Attached files
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EX-31.1 - RULE 13A-14(A) CERTIFICATION (CHIEF EXECUTIVE OFFICER) - PROGINET CORP | prgf10q20091031ex31-1.htm |
EX-32.2 - SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER - PROGINET CORP | prgf10q20091031ex32-2.htm |
EX-31.2 - RULE 13A-14(A) CERTIFICATION (CHIEF FINANCIAL OFFICER) - PROGINET CORP | prgf10q20091031ex31-2.htm |
EX-32.1 - SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - PROGINET CORP | prgf10q20091031ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the quarterly period ended October 31,
2009
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from ____________ to
____________
|
Commission
File No.: 000-30151
Proginet
Corporation
(Exact
name of registrant as specified in its charter)
Delaware
|
11-3264929
|
(State
or other jurisdiction of
|
(IRS
Employer Identification No.)
|
incorporation
or organization)
|
200 Garden City Plaza,
Garden City,
NY 11530
(Address
of principal executive offices) (Zip
Code)
(516)
535-3600
(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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during
the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes __ No
__
Indicate
by check mark whether registrant is a large accelerated filer, accelerated
filer, 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.
Large
accelerated filer o
Accelerated
filer o
Non-accelerated
filer o (Do not
check if a smaller reporting company)
Smaller
reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
No X
There
were 16,826,073 shares of Common Stock outstanding as of November 30,
2009.
1
PROGINET
CORPORATION
FORM
10-Q
FOR
THE QUARTER ENDED October 31, 2009
PART
I. FINANCIAL
STATEMENTS
|
||
Item
1.
|
Financial
Statements
|
|
Balance
Sheets as of October 31, 2009 (Unaudited) and July 31,
2009
|
3
|
|
Statements
of Operations for the Three Months ended October 31, 2009 and 2008
(Unaudited)
|
4
|
|
Statement
of Stockholders' Equity for the Three Months ended October 31, 2009
(Unaudited)
|
5
|
|
Statements
of Cash Flows for the Three Months Ended October 31, 2009 and 2008
(Unaudited)
|
6
|
|
Notes
to Financial Statements (Unaudited)
|
7
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
20
|
Item
4T.
|
Controls
and Procedures
|
21
|
PART
II. OTHER
INFORMATION
|
||
Item
1A
|
Risk
Factors
|
22
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
22
|
Item
6.
|
Exhibits
|
22
|
SIGNATURES
|
23
|
2
PROGINET
CORPORATION
Balance
Sheets
October
31,
2009
(Unaudited)
|
July
31,
2009
|
|||||||
Assets
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 1,545,619 | $ | 1,106,349 | ||||
Trade
accounts receivable, net
|
1,054,878 | 2,366,174 | ||||||
Prepaid
expenses
|
235,311 | 207,050 | ||||||
Total
current assets
|
2,835,808 | 3,679,573 | ||||||
Property
and equipment, net
|
299,040 | 323,478 | ||||||
Capitalized
software development costs, net
|
4,117,954 | 4,080,434 | ||||||
Purchased
software, net
|
58,108 | 133,198 | ||||||
Customer
relationships, net
|
46,395 | 106,350 | ||||||
Goodwill
|
135,932 | 135,932 | ||||||
Other
assets
|
35,870 | 35,870 | ||||||
$ | 7,529,107 | $ | 8,494,835 | |||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 322,394 | $ | 395,835 | ||||
Accrued expense | 479,775 | 865,819 | ||||||
Deferred
revenues
|
2,105,440 | 2,804,438 | ||||||
Deferred
rent
|
26,411 | 23,900 | ||||||
Total
current liabilities
|
2,934,020 | 4,089,992 | ||||||
Deferred
revenues
|
51,378 | 64,919 | ||||||
Deferred
rent
|
116,498 | 123,938 | ||||||
3,101,896 | 4,278,849 | |||||||
Stockholders’
equity
|
||||||||
Preferred
stock, $.01 par value, 10,000,000 shares authorized,
|
||||||||
none
issued
|
- | - | ||||||
Common
stock, $.001 par value, 40,000,000 shares authorized,
|
||||||||
18,151,299
shares issued at October 31, 2009 and 17,847,508 at July 31,
2009
|
18,152 | 17,848 | ||||||
Additional
paid-in capital
|
13,931,432 | 13,799,030 | ||||||
Treasury
stock 1,325,226, at cost, at October 31, 2009 and July 31,
2009
|
(606,023 | ) | (606,023 | ) | ||||
Accumulated
deficit
|
(8,916,350 | ) | (8,994,869 | ) | ||||
Total
stockholders’ equity
|
4,427,211 | 4,215,986 | ||||||
$ | 7,529,107 | $ | 8,494,835 |
The
accompanying notes are an integral part of these financial
statements.
