WASHINGTON, D.C. 20549
SELECTICA, INC.
2121 South El Camino Real, 10th Floor, San Mateo, CA 94403 (Address of Principal Executive Offices)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
The number of shares outstanding of the registrant’s common stock, par value $0.002 per share, as of August 3, 2012, was 2,821,079.
SELECTICA, INC.
INDEX
| PART I FINANCIAL INFORMATION | 4 |
| | | |
| ITEM 1: Financial Statements | 4 |
| | Condensed Consolidated Balance Sheets as of June 30, 2012 and March 31, 2012 | 4 |
| | Condensed Consolidated Statements of Operations for the three months ended June 30, 2012 and 2011 | 5 |
| | Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2012 and 2011 | 6 |
| | Notes to Condensed Consolidated Financial Statements | 7 |
| ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| ITEM 3: Quantitative and Qualitative Disclosures about Market Risk | 22 |
| ITEM 4: Controls and Procedures | 22 |
| | | |
| PART II OTHER INFORMATION | 23 |
| | | |
| ITEM 1: Legal Proceedings | 23 |
| ITEM 1A: Risk Factors | 23 |
| ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds | 23 |
| ITEM 3: Defaults Upon Senior Securities | 23 |
| ITEM 4: Mine Safety Disclosures | 23 |
| ITEM 5: Other Information | 23 |
| ITEM 6: Exhibits | 23 |
| Signatures | 25 |
Cautionary Statement Pursuant to Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995
The words “Selectica”, “we”, “our”, “ours”, “us”, and the “Company” refer to Selectica, Inc. In addition to historical information, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in Item 1A to Part 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012. You should carefully review the risks described in other documents the Company files from time to time with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding the Company’s expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report on Form 10-Q. The Company undertakes no obligation to release publicly any updates to the forward-looking statements included herein after the date of this document.
PART I: FINANCIAL INFORMATION
| ITEM 1: | FINANCIAL STATEMENTS |
SELECTICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
| | | June 30, 2012 | | | March 31, 2012 | |
| | | (unaudited) | | | | |
| Assets | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 13,583 | | | $ | 15,877 | |
| Short-term investments | | | — | | | | 199 | |
| Accounts receivable, net of allowance for doubtful accounts of $73 and $50 as of June 30, 2012 and March 31, 2012, respectively | | | 3,581 | | | | 2,446 | |
| Prepaid expenses and other current assets | | | 655 | | | | 531 | |
| Total current assets | | | 17,819 | | | | 19,053 | |
| | | | | | | | | |
| Property and equipment, net | | | 372 | | | | 362 | |
| Other assets | | | 39 | | | | 39 | |
| Total assets | | $ | 18,230 | | | $ | 19,454 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Credit facility (see Note 8) | | | 6,000 | | | | 6,000 | |
| Accounts payable | | | 930 | | | | 395 | |
| Accrued payroll and related liabilities | | | 613 | | | | 1,771 | |
| Other accrued liabilities | | | 84 | | | | 88 | |
| Deferred revenues | | | 5,538 | | | | 5,394 | |
| Total current liabilities | | | 13,165 | | | | 13,648 | |
| | | | | | | | | |
| Long-term deferred revenues | | | 1,126 | | | | 1,327 | |
| Other long-term liabilities | | | 37 | | | | 41 | |
| Total liabilities | | | 14,328 | | | | 15,016 | |
| Stockholders’ equity: | | | | | | | | |
| Common stock | | | 4 | | | | 4 | |
| Additional paid-in capital | | | 266,681 | | | | 266,508 | |
| Treasury stock | | | (472 | ) | | | (472 | ) |
| Accumulated deficit | | | (262,311 | ) | | | (261,602 | ) |
| Total stockholders’ equity | | | 3,902 | | | | 4,438 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 18,230 | | | $ | 19,454 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
SELECTICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Revenues: | | | | | | |
| Recurring revenues | | $ | 2,636 | | | $ | 2,173 | |
| Non-recurring revenues | | | 1,540 | | | | 1,581 | |
| | | | | | | | | |
| Total revenues | | | 4,176 | | | | 3,754 | |
| Cost of revenues: | | | | | | | | |
| Recurring cost of revenues | | | 331 | | | | 254 | |
| Non-recurring cost of revenues | | | 1,228 | | | | 1,039 | |
| | | | | | | | | |
| Total cost of revenues | | | 1,559 | | | | 1,293 | |
| Gross profit: | | | | | | | | |
| Recurring gross profit | | | 2,305 | | | | 1,919 | |
| Non-recurring gross profit | | | 312 | | | | 542 | |
| | | | | | | | | |
| Total gross profit | | | 2,617 | | | | 2,461 | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Research and development | | | 931 | | | | 896 | |
| Sales and marketing | | | 1,520 | | | | 1,180 | |
| General and administrative | | | 870 | | | | 929 | |
| | | | | | | | | |
| Total operating expenses | | | 3,321 | | | | 3,005 | |
| | | | | | | | | |
| Loss from operations | | | (704 | ) | | | (544 | ) |
| Interest and other income (expense), net | | | (5 | ) | | | (52 | ) |
| | | | | | | | | |
| Net loss | | $ | (709 | ) | | $ | (596 | ) |
| | | | | | | | | |
| Basic and diluted net loss per share | | $ | (0.25 | ) | | $ | (0.21 | ) |
| | | | | | | | | |
| Weighted-average shares of common stock used in computing basic and diluted net loss per share | | | 2,807 | | | | 2,831 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
SELECTICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Operating activities | | | | | | | | |
| Net loss | | $ | (709 | ) | | $ | (596 | ) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 48 | | | | 72 | |
| Loss on disposition of property and equipment | | | — | | | | 1 | |
| Stock-based compensation | | | 208 | | | | 109 | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts receivable, net | | | (1,135 | ) | | | 649 | |
