Total revenues from continuing operations increased $0.7 million or 12.4% for the six months ended June 30, 2007 as compared to the corresponding prior year period due to a $1.0 million or 82.6% increase in license fees. The six months ended June 30, 2007 included license revenue of approximately $1.2 million from two large customers, with no comparable sized deals in the first half of 2006. Additionally, revenue from our partner channel was stronger in the first half of 2007 compared with the first half of 2006.
The following table sets forth, for the periods indicated, each major category of our services revenues as a percent of total services revenues:
Maintenance revenue increased for the first six months of 2007 compared with 2006 as a result of increased maintenance contracts from new license deals in the prior four quarters. Consulting revenue decreased in the same period resulting from a large implementation project during the first six months of 2006 with no similar consulting project in the first six months of 2007. Subscription revenue has increased resulting from larger volumes of records being processed through the Company’s hosted e-Delivery product in the first six months of 2007 compared with the first six months of 2006.
Cost of license fees consists primarily of amortization of capitalized software development costs and amounts paid to third parties with respect to products we resell in conjunction with the licensing of our products. The elements can vary substantially from period to period as a percentage of license fees. Costs of license fees for the six months ended June 30, 2007 were $0.4 million lower than the same period last year due to lower usage and lower cost of third party software as well as there being no amortization of capitalized software development cost in the first six months of 2007. All capitalized software development costs have been fully amortized as of December 31, 2006.
Cost of services consists primarily of personnel and third party costs for product quality assurance, training, installation, consulting and customer support. Cost of services decreased $1.3 million or 31.6% for the six months ended June 30, 2007, as compared to the corresponding prior year period. The decrease for the six -month period was mainly due to headcount reductions as a result of the reduction in force implemented in the fourth quarter of 2006. The service margin was 27.6% for the six months ended June 30, 2007 compared with 3.0% for the corresponding prior year period. This margin improvement was the result of the reduction in cost in the second quarter of 2007.
Sales and marketing expenses consist primarily of salaries, commissions and bonuses related to sales and marketing personnel, as well as travel and promotional expenses. Sales and marketing expenses were $0.9 million or 18.3% lower for the six months ended June 30, 2007, as compared to the corresponding prior year period. The decrease for the six -month period was primarily due to headcount reductions as a result of the reduction in force implemented in the fourth quarter of 2006 and lower marketing program cost.
Research and development expenses consist primarily of personnel costs, costs of equipment, facilities and third party software development costs. Research and development expenses are generally charged to operations as incurred. However, certain software development costs are
capitalized in accordance with Statement of Financial Accounting Standards No. 86 (‘‘SFAS 86’’). Such capitalized software development costs are generally amortized to cost of license fees on a straight-line basis over periods not exceeding three years. There was no cost capitalized over the periods ended June 30, 2007 and 2006.
Research and development expenses were $0.1 million or 2.9% lower for the six months ended June 30, 2007, as compared to the comparable prior year period. The decrease for the six-month period was primarily due to headcount reductions as a result of the reduction in force implemented in the fourth quarter of 2006.
General and administrative expenses consist primarily of salaries for administrative, executive and financial personnel, and outside professional fees. General and administrative expenses were $0.2 million or 7.8% lower than the six months ended June 30, 2007 as compared to the corresponding prior year period. This reduction resulted from headcount reductions as a result of the reduction in force implemented in the fourth quarter of 2006 and lower facility costs.
Operating Loss
Operating loss improved $3.6 million for the six months ended June 30, 2007 as compared to the corresponding prior year period as a result of the increase in license revenue of $1.0 million and reductions in operating expenses of $2.9 million resulting from the reasons described above.
Other Income (Expense), Net
Other income (expense), net was flat for the six months ended June 30, 2007, as compared to the same period in 2006. As of January 1, 2007, the Company has considered its inter-company loans to its foreign subsidiaries to be permanently reinvested. As a result of this decision, all foreign currency translation adjustments are recorded through the foreign currency translation adjustment account in the stockholders equity section of the Company’s balance sheet and are no longer recorded on the Company’s Statement of Operations.
Loss from continuing operations
Loss from continuing operations improved $3.5 million for the six months ended June 30, 2007, as compared to the same period in 2006 for the reasons described in ‘‘Operating Loss’’ above.
