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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-21511
V-ONE CORPORATION
-----------------
(Exact name of registrant as specified in its charter)
Delaware 52-1953278
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20300 Century Blvd., Suite 200, Germantown, Maryland 20874
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(301) 515-5200
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 1, 2004
----- -----------------------------
Common Stock, $0.001 par value per share 15,642,555
V-ONE Corporation
Quarterly Report on Form 10-Q
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Condensed Balance Sheets as of June 30, 2004 3
(unaudited) and December 31, 2003
Condensed Statements of Operations for the 4
three and six months ended June 30, 2004
(unaudited) and June 30, 2003 (unaudited)
Condensed Statements of Cash Flows for the 5
six months ended June 30, 2004 (unaudited)
and June 30, 2003 (unaudited)
Notes to the Condensed Financial Statements 6
(unaudited)
Item 2. Management's Discussion and Analysis of 11
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures 14
About Market Risk
Item 4. Controls and Procedures 14
PART II. OTHER INFORMATION 14
Item 1. Legal Proceedings 14
Item 2. Changes in Securities, Use of Proceeds and 14
Issuer Purchases of Equity Securities
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security 15
Holders
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
SIGNATURE 17
2
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
V-ONE CORPORATION
CONDENSED BALANCE SHEETS
June 30, 2004 December 31, 2003
ASSETS (Unaudited)
---------------- ------------------
Current assets:
Cash and cash equivalents $ 238,842 $ 27,755
Certificate of deposit - restricted - 26,500
Accounts receivable, less allowances of $20,000 and $15,500 respectively 134,735 606,426
Finished goods inventory, less allowances of $9,226 and $8,901 respectively 821 3,636
Prepaid expenses and other assets 105,260 61,875
---------------- ------------------
Total current assets 479,658 726,192
Property and equipment, net 72,958 64,138
Deferred financing costs, net 342,305 -
Deferred costs of business combination 154,346 -
Deposits 95,141 95,141
---------------- ------------------
Total assets $ 1,144,408 $ 885,471
================ ==================
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses $ 1,369,224 $ 1,320,361
Deferred revenue 687,241 692,914
Convertible notes payable - 493,000
Notes payable, other 110,460 151,248
---------------- ------------------
Total current liabilities 2,166,925 2,657,523
Convertible notes payable, noncurrent, net of debt
discount of $1,118,302 81,698 -
Notes payable, other - noncurrent - 45,287
Deferred rent 41,601 40,535
---------------- ------------------
Total liabilities 2,290,224 2,743,345
Commitments and contingencies
Shareholders' deficiency:
Preferred stock, $.001 par value,13,333,333 shares authorized:
Series C redeemable preferred stock, 500,000 designated; 42,904
shares issued and outstanding
(liquidation preference of $1,126,000) 43 43
Series D convertible preferred stock 3,675,000 shares designated,
3,021,000 shares issued and outstanding 3,021 3,021
(liquidation preference of $5,770,110)
Common stock, $0.001 par value; 75,000,000 shares authorized;
15,642,555 and 13,950,284 shares issued and outstanding, respectively 15,643 13,950
Accrued dividends payable 2,974,346 2,517,765
Additional paid-in capital 64,482,233 62,121,291
Accumulated deficit (68,621,102) (66,513,944)
---------------- ------------------
Total shareholders' deficiency (1,145,816) (1,857,874)
---------------- ------------------
Total liabilities and shareholders' deficiency $ 1,144,408 $ 885,471
================ ==================
The accompanying notes are an integral part of these financial statements.
3
V-ONE CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Three months Three months Six months Six months
ended ended ended ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
(unaudited) (unaudited) (unaudited) (unaudited)
------------- ------------- ------------ --------------
Revenues:
Products $ 141,626 $ 771,117 $ 400,257 $ 1,412,219
Consulting and services 377,386 384,103 767,474 748,272
------------- ------------- ------------ --------------
Total revenues 519,012 1,155,220 1,167,731 2,160,491
Cost of revenues:
Products 7,295 127,695 13,858 143,100
Consulting and services 21,249 14,651 48,793 40,426
------------- ------------- ------------ --------------
Total cost of revenues 28,544 142,346 62,651 183,526
------------- ------------- ------------ --------------
Gross profit 490,468 1,012,874 1,105,080 1,976,965
Operating expenses:
Research and development 243,265 272,326 465,601 594,439
Sales and marketing 433,217 364,265 807,860 747,853
General and administrative 395,470 373,611 828,329 847,930
------------- ------------- ------------ --------------
Total operating expenses 1,071,952 1,010,202 2,101,790 2,190,222
------------- ------------- ------------ --------------
Operating profit (loss) (581,484) 2,672 (996,710) (213,257)
Other (expense) income:
Interest expense (137,616) (28,744) (656,077) (161,475)
Interest income 1,416 20 2,003 5,052
Other (expense) income (52) (183) 207 (9,153)
------------- ------------- ------------ --------------
Total other (expense) income (136,252) (28,907) (653,867) (165,576)
------------- ------------- ------------ --------------
Net loss (717,736) (26,235) (1,650,577) (378,833)
Dividends on preferred stock 232,595 171,936 456,581 341,983
------------- ------------- ------------ --------------
Loss attributable to holders
of common stock $ (950,331) $ (198,171) $(2,107,158) $ (720,816)
============= ============= ============ ==============
Basic and diluted loss per
share attributable to
holders of common stock $ (0.06) $ (0.01) $ (0.14) $ (0.05)
============= ============= ============ ==============
Weighted average number of
common shares outstanding 15,567,350 13,479,425 15,264,324 13,419,627
============= ============= ============ ==============
The accompanying notes are an integral part of these financial statements.