3
PROGINET CORPORATION
Statements
of Operations (Unaudited)
Three
months ended
|
||||||||
October
31,
|
||||||||
2009
|
2008
|
|||||||
Revenues
|
||||||||
Software
licenses
|
$ | 631,255 | $ | 1,454,606 | ||||
Software
maintenance fees and other
|
1,439,122 | 1,332,622 | ||||||
Professional
services
|
96,000 | 76,138 | ||||||
2,166,377 | 2,863,366 | |||||||
Operating
expense
|
||||||||
Cost
of software licenses
|
402,001 | 443,718 | ||||||
Cost
of maintenance fees and other
|
322,311 | 283,817 | ||||||
Cost
of professional services
|
55,500 | 20,844 | ||||||
Commissions
|
149,172 | 170,049 | ||||||
Research
and development
|
13,592 | 62,468 | ||||||
Selling
and marketing
|
437,086 | 818,810 | ||||||
General
and administrative
|
709,494 | 1,073,837 | ||||||
2,089,156 | 2,873,543 | |||||||
Income
(loss) from operations
|
77,221 | (10,177 | ) | |||||
Interest
income
|
1,298 | 6,925 | ||||||
Income
(loss) before income taxes
|
$ | 78,519 | $ | (3,252 | ) | |||
Income
tax expense
|
- | - | ||||||
Net
income (loss)
|
$ | 78,519 | (3,252 | ) | ||||
Basic
income (loss) per common share
|
$ | - | $ | - | ||||
Diluted
income (loss) per common share
|
$ | - | $ | - | ||||
Weighted
average common shares outstanding – basic
|
16,737,905 | 14,808,022 | ||||||
Weighted
average common shares outstanding – diluted
|
17,205,238 | 14,808,022 |
The
accompanying notes are an integral part of these financial
statements.
4
PROGINET
CORPORATION
Statement
of Stockholders’ Equity
Three
months ended October 31, 2009 (unaudited)
Common
Stock
|
Additional
paid-in
capital
|
Treasury
Stock
|
Accum-
Ulated
deficit
|
Total
|
||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||
Balance
– August 1, 2009
|
17,847,508 | $ | 17,848 | $ | 13,799,030 | $ | (606,023 | ) | $ | (8,994,869 | ) | $ | 4,215,986 | |||||||||||
Exercise
of common stock options
|
142,500 | 143 | 44,107 | 44,250 | ||||||||||||||||||||
Stock
Option Expense
|
38,456 | 38,456 | ||||||||||||||||||||||
Private
placement, net
|
161,291 | 161 | 49,839 | 50,000 | ||||||||||||||||||||
Net
income
|
78,519 | 78,519 | ||||||||||||||||||||||
Balance
– October 31, 2009
|
18,151,299 | $ | 18,152 | $ | 13,931,432 | $ | (606,023 | ) | $ | (8,916,350 | ) | $ | 4,427,211 |
The
accompanying notes are an integral part of these financial
statements.
