loss | | | | | — | | | | | | 6,687 | | |
Total costs of revenue and operating expenses | | | | | 25,372 | | | | | | 33,644 | | |
Income (loss) from operations | | | | | 980 | | | | | | (7,894) | | |
Other income (expense) | | | | | | | | | | | | | |
Interest income | | | | | 5 | | | | | | 15 | | |
Interest expense | | | | | (70) | | | | | | (314) | | |
Other income | | | | | 186 | | | | | | 56 | | |
Foreign currency exchange income (loss) | | | | | 370 | | | | | | (455) | | |
Other income (expense), net | | | | | 491 | | | | | | (698) | | |
Income (loss) from operations before income taxes | | | | | 1,471 | | | | | | (8,592) | | |
Income tax expense | | | | | 828 | | | | | | 1,103 | | |
Net income (loss) | | | | $ | 643 | | | | | $ | (9,695) | | |
Basic earnings (loss) per common share | | | | $ | 0.05 | | | | | $ | (0.80) | | |
Diluted earnings (loss) per common share | | | | $ | 0.05 | | | | | $ | (0.80) | | |
Weighted average basic shares outstanding | | | | | 12,187 | | | | | | 12,157 | | |
Weighted average diluted shares outstanding | | | | | 12,271 | | | | | | 12,157 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Net income (loss) | | | | $ | 643 | | | | | $ | (9,695) | | |
Other comprehensive (loss) income | | | | | | | | | | | | | |
Foreign currency translation (loss) income | | | | | (292) | | | | | | 62 | | |
Comprehensive income (loss) | | | | $ | 351 | | | | | $ | (9,633) | | |
| | | Common Stock | | | Additional paid-in capital | | | Treasury stock | | | Accumulated other comprehensive loss | | | Accumulated deficit | | | Total stockholders’ equity | | ||||||||||||||||||||||||
| Shares | | | Amount | | ||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2019 | | | | | 12,126,708 | | | | | $ | 12 | | | | | $ | 99,224 | | | | | $ | (1,253) | | | | | $ | (10,115) | | | | | $ | (69,448) | | | | | $ | 18,420 | | |
Restricted stock vested | | | | | 37,126 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stock-based compensation expense | | | | | — | | | | | | — | | | | | | 331 | | | | | | — | | | | | | — | | | | | | — | | | | | | 331 | | |
Net loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (9,695) | | | | | | (9,695) | | |
Foreign currency translation income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 62 | | | | | | — | | | | | | 62 | | |
Balance at December 31, 2019 | | | | | 12,163,834 | | | | | $ | 12 | | | | | $ | 99,555 | | | | | $ | (1,253) | | | | | $ | (10,053) | | | | | $ | (79,143) | | | | | $ | 9,118 | | |
Restricted stock vested | | | | | 32,075 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stock-based compensation expense | | | | | — | | | | | | — | | | | | | 221 | | | | | | — | | | | | | — | | | | | | — | | | | | | 221 | | |
Net income | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 643 | | | | | | 643 | | |
Foreign currency translation loss | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (292) | | | | | | — | | | | | | (292) | | |
Balance at December 31, 2020 | | | | | 12,195,909 | | | | | $ | 12 | | | | | $ | 99,776 | | | | | $ | (1,253) | | | | | $ | (10,345) | | | | | $ | (78,500) | | | | | $ | 9,690 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net income (loss) | | | | $ | 643 | | | | | $ | (9,695) | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | | | | | | | | | |
Depreciation | | | | | 216 | | | | | | 190 | | |
Amortization of intangible assets | | | | | 940 | | | | | | 938 | | |
Amortization of debt issuance costs | | | | | 6 | | | | | | 6 | | |
Amortization of operating leases – right of use assets | | | | | 272 | | | | | | 414 | | |
Stock-based compensation expense | | | | | 221 | | | | | | 331 | | |
Foreign currency transaction (income) loss, net | | | | | (77) | | | | | | 455 | | |
Bad debt expense, net of recoveries | | | | | (92) | | | | | | 100 | | |
Provision for deferred income taxes | | | | | (56) | | | | | | 330 | | |