| Prepaid expenses and other current assets | | | (124 | ) | | | (7 | ) |
| Accounts payable | | | 535 | | | | (69 | ) |
| Accrued payroll and related liabilities | | | (1,157 | ) | | | 237 | |
| Other accrued liabilities and other long-term liabilities | | | (8 | ) | | | (18 | ) |
| Deferred revenues | | | (57 | ) | | | (357 | ) |
| | | | | | | | | |
| Net cash (used in) provided by operating activities | | | (2,399 | ) | | | 21 | |
| | | | | | | | | |
| Investing activities | | | | | | | | |
| Proceeds from maturities of short-term investments | | | 199 | | | | — | |
| Purchase of property and equipment | | | (58 | ) | | | (7 | ) |
| | | | | | | | | |
| Net cash provided by (used in) investing activities | | | 141 | | | | (7 | ) |
| | | | | | | | | |
| Financing activities | | | | | | | | |
| Payments on note payable to Versata | | | — | | | | (200 | ) |
| Repurchases of common stock, net | | | (36 | ) | | | — | |
| | | | | | | | | |
| Net cash used in financing activities | | | (36 | ) | | | (200 | ) |
| | | | | | | | | |
| Net decrease in cash and cash equivalents | | | (2,294 | ) | | | (186 | ) |
| Cash and cash equivalents at beginning of the period | | | 15,877 | | | | 16,822 | |
| | | | | | | | | |
| Cash and cash equivalents at end of the period | | $ | 13,583 | | | $ | 16,636 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The condensed consolidated balance sheet as of June 30, 2012, the condensed consolidated statements of operations for the three months ended June 30, 2012 and 2011, and the condensed consolidated statements of cash flows for the three months ended June 30, 2012 and 2011 have been prepared by the Company and are unaudited. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial position at June 30, 2012, and the results of operations and cash flows for the three months ended June 30, 2012 and 2011, respectively. Interim results are not necessarily indicative of the results for a full fiscal year. The condensed consolidated balance sheet as of March 31, 2012 has been derived from the audited consolidated financial statements at that date.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2012.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
2. Summary of Significant Accounting Policies
There have been no material changes to any of the Company’s significant accounting policies and estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2012.
Customer Concentrations
A limited number of customers have historically accounted for a substantial portion of the Company’s revenues.
Customers who accounted for at least 10% of total revenues were as follows:
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Customer A | | | 14 | % | | | 15 | % |
Customers who accounted for at least 10% of gross accounts receivable were as follows:
| | | June 30, 2012 | | | March 31, 2012 | |
| Customer A | | | 16 | % | | | 22 | % |
| Customer B | | | * | | | | 11 | % |
| Customer C | | | 12 | % | | | * | |
| Customer D | | | 18 | % | | | * | |
| * | Less than 10% of total accounts receivable. |
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
Fair Value Measurements
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2012 (in thousands):
| Description | | Balance as of June 30, 2012 | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | |
| Cash equivalents: | | | | | | | | | |
| Money market fund | | $ | 4 | | | $ | 4 | | | $ | — | |
| Certificates of deposit | | | 199 | | | | — | | | | 199 | |
| | | | | | | | | | | | | |
| Total | | $ | 203 | | | $ | 4 | | | $ | 199 | |
The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of March 31, 2012 (in thousands):
| Description | | Balance as of March 31, 2012 | | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | | Significant Other Observable Inputs (Level 2) | |
| Cash equivalents: | | | | | | | | | |
| Money market fund | | $ | 4 | | | $ | 4 | | | $ | — | |
| Short-term investments: | | | | | | | | | | | | |
| Certificates of deposit | | | 199 | | | | — | | | | 199 | |
| | | | | | | | | | | | | |
| Total | | $ | 203 | | | $ | 4 | | | $ | 199 | |
The Company’s financial assets and liabilities are valued using market prices on both active markets (Level 1) and less active markets (Level 2). Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 instrument valuations are obtained from readily-available pricing sources for comparable instruments. As of June 30, 2012 and March 31, 2012, the Company did not have any assets or liabilities without observable market values that would require a high level of judgment to determine fair value (Level 3).
Segment Information
The Company operates as one business segment and therefore segment information is not presented.
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
3. Income Taxes
At June 30, 2012, the Company had approximately $2.0 million of unrecognized tax benefits. As these unrecognized tax benefits relate to deferred tax assets with a full valuation allowance, there will be no effect on the Company’s effective tax rate if these amounts are recognized.
The Company’s Federal, state, and foreign tax returns may be subject to examination by the tax authorities from fiscal years 1998 to 2012 due to net operating losses and tax carryforwards unutilized from such years.
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
4. Stock-Based Compensation
Equity Incentive Program
The Company’s equity incentive program is a broad-based, retention program comprised of stock options, restricted stock units and an employee stock purchase plan designed to align stockholder and employee interests. For a description of the Company’s equity plans, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended March 31, 2012.