5
PROGINET
CORPORATION
Statements
of Cash Flows (Unaudited)
Three
months ended
|
||||||||
October
31,
|
||||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income (loss)
|
$ | 78,519 | $ | (3,252 | ) | |||
Adjustments
to reconcile net loss to cash provided by (used in) operating
activities
|
||||||||
Depreciation
and amortization
|
429,598 | 438,508 | ||||||
Provision
for bad debt allowance, net
|
- | - | ||||||
Stock
based compensation
|
38,456 | - | ||||||
Deferred
revenue
|
(712,539 | ) | (1,522,567 | ) | ||||
Deferred
rent
|
(4,929 | ) | (2,503 | ) | ||||
Changes
in operating assets and liabilities
|
||||||||
Trade
accounts receivable
|
1,311,296 | 1,196,220 | ||||||
Prepaid
expenses and other assets
|
(28,261 | ) | 2,816 | |||||
Accounts
payable and accrued expenses
|
(459,485 | ) | 205,393 | |||||
Net
cash provided by operating activities
|
652,655 | 314,615 | ||||||
Cash
flows from investing activities
|
||||||||
Capitalized
software development costs
|
(304,476 | ) | (613,451 | ) | ||||
Purchases
of property and equipment
|
(3,159 | ) | (210,761 | ) | ||||
Net
cash used in investing activities
|
(307,635 | ) | (824,212 | ) | ||||
Cash
flows from financing activities
|
||||||||
Proceeds
from private placement, net
|
50,000 | - | ||||||
Exercise
of common stock options
|
44,250 | 63,700 | ||||||
Net
cash provided by financing activities
|
94,250 | 63,700 | ||||||
Net
increase (decrease) in cash
|
439,270 | (445,897 | ) | |||||
Cash
at beginning of period
|
1,106,349 | 2,338,335 | ||||||
Cash
at end of period
|
$ | 1,545,619 | $ | 1,892,438 |
The
accompanying notes are an integral part of these financial
statements.
6
PROGINET
CORPORATION
NOTES
TO FINANCIAL STATEMENTS
October
31, 2009
(Unaudited)
1.
|
Interim
Financial Data
|
The accompanying unaudited financial statements have been prepared
by Proginet Corporation in accordance with accounting principles generally
accepted in the United States of America (“US GAAP”). Unless the
context otherwise requires, “we,” “our,” “us” and similar expressions refer to
Proginet Corporation. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments, consisting only of those of a
normal recurring nature, necessary for a fair presentation of our financial
position, results of operations and cash flows at the dates and for the periods
indicated. These financial statements should be read in conjunction
with the financial statements and notes related thereto, included in the Annual
Report on Form 10-K for year ended July 31, 2009.
These
results for the period ended October 31, 2009 are not necessarily indicative of
the results to be expected for the full fiscal year. The preparation of the
financial statements in conformity with US GAAP 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.
Subsequent
events have been updated through December 14, 2009.
2.
|
Revenue
Recognition
|
We
recognize revenue in accordance with FASB Accounting Standards Codification
(ASC) 985-605. We recognize software license revenues when all of the following
criteria are met: persuasive evidence of an arrangement exists, the fee is fixed
or determinable, collectability is probable, delivery of the product has
occurred and the customer has accepted the product (including the expiration of
an acceptance period) if the terms of the contract include an acceptance
requirement. In instances when any of the criteria are not met, we will either
defer recognition of the software license revenue until the criteria are met or
we will recognize the software license revenue on a ratable basis, as required
by ASC 985-605. We generally utilize written contracts as the means
to establish the terms and conditions by which our products support and services
are sold to our customers. Our revenues are derived from our direct sales force
and channel partnerships (value-added resellers (VARs), Original Equipment
Manufacturers (OEMs), and distributors). Revenues from sales through
distributors are recorded at the gross amount charged based on the economic
risks and ongoing product support responsibilities we assume.
We
consider a non-cancelable agreement signed by us and the customer to be evidence
of an arrangement. Delivery is considered to occur when media containing the
licensed programs is provided to a common carrier, or the customer is given
electronic access to the licensed software. Our typical end user license
agreements do not contain acceptance clauses. We consider the fee to be fixed or
determinable if the fee is not subject to refund or adjustment. If the fee is
not fixed or determinable, we recognize revenue as the amounts become due and
payable. Probability of collection is based upon our assessment of the
customer’s financial condition through review of its current financial
statements or credit reports. Collection is deemed probable if we expect that
the customer will be able to pay amounts under the arrangement as payments
become due. For follow-on sales to existing customers, prior payment history is
also used to evaluate probability of collection. If we determine that collection
is not probable, we defer the revenue and recognize the revenue upon cash
collection.