Goodwill impairment loss | | | | | — | | | | | | 6,687 | | |
Change in operating assets and liabilities: | | | | | | | | | | | | | |
Contract receivables | | | | | 1,286 | | | | | | 858 | | |
Unbilled work-in-progress | | | | | (2,095) | | | | | | 1,839 | | |
Prepaid and other assets | | | | | (195) | | | | | | (231) | | |
Accounts payable and accrued liabilities | | | | | 337 | | | | | | (700) | | |
Income taxes receivable | | | | | 683 | | | | | | 12 | | |
Unearned revenue | | | | | (391) | | | | | | (49) | | |
Lease obligations – operating leases | | | | | (270) | | | | | | (406) | | |
Net cash provided by operating activities | | | | | 1,428 | | | | | | 1,079 | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Purchases of property and equipment | | | | | (268) | | | | | | (383) | | |
Proceeds on sale of property and equipment | | | | | 2 | | | | | | — | | |
Net cash used in investing activities | | | | | (266) | | | | | | (383) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Principal payments on notes payable | | | | | (1,370) | | | | | | (4,243) | | |
Proceeds from loan | | | | | 319 | | | | | | — | | |
Net cash used in financing activities | | | | | (1,051) | | | | | | (4,243) | | |
Effect of exchange rate changes on cash and cash equivalents | | | | | (424) | | | | | | (109) | | |
Net decrease in cash and cash equivalents | | | | | (313) | | | | | | (3,656) | | |
Cash and cash equivalents at beginning of period | | | | | 3,076 | | | | | | 6,732 | | |
Cash and cash equivalents at end of period | | | | $ | 2,763 | | | | | $ | 3,076 | | |
Supplemental disclosure of cash and non-cash transactions: | | | | | | | | | | | | | |
Interest paid | | | | $ | 66 | | | | | $ | 327 | | |
Income taxes paid, net of refunds | | | | $ | (269) | | | | | $ | 995 | | |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | | | | $ | 41 | | | | | $ | 1,609 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Primary geographical markets | | | | | | | | | | | | | |
United Kingdom | | | | $ | 5,212 | | | | | $ | 5,039 | | |
Other | | | | | 21,140 | | | | | | 20,711 | | |
| | | | $ | 26,352 | | | | | $ | 25,750 | | |
Major products/service lines | | | | | | | | | | | | | |
Licensing fees | | | | $ | 745 | | | | | $ | 1,245 | | |
Customer support, including warranty support fees | | | | | 7,896 | | | | | | 9,070 | | |
Services | | | | | 8,241 | | | | | | 7,211 | | |
Managed services | | | | | 9,470 | | | | | | 8,224 | | |
Total services | | | | | 25,607 | | | | | | 24,505 | | |
| | | | $ | 26,352 | | | | | $ | 25,750 | | |
Timing of revenue recognition | | | | | | | | | | | | | |
Products transferred at a point in time | | | | $ | 439 | | | | | $ | 480 | | |
Products and services transferred over time | | | | | 25,913 | | | | | | 25,270 | | |
| | | | $ | 26,352 | | | | | $ | 25,750 | | |
| | | December 31, 2020 | | | December 31, 2019 | | ||||||
Assets | | | | | | | | | | | | | |
Contract receivables, net | | | | $ | 5,681 | | | | | $ | 6,732 | | |
Unbilled work-in-progress, net | | | | $ | 3,365 | | | | | $ | 1,105 | | |
Liabilities | | | | | | | | | | | | | |
Unearned revenue | | | | $ | 3,713 | | | | | $ | 3,971 | | |
Fiscal Year | | | Description | | | Balance at Beginning of Period | | | Bad Debt Expense/ (Recovery) | | | Write-Offs Charged to Allowance | | | Effects of Foreign Currency Exchange Rates | | | Balance at End of Period | | |||||||||||||||
2020 | | | Allowance for doubtful accounts | | | | $ | 710 | | | | | $ | 96 | | | | | $ | (11) | | | | | $ | (15) | | | | | $ | 780 | | |
2019 | | | Allowance for doubtful accounts | | | | $ | 771 | | | | | $ | (76) | | | | | $ | 19 | | | | | $ | (4) | | | | | $ | 710 | | |
Fiscal Year | | | Description | | | Balance at Beginning of Period | | | Unbilled Work-in- Progress Allowance/ (Recovery) | | | Write-Offs Charged to Allowance | | | Effects of Foreign Currency Exchange Rates | | | Balance at End of Period | | |||||||||||||||