During the three months ended June 30, 2012 and 2011, there were 57,500 and 7,500 restricted stock units granted, respectively.
Valuation Assumptions
The Company did not issue employee stock options during the three months ended June 30, 2012. For the three months ended June 30, 2011, the Company calculated the fair value of its employee stock options at the date of grant with the following weighted average assumptions:
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Risk-free interest rate | | | N/A | | | | 0.88 | % |
| Dividend yield | | | N/A | | | | 0.00 | % |
| Expected volatility | | | N/A | | | | 82.17 | % |
| Expected option life in years | | | N/A | | | | 3.22 | |
| Weighted average fair value at grant date | | | N/A | | | $ | 2.84 | |
Forfeitures are estimated at the time of grant and revised if necessary in subsequent periods if actual forfeitures differ from those estimates. Based on the Company’s estimates of future forfeiture rates, the Company has assumed an annualized forfeiture rate of 23.91% for its options.
The following table summarizes activity under the equity incentive plans for the indicated periods:
| | | | | | Options and Awards Outstanding | |
| | | Shares available for grant | | | Number of shares | | | Weighted-average exercise price | |
| | | (in thousands except for per share amount) | | | | |
| Outstanding at March 31, 2012 | | | 1,223 | | | | 478 | | | $ | 7.48 | |
| Awards granted | | | (57 | ) | | | 57 | | | | — | |
| Awards released | | | — | | | | (25 | ) | | | — | |
| Awards cancelled | | | 7 | | | | (7 | ) | | | — | |
| Options cancelled | | | 11 | | | | (11 | ) | | | 6.38 | |
| | | | | | | | | | | | | |
| Outstanding at June 30, 2012 | | | 1,184 | | | | 492 | | | $ | 7.54 | |
The weighted average term for exercisable options is 5.93 years. The intrinsic value is calculated as the difference between the market value as of June 30, 2012 and the exercise price of the shares. The market value of the Company’s common stock as of June 30, 2012 was $4.08 as reported by the NASDAQ Capital Market. The aggregate intrinsic value of stock options outstanding at June 30, 2012 and 2011 was $8,930 and $0, respectively.
The options outstanding and exercisable at June 30, 2012 were in the following exercise price ranges:
| | | Options Outstanding | | | Options Vested | |
| Range of Exercise Prices per share | | Number of Shares | | | Weighted-Average Remaining Contractual Life (in years) | | | Number of Shares | | | Weighted-Average Exercise Price per share | |
| | | (in thousands except for per share amount) | |
| $3.70 — $5.20 | | | 74 | | | | 7.26 | | | | 24 | | | $ | 5.01 | |
| $5.21 — $5.26 | | | 51 | | | | 9.08 | | | | 6 | | | | 5.26 | |
| $5.27 — $5.93 | | | 57 | | | | 6.43 | | | | 30 | | | | 5.61 | |
| $5.94 — $38.50 | | | 36 | | | | 4.72 | | | | 36 | | | | 18.79 | |
| $38.51 — $42.40 | | | 1 | | | | 1.23 | | | | 1 | | | | 42.40 | |
| | | | | | | | | | | | | | | | | |
| $3.70 — $42.40 | | | 219 | | | | 7.02 | | | | 97 | | | $ | 10.64 | |
The effect of recording stock-based compensation expense for each of the periods presented was as follows (in thousands):
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Cost of revenues | | $ | 35 | | | $ | 7 | |
| Research and development | | | 47 | | | | 26 | |
| Sales and marketing | | | 53 | | | | 34 | |
| General and administrative | | | 73 | | | | 42 | |
| Impact on net loss | | $ | 208 | | | $ | 109 | |
As of June 30, 2012, the unrecorded share-based compensation balance related to stock options outstanding excluding estimated forfeitures was $1.5 million and will be recognized over an estimated weighted average amortization period of 2.5 years. The amortization period is based on the expected remaining vesting term of the options.
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
1999 Employee Stock Purchase Plan (“ESPP”)
The price paid for the Company’s common stock purchased under the ESPP is equal to 85% of the lower of the fair market value of the Company’s common stock at the beginning of each offering period or at the end of each offering period. The compensation expense in connection with the ESPP for the three months ended June 30, 2012 and 2011 was $0 and $3,175, respectively. During the three months ended June 30, 2012 and 2011, there were no shares issued under the ESPP.
The Company did not have ESPP expense during the three months ended June 30, 2012. For the three months ended June 30, 2011, the Company calculated the fair value of rights granted under its employee stock purchase plan at the date of grant using the following weighted average assumptions:
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Risk-free interest rate | | | N/A | | | | 1.04 | % |
| Dividend yield | | | N/A | | | | 0.00 | % |
| Expected volatility | | | N/A | | | | 90.17 | % |
| Expected life in years | | | N/A | | | | 1.96 | |
| Weighted average fair value at grant date | | | N/A | | | $ | 4.44 | |
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
5. Computation of Basic and Diluted Net Loss per Share
Basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period.