7
When
software licenses contain multiple elements, revenue is allocated to each
element based on the relative fair values of the elements. Multiple element
arrangements generally include post-contract support (PCS or support), software
products, and in some cases, service. Revenue from multiple-element arrangements
is allocated to undelivered elements of the arrangement, such as PCS, based on
the relative fair values of the specific elements. Our determination of fair
value of each element in multi-element arrangements is based on vendor-specific
objective evidence, which is generally determined by sales of the same element
or service to third parties or by reference to a renewal rate specified in the
related arrangement.
Where
vendor-specific objective evidence of fair value exists for all undelivered
elements, but evidence does not exist for one or more delivered elements, we
account for the delivered elements in accordance with the ”Residual Method”
prescribed by ASC 985-605. Under the residual method, the fair value of the
undelivered elements is deferred and the remaining portion of the arrangement
fee is recognized as revenue. In most cases, the bundled multiple elements
include PCS and the software product. In such cases, when vendor-specific
objective evidence of fair value exists for all of the undelivered elements
(most commonly PCS), the selling price amount is recognized as revenue and the
PCS is recognized ratable over the PCS term, which is typically 12
months.
A
customer typically prepays maintenance revenues and such maintenance revenues
are recognized ratable monthly over the term of the maintenance contract, which
is generally 12 months. Maintenance contracts include the right to
unspecified upgrades on a when-and-if available basis and ongoing
support.
Deferred
revenues include amounts received from customers for which revenue has not yet
been recognized that generally results from agreements where all necessary
revenue recognition requirements have not been met, deferred maintenance,
consulting or training services not yet rendered and license revenue deferred
until all requirements under ASC 985-605 are met. Deferred revenue is recognized
upon delivery of our products, as services are rendered, or as other
requirements requiring deferral under ASC 985-605 are satisfied.
Commission
Expense
Commission
expense is recorded at the time of sale. Commission rates to direct salespeople
are based on a graduating scale, ranging from 2% to 15% of the sale, dependent
upon the revenue volume generated by the sales executive. Distributors are
typically compensated at a commission rate of 40% to 50% and VARs are
compensated at a commission rate of 25% to 40% of the license revenue generated.
The rates vary based upon their level of effort, resources assigned and products
sold. The OEM arrangements include a commission structure similar to
distributors and also may include specific fixed pricing for the number of
“users” the product is licensed for.
8
3.
|
Accounts
Receivable
|
On a
periodic basis, we evaluate our accounts receivable and establish an allowance
for doubtful accounts, when deemed necessary, based on its history of past
write-offs and collections and current credit conditions. As of October 31, 2009
and July 31, 2009, there was an allowance for doubtful accounts of
$45,000.
4.
|
Research
and Development Costs and Capitalized Software Development
Costs
|
Research
and development costs consist of salaries and other costs related to the
development and enhancement of computer software programs. Software
development costs are capitalized upon the establishment of product
technological feasibility until the product is available for general release to
the public. The establishment of technological feasibility and the
ongoing assessment of recoverability of capitalized software development costs
require considerable judgment by management with respect to certain factors
including, but not limited to, the timing of technological feasibility,
anticipated future gross revenues, estimated economic life and changes in
software and hardware technologies. Software development costs not capitalized
are expensed as research and development.
Amortization
of capitalized software development costs is provided on a product-by-product
basis at the greater of the amount computed using the ratio of current gross
revenues for a product to the total of current and anticipated future gross
revenues or the straight-line method over the remaining estimated economic life
of the product.
Amortization
commences once a product becomes available for sale to
customers. Generally, an original estimated economic life of five
years is assigned to capitalized software development costs. Amortization
expense charged to operations was $266,372 and $280,137 for the three months
ended October 31, 2009 and 2008, respectively. This expense is recorded under
“Cost of software licenses” on the Statement of
Operations. Capitalized software development costs are net of
accumulated amortization of $4,117,966 and $3,982,530 at October 31, 2009 and
July 31, 2009, respectively. Capitalized software development costs are retired
from the balance sheet when fully amortized. As of October 31, 2009, $8,801,054
of capitalized software development costs were retired from the balance
sheet.