4
V-ONE CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Six months Six months
ended ended
June 30, 2004 June 30, 2003
(unaudited) (unaudited)
-------------- -------------
Cash flows from operating activities:
Net loss $ (1,650,577) $ (378,833)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 26,303 189,032
Amortization of debt discount 81,698 11,758
Interest expense-beneficial conversion feature 434,888 22,000
Interest expense on repricing of warrants - 23,890
Amortization of deferred financing costs 85,692 68,974
Noncash charge related to issuance of warrants,
options and stock as compensation 2,088 21,193
Changes in operating assets and liabilities:
Accounts receivable 471,691 (329,524)
Inventory 2,815 2,952
Prepaid expenses and other assets (43,385) 43,910
Payments of business combination costs (154,346) -
Accounts payable and accrued expenses 17,474 392,391
Accrued interest on note payable related to
financing costs
Deferred revenue (5,673) (145,502)
Deferred rent 1,066 4,524
-------------- -------------
Net cash used in operating activities (730,266) (73,235)
Cash flows from investing activities:
Net purchase of property and equipment (35,124) 6,586
Certificate of deposit redemption 26,500 8,500
-------------- -------------
Net cash provided by (used in)
investing activities (8,624) 15,086
Cash flows from financing activities:
Exercise of options and warrants 900 -
Payment of fractional shares (9) -
Issuance of common stock under employee
stock plans 4,072 2,869
Proceeds of notes payable 1,200,000 -
Payments of deferred financing costs (200,301) -
Payments on notes payable-other (24,068) -
Payments of notes payable (30,617) -
-------------- -------------
Net cash provided by financing activities 949,977 2,869
-------------- -------------
Net increase (decrease) in cash and cash equivalents 211,087 (55,280)
Cash and cash equivalents at beginning of period 27,755 93,985
-------------- -------------
Cash and cash equivalents at end of period $ 238,842 $ 38,705
============== =============
The accompanying notes are an integral part of these financial statements.
5
V-ONE CORPORATION
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of the Business
V-ONE Corporation ("Company" or "V-ONE") develops, markets and licenses a
comprehensive suite of network security products that enables organizations to
conduct secured electronic transactions and information exchange using private
enterprise networks and public networks, such as the Internet. The Company's
principal market is the United States, with headquarters in Maryland, with
secondary markets in Europe and Asia.
2. Basis of Presentation
The condensed financial statements for the three and six months ended June 30,
2004 and June 30, 2003 are unaudited and reflect all adjustments, consisting of
normal recurring adjustments, which are, in the opinion of management, necessary
to present fairly the results for the interim periods. The balance sheet at
December 31, 2003 is as presented in the financial statements at that date, but
does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. These
financial statements should be read in conjunction with the audited financial
statements as of December 31, 2003 and 2002 and for the three years ended
December 31, 2003, which are included in the Company's 2003 Annual Report on
Form 10-K ("Form 10-K").
The preparation of financial statements to be in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates
and would affect future results of operations and cash flows.
The results of operations for the three-month and six month period ended June
30, 2004 are not necessarily indicative of the results expected for the full
year ending December 31, 2004.
Certain prior year amounts have been reclassified to conform to the 2004
presentation. These changes had no impact on previously reported results of
operations.
3. Common and Preferred Stock
On June 30, 2004, the Company sold 8,426 shares of common stock at a price of
$.22015 per share as part of its Employee Stock Purchase Plan.
As of March 31, 2004 holders had converted $1,038,000 or 87% of the 8% Secured
Convertible Notes ("8% Notes) into shares of common stock. In April 2004,
holders converted the remaining $150,000 or 13% of the 8% Notes into shares of
Common Stock.
4. Management's Plans
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company reported a net loss of $449,650,
$5,635,191 and $6,237,278 for the years ended December 31, 2003, 2002 and 2001,
respectively, and further net losses of $717,736 and $1,650,577 for the three
and six months ended June 30, 2004, respectively. Notwithstanding acceptance of
the Company's security concepts and critical acclaim for its products, there can
be no assurance that the consummation of sales of the Company's products to
existing customers or proposed agreements with potential customers will generate
timely or sufficient revenue for the Company to cover its costs of operations
and meet its cash flow requirements. Accordingly, the Company may not have the
funds needed to sustain operations during 2004.
For the immediate future, V-ONE will focus on existing and potential customers
in the government sector, targeted marketing operations to commercial accounts
and continued minimization of general and administrative expenditures. V-ONE may
not be successful in further reducing operating levels without jeopardizing the
ability to serve existing customers or grow its business base. In February 2004,
the Company completed a private placement of 7% Subordinated Convertible Notes
with detachable warrants for an aggregate of $1,200,000, which resulted in net
proceeds to the Company of $1,065,690. The Company believes that to maintain
6
operations for any extended period of time it must generate revenue from
existing and new customers, raise additional capital or undergo a significant
strategic transformative event. The Company's ability to reach sustainable
profitability is dependent on its ability to generate sufficient cash flow to
meet its obligations and needs on a timely basis or to obtain additional
funding.
The Company expanded its banking relationships to explore alternatives to
preserve its operations and maximize shareholder value, including potential
strategic partnering relationships, a business combination with a strategically
placed partner, or a sale of the Company. On May 19, 2004, the Company signed a
letter of intent with SteelCloud Inc. ("SteelCloud"), for SteelCloud to acquire
V-ONE in an all stock transaction. On August 11, 2004, the parties signed a
definitive agreement for the transaction. For further information, refer to Part
II, Item 5 of this Quarterly Report on Form 10-Q and V-ONE's Current Report on
Form 8-K filed with the SEC on August 11, 2004.