The Company excludes potentially dilutive securities from its diluted net loss per share computation when their effect would be antidilutive to net loss per share amounts. The following common stock equivalents were excluded from the net loss per share computation:
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| | | (In thousands) | |
| Options excluded due to the exercise price exceeding the average fair market value of the Company’s common stock during the period | | | 199 | | | | 137 | |
| Options excluded for which the exercise price was at or less than the average fair market value of the Company’s common stock during the period but were excluded as inclusion would decrease the Company’s net loss per share | | | 24 | | | | 27 | |
| | | | | | | | | |
| Total common stock equivalents excluded from diluted net loss per common share | | | 223 | | | | 164 | |
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
6. Litigation and Contingencies
The Company is subject to certain routine legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of its business. The Company believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not materially affect its financial position, results of operations or liquidity.
Rights Agreement
On December 22, 2008, the Company filed suit in the Court of Chancery of the State of Delaware against Trilogy, Inc. and certain related parties (“Trilogy”) seeking declaratory relief that the Company’s Rights Agreement as amended on November 16, 2008 was an appropriate measure to protect a valuable asset – the Company’s net operating loss carryforwards and related tax credits – from being limited as to utilization as provided under Section 382 of the Internal Revenue Code (IRC) which could in turn substantially reduce the value of that asset to all of the Company’s shareholders. The Company sued Trilogy after (i) it amended the Rights Agreement on November 16, 2008 to reduce the ownership threshold from 15% to 4.99%, with existing 5% or greater shareholders limited to acquiring no more than an additional 0.5% and (ii) despite the ownership threshold, Trilogy increased its beneficial ownership by 0.51% to 6.71% as announced in its 13(d) filing with the SEC on December 22, 2008. As a result, on January 2, 2009, a special committee of the Company’s Board of Directors declared Trilogy an “Acquiring Person” under the Rights Agreement, exchanged the rights (other than those belonging to Trilogy) for new shares of common stock under the Exchange Provision in the Rights Agreement, adopted an amended Rights Agreement and declared a new dividend of rights under the amended Rights Agreement. On January 16, 2009, the defendants in this action, Trilogy, filed an answer to the Company’s complaint and a counterclaim alleging that the Company’s Board of Directors had breached fiduciary duties in amending the Rights Agreement, in exchanging the rights, in adopting the amended Rights Agreement and in declaring a new dividend of rights. The Company, and its Board of Directors, believes that the actions taken were lawful and appropriate under the circumstances and in the interest of all the Company’s shareholders and therefore the allegations of the counterclaim were without merit. The counterclaim asked for various measures of equitable relief and also included a claim for punitive or exemplary damages, which are not available in Delaware. The case was tried in the Delaware Court of Chancery in 2009. On February 26, 2010, the Delaware Court of Chancery issued a memorandum opinion that determined, among other things (i) that the actions taken by the Company’s Board of Directors and its special committee were lawful and appropriate under the circumstances, and (ii) that Trilogy was not entitled to relief for its counterclaims. An appeal from this decision was filed with the Delaware Supreme Court. On October 11, 2010, the Delaware Supreme Court issued an opinion that affirmed the Court of Chancery’s ruling in the Company’s favor, confirming the validity of the actions the Board of Directors and its special committee took to preserve the Company’s net operating losses. On November 11, 2010, the Company filed suit in the Delaware Court of Chancery against Trilogy seeking a declaratory judgment that the Company is not obligated to pay more than $1 million in fees demanded by Trilogy in connection with an alleged “investigation” into the Company’s corporate governance policies and procedures. On January 13, 2011, Trilogy answered the Company’s complaint and asserted a counterclaim for such fees. The Company filed a reply on February 2, 2011. On September 20, 2011, the Company and Trilogy entered into a Comprehensive Settlement Agreement (the “Settlement Agreement”) providing for both the settlement of existing claims as well as the restriction of future claims between the parties. The Settlement Agreement provides for, among other things, (i) the repayment by the Company of all outstanding amounts payable to Trilogy under the previous Settlement, Release and License Agreement dated October 5, 2007 entered into between the Company and Versata (the “2007 Settlement Agreement”), (ii) the purchase by the Company of all shares of Company common stock held by Versata and related standstill requirement whereby Versata would not be able to purchase any further shares of Company common stock for a 25 year period and (iii) the entry into a consulting agreement between the Company and one of Versata’s affiliated entities whereby the Company could utilize certain services of such entity. Each party provided a general release of claims to the other party with respect to any and all claims that such party (or any of its affiliates) may have against the other party occurring before the date of the Settlement Agreement, and the parties entered into a covenant not to sue each other. As a result of the Settlement Agreement, the claims and counterclaims referenced above were dismissed by the parties.
As the costs of this litigation and related legal work were directly related to the issuance of shares under the Company’s Rights Agreement, these costs were charged as issuance costs against the additional paid-in capital (APIC) account on the Company’s balance sheet, less a reserve for both received and anticipated recoveries from the Company’s Director’s and Officer’s insurance policy. As of June 30, 2012 and March 31, 2012, there were no anticipated recoveries reflected in prepaid expenses and other current assets on the Company’s balance sheet. The net amount charged to APIC as a result of this litigation was $3.6 million.
SELECTICA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(UNAUDITED)
7. Versata Note Payable
Pursuant to the Settlement Agreement, during fiscal 2012, the Company paid to Versata the following: (i) $4.5 million for the repayment of all outstanding amounts payable under the 2007 Settlement Agreement, (ii) $472,000 for the repurchase of the Company common stock held by Versata and (iii) $500,000 for the consulting services to be provided by Versata’s affiliated entity, with an additional $500,000 payable during the three months ended September 30, 2012.