Income from discontinued operations
There was no activity in discontinued operations during the six months ended June 30, 2007 compared to income of $4.6 million in the same period 2006. The Enterprise Solutions business was sold on October 31, 2006 as described in footnote 2 to the financial statements contained herein.
Net loss
The net loss was $6.3 million, or $(0.18) per diluted share for the six months ended June 30, 2007, as compared to $5.2 million or $(0.15) per diluted share for the six months ended June 30, 2006, for the reasons described above.
Liquidity and Capital Resources
On August 11, 2004, the Company entered into a two-year Loan and Security Agreement (the ‘‘Agreement’’) with Silicon Valley Bank (the ‘‘Bank’’) which contained a revolving line of credit under which the Company had available the lesser of $4.0 million or 80% of eligible accounts, as defined.
On January 27, 2005, March 28, 2005 and September 13, 2005, the Company entered into modifications to the Agreement (the ‘‘Amended Agreement’’) in order to revise certain terms of the Agreement including the loan fees, interest on the loan and the financial covenants.
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On October 31, 2006 the Company and the Bank entered into a Second Loan Modification Agreement and an Intellectual Property Security Agreement. The Second Loan Modification Agreement served (a) to amend the Amended Agreement by reducing the amount the Company may borrow on a revolving basis from (i) up to the lesser of (A) $4,000 or (B) 80.0% of the Eligible Accounts to (ii) up to the lesser of (A) $2,000 or (B) 70.0% of the Eligible Accounts, and (b) as an agreement by the Bank to forbear until November 10, 2006 from exercising its rights and remedies with respect to the default of the Company for failure to comply with certain financial covenants under the Amended Agreement at September 30, 2006. The Intellectual Property Security Agreement serves to supplement the Amended Agreement by including among the assets securing the Company’s indebtedness to the Bank, a security interest in all of the Company’s right, title an d interest in, to and under its intellectual property.
On November 11, 2006 the Company and the Bank entered into a Third Loan Modification Agreement. The Third Loan Modification Agreement serves (a) to amend the Second Loan Modification Agreement by increasing the amount the Company may borrow on a revolving basis from (i) up to the lesser of (A) $2,000 or (B) 70.0% of the Eligible Accounts to (ii) up to the lesser of (A) $4,000 or (B) 70.0% of the Eligible Accounts, and (b) as an agreement by the Bank to extend the forbearance from exercising its rights and remedies with respect to the default of the Company through December 10, 2006 for failure to comply with certain financial covenants under the Amended Agreement at September 30, 2006.
On March 6, 2007, the Company entered into a Fourth Loan Modification Agreement (the ‘‘Fourth Modification Agreement’’) with the Bank effective as of February 15, 2007 to amend and supplement its Amended and Restated Loan and Security Agreement dated as of September 13, 2005 between the Company and the Bank, as amended by the First Loan Modification Agreement dated as of March 14, 2006, the Second Loan Modification Agreement dated as of October 31, 2006, and the Third Loan Modification Agreement dated as of November 11, 2006 (as amended, the ‘‘Loan Agreement’’).
Subject to certain borrowing base limitations and compliance with covenants, the Fourth Modification Agreement served to amend the Loan Agreement by changing the amount the Company may borrow on a revolving basis from (i) up to the lesser of (A) $4,000 or (B) 70.0% of the Eligible Accounts (as such term is defined in the Loan Agreement) to (ii) up to the lesser of (A) $2,500 or (B) 80.0% of the Eligible Accounts (as such term is defined in the Loan Agreement). The Fourth Modification Agreement also extended the maturity date of the Loan Agreement from February 15, 2007 to April 1, 2008. In addition, the Fourth Modification Agreement deleted the existing financial covenants contained in the Loan Agreement and added two new financial covenants: (i) a covenant requiring the Company to maintain a Tangible Net Worth (as defined in the Fourth Modification Agreement) of at least (A) $1,700 as of the months ending January 31, 2007, February 28, 2007 and March 31, 2007, (B) $600 as of the months ending April 30, 2007, May 31, 2007 and June 30, 2007, (C) ($150) as of the months ending July 31, 2007, August 31, 2007 and September 30, 2007, and (D) $1.00 as of the month ending October 31, 2007 and as of the last day of each month thereafter and (ii) a covenant requiring the Company to maintain Liquidity (representing the amount of unrestricted cash of the Company at the Bank plus the unused availability under the Loan Agreement) at all times of at least $1,000. The Bank also waived the Company’s existing defaults under the Loan Agreement based on certain failures to meet prior financial covenants during the year ended December 31, 2006.