2020 | | | Allowance for unbilled work-in-progress | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
2019 | | | Allowance for unbilled work-in-progress | | | | $ | 552 | | | | | $ | 106 | | | | | $ | (643) | | | | | $ | (15) | | | | | $ | — | | |
| | | December 31, 2020 | | ||||||||||||||||||
| | | Gross Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Weighted-Average Amortization Period | | |||||||||
Purchased software | | | | $ | 2,932 | | | | | $ | (1,907) | | | | | $ | 1,025 | | | | 4.7 yrs. | |
Trademarks and tradenames | | | | | 311 | | | | | | (272) | | | | | | 39 | | | | 0.7 yrs. | |
Non-competition | | | | | 40 | | | | | | (40) | | | | | | — | | | | 0.0 yrs. | |
Customer relationships | | | | | 4,396 | | | | | | (2,691) | | | | | | 1,705 | | | | 5.7 yrs. | |
| | | | $ | 7,679(1) | | | | | $ | (4,910) | | | | | $ | 2,769 | | | | 3.8 yrs. | |
| | | December 31, 2019 | | ||||||||||||||||||
| | | Gross Amount | | | Accumulated Amortization | | | Net Carrying Amount | | | Weighted-Average Amortization Period | | |||||||||
Purchased software | | | | $ | 2,903 | | | | | $ | (1,508) | | | | | $ | 1,395 | | | | 5.7 yrs. | |
Trademarks and tradenames | | | | | 307 | | | | | | (247) | | | | | | 60 | | | | 1.7 yrs. | |
Non-competition | | | | | 39 | | | | | | (39) | | | | | | — | | | | 0.0 yrs. | |
Customer relationships | | | | | 4,346 | | | | | | (2,136) | | | | | | 2,210 | | | | 6.7 yrs. | |
| | | | $ | 7,595(1) | | | | | $ | (3,930) | | | | | $ | 3,665 | | | | 4.8 yrs. | |
Year ending December 31, | | | | | | | |
2021 | | | | $ | 941 | | |
2022 | | | | | 754 | | |
2023 | | | | | 375 | | |
2024 | | | | | 172 | | |
2025 | | | | | 93 | | |
Thereafter | | | | | 434 | | |
| | | | $ | 2,769 | | |
| | | Total Goodwill | | |||
Balance at January 1, 2019 | | | | $ | 6,738 | | |
Goodwill impairment loss | | | | | (6,687) | | |
Effects of changes in foreign currency exchange rates(1) | | | | | (51) | | |
Balance at December 31, 2019 | | | | $ | — | | |
Goodwill impairment loss | | | | | — | | |
Balance at December 31, 2020 | | | | $ | — | | |
| | | December 31, 2020 | | | December 31, 2019 | | ||||||
Accounts payable and accrued liabilities: | | | | | | | | | | | | | |
Accounts payable | | | | $ | 878 | | | | | $ | 889 | | |
Accrued compensation and related expenses | | | | | 2,180 | | | | | | 1,755 | | |
Accrued liabilities | | | | | 1,247 | | | | | | 1,183 | | |
| | | | $ | 4,305 | | | | | $ | 3,827 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Domestic | | | | $ | 574 | | | | | $ | (290) | | |
Foreign | | | | | 897 | | | | | | (8,302) | | |
Total | | | | $ | 1,471 | | | | | $ | (8,592) | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Current: | | | | | | | | | | | | | |
Federal | | | | $ | (162) | | | | | $ | (365) | | |
Foreign | | | | | 1,039 | | | | | | 1,110 | | |
State | | | | | 7 | | | | | | 28 | | |
Total Current | | | | | 884 | | | | | | 773 | | |
Deferred: | | | | | | | | | | | | | |
Federal | | | | | 197 | | | | | | 385 | | |
Foreign | | | | | (253) | | | | | | (55) | | |
Total Deferred | | | | | (56) | | | | | | 330 | | |
Total | | | | $ | 828 | | | | | $ | 1,103 | | |
| | | December 31, 2020 | | | December 31, 2019 | | ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Foreign tax credits carryforwards | | | | $ | 4,671 | | | | | $ | 4,650 | | |
Net operating loss carryforwards – Foreign | | | | | 6,767 | | | | | | 5,911 | | |
Net operating loss carryforwards – State | | | | | 942 | | | | | | 753 | | |
AMT credits | | | | | — | | | | | | 385 | | |
Stock compensation | | | | | 290 | | | | | | 552 | | |
Depreciable assets | | | | | 73 | | | | | | 54 | | |
Accrued liabilities and reserves | | | | | 161 | | | | | | 127 | | |
Total deferred tax assets | | | | | 12,904 | | | | | | 12,432 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Intangibles | | | | | (51) | | | | | | (180) | | |
Accrued liabilities and reserves | | | | | (166) | | | | | | (170) | | |