During the twelve months ended March 31, 2012, the Company recorded a $470,000 charge on the early extinguishment of the note payable, as well as a $500,000 charge relating to the consulting services paid as part of the Settlement Agreement.
8. Credit Facility
On September 29, 2011, the Company entered into a Business Financing Agreement (the “Credit Facility”) with Bridge Bank, National Association. The Credit Facility provides a revolving receivables financing facility in an amount up to $2.0 million (the “Receivables Financing Facility”) and a revolving cash secured financing facility in an amount up to $4.0 million (the “Working Capital Facility”), for an aggregate revolving credit facility of up to $6.0 million.
The Receivables Financing Facility may be drawn in amounts up to $2.0 million in the aggregate, subject to a minimum borrowing base requirement equal to 80% of the Company’s eligible accounts receivable as determined under the 2011 Credit Facility. The Working Capital Facility may be drawn in such amounts as requested by the Company, not to exceed $4.0 million in the aggregate. The Credit Facility terminates on September 29, 2012, provided, however, that in the event of an early termination by the Company, a penalty of 1.0% of the total credit facility would be triggered.
All amounts borrowed under the Credit Facility are secured by a general security interest on the assets of the Company and are subject to a 1.75 Current Ratio of (i) cash and cash equivalents plus all eligible receivables in relation to (ii) the Company’s current liabilities excluding current deferred revenue.
Except as otherwise set forth in the Credit Facility, borrowings made under the Receivables Financing Facility will bear interest at a rate equal to the prime rate or 3.25%, whichever is greater, plus 0.25%, and borrowings made under the Working Capital Facility will bear interest at a rate equal to the financial institution’s certificate of deposit 30-day rate plus 200 basis points, with the total minimum monthly interest to be charged being $2,000.
As of June 30, 2012, the Company owed $6.0 million under the Credit Facility, and no amounts were available for future borrowings.
9. Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-04,“Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” (“ASU 2011-04”). ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively for reporting periods beginning on or after December 15, 2011. The Company adopted this standard in the fourth quarter of fiscal 2012. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
In June 2011, the FASB issued Accounting Standards Update No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” (“ASU 2011-05”). ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in equity. ASU 2011-05 requires that all non-owner changes in stockholders’ equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to be applied retrospectively for interim and annual periods beginning after December 15, 2011. The Company adopted this standard in the fourth quarter of fiscal 2012. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
In September 2011, the FASB issued ASU 2011-08, “Intangibles—Goodwill and Other (ASC 350): Testing Goodwill for Impairment.” This accounting standard update is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities an option to perform a “qualitative” assessment to determine whether further impairment testing is necessary. Specifically, an entity has the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test. If an entity believes, as a result of its qualitative assessment, that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. This standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this standard did not have any impact on the Company’s consolidated financial statements.
| MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
In addition to historical information, this quarterly report contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in the “Risk Factors” in Item 1A to Part 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012 (the “Form 10-K”). They include the following: the level of demand for Selectica’s products and services; the intensity of competition; Selectica’s ability to effectively manage product transitions and to continue to expand and improve internal infrastructure; risks associated with potential acquisitions; and adverse financial, customer and employee consequences that might result to us if litigation were to be resolved in an adverse manner to us. For a more detailed discussion of the risks relating to our business, readers should refer to 1A to Part 1 in the Form 10-K entitled “Risk Factors.” Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding our expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report. We assume no obligation to update these forward-looking statements.
Overview
We provide cloud-based software solutions that help growing companies to close deals faster, more profitably, and with lower risk.
Selectica Contract Lifecycle Management (CLM) combines a single, company-wide contract repository with a flexible workflow engine capable of supporting each organization’s unique contract management processes. Our cloud-based solution streamlines contract processes, from request, authoring, negotiation, and approval through ongoing obligations management, analysis, reporting, and renewals. It helps companies take control of their contract management processes by converting from paper-based to electronic repositories and by unlocking multiple layers of critical business data, making it available for the evaluation of risk, the exposure of lost revenue, the evaluation of supplier performance, and other purposes. The solution helps to improve the customer buying experience for sales organizations, improve the control of risk and decrease time spent drafting, monitoring and managing contracts, and gain access to previously hidden discounts through the exposure and elimination of unfavorable agreements for procurement and sourcing organizations.
Selectica Guided Selling (GS) streamlines the management and dissemination of complex product information enabling companies to streamline the opportunity-to-order process for manufacturers, service providers, and financial services companies. Our Guided Selling solution can be seamlessly integrated with leading CRM systems, as well as ERP systems like Oracle and SAP, to ensure that the latest product, customer, and pricing data is always being used. This helps to simplify and automate the configuration, pricing, and quoting of complex products and services. By empowering customers, product management, marketing, sales leadership, sales operations, salespeople, and channel partners to generate error-free sales proposals for their unique requirements, we believe our cloud-based solution helps companies to close sales faster, accelerate revenue generation and enhance customer relationships.