5. 8% Secured Convertible Notes with Detachable Warrants
In July and August 2002, the Company closed on approximately $1,188,000 in a
private placement of 8% Secured Convertible Notes with detachable warrants, due
180 days after issuance with an additional 180-day extension available at the
option of the Company or the holders. Detachable five year warrants, exercisable
at $0.50 per share, are included to provide one warrant share for every dollar
invested as warrant coverage to the note holders. In January 2003, the Company
elected to extend the 8% Notes for an additional 180 days, paid the interest
accrued under the initial term of the 8% Notes and agreed to adjust the exercise
price of the warrants from $0.50 per share to $0.15 per share. In July 2003, the
Company requested and received an extension of the 8% Notes for an additional
180 days and agreed to an increase in the interest rate from 10% to 12% during
the extension period. In connection with a restructuring of the 8% Notes, the
Company agreed in January 2004 to adjust the conversion price of certain 8%
Notes constituting $150,000 in principal to $.18 per share in exchange for an
extension of the term of such 8% Notes to July 15, 2004 at an interest rate of
10%. Also in connection with the January 2004 restructuring, the Company
adjusted the conversion price of the remaining 8% Notes outstanding, which
constituted $343,000 in principal, to $.15 per share and granted warrants to
purchase a total of 250,000 shares of Common Stock at an exercise price of $0.18
per share to Joseph Gunnar & Co., LLC, placement agent for the 8% Notes
offering. In the three months ended June 30, 2004, 8% Note holders exercised
warrants to purchase 130,106 shares of Common Stock.
As of June 30, 2004, holders had converted $1,188,000 or 100% of the 8% notes
into shares of Common Stock.
The Company recorded $2,600 in accrued interest expense for the second quarter
of 2004. The accrued interest was paid upon conversion of the outstanding 8%
Notes.
6. 7% Subordinated Convertible Notes
In a closing on February 27, 2004, V-ONE issued 7% Subordinated Convertible
Notes ("7% Notes") with warrants for an aggregate principal amount of
$1,200,000, resulting in net proceeds to V-ONE of $1,065,690. The 7% Notes
mature on February 27, 2009. Interest at the rate of 7% per annum is payable
semi-annually at the option of V-ONE in cash or in shares of Common Stock. The
7% Notes rank senior to the Common Stock and junior to the Series C Shares and
Series D Shares as to the payment of dividends and as to distribution of assets
upon liquidation, dissolution or winding up of V-ONE. So long as at least
$500,000 of the principal amount of the 7% Notes is outstanding, the affirmative
vote of the holders of at least 75% of the principal amount of the 7% Notes
outstanding is required to issue any securities that rank senior to or on parity
with the 7% Notes.
Under the original terms of the 7% Notes, the holders could convert the
principal amount of their 7% Notes, in whole or in part, at any time into shares
of Common Stock at a conversion price of $0.20 per share. On May 14, 2004, V-ONE
effected a 1:2 reverse stock split modifying the original conversion price of
the 7% Notes to $0.40 per share. In addition, subject to certain terms, the
principal amount of the 7% Notes plus all accrued and unpaid interest shall
automatically convert into shares of Common Stock at the then current conversion
price on the earlier of (i) February 27, 2009 and (ii) the first date which is
at least 180 days following the effective date of the Registration Statement
providing for the resale of the shares of Common Stock issuable upon conversion
of the 7% Notes that the closing bid price of V-ONE Common Stock exceeds $1.00
for a period of 20 consecutive trading days. On May 14, 2004, V-ONE effected a
1:2 reverse stock split modifying the closing bid to $2.00 per share.
An event of default will occur if V-ONE fails to make any principal payment
under the 7% Notes, V-ONE fails to make any interest payment for a period of
five days after such payment is due, V-ONE fails to timely file the Registration
Statement providing for the resale of the shares of Common Stock issuable upon
conversion of the 7% Notes or the Registration Statement is not declared
effective by the SEC within 180 days of February 27, 2004, the effectiveness of
7
the Registration Statement lapses for a period of 20 consecutive trading days,
or upon the occurrence of other default events, including, but not limited to,
an assignment for the benefit of creditors, an application for the appointment
of a trustee or receiver or the commencement of a bankruptcy proceeding. If an
event of default occurs, the Notes will bear interest at the lesser of 12% and
the maximum applicable legal rate per annum from the date of the event of
default until such default is cured.
Upon the occurrence of certain events of default and other triggering events, a
7% Note holder shall have the right to require V-ONE to prepay in cash all or a
portion of the holder's 7% Note at 120% of the aggregate principal amount of the
7% Note, plus all accrued and unpaid interest. Similar provisions apply if V-ONE
cannot fully convert a 7% Note into shares of registered Common Stock upon the
receipt of a proper conversion notice from the holder. In addition, in the event
of a major corporate transaction such as the consolidation, merger or other
business combination of V-ONE into another entity or a sale or transfer of more
than 50% of V-ONE's assets, the 7% Note holder shall have the right to require
V-ONE to prepay in cash all or a portion of the holder's 7% Note at 100% of the
aggregate principal amount of the 7% Note, plus all accrued and unpaid interest.
If the major corporate transaction is consummated within six months of the
issuance of the 7% Note, then the prepayment shall be at 110% of the aggregate
principal amount of the 7% Note, plus all accrued and unpaid interest. Also,
beginning one year after the issuance of the 7% Notes, V-ONE may prepay any
portion or all of the outstanding principal balance of the 7% Notes together
with all accrued and unpaid interest at 110% of the aggregate principal amount
of the 7% Notes plus any accrued and unpaid interest.
For twelve months after the issuance of the 7% Notes, each holder shall have a
right of first refusal to purchase its pro rata portion of V-ONE Common Stock
(or any securities convertible, exercisable or exchangeable into Common Stock)
offered to a third party in a private transaction on the same terms as those
offered to the third party, other than in certain permitted financings. If a
holder elects not to exercise its right of first refusal, the other holders may
participate on a pro rata basis. If the holders do not participate, V-ONE may
proceed with the transaction with the third party.