Total deferred tax liability | | | | | (217) | | | | | | (350) | | |
Net deferred tax assets, before valuation allowance | | | | | 12,687 | | | | | | 12,082 | | |
Valuation allowance | | | | | (11,734) | | | | | | (11,082) | | |
Net deferred tax asset | | | | $ | 953 | | | | | $ | 1,000 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
U.S. federal income tax expense at statutory rates | | | | $ | 309 | | | | | $ | (1,804) | | |
State income tax expense, net of federal impact | | | | | 7 | | | | | | 28 | | |
Foreign rate differential | | | | | (39) | | | | | | 244 | | |
Federal Refund | | | | | — | | | | | | (26) | | |
Change in valuation allowance | | | | | 505 | | | | | | 468 | | |
Research and development credits | | | | | (322) | | | | | | (537) | | |
Foreign taxes withholdings | | | | | 762 | | | | | | 1,216 | | |
Goodwill impairment loss | | | | | — | | | | | | 1,404 | | |
Permanent differences and other, net | | | | | (394) | | | | | | 110 | | |
Total tax expense | | | | $ | 828 | | | | | $ | 1,103 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Cost of revenue, excluding depreciation and amortization | | | | $ | 47 | | | | | $ | 42 | | |
Sales and marketing | | | | | 24 | | | | �� | | 23 | | |
General and administrative | | | | | 155 | | | | | | 239 | | |
Product development | | | | | (5) | | | | | | 27 | | |
Total share-based compensation | | | | $ | 221 | | | | | $ | 331 | | |
| | | Restricted Stock Number of Shares | | |||
| | | (in thousands) | | |||
Unvested restricted stock at January 1, 2019 | | | | | 349 | | |
Less restricted stock vested | | | | | (37) | | |
Less restricted stock forfeited/expired | | | | | (153) | | |
Unvested restricted stock at December 31, 2019 | | | | | 159 | | |
Less restricted stock vested | | | | | (32) | | |
Less restricted stock forfeited/expired | | | | | (64) | | |
Unvested restricted stock at December 31, 2020 | | | | | 63 | | |
| | | Number of Shares (in thousands) | | | Weighted- Average Exercise Price | | | Weighted- Average Remaining Contractual Term (Years) | | | Aggregate Intrinsic Value (in thousands) | | ||||||||||||
Options outstanding at January 1, 2019 | | | | | 591 | | | | | $ | 5.75 | | | | | | 7.39 | | | | | $ | — | | |
Less options forfeited/cancelled | | | | | (138) | | | | | | 5.61 | | | | | | | | | | | | | | |
Less options expired | | | | | (15) | | | | | | 8.94 | | | | | | | | | | | | | | |
Options outstanding at December 31, 2019 | | | | | 438 | | | | | $ | 5.69 | | | | | | 6.51 | | | | | $ | — | | |
Less options forfeited/cancelled | | | | | (92) | | | | | | 5.29 | | | | | | | | | | | | | | |
Less options expired | | | | | (3) | | | | | | 2.86 | | | | | | | | | | | | | | |
Options outstanding at December 31, 2020 | | | | | 343 | | | | | $ | 5.82 | | | | | | 5.62 | | | | | $ | | | |
Options exercisable at December 31, 2020 | | | | | 293 | | | | | $ | 6.04 | | | | | | 5.40 | | | | | $ | | | |
| Stock Options Outstanding | | | Stock Options Exercisable | | |||||||||||||||||||||||||||||||||
| Range of Exercise Prices | | | Number of Shares | | | Weighted Avg. Remaining Contractual Life (years) | | | Weighted Avg. Exercise Price | | | Number of Shares | | | Weighted Avg. Exercise Price | | |||||||||||||||||||||
| $2.25 | | | | $ | 4.31 | | | | | | 12,857 | | | | | | 3.61 | | | | | $ | 3.39 | | | | | | 12,857 | | | | | $ | 3.39 | | |
| $4.32 | | | | $ | 4.55 | | | | | | 150,000 | | | | | | 6.84 | | | | | $ | 4.50 | | | | | | 112,500 | | | | | $ | 4.50 | | |
| $4.56 | | | | $ | 4.94 | | | | | | 50,000 | | | | | | 6.92 | | | | | $ | 4.60 | | | | | | 37,500 | | | | | $ | 4.60 | | |
| $4.95 | | | | $ | 8.41 | | | | | | 60,551 | | | | | | 4.09 | | | | | $ | 6.08 | | | | | | 60,551 | | | | | $ | 6.08 | | |
| $8.42 | | | | $ | 10.90 | | | | | | 69,600 | | | | | | 3.75 | | | | | $ | 9.75 | | | | | | 69,600 | | | | | $ | 9.75 | | |
| | | For the Years Ended December 31, | | |||||||||