For each month of 2007 the Company was in compliance with its liquidity covenant but was not in compliance with its minimum tangible net worth covenant of $1,700 for the months ended February 28 and March 31, 2007. Tangible net worth as of March 31, 2007 was $1,201. On May 15, 2007, the Bank waived such violations and agreed to forbear until June 15, 2007, from exercising its rights and remedies with respect to the default of the Company for failure to comply with the tangible net worth covenant.
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On July 18, 2007, the Company entered into a Second Amended and Restated Loan and Security Agreement with the Bank to amend and supplement the Loan Agreement (as amended, the ‘‘Second Amended Agreement’’).
The Second Amended Agreement provides for a revolving line of credit in an amount equal to the lesser of $2.5 million or 80% of eligible gross domestic accounts receivable. Borrowings under the revolving line of credit, bear interest at prime rate plus one quarter of one percent (0.25%) on the average gross daily financed account balance as long as the Company’s liquidity ratio (as described in the Second Amended Agreement) is above 1.30:1.00. Should the liquidity ratio fall below 1.30:1.00, the interest rate would increase to prime rate plus three quarters of one percent (0.75%) on the average gross daily financed account balance in addition to a monthly collateral handling fee of one quarter of one percent (0.25%) of the average monthly financed receivable balance. The Company is required to pay quarterly interest charges equal to 10% of the minimum net facility usage. If actual interest charges incurred exceed minimum, then no additional charge wil l be assessed. The Second Amended Agreement is secured by substantially all domestic assets of the Company. The maturity date of the loan is April 1, 2008. As described in greater detail in the Second Amended Agreement, the loan is subject to acceleration upon breach of: (i) a covenant tested quarterly requiring the Company’s net loss not to exceed $4.0 million, $2.8 million and $2.4 million for the quarters ended June 30, 2007, September 30, 2007 and December 31, 2007, respectively and (ii) other customary non-financial covenants.
As of June 30, 2007, the Company had no borrowings and had remaining availability under the Second Amended Agreement of $718.
On May 29, 2007, the Company entered into a Convertible Note and Warrant Purchase Agreement (the ‘‘Purchase Agreement’’) pursuant to which it sold and issued an aggregate of $5,000,000 of convertible notes consisting of (i) $2,500,000 of Series A 6% Secured Convertible Promissory Notes due May 29, 2009 and (ii) $2,500,000 of Series B 6% Secured Convertible Promissory Notes due May 29, 2009, together with warrants to purchase an aggregate of 2,000,000 shares of common stock of AXS-One. Net proceeds to AXS-One after transaction expenses were approximately $4.9 million. The notes and warrants were sold in a private placement under Rule 506 promulgated under the Securities Act of 1933, as amended, to three accredited investors.
The Series A notes mature on May 29, 2009, are convertible into AXS-One common stock at a fixed conversion rate of $1.00 per share, bear interest of 6% per annum and are secured by substantially all the assets of AXS-One. The Series B notes mature on May 29, 2009, are convertible into AXS-One common stock at a fixed conversion rate of $2.50 per share, bear interest of 6% per annum and are secured by substantially all the assets of AXS-One. The security interest of the noteholders has been subordinated to the security interest of Silicon Valley Bank, AXS-One’s current senior lender. Each series of notes may be converted at the option of the noteholder at any time prior to maturity.
Each noteholder received a warrant to purchase a number of shares of AXS-One common stock equal to 40% of the principal amount of notes purchased. Each warrant has an exercise price of $0.01 per share and is exercisable at any time through May 29, 2014.
Our operating activities used cash of $5.4 million for the six months ended June 30, 2007 and $8.3 million for the six months ended June 30, 2006. Net cash used in operating activities during the six months ended June 30, 2007 is primarily the result of the net loss from continuing operations, a decrease in accounts payable and accrued expenses and an increase in other assets, offset slightly by decreased accounts receivable, decreased prepaid expenses and other current assets, increased deferred revenue and non-cash stock compensation expense.