In connection with the 7% Notes offering, V-ONE issued detachable warrants to
purchase 6,000,000 shares of Common Stock to the holders of the 7% Notes. The
warrants are exercisable beginning on August 27, 2004 at an exercise price of
$0.25 per share and expire on August 27, 2008. On May 14, 2004, V-ONE effected a
1:2 reverse stock split reducing the number of shares purchasable under the
warrants to 3,000,000 and increasing the exercise price to $0.50. Beginning 180
days after the effective date of a Registration Statement providing for the
resale of the shares of Common Stock issuable upon conversion of the 7% Notes
and exercise of the warrants, V-ONE may call up to 100% of the warrants if the
per share market value of its Common Stock has been greater than $0.75 for a
period of 20 consecutive trading days by issuing a call notice to the warrant
holders. On May 14, 2004, V-ONE effected a 1:2 reverse stock split modifying the
per share market value required for a call of the warrants to $1.50. The rights
and privileges granted to a warrant holder with respect to the shares subject to
the call notice shall expire on the twentieth day after the holder receives the
call notice if the holder does not exercise the warrant. If the holder does not
exercise the warrant, V-ONE shall remit to the warrant holder (i) $0.01 per
share subject to the call notice and (ii) a new warrant representing the number
of shares of Common Stock, if any, which were not subject to the call notice.
The exercise price and number of shares of Common Stock to be issued upon
conversion of the 7% Notes and exercise of the warrants are subject to equitable
adjustment in the event of stock dividends, stock splits and similar events
affecting the Common Stock. In addition, if V-ONE issues any shares of Common
Stock or equivalents at a purchase price less than the then current conversion
price for the 7% Notes or warrant exercise price, the conversion price and
warrant exercise price will be equitably reduced, and number of shares of Common
Stock to be issued upon conversion of the 7% Notes and exercise of the warrants
adjusted accordingly. However, in no event shall the conversion price, or
exercise price in the event of the issuance of V-ONE securities at less than the
current warrant exercise price, be less than $0.15 per share. On May 14, 2004,
V-ONE effected a 1:2 reverse stock split modifying the minimum warrant exercise
price to $0.30 per share.
In connection with the 7% Notes offering, V-ONE granted warrants to purchase up
to a total of 1,260,000 shares of Common Stock to H.C. Wainwright & Co., Inc.,
placement agent for the 7% Notes offering. As a result of the stock split
effected in May 2004, the shares that may be purchased under warrants issued to
H.C. Wainwright & Co., Inc. have been reduced to 630,000. The placement agent
warrants include a cashless exercise provision. The remaining terms of the
placement agent warrants mirror those of the warrants granted in connection with
the 7% Notes offering.
Upon issuance of the 7% Notes, the Company recorded a debt discount of
approximately $1,200,000 in accordance with the accounting requirements for a
beneficial conversion feature on the 7% Notes. The debt discount will be
amortized over the 5 year term of the notes. During the three and six months
ended June 30, 2004, the Company amortized $21,698 and $60,000 of the discount
to interest expense, respectively. Additionally, the Company recorded $21,233 in
accrued interest expense for the second quarter of 2004.
8
7. Stock-Based Compensation
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), allows companies to account for stock-based
compensation either under the provisions of SFAS 123 or under the provisions of
Accounting Principles Bulletin No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), as amended by FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation (an Interpretation of APB
Opinion No. 25)," but requires pro forma disclosure in the footnotes to the
financial statements as if the measurement provisions of SFAS 123 had been
adopted. The Company has elected to account for its stock-based compensation in
accordance with the provisions of APB 25. The following table illustrates the
effect on net income (loss) and earnings per share if the Company had applied
the fair value recognition provisions of SFAS 123:
Three months ended June 30, Six months ended June 30,
-------------------------------------- ------------------------------------
2004 2003 2004 2003
Net Loss, as reported $ (717,736) $ (26,235) $ (1,650,577) $ (378,833)
Add: Stock-based employee
compensation expense included
in reported net income, net
of related tax effects
Deduct: Total stock-based
employee compensation income (expense)
determined under fair value
based method for all awards,
net of related tax effects $ 49,557 $ (66,407) $ (19,081) $ (132,814)
----------------- ----------------- ---------------- ----------------
Pro forma net loss $ (668,179) $ (92,642) $ (1,669,658) $ (511,647)
================= ================= ================ ================
Earnings per share:
Basic - as reported $ (0.05) $ (0.00) $ (0.11) $ (0.03)
Basic - pro forma $ (0.04) $ (0.01) $ (0.11) $ (0.04)
Diluted - as reported $ (0.06) $ (0.00) $ (0.11) $ (0.03)
Diluted - pro forma $ (0.05) $ (0.01) $ (0.11) $ (0.04)
Denominator for basic and
diluted net loss per share-
adjusted weighted average
shares 15,567,350 13,479,425(1) 15,264,324 13,419,627(1)
================= ================= ================ ===============
(1) reflects 1:2 reverse stock split effected May 14, 2004
This disclosure is in accordance with Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure," that the Company has adopted in these financial statements.
Stock options and warrants granted to non-employees are accounted for in
accordance with SFAS 123 and the Emerging Issues Task Force Consensus No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services," which requires
the value of the options to be periodically re-measured as they vest over a
performance period. The fair value of the options and warrants is determined
using the Black-Scholes model.