| | | 2020 | | | 2019 | | ||||||
Basic earnings (loss) per common share: | | | | | | | | | | | | | |
Net income (loss) | | | | $ | 643 | | | | | $ | (9,695) | | |
Basic weighted average shares outstanding | | | | | 12,187 | | | | | | 12,157 | | |
Basic earnings (loss) per common share: | | | | $ | 0.05 | | | | | $ | (0.80) | | |
Diluted earnings (loss) per common share: | | | | | | | | | | | | | |
Net income (loss) | | | | $ | 643 | | | | | $ | (9,695) | | |
Weighted average shares outstanding | | | | | 12,187 | | | | | | 12,157 | | |
Effect of dilutive securities – options and restricted stock | | | | | 84 | | | | | | — | | |
Diluted weighted average shares outstanding | | | | | 12,271 | | | | | | 12,157 | | |
Diluted earnings (loss) per common share: | | | | $ | 0.05 | | | | | $ | (0.80) | | |
| | | As of December 31, 2020 | | | As of December 31, 2019 | | ||||||
Other Long-term assets – right of use assets | | | | $ | 915 | | | | | $ | 1,205 | | |
Lease obligations – operating leases | | | | $ | 294 | | | | | $ | 321 | | |
Lease obligations – operating leases, net of current portion | | | | | 613 | | | | | | 876 | | |
Total lease liability | | | | $ | 907 | | | | | $ | 1,197 | | |
Weighted average remaining operating lease term (in years) | | | | | 3.6 | | | | | | 4.4 | | |
Weighted average discount rate | | | | | 6.50% | | | | | | 6.75% | | |
| | | For the year ending | | |||
2021 | | | | $ | 334 | | |
2022 | | | | | 307 | | |
2023 | | | | | 170 | | |
2024 | | | | | 71 | | |
2025 | | | | | 71 | | |
Thereafter | | | | | 42 | | |
Total future minimum lease payments | | | | | 995 | | |
Present value Adjustment | | | | | 88 | | |
Total | | | | $ | 907 | | |
| | | December 31, 2020 | | | December 31, 2019 | | ||||||
Long-lived assets, net | | | | | | | | | | | | | |
United States | | | | $ | 1,352 | | | | | $ | 2,063 | | |
United Kingdom | | | | | 1,578 | | | | | | 1,727 | | |
Other | | | | | 1,286 | | | | | | 1,562 | | |
| | | | $ | 4,216 | | | | | $ | 5,352 | | |
Exhibit No. | | | Description of Document | |
2.1 | | | Asset Purchase Agreement, dated as of April 21, 2011, by and between Evolving Systems, Inc. and NeuStar, Inc., as filed as Exhibit 2.1 to the Registrant’s Form 8-K filed on April 21, 2011 and incorporated herein by reference. | |
2.2 | | | Agreement and Plan of Merger by and among Evolving Systems, Inc., Topaz Merger Sub, Inc., Telespree Communications and Gill Cogan as the exclusive representative of the Effective Time Shareholders and Change in Control Payment Recipients, as filed as Exhibit 2.1 to the Registrant’s Form 8-K filed on October 25, 2013 and incorporated herein by reference. | |
2.3 | | | Merger Agreement dated as of September 30, 2015, by and among Evolving Systems, Inc., Evolving Systems NC, Inc., a wholly owned subsidiary of Evolving Systems, RateIntegration, Inc. and a representative of the stockholders and change in control payment recipients of RateIntegration, Inc., as filed as Exhibit 2.1 to the Registrant’s Form 8-K filed September 30, 2015 and incorporated herein by reference. | |
3.1 | | | Restated Certificate of Incorporation, as filed as an exhibit to the Registrant’s registration statement on Form S-1 filed on January 9, 1998 and incorporated herein by reference. | |
3.2 | | | Certificate of Designation for the Series B Convertible Preferred Stock, as filed as Exhibit 3.1 to the Registrant’s Form 8-K filed November 10, 2004 and incorporated herein by reference. | |
3.3 | | | Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock filed as Exhibit 3.1(c) to the Registrant’s Form 8-K filed November 17, 2005 and incorporated herein by reference. | |
3.4 | | | Certificate of Amendment to Certificate of Designation of Series B Convertible Preferred Stock filed as Exhibit 3.01 to the Registrant’s Form 8-K filed May 4, 2007 and incorporated herein by reference. | |