Quarterly Financial Overview
For the three months ended June 30, 2012, our total revenues increased by 11%, or $0.4 million, to $4.2 million compared with total revenues of $3.8 million for the three months ended June 30, 2011. Recurring revenues, comprised of subscription license sales, maintenance revenues from previously sold perpetual licenses, and hosting revenues, totaled $2.6 million, or 63% of total revenues, representing an increase of $0.5 million, or 21%, over the three months ended June 30, 2011. Non-recurring revenues, comprised of perpetual license sales and revenues from professional services for system implementations, enhancements, and training, totaled $1.5 million, or 37% of total revenues, which was flat compared to the $1.6 million recognized during the three months ended June 30, 2011. The increase in recurring revenues year over year resulted primarily from new subscription license customers reflecting the shift in business focus and strategy to emphasize our cloud-based solutions.
During the quarter ended June 30, 2012, our net loss totaled approximately $0.7 million, which was flat compared to our net loss of $0.6 million for the quarter ended June 30, 2011.
Shift in Business Model
In response to market demand, beginning in 2012, we have shifted our primary business focus from the sale of perpetual licenses to subscription license arrangements for our cloud-based solutions. Our business and revenue model is now focused on recurring revenues. This shift could adversely affect our short-term financial results and cash flows since the financial terms of the subscription arrangements typically require smaller periodic payments over the term of the arrangement versus the larger, initial payments we have historically received under the perpetual license arrangements. However, we believe that the subscription licensing arrangements will help to increase our ability to attract new customers and improve the predictability of our revenues and cash flows by reducing our dependency on the larger, perpetual licensing arrangements. Despite the shift in our business model to focus more on subscription licensing arrangements, which has had the corresponding effect of increasing our recurring revenue, our customers have varied preferences for how they want to deploy our solutions. As such, we will continue to offer and support the traditional software license model that some of our customers still prefer.
Critical Accounting Policies and Estimates
There have been no material changes to any of our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K for the year ended March 31, 2012.
Factors Affecting Operating Results
A small number of customers continue to account for a significant portion of our total revenues. We expect that our revenues will continue to depend upon a limited number of customers. If we were to lose a large customer, it would have a significant impact upon future revenues. Customers who accounted for at least 10% of total revenues were as follows:
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Customer A | | | 14 | % | | | 15 | % |
We have incurred significant losses since inception and, as of June 30, 2012, we had an accumulated deficit of approximately $262 million. We believe our success depends on the growth of our customer base as well as market growth for our CLM and GS solutions.
We believe that period-to-period comparisons of revenues and operating results are not necessarily meaningful and should not be relied upon as indications of future performance. Our operating results have historically been dependent on a few significant customer transactions which make predicting future performance difficult.
Results of Operations:
Revenues
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | | | Change | |
| | | (in thousands, except percentages) | |
| Recurring revenues | | $ | 2,636 | | | $ | 2,173 | | | $ | 463 | |
| Percentage of total revenues | | | 63 | % | | | 58 | % | | | 21 | % |
| Non-recurring revenues | | $ | 1,540 | | | $ | 1,581 | | | $ | (41 | ) |
| Percentage of total revenues | | | 37 | % | | | 42 | % | | | (3 | )% |
| Total revenues | | $ | 4,176 | | | $ | 3,754 | | | $ | 422 | |
Recurring revenues. Recurring revenues consist of subscription license sales, maintenance revenues from previously sold perpetual licenses, and hosting revenues. Our recurring revenues during the three months ended June 30, 2012 increased by $0.5 million, or 21%, year over year primarily due to new subscription license customers. This is a reflection in the shift in business focus and strategy to emphasize our cloud-based solutions.
Non-recurring revenues. Non-recurring revenues are comprised of perpetual license sales and revenues from professional services for system implementations, enhancements, and training. Non-recurring revenues during the three months ended June 30, 2012 were flat compared to the three months ended June 30, 2011.
We expect non-recurring revenues to continue to fluctuate in future periods as a percentage of total revenues and in absolute dollars. This will depend on new license revenue and the number and size of new software implementations and follow-on services to our existing customers. We expect recurring revenues to fluctuate in absolute dollars and as a percentage of total revenues with respect to the number of maintenance renewals, and number and size of new subscription license contracts. In addition, maintenance renewals are extremely dependent upon economic conditions, customer satisfaction and the level of need to make changes or upgrade versions of our software by our customers. Fluctuations in revenue are also due to timing of revenue recognition, achievement of milestones, customer acceptance, changes in scope or renegotiated terms, and additional services.
Cost of revenues
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | | | Change | |
| | | (in thousands, except percentages) | |
| Recurring cost of revenues | | $ | 331 | | | $ | 254 | | | $ | 77 | |
| Percentage of recurring revenues | | | 13 | % | | | 12 | % | | | 30 | % |
| Non-recurring cost of revenues | | $ | 1,228 | | | $ | 1,039 | | | $ | 189 | |
| Percentage of non-recurring revenues | | | 80 | % | | | 66 | % | | | 18 | % |
| Total cost of revenues | | $ | 1,559 | | | $ | 1,293 | | | $ | 266 | |
Recurring cost of revenues. Recurring cost of revenues consist of costs associated with supporting our data center, a fixed allocation of our research and development costs, and salaries and related expenses of our support organization. During the three months ended June 30, 2012, recurring cost of revenues increased $0.1 million, or 30%, compared to the three months ended June 30, 2011 primarily due to an increase in license and support costs in our data center, higher compensation expenses in our support organization, and a higher allocation of R&D costs.
We expect recurring cost of revenues to increase in absolute dollars in fiscal 2013.