Our investing activities used $0.1 million and $0.2 million of cash for the six months ended June 30, 2007 and 2006, respectively. The use of cash in each year was primarily for the purchase of computer equipment for the Company’s internal operations.
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Cash provided by financing activities was $5.1 million and $0.2 million for the six months ended June 30, 2007 and 2006, respectively. For the six months ended June 30, 2007, cash was provided by the issuance of convertible debt, described in more detail above, and the exercise of stock options during the period. For the six months ended June 30, 2006, cash was provided by the exercise of stock options during the period offset slightly by debt issuance cost.
Cash used by discontinued operations was $1.0 for the six months ended June 30, 2007. Cash provided by discontinued operations was $8.0 million for the six months ended June 30, 2006. For the six months ended June 30, 2007, cash used related to payment of cash to Computron Software, LLC related to collection of their accounts receivable received by us and required to be returned to Computron Software, LLC. For the six months ended June 30, 2006, cash was provided by net income from discontinued operations and by the change in net assets held for sale.
We have no significant capital commitments. Planned capital expenditures for the year 2007 are expected to be less than $0.5 million. Our aggregate minimum operating lease payments for 2007 will be approximately $1.2 million. We have $0.1 million of remaining aggregate minimum royalties payable to third party software providers in accordance with 2007 agreements for third party software used in conjunction with our software. Future commitments to third party software providers are as follows:
| | | | | | |
| (in thousands) |
| Year | | | Amount |
| 2007 | | | | $ | 100 | |
| 2008 | | | | | 50 | |
| 2009 | | | | | 50 | |
| 2010 | | | | | — | |
| 2011 | | | | | — | |
| Total | | | | $ | 200 | |
AXS-One incurred a loss from continuing operations of $19.6 million, $15.1 million and $2.7 million for the years ended December 31, 2006, 2005 and 2004, respectively. The net loss for the first six months of 2007 was $6.4 million. We have not yet been able to obtain operating profitability from continuing operations and may not be able to be profitable on a quarterly or annual basis in the future. Management’s initiatives over the last three years, including the restructurings in December 2006, June 2005 and June 2004, the private placements of common stock in June 2005 and April 2004, the executive management salary reductions for most of the second half of 2005 and for all of 2007, the sale of the Enterprise Solutions business, and securing additional debt financing in May 2007 have been designed to improve operating results and liquidity and better position AXS-One to compete under current mar ket conditions. However, we may in the future be required to seek new sources of financing or future accommodations from our existing lender or other financial institutions, or we may seek equity infusions from private investors. Our ability to fund our operations is heavily dependent on the growth of our revenues over current levels to achieve profitable operations, particularly given the recent sale of the Enterprise Solutions business, which historically was our profitable segment. We may also be required to further reduce operating costs in order to meet our obligations if deemed necessary. If we are unable to achieve profitable operations or secure additional sources of capital, there would be substantial doubt about our ability to fund future operations. Additionally, there is a risk that cash held by one foreign subsidiary approximating $0.1 million at June 30, 2007 may not be readily available for use in our U.S. operations to pay our obligations, as the transfer of funds is sometimes delayed due to various foreign government restrictions. No assurance can be given that management’s initiatives will be successful or that any such additional sources of financing, lender accommodations or equity infusions will be available.
Critical Accounting Estimates
Our critical accounting policy is revenue recognition.
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Revenue Recognition
The Company recognizes revenue in accordance with Statement of Position 97-2, ‘‘Software Revenue Recognition’’ (‘‘SOP 97-2’’), and Statement of Position 98-9, ‘‘Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions.’’ Revenue from non-cancelable software licenses is recognized when the license agreement has been signed, delivery has occurred, the fee is fixed or determinable and collectibility is probable. The Company recognizes license revenue from resellers when an end user has placed an order with the reseller and the above revenue recognition criteria have been met with respect to the reseller. In multiple element arrangements, the Company defers the vendor-specific objective evidence of fair value (‘‘VSOE’’) related to the undelivered elements and recognizes revenue on the delivered elements using the residual method. If VSO E of Fair Value does not exist for any undelivered element, the entire arrangement consideration is deferred until VSOE of fair value is determined for that undelivered element or the element is delivered. The most commonly deferred elements are initial maintenance and consulting services. Initial maintenance is recognized on a straight-line basis over the initial maintenance term. The VSOE of maintenance is determined by using a consistent percentage of maintenance fee to license fee based on renewal rates. Maintenance fees in subsequent years are recognized on a straight-line basis over the life of the applicable agreement. Maintenance contracts entitle the customer to hot-line support and all unspecified product upgrades released during the term of the maintenance contract. Upgrades include any and all unspecified patches or releases related to a licensed software product. Maintenance does not include implementation services to install these upgrades. The VSOE of services is determined by using an average consulting rate per hour for consulting services sold separately multiplied by the estimate of hours required to complete the consulting engagement.