8. Net Loss Per Share
The following table sets forth the computation of basic and diluted net loss per
share:
9
Three Months ended June 30, Six Months ended June 30
---------------------------------------- ----------------------------------------
2004 2003 2004 2003
Numerator:
Net Loss $ (717,736) $ (26,235) $ (1,650,577) $ (378,833)
Less: Dividend on preferred stock (232,595) (171,936) (456,581) (341,983)
----------------- ------------------ ---------------- -------------------
Net loss attributable to holders of
common stock $ (950,331) $ (198,171) $ (2,107,158) $ (720,816)
================= ================== ================ ===================
Denominator:
Denominator for basic and diluted net
loss per share-weighted average
shares 15,567,350 13,479,425 15,264,324 13,419,627
Effect of dilutive securities:
Preferred Stock - - - -
Stock Options - - - -
Warrants - - - -
----------------- ------------------ ---------------- -------------------
Dilutive potential common shares - - - -
----------------- ------------------ ---------------- -------------------
Denominator for diluted net loss per
share-adjusted weighted average shares 15,567,350 13,479,425(1) 15,264,324 13,419,627 (1)
================= ================== ================ ===================
Net loss attributable to holders of
common stock $ (0.06) $ (0.01) $ (0.14) $ (0.05)
================= ================== ================ ===================
(1) reflects 1:2 reverse stock split effected May 14, 2004
The following equity instruments were not included in the diluted net loss per share calculation because their effect would be
anti-dilutive:
Six Months ended June 30
2004 2003
------------ -----------
Preferred stock:
Series D 1,510,500 1,510,500 (1)
Stock options 2,458,699 2,569,479 (1)
Warrants 4,693,662 1,153,352 (1)
(1) reflects 1:2 reverse stock split effected May 14, 2004
9. Supplemental Cash Flow Disclosure
Three Months Ended Six Months Ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- ------------- ------------- -------------
Cash paid for interest 14,818 1,194 52,299 27,702
Non-cash investing and financing
activities:
Debt discount on 7%
Convertible Notes 0 0 1,200,000 0
Issuance of warrants for
financing costs 0 0 227,696 0
Debt converted to common stock 150,000 50,000 343,000 25,000
10
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. These statements may differ
in a material way from actual future events. For instance, factors that could
cause results to differ from future events include rapid rates of technological
change and intense competition, among others. The Company's total revenues and
operating results have varied substantially from quarter to quarter and should
not be relied upon as an indication of future results. Several factors may
affect the ability to forecast the Company's quarterly operating results,
including the size and timing of individual software and hardware sales; the
length of the Company's sales cycle; the level of sales and marketing, research
and development and administrative expenses; and general economic conditions.
Operating results for a given period could be disproportionately affected by any
shortfall in expected revenues. In addition, fluctuation in revenues from
quarter to quarter will likely have an increasingly significant impact on the
Company's results of operations. The Company's performance in recent periods may
not be an accurate indication of future results of operations in light of the
evolving nature of the network security market and the uncertainty of the demand
for Internet and intranet products in general and the Company's products in
particular. Because the Company's operating expenses are based on anticipated
revenue levels, a small variation in the timing of recognition of revenues can
cause significant variations in operating results from quarter to quarter.
Readers are also referred to the documents filed by the Company with the SEC,
specifically the Company's latest Annual Report on Form 10-K that identifies
important risk factors for the Company.
RESULTS OF OPERATIONS
REVENUES
Total revenues decreased from approximately $1,155,000 and $2,160,000 for the
three and six months ended June 30, 2003, respectively, to approximately
$519,000 and $1,168,000 for the three and six months ended June 30, 2004,
respectively. This decrease of approximately $636,000 or 55% and $993,000 or 46%
is due primarily to a decrease in product revenue of $629,000 and $1,012,000 for
the three and six months ended June 30, 2004, respectively. Product revenues are
derived principally from software licenses and the sale of hardware products.
Product revenues decreased from approximately $771,000 and $1,412,000 for the
three and six months ended June 30, 2003, respectively, to approximately
$142,000 and $400,000 for the three and six months ended June 30, 2004,
respectively. Consulting and services revenues are derived principally from fees
for services complementary to the Company's products, including consulting,
maintenance, installation and training. Consulting and services revenues
decreased from approximately $384,000 for the three months ended June 30, 2003
to approximately $377,000 for the three months ended June 30, 2004. Consulting
and services revenues increased from approximately $748,000 for the six months
ended June 30, 2003 to approximately $767,000 for the six months ended June 30,
2004. This was due principally to an increase in the number of renewing
maintenance contracts provided to customers in the first quarter of fiscal 2004.
The Company cannot be certain that revenue will, in fact, become more
predictable or certain of the relative levels of software, hardware, consulting
and services revenues to be generated in future periods.
COST OF REVENUES
Total cost of revenues as a percentage of total revenues decreased from
approximately 12% and 9% for the three and six months ended June 30, 2003,
respectively, to approximately 6% and 5% for the three and six months ended June
30, 2004, respectively. The percentage decrease was primarily due to lower sales
of software licenses and SmartGuard appliances sales in the current year. Total
cost of revenues is comprised of cost of product revenues and cost of consulting
and services revenues.
Cost of product revenues consists principally of the costs of computer hardware,
licensed technology, manuals and labor associated with the distribution and
support of the Company's products. Cost of product revenues decreased from
approximately $128,000 and $143,000 or the three and six months ended June 30,
2003, respectively to approximately $7,000 and $14,000 for the three and six
11
months ended June 30, 2004, respectively. The decrease in cost of product
revenues for the three and six months ended June 30, 2004 was primarily
attributable to lower sales of SmartGuard appliances and turnkey hardware
solutions in the current year. Cost of product revenues as a percentage of
product revenues was approximately 11% and 7% for the three and six months ended
June 30, 2003, respectively and approximately 1% for the three and six month
periods ended June 30, 2004.