Non-recurring cost of revenues. Non-recurring cost of revenues is comprised mainly of salaries and related expenses of our services organization, fees paid to resellers, costs of purchased third party licenses sold to customers as part of a bundled arrangement, and certain allocated corporate expenses. During the three months ended June 30, 2012, these costs increased by approximately $0.2 million, or 18%, compared to the three months ended June 30, 2011 primarily due to the increase in the use of third-party consultants used for our system implementations.
We expect non-recurring cost of revenues to increase in absolute dollars in fiscal 2013.
Gross Profit and Margin
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| Gross margin, recurring revenues | | | 87 | % | | | 88 | % |
| Gross margin, non-recurring revenues | | | 20 | % | | | 34 | % |
| Gross margin, total revenues | | | 63 | % | | | 66 | % |
Gross profit was $2.6 million, or 63% of revenues, during the three months ended June 30, 2012, compared with $2.5 million, or 66% of revenues, during the three months ended June 30, 2011. This decrease in gross profit percentage resulted from higher non-recurring cost of revenues primarily due to the increase in the use of third-party consultants used for our system implementations.
Gross Margin—Gross margins represent gross profit as a percentage of revenue. Gross margins during the three months ended June 30, 2012 and 2011 were affected by the factors discussed above under “Revenues” and “Cost of Revenues.”
We expect that our overall gross margins will continue to fluctuate due to the timing of service and license revenue recognized from perpetual licenses and will continue to be adversely affected by lower margins associated with service revenues. The impact on our gross margin will depend on the mix of services we provide, whether the services are performed by our professional services employees or third party consultants, and the overall utilization rates of our professional services organization.
Operating Expenses
Research and Development Expenses
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | | | Change | |
| | | (in thousands, except percentages) | |
| Research and development | | $ | 931 | | | $ | 896 | | | $ | 35 | |
| Percentage of total revenues | | | 22 | % | | | 24 | % | | | 4 | % |
Research and development expenses consist primarily of salaries and related costs of our engineering, quality assurance, technical publication efforts and certain allocated expenses. Research and development expenses were flat during the three months ending June 30, 2012 compared to the same period in 2011.
We expect research and development expenditures to increase modestly in absolute dollars over the next year as we continue to invest in research and development in the U.S as well as in our Ukraine research and operations center.
Sales and Marketing
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | | | Change | |
| | | (in thousands, except percentages) | |
| Sales and marketing | | $ | 1,520 | | | $ | 1,180 | | | $ | 340 | |
| Percentage of total revenues | | | 36 | % | | | 31 | % | | | 29 | % |
Sales and marketing expenses consist primarily of salaries and related costs for our sales and marketing organization, sales commissions, expenses for travel and entertainment, trade shows, public relations, collateral sales materials, advertising and certain allocated expenses. For the three months ended June 30, 2012, sales and marketing expenses increased $0.3 million, or 29%, compared to the same period in 2011. The increase is primarily due to increased sales and marketing headcount, our 2012 annual Fusion conference, our recently updated website and new logo, as well as other trade show expenses.
We expect increases in sales and marketing expenses in fiscal 2013 in absolute dollars and as a percentage of total revenues.
General and Administrative
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | | | Change | |
| | | (in thousands, except percentages) | |
| General and administrative | | $ | 870 | | | $ | 929 | | | $ | (59 | ) |
| Percentage of total revenues | | | 21 | % | | | 25 | % | | | (6 | )% |
General and administrative expenses consist mainly of personnel and related costs for general corporate functions, including finance, accounting, legal, human resources, bad debt expense and certain allocated expenses. General and administrative expenses remained flat compared to the same period in 2011. We expect modest increases in general and administrative expenses in fiscal 2013 compared to fiscal 2012 in absolute dollars.
Interest and Other Income (Expense), Net
Interest and other income (expense), net consists primarily of interest earned on cash balances and short-term investments, interest expense on our note payable to Versata, foreign currency fluctuations, and other miscellaneous expenditures. During the three months ended June 30, 2012 and 2011, interest and other income (expense), net decreased $0.1 million primarily due to the Versata note payoff, as discussed further in Note 7 of the Notes to Condensed Consolidated Financial Statements.
Provision for Income Taxes
During the three months ended June 30, 2012 and 2011, we did not record an income tax provision.
Liquidity and Capital Resources
| | | June 30, 2012 | | | March 31, 2012 | |
| | | (in thousands) | |
| Cash, cash equivalents and short-term investments | | $ | 13,583 | | | $ | 16,076 | |
| Working capital | | $ | 4,654 | | | $ | 5,405 | |
| | | Three Months Ended June 30, | |
| | | 2012 | | | 2011 | |
| | | (in thousands) | |
| Net cash (used in) provided by operating activities | | $ | (2,399 | ) | | $ | 21 | |
| Net cash provided by (used in) investing activities | | $ | 141 | | | $ | (7 | ) |
| Net cash used in financing activities | | $ | (36 | ) | | $ | (200 | ) |
Our primary sources of liquidity consisted of approximately $13.6 million in cash and cash equivalents as of June 30, 2012, $6.0 million of which was received from our short-term credit facility. This compares to approximately $16.1 million in cash, cash equivalents and short-term investments as of March 31, 2012, $6.0 million of which was received from our short-term credit facility.