3.5 | | | Certificate of Amendment to the Restated Certificate of Incorporation of Evolving Systems, Inc., as filed as Exhibit 3.1 to the Registrant’s Form 8-K filed on July 21, 2009 and incorporated herein by reference. | |
3.6 | | | Certificate of Amendment to Amended and Restated Certificate of Incorporation of Evolving Systems, Inc. as filed as Exhibit 3(i) to the Registrant’s Form 8-K filed on June 16, 2011 and incorporated herein by reference. | |
3.7 | | | Amended and Restated Bylaws of Evolving Systems, Inc., as filed as Exhibit 3(ii) to the Registrant’s Form 8-K filed on July 31, 2014 and incorporated herein by reference. | |
4.1 | | | Evolving Systems, Inc. Amended and Restated 2007 Stock Incentive Plan, as filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 30, 2015 and incorporated herein by reference. | |
4.2† | | | Specimen stock certificate representing shares of Common Stock as filed as an exhibit to the Registrant’s registration statement on Form S-1 filed on January 9, 1998 and incorporated herein by reference. | |
4.3 | | | Description of Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as filed as an exhibit to the Registrant’s annual report on Form 10-K filed on March 30, 2020 and incorporated herein by reference. | |
10.1* | | | Form of Indemnification Agreement, entered into by the Registrant and each of its directors and executive officers, as filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on July 31, 2014 and incorporated herein by reference. | |
10.2* | | | Employee Stock Purchase Plan, as filed as an exhibit to the Registrant’s registration statement on Form S-1 filed on January 9, 1998 and incorporated herein by reference. | |
10.3 | | | Fifth Amendment to Office Building Lease Agreement, as filed as Exhibit 10.21 to the Registrant’s Form 10-Q filed May 11, 2007 and incorporated herein by reference. | |
Exhibit No. | | | Description of Document | |
10.4 | | | Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1(a) to the Registrant’s Form 8-K filed on October 25, 2012 and incorporated herein by reference. | |
10.5 | | | Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on November 6, 2014 and incorporated herein by reference. | |
10.6 | | | Third Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on September 30, 2015 and incorporated herein by reference. | |
10.7 | | | Fourth Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on November 10, 2015 and incorporated herein by reference. | |
10.8 | | | Fifth Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on March 3, 2016 and incorporated herein by reference. | |
10.9 | | | Sixth Amendment to Loan and Security Agreement between Evolving Systems, Inc. and East West Bank, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on October 9, 2019 and incorporated herein by reference. | |
10.10 | | | First Amendment to Term Loan Facility Agreement entered into by and among Evolving Systems, Inc. as Parent Guarantor, Evolving Systems Holdings Limited, as Original Borrower, Evolving Systems Limited and Evolving Systems BLS Limited, as further Original Guarantors, Lumata UK Limited, and East West Bank as Lender, as filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on October 9, 2019 and incorporated herein by reference. | |
10.11* | | | Evolving Systems, Inc. 2016 Stock Incentive Plan, as amended, as filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 26, 2018 and incorporated herein by reference. | |
10.12 | | | Term Loan Facility Agreement entered into by and among Evolving Systems, Inc. as Parent Guarantor, Evolving Systems Holdings Limited, as Original Borrower, Evolving Systems Limited and Evolving Systems BLS Limited, as further Original Guarantors and East West Bank as Lender dated August 16, 2017, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on August 22, 2017 and incorporated herein by reference. | |