Cost of consulting and services revenue consists principally of personnel and
related costs incurred in providing consulting, support and training services to
customers and costs of third-party product support. Cost of consulting and
services revenues increased from approximately $15,000 and $40,000 for the three
and six months ended June 30, 2003, respectively, to approximately $21,000 and
$49,000 for the three and six months ended June 30, 2004, respectively. Cost of
consulting and services revenues as a percentage of consulting and services
revenue was approximately 1% and 2% for the three and six months ended June 30,
2003, respectively, and 4% for the three and six month periods ended June 30,
2004.
OPERATING EXPENSES
Research and Development -- Research and development expense consists
principally of the costs of research and development personnel and other
expenses associated with the development of new products and enhancement of
existing products. Research and development expenses decreased from
approximately $272,000 and $594,000 for the three and six months ended June 30,
2003, respectively, to approximately $243,000 and $466,000 for the three and six
months ended June 30, 2004, respectively. The dollar decrease of approximately
$29,000 and $128,000, was primarily due to lower consulting expense of $13,000
and $21,000, lower depreciation expense of $30,000 and $80,000 and lower rent
expense of $13,000 and $25,000 partially offset by higher salary expense of
$32,000 and $1,000, respectively. Research and development expense as a
percentage of total revenue was approximately 24% and 28% for the three and six
months ended June 30, 2003, respectively, and approximately 47% and 40% for the
three and six months ended June 30, 2004, respectively. The percentage increase
was primarily due to lower revenues for the three and six months ended June 30,
2004.
Sales and Marketing -- Sales and marketing expense consists principally of the
costs of sales and marketing personnel, advertising, promotions and trade shows.
Sales and marketing expenses increased from approximately $364,000 and $748,000
for the three and six months ended June 30, 2003, respectively, to approximately
$433,000 and $808,000 for the three and six months ended June 30, 2004,
respectively. The dollar increase of $69,000 and $60,000 for the three and six
months ended June 30, 2004, respectively, relates primarily to higher salary
expense of $55,000 and $79,000, higher marketing expense of $35,000 and $43,000,
higher consulting expense of $22,000 and $22,000, higher travel expense of
$20,000 and $16,000 and higher public relations expense of $30,000 and $21,000
partially offset by lower commission expense of $77,000 and $66,000, lower
telephone expense of $5,000 and $10,000 and lower depreciation expense of
$16,000 and $57,000, respectively. Sales and marketing expenses as a percentage
of total revenues were approximately 32% and 35% for the three and six months
ended June 30, 2003, respectively, and approximately 84% and 69% for the three
and six months ended June 30, 2004, respectively. The percentage increase is due
primarily to lower revenue for fiscal 2004 when compared to the same period for
fiscal 2003.
General and Administrative -- General and administrative expense consists
principally of the costs of accounting and finance, legal and human resources
management, administrative personnel and facilities expenses. General and
administrative expenses increased from approximately $374,000 for the three
months ended June 30, 2003 to approximately $395,000 for the three months ended
June 30, 2004 and decreased from approximately $848,000 for the six months ended
June 30, 2003 to approximately $828,000 for the six months ended June 30, 2004.
The increase in expense of approximately $22,000 for the three months ended June
30, 2004 was due principally to higher salary expense of $26,000, higher
consulting expense of $20,000, higher annual report expense of $12,000, higher
travel expense of $3,000, higher membership expenses of $18,000 and higher
accounting and audit fees of $2,000 partially offset by lower depreciation
expense of $6,000, lower commission expense of $16,000 and a decrease in legal
expense of $33,000. The decrease in expense of approximately $19,000 for the six
months ended June 30, 2004 is primarily due to a decrease in commission expense
of $20,000, a decrease in accounting and audit fees of $79,000, a decrease in
miscellaneous expense of $16,000 and a decrease in depreciation expense of
$25,000, partially offset by an increase in salary expense of $26,000, an
increase in legal expense of $30,000, an increase in consulting expense of
$63,000 and an increase an annual report expense of $13,000. General and
administrative expenses as a percentage of total revenues were approximately 32%
and 39% for the three and six months ended June 30, 2003 and 76% and 71% for the
three and six months ended June 30, 2004.
Other (Expense) Income -- Other (expense) income represents the income or
expense resulting from non-operational activities that are of an infrequently
occurring nature. Other (expense) income increased from approximately zero and
$(9,000) for the three and six months ended June 30, 2003, respectively, to
approximately zero for the three and six months ended June 30, 2004. The expense
12
in 2003 was due primarily to early retirement of certain fixed assets.
Interest Income and Expense -- Interest income represents interest earned on
cash and cash equivalents. Interest income decreased from approximately zero and
$5,000 for the three and six months ended June 30, 2003, respectively, to
approximately $1,000 and $2,000 for the three and six months ended June 30,
2004, respectively. The increase was attributable to higher levels of cash and
cash equivalents in the current period. Interest expense represents interest
paid or payable on loans and capitalized lease obligations. Interest expense
increased from approximately $29,000 and $161,000 for the three and six months
ended June 30, 2003, respectively, to approximately $138,000 and $656,000 for
the three and six months ended June 30, 2004, respectively, substantially all of
which was for recognition of a beneficial conversion feature on the 7%
Subordinated Convertible Notes.
Income Taxes -- The Company did not incur income tax expenses as a result of the
net loss incurred during the three and six months ended June 30, 2003 and 2004.
Dividend on Preferred Stock -- The Company provided for dividends on preferred
stock of approximately $233,000 and $457,000 during the three and six months
ended June 30, 2004, respectively, and approximately $172,000 and $342,000 for
the three and six months ended June 30, 2003, respectively. Under the terms of
the purchase agreements for the Series C and Series D Preferred Stock, the
Company may elect to pay these dividends in cash or stock.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating activities used cash of approximately $73,000 for the
six months ended June 30, 2003 and used cash of approximately $730,000 for the
six months ended June 30, 2004. Cash used in operating activities resulted
principally from net operating losses in the periods offset in part by an
increase in accounts payable in 2003 and interest expense and accounts
receivable in 2004. The increase in cash used in operating activities of
approximately $657,000 in the first six months of 2004 was attributable
primarily to an increase in net operating loss of $1,426,000.