Delivery of software generally occurs when the product (on CDs) is delivered to a common carrier. Occasionally, delivery occurs through electronic means where the software is made available through our secure FTP (File Transfer Protocol) site. The Company generally does not offer any customers or resellers a right of return.
For software license, services and maintenance revenue, the Company assesses whether the fee is fixed and determinable and whether or not collection is probable based on the payment terms associated with the transaction and the credit worthiness of the customer. If a significant portion of a fee is due after our normal payment terms, which are 30 to 90 days from invoice date, the fee is considered not fixed and determinable. In these cases, the Company recognizes revenue as the fees become due.
The Company assesses assuredness of collection based on a number of factors, including past transaction history with the customer and the credit-worthiness of the customer. Collateral is not requested from customers. If it is determined that collection of a fee is not probable, the fee is deferred and revenue is recognized at the time collection becomes probable, which is generally upon receipt of cash.
The Company’s arrangements do not generally include acceptance clauses. However, if an arrangement includes an acceptance provision, acceptance occurs upon the earliest of receipt of a written customer acceptance or expiration of the acceptance period.
The majority of our training and consulting services are billed based on hourly rates. The Company generally recognizes revenue as these services are performed. However, when there is an arrangement that is based on a fixed fee or requires significant work either to alter the underlying software or to build additional complex interfaces so that the software performs as the customer requests, the Company recognizes the related revenue using the percentage of completion method of accounting. This would apply to our custom programming services, which are generally contracted on a fixed fee basis. Anticipated losses, if any, are charged to operations in the period such losses are determined to be probable.
Revenues from transaction fees associated with subscription arrangements, billable on a per transaction basis and included in services revenue on the Consolidated Statements of Operations, are recognized based on the actual number of transactions processed during the period.
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In accordance with EITF Issue No. 01-14, ‘‘Income Statement Characterization of Reimbursement Received for ‘Out of Pocket’ Expenses Incurred,’’ reimbursements received for out-of-pocket expenses incurred are classified as services revenue in the Consolidated Statements of Operations.
Recently Issued Accounting Standards
In July 2006, the FASB issued FIN 48 ‘‘Accounting for Uncertainty in Income Taxes.’’ This interpretation requires that we recognize in our financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The Company adopted the provisions of FASB Interpretation No. 48 (‘‘FIN 48’’) ‘‘Accounting for Uncertainty in Income Taxes’’, on January 1, 2007. The adoption of FIN 48 had no impact on the Company’s financial position and statement of operations. As of June 30, 2007, there were no or insignificant unrecognized tax benefits. As of January 1, 2007, the Company is subject to income tax examinations for its U.S. federal income taxes for the fiscal years 2005 and 2006 and for non-U.S. income taxes for the tax years 1999 through 2006.
In September 2006, the FASB issued Statement No. 157 ‘‘Fair Value Measurements’’, which defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosure about fair value measurement. FASB Statement No. 157 applies to other accounting pronouncements that require fair value measurements or permit fair value measurements. The new guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and for interim periods within those fiscal years. We are currently evaluating the potential impact, if any, of the adoption of FASB Statement No. 157 on our consolidated financial position, results of operations and cash flows.
Certain Factors That May Affect Future Results and Financial Condition and the Market Price of Securities
See our 2006 Annual Report on Form 10K for a detailed discussion of risk factors.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
In the normal course of business, we are exposed to fluctuations in interest rates and equity market risks as we seek debt and equity capital to sustain our operations. We are also exposed to fluctuations in foreign currency exchange rates as the financial results and financial conditions of our foreign subsidiaries are translated into U.S. dollars in consolidation. We do not use derivative instruments or hedging to manage our exposures and do not currently hold any market risk sensitive instruments for trading purposes.