10.13 | | | Debenture entered into by and among Evolving Systems Holdings Limited, the Original Guarantors and East West Bank, dated August 16, 2017, as filed as Exhibit 10.2 to the Registrant’s Form 8-K filed on August 22, 2017 and incorporated herein by reference. | |
10.14 | | | Subordination Deed entered into by and among Evolving Systems, Inc., Evolving Systems Holdings Limited, the Original Guarantors and East West Bank, dated August 16, 2017, as filed as Exhibit 10.3 to the Registrant’s Form 8-K filed on August 22, 2017 and incorporated herein by reference. | |
10.15* | | | Employment Agreement dated December 4, 2017, entered into between Evolving Systems, Inc. and Mark P. Szynkowski, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on December 4, 2017 and incorporated herein by reference. | |
10.16 | | | East West Bank Fixed Coverage Charge Waiver Letter dated, as filed as Exhibit 10.32 to the Registrant’s Form 10-K filed on April 4, 2019 and incorporated herein by reference. | |
10.17* | | | Employment Agreement entered into between Evolving Systems, Inc. and Matthew Stecker, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on July 23, 2019 and incorporated herein by reference. | |
10.18* | | | Amendment to Employment Agreement entered into between Evolving Systems, Inc. and Matthew Stecker, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on May 22, 2020 and incorporated herein by reference. | |
Exhibit No. | | | Description of Document | |
10.19 | | | Amendment and Waiver Letter to Term Loan Facility Agreement entered into by and among Evolving Systems, Inc. as Parent Guarantor, Evolving Systems Holdings Limited, as Original Borrower, Evolving Systems Limited and Evolving Systems BLS Limited, as further Original Guarantors, Evolving Systems Lumata Limited, and East West Bank as Lender, as filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on July 7, 2020 and incorporated herein by reference. | |
14.1 | | | Code of Business Conduct, filed herewith. | |
21.1 | | | Subsidiaries of the Registrant, as filed as an exhibit to the Registrant’s annual report on Form 10-K filed on March 30, 2020 and incorporated herein by reference. | |
23.1 | | | Consent of Marcum LLP, Independent Registered Public Accounting Firm related to Registration Statements on Forms S-8 (filed herewith). | |
24.1 | | | Power of Attorney (included on signature page) | |
31.1 | | | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |
31.2 | | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |
32.1 | | | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
32.2 | | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |
101 | | | The following financial information from the annual report on Form 10-K of Evolving Systems, Inc. for the year ended December 31, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2020 and 2019 (ii) Consolidated Statements of Operations for the years ended December 31, 2020 and 2019 (iii) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2020 and 2019 (iv) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2020 and 2019, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 and (vi) Notes to the Consolidated Financial Statements. | |
| By: | | | /s/ MATTHEW STECKER Matthew Stecker | | | Chief Executive Officer and Executive Chairman (Principal Executive Officer) | | | March 17, 2021 | |
| Signature | | | Title | | | Date | | |||
| By: | | | /s/ MATTHEW STECKER Matthew Stecker | | | Chief Executive Officer and Executive Chairman (Principal Executive Officer) | | | March 17, 2021 | |
| By: | | | /s/ MARK P. SZYNKOWSKI Mark P. Szynkowski | | | Senior Vice President of Finance (Principal Financial and Accounting Officer) | | | March 17, 2021 | |
| By: | | | /s/ DAVID J. NICOL David J. Nicol | | | Director | | | March 17, 2021 | |
| By: | | | /s/ DAVID S. OROS David S. Oros | | | Director | | | March 17, 2021 | |
| By: | | | /s/ JULIAN D. SINGER Julian D. Singer | | | Director | | | March 17, 2021 | |