The Company's investing activities provided cash of approximately $15,000 in the
six months ended June 30, 2003 and used approximately $9,000 in the six months
ended June 30, 2004. Net capital expenditures for property and equipment were
approximately $7,000 and ($35,000) during the six months ended June 30, 2003 and
2004, respectively. These expenditures have generally been for computer
workstations and personal computers, office furniture and equipment, and
leasehold additions and improvements.
The Company's financing activities provided cash of approximately $3,000 during
the six months ended June 30, 2003 and provided cash of approximately $950,000
during the six months ended June 30, 2004. In fiscal 2004, the cash was provided
primarily by the 7% Notes.
The Company had a working capital deficiency of ($1,931,000) and ($1,638,000) at
December 31, 2003 and June 30, 2004, respectively. As of June 30, 2004, the
Company had an accumulated deficit of approximately $68,621,000.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company reported a net loss of $449,650,
$5,635,191 and $6,237,278 for the years ended December 31, 2003, 2002 and 2001,
respectively, and a further net losses of $717,736 and $1,650,577 for the three
and six months ended June 30, 2004, respectively. Notwithstanding acceptance of
the Company's security concepts and critical acclaim for its products, there can
be no assurance that the consummation of sales of the Company's products to
existing customers or proposed agreements with potential customers will generate
timely or sufficient revenue for the Company to cover its costs of operations
and meet its cash flow requirements. Accordingly, the Company may not have the
funds needed to sustain operations during 2004.
For the immediate future, V-ONE will focus on existing and potential customers
in the government sector, targeted marketing operations to commercial accounts
and continued minimization of general and administrative expenditures. V-ONE may
not be successful in further reducing operating levels without jeopardizing the
ability to serve existing customers or grow its business base. In February 2004,
the Company completed a private placement of 7% Subordinated Convertible Notes
with detachable warrants for an aggregate of $1,200,000, which resulted in net
proceeds to the Company of $1,065,690. The Company believes that to maintain
operations for any extended period of time it must generate revenue from
existing and new customers, raise additional capital or undergo a significant
strategic transformative event. The Company's ability to reach sustainable
profitability is dependent on its ability to generate sufficient cash flow to
meet its obligations and needs on a timely basis or to obtain additional
funding.
13
The Company expanded its banking relationships to explore alternatives to
preserve its operations and maximize shareholder value, including potential
strategic partnering relationships, a business combination with a strategically
placed partner, or a sale of the Company. On May 19, 2004, the Company signed a
letter of intent with SteelCloud Inc. ("SteelCloud"), for SteelCloud to acquire
V-ONE in an all stock transaction. On August 11, 2004, the parties signed a
definitive agreement for the transaction. For further information, refer to Part
II, Item 5 of this Quarterly Report on Form 10-Q and V-ONE's Current Report on
Form 8-K filed with the SEC on August 11, 2004.
CONTRACTUAL OBLIGATIONS
The following table discloses aggregate information about the Company's
contractual obligations as of June 30, 2004 and the periods in which payments
are due:
Payments Due By Period
----------------------------------------------------------------
Remainder 2005 2007 Thereafter Total
of 2004 and 2006 and 2008
----------------------------------------------------------------
Long-term debt obligations $69,351 $46,234 $0 $0 $115,585
Convertible debt 0 0 0 1,200,000 1,200,000
------------ --------- ---------- ------------ ------------
Operating leases 116,064 465,069 296,275 0 877,408
------------ --------- ---------- ------------ ------------
$185,415 $511,303 $296,275 $1,200,000 $2,192,993
============ ========= ========== ============ ============
OFF-BALANCE SHEET ARRANGEMENTS
The Company had no material off-balance sheet arrangements during the first
three and six months of fiscal 2004 or 2003.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is not materially exposed to fluctuations in currency exchange rates
as all of its products are invoiced in U.S. dollars. The Company does not hold
any derivatives or marketable securities. However, the Company is exposed to
interest rate risk. The Company believes that the market risk arising from
holdings of its financial instruments is not material.
Item 4. Controls and Procedures
The Company carried out an evaluation under the supervision and with
participation of the Company's management, including the Company's President,
Chief Executive Officer and Principal Financial Officer, of the effectiveness of
the Company's disclosure controls and procedures pursuant to Rule 13a-15 under
the Securities Exchange Act of 1934 as of the period covered by this report.
Based on that evaluation, the Company's President, Chief Executive Officer and
Principal Financial Officer have concluded that disclosure controls and
procedures were effective as of the end of the period covered by this report to
ensure that information required to be disclosed by the Company in its reports
that it files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms. There was no change in the
Company's internal controls over financial reporting that occurred during the
period covered by this report that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On March 20, 2003, BSA Sales, Inc. d/b/a BSA ("BSA") filed a complaint against
the Company in the Court of Common Pleas in the County of Greenville, South
Carolina, alleging breach of contract for failure to pay disputed fees and
seeking damages of a maximum of $75,000. The fees relate to the early
termination of a contract by the Company for BSA's non-performance under the
contract. The parties proceeded to arbitration as required by the state of North
Carolina, but were unsuccessful in settling the matter. The Company agreed to a
$20,000 settlement in the matter in April 2004 and the complaint was dismissed
with prejudice.