Item 4T. Controls and Procedures
Evaluation of disclosure controls and procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of ‘‘disclosure controls and procedures’’ in Rule 13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relat ionship of possible controls and procedures.
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The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2007. Based upon the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2007.
Internal controls over financial reporting
There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At our Annual Meeting of Stockholders on May 23, 2007, the following directors were nominated and elected by the votes indicated:
| | | | | | | | | | | | |
| | | | Votes For | | | Votes Withheld |
| William P. Lyons | | | | | 24,114,680 | | | | | | 5,022,935 | |
| Anthony Bloom | | | | | 24,251,436 | | | | | | 4,886,179 | |
| Daniel H. Burch | | | | | 27,075,149 | | | | | | 2,062,466 | |
| Harold Copperman | | | | | 24,321,091 | | | | | | 4,816,524 | |
| Robert Migliorino | | | | | 24,240,997 | | | | | | 4,896,618 | |
| Elias Typaldos | | | | | 26,806,467 | | | | | | 2,331,148 | |
| Gennaro Vendome | | | | | 26,891,096 | | | | | | 2,246,519 | |
| Allan Weingarten | | | | | 25,599,823 | | | | | | 3,537,792 | |
In addition, the stockholders ratified the appointment of Amper, Politziner & Mattia as the Company’s independent auditors for 2007 by the following vote:
| | | | | | | | | | | | |
| Votes For | | | Votes Against | | | Abstentions |
| 28,699,985 | | | | | 404,093 | | | | | | 33,535 | |
The stockholders also approved the amendment of the 1998 Stock Incentive Plan by the following vote:
| | | | | | | | | | | | | | | | | | |
| Votes For | | | Votes Against | | | Abstentions | | | Broker Non-votes |
| 11,013,054 | | | | | 3,012,618 | | | | | | 12,845 | | | | | | 15,099,098 | |
Item 5. Other information
On August 13, 2007, the Company entered into an Agreement and General Release (the ‘‘Release’’) with Elias Typaldos, its Executive Vice President, Technology, pursuant to which it terminated the Employment Agreement dated February 15, 2007 between the Company and Mr. Typaldos. Notwithstanding the foregoing, certain provisions of the Employment Agreement regarding ongoing covenants of Mr. Typaldos remain in effect. Mr. Typaldos’ employment with the Company will terminate effective August 31, 2007. Pursuant to the Release, Mr. Typaldos will receive the following consideration from the Company: (i) $450,000 to be paid as severance in accordance with the Company’s ordinary payroll practices over a two-year period; (ii) $150,000 to be paid as follows: (A) twenty-five percent (25%) shall be paid in a lump sum on March 15, 2008; (B) the amount remaining after the payment of twenty-five percent (25%) in (A), above, shall be paid in equal payments in accordance with normal payroll procedures for the period March 1, 2008 to August 31, 2009, and the last payment shall be made on or before August 31, 2009; and (ii) payment of Mr. Typaldos’ COBRA coverage premiums until the earlier of February 15, 2009 or the date when he becomes eligible for similar health insurance with a new employer. The Company estimates that it will record a one-time charge in the 3rd quarter of 2007 of approximately $675,000 related to the Release. Mr. Typaldos released the Company from claims arising out of his employment with the Company and/or the termination of that employment. The foregoing description of the Release does not purport to be complete and is qualified in its entirety by reference to the Release, a copy of which is filed as an Exhibit 10.1 hereto and incorporated herein by reference.
Item 6. Exhibits
| | | |
| Exhibit 10.1 | | | Agreement and General Release between AXS-One Inc. and Elias Typaldos |
| Exhibit 31.1 | | | Rule 13a-14(a)/15d-14(a) Certification – William P. Lyons |
| Exhibit 31.2 | | | Rule 13a-14(a)/15d-14(a) Certification – Joseph P. Dwyer |
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| | | |
| Exhibit 32 | | | Officer Certifications under 18 USC 1350 |
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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.
| | | | | | |
| | | | AXS-ONE INC. |
| Date: August 14, 2007 | | | By: | | | /s/ William P. Lyons |
| | | | | | | William P. Lyons
Chief Executive Officer and
Chairman of the Board |
| | | | By: | | | /s/ Joseph P. Dwyer |
| | | | | | | Joseph P. Dwyer
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer) |
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