Net cash used in operating activities was $2.4 million for the three months ended June 30, 2012, resulting primarily from our year-to-date net loss of $0.7 million, a $1.1 million increase in accounts receivable, net, and a $1.2 million decrease in accrued payroll and related liabilities. These decreases were partially offset by a $0.5 million increase in accounts payable.
Net cash provided by operating activities was not significant for the three months ended June 30, 2011.
Net cash provided by investing activities was $0.1 million for the three months ended June 30, 2012, resulting primarily from proceeds from maturities of short-term investments partially offset by capital asset purchases.
Net cash used in investing activities was not significant for the three months ended June 30, 2011.
As a result of current adverse financial market conditions, investments in some financial instruments may pose risks arising from liquidity and credit concerns. Although we believe our current investment portfolio has very little risk of impairment, we cannot predict future market conditions or market liquidity and can provide no assurance that our investment portfolio will remain unimpaired.
Net cash used in financing activities was not significant for the three months ended June 30, 2012.
Net cash used in financing activities was $0.2 million for the three months ended June 30, 2011, resulting from our $0.2 million payment on our note payable to Versata.
We expect to incur significant operating costs for the foreseeable future. We expect to fund our operating costs, as well as our future capital expenditures and liquidity needs, from a combination of available cash balances, internally generated funds, and our short-term credit facility. We have no outside debt other than our short-term credit facility, and do not have any plans to enter into any additional borrowing arrangements. As a result, our net cash flows will depend heavily on the level of future sales, changes in deferred revenues, and our ability to manage costs.
We believe our cash and cash equivalents balances as of June 30, 2012 are adequate to fund our operations through at least June 30, 2013. However, given the significant changes in our business and results of operations in the last 12 months, the fluctuation in cash and investment balances may be greater than presently anticipated. After the next 12 months, we may find it necessary to obtain additional funds. In the event additional funds are required, we may not be able to obtain additional financing on favorable terms or at all.
Contractual Obligations
We had no significant commitments for capital expenditures as of June 30, 2012.
We do not anticipate any significant capital expenditures, payments due on long-term obligations, or other contractual obligations other than the repayment of our credit facility balance and the $0.5 million payable to Versata in September 2012 in connection with agreed upon consulting services. However, management is continuing to review our cost structure to minimize expenses and use of cash as we implement our planned business model changes. This activity may result in additional restructuring charges or severance and other benefits.
Our contractual obligations and commercial commitments at June 30, 2012, are summarized as follows:
| | | Payments Due By Period | | | |
| Contractual Obligations: | | Total | | | Less Than 1 Year | | | 1-3 Years | | | 4-5 Years | | | After 5 Years | |
| | (in thousands) | |
| Operating leases | | $ | 633 | | | $ | 248 | | | $ | 384 | | | $ | 1 | | | $ | — | |
| Versata consulting services | | | 500 | | | | 500 | | | | — | | | | — | | | | — | |
| Credit facility | | | 6,000 | | | | 6,000 | | | | — | | | | — | | | | — | |
| Total | | $ | 7,133 | | | $ | 6,748 | | | $ | 384 | | | $ | 1 | | | $ | — | |
| ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.
| ITEM 4: | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management, including our President and Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the period ending June 30, 2012. Based upon this evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2012.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act that was conducted during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II: OTHER INFORMATION
Not applicable.
Not applicable.
| ITEM 2: | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Purchases of Equity Securities by the Issuer
We have granted shares of restricted common stock that allow statutory tax withholding obligations incurred upon vesting of those shares to be satisfied by forfeiting a portion of those shares to us. The following table shows the shares acquired by us upon forfeiture of restricted shares during the quarter ended June 30, 2012.
| ISSUER PURCHASES OF EQUITY SECURITIES |
| Period | | Total Number of Shares Purchased | | | Average Price Paid per Share | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under the Plans or Program | |
| April 1, 2012— April 30, 2012 | | | — | | | $ | — | | | | — | | | | — | |
| May 1, 2012— May 31, 2012 | | | 9,193 | | | | 3.91 | | | | — | | | | — | |
| June 1, 2012— June 30, 2012 | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total | | | 9,193 | | | $ | 3.91 | | | | — | | | | — | |
| ITEM 3: | DEFAULTS UPON SENIOR SECURITIES |
Not applicable.
| ITEM 4: | MINE SAFETY DISCLOSURES |
Not applicable.
Not applicable.
Exhibit No. | | Description |
| | |
| 31.1 | | Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| 31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| 32.1 | | Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
| 32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101 | | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2012 (unaudited) and March 31, 2012; (ii) Condensed Consolidated Statements of Operations for the three months ended June 30, 2012 and 2011 (unaudited); (iii) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2012 and 2011 (unaudited); and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that the Company specifically incorporates it by reference. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: August 13, 2012 | By: | /s/ TODD SPARTZ | |
| | | Todd Spartz | |
| | | Chief Financial Officer | |
EXHIBIT INDEX
Exhibit No. | | Description |
| | |
| 31.1 | | Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| 31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
| 32.1 | | Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
| 32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101 | | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Condensed Consolidated Balance Sheets as of June 30, 2012 (unaudited) and March 31, 2012; (ii) Condensed Consolidated Statements of Operations for the three months ended June 30, 2012 and 2011 (unaudited); (iii) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2012 and 2011 (unaudited); and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that the Company specifically incorporates it by reference. |
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