14
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities
In a closing on February 27, 2004, V-ONE issued 7% Subordinated Convertible
Notes with warrants to certain accredited investors for an aggregate principal
amount of $1,200,000, resulting in net proceeds to V-ONE of $1,065,690, which
will be used for general working capital purposes. The 7% Notes mature on
February 27, 2009 and were sold pursuant to Rule 506 of Regulation D promulgated
under the Securities Act of 1933, as amended. Interest at the rate of 7% per
annum is payable semi-annually at the option of V-ONE in cash or in shares of
Common Stock. The holders may convert the principal amount of their 7% Notes, in
whole or in part, at any time into shares of Common Stock at a conversion price
of $0.20 per share. On May 14, 2004, V-ONE effected a 1:2 reverse stock split
modifying the original conversion price of the 7% Notes to $0.40 per share. In
addition, subject to certain terms, the principal amount of the 7% Notes plus
all accrued and unpaid interest shall automatically convert into shares of
Common Stock at the then current conversion price on the earlier of (i) February
27, 2009 and (ii) the first date which is at least 180 days following the
effective date of the Registration Statement providing for the resale of the
shares of Common Stock issuable upon conversion of the 7% Notes that the closing
bid price of V-ONE Common Stock exceeds $1.00 for a period of 20 consecutive
trading days. On May 14, 2004, V-ONE effected a 1:2 reverse stock split
modifying the closing bid to $2.00 per share.
In connection with the 7% Notes offering, V-ONE issued detachable warrants to
purchase 6,000,000 shares of Common Stock to the holders of the 7% Notes. The
warrants are exercisable beginning on August 27, 2004 at an exercise price of
$0.25 per share and expire on August 27, 2008. On May 14, 2004, V-ONE effected a
1:2 reverse stock split reducing the number of shares purchasable under the
warrants to 3,000,000 and increasing the exercise price to $.50. Beginning 180
days after the effective date of a Registration Statement providing for the
resale of the shares of Common Stock issuable upon conversion of the 7% Notes
and exercise of the warrants, V-ONE may call up to 100% of the warrants if the
per share market value of its Common Stock has been greater than $.75 for a
period of 20 consecutive trading days by issuing a call notice to the warrant
holders. The rights and privileges granted to a warrant holder with respect to
the shares subject to the call notice shall expire on the twentieth day after
the holder receives the call notice if the holder does not exercise the warrant.
If the holder does not exercise the warrant, V-ONE shall remit to the warrant
holder (i) $0.01 per share subject to the call notice and (ii) a new warrant
representing the number of shares of Common Stock, if any, which were not
subject to the call notice. Also in connection with the 7% Notes offering, V-ONE
granted warrants to purchase up to a total of 1,260,000 shares of Common Stock
to H.C. Wainwright & Co., Inc., placement agent for the 7% Notes offering. As a
result of the May 2004 1:2 reverse stock split, such shares have been reduced to
630,000. The placement agent warrants contain a cashless exercise provision. The
other terms of the placement agent warrants mirror those of the warrants granted
in connection with the 7% Notes offering.
For the terms and conditions of the 7% Notes and warrants, refer to V-ONE's Form
8-K filed with the SEC on March 5, 2004 and note 6 to the financial statements
contained herein.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On May 13, 2004, the following items were voted on at the Annual Meeting of
Shareholders:
Reelection
Proposal 1*: of Directors For Withheld Abstain Broker Non-Vote
--- -------- ------- ---------------
Molly G. Bayley 24,796,147 198,874 0 18,791,123
Proposal 2*: Amendment to the Company's certificate of incorporation, as
amended and restated, to effect a 1:2 reverse stock split of
Company common stock.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
23,459,243 1,504,146 21,632 18,791,123
15
Proposal 3: Amendment to the Company's 1998 Amended Incentive Stock Plan
increasing the number of shares of common stock authorized and
reserved for issuance under the plan from 5,000,000 to 6,000,000.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
5,647,854 502,267 50,777 0
Proposal 4*: Ratification of appointment of Aronson & Company as the auditors
of the Company for the year ending December 31, 2004.
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
24,694,306 94,581 206,134 18,791,123
- ----------
* Broker non-votes are included in "For" votes on this proposal.
Item 5. Other Information
On May 19, 2004, the Company signed a letter of intent with SteelCloud Inc.
("SteelCloud"), for SteelCloud to acquire V-ONE in an all stock transaction. The
letter of intent contemplated that V-ONE common shareholders would receive one
share of SteelCloud Common Stock in exchange for approximately 8.5 shares of
V-ONE Common Stock. Because of continuing delays in the governmental programs
underlying V-ONE's revenue plan and the resulting adverse effect on V-ONE's
financial position, the parties renegotiated the transaction valuation, taking
into consideration the risks associated with possible additional delays in
V-ONE's government programs. The parties have signed a definitive agreement, a
copy of which was filed with the Securities and Exchange Commission on August
11, 2004 as an exhibit to V-ONE's Current Report on Form 8-K. The definitive
agreement contemplates that V-ONE common shareholders will receive one share of
SteelCloud Common Stock in exchange for approximately 21 shares of V-ONE Common
Stock, plus warrants to purchase an aggregate of 750,000 shares of SteelCloud
Common Stock. The management and respective Boards of Directors of SteelCloud
and V-ONE have approved this transaction subject to shareholder approval and
other customary closing conditions.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this quarterly report on Form
10-Q for the period ended June 30, 2004:
Exhibit Description
- ------- -----------
3.1 Certificate of Amendment to Amended and Restated Certificate of
Incorporation dated May 13, 2004
31 Certification of Chief Executive Officer and Principal Financial
Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Principal Financial
Officer Pursuant to Title 18, United States Code, Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
Form 8-K filed May 20, 2004, reporting under Items 5 and 7.
16
SIGNATURE
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.
V-ONE CORPORATION
Registrant
Date: August 16, 2004 By: /s/ Margaret E. Grayson
--------------------------------------
Name: Margaret E. Grayson
Title: President, Chief Executive
Officer and Principal
Financial Officer
17