5.
|
Corporate
Developments
|
On
October 31, 2008, we entered into an Asset Exchange Agreement (the “Asset
Exchange Agreement”), with Beta Systems Software of North America, Inc., a
Delaware corporation ("Beta America"), and Beta Systems Software of Canada Ltd.,
a Canadian body corporate ("Beta Canada"), effective as of October 1,
2008. Under the Asset Exchange Agreement, we (i) have transferred to
Beta Canada all of our intellectual property rights, and books and records,
relating to our Secur-Pass products, and (ii) has assigned to Beta America its
customer, maintenance and service agreements relating to our Secur-Pass
products, in exchange for Beta Canada’s transfer to us of all of its
intellectual property rights, and Beta America’s transfer to us of its customer,
maintenance and service agreements, each relating to the Harbor NSM and Harbor
HFT products. Such agreements were transferred on the effective
date. However, because Beta Canada retained the maintenance and
service obligations associated with the Harbor NSM and HFT products pursuant to
the Services Agreement and Master Distributor Agreement described below, no
liability for these agreements was recorded by us. The revenue associated with
the customer, maintenance and service agreements of the Secur-Pass products was
applied by Beta America as consideration for the Secur-Line License Agreement,
discussed below. The Asset Exchange Agreement contains customary representations
and warranties and indemnities of the parties. The Asset Exchange Agreement was
accounted for as a non-monetary exchange of assets in accordance with ACS 845,
“Non-Monetary Transactions”.
We also
entered into a Support Services Agreement (the “Services Agreement”), with Beta
Canada on October 31, 2008, under which Beta Canada provides to us certain
maintenance and support services for our CFI Suite and the Harbor NSM and Harbor
HFT products. The Services Agreement was effective October 1, 2008
and will continue in effect for two years with automatic one year renewal terms
thereafter, subject to certain non-renewal and termination rights. We
have agreed to compensate Beta Canada a percentage of the gross maintenance
revenue received by us in respect of the support services provided by Beta
Canada under the Services Agreement.
9
On
October 31, 2008, we entered into a Secur-Line Products License Agreement (the
“Secur-Line License Agreement”), with Beta America under which we have licensed
to Beta America, on a non-exclusive basis, intellectual property
rights relating to our Secur-Line products, effective October 1,
2008. The consideration for the license is certain retained customer
payments and receivables generated under various contracts assigned to Beta
America.
We have
assigned to Beta America, under the Asset Exchange Agreement, its customer,
maintenance and service agreements relating to the Secur-Line intellectual
property and technology rights licensed under the Secur-Line License
Agreement. The Secur-Line associated agreements have been assigned in
consideration of certain royalty fees, payable by Beta America to us, based on
gross revenue received by Beta America during the license term under such
agreements which is recorded at the gross amount received under the customer,
maintenance and service agreements in “Maintenance fee and other” in the
accompanying Statement of Operations. We have agreed, in turn, to pay
to Beta America commissions equal to a percentage of such gross revenue which is
recorded in “Costs of maintenance fees and other” in the accompanying Statement
of Operations. The term of the Secur-Line License Agreement expires
on October 1, 2028, at which point the underlying license grant will continue
but be deemed to be fully-paid and royalty-free. All requirements to
make royalty and commission payments will continue until October 1,
2028. The primary purpose of the license grant is to permit Beta
America to provide support services under the Secur-Line associated agreements
assigned under the Asset Exchange Agreement and to further license the relevant
intellectual property.
Under a
Master Distributor Agreement (the “Master Distributor Agreement”), entered into
on October 31, 2008 between Beta Systems Software AG, a German corporation
(“Beta Germany”), and ourselves, Beta Germany or any of its
distributors, subsidiaries or associated companies, has become the exclusive
distributor, subject to certain exceptions, for our CFI Suite and the Harbor NSM
and Harbor HFT products (our file transfer product suite) in Europe and certain
other countries specified therein. Beta has also agreed to provide
certain maintenance and support services to certain eligible customers under the
Master Distributor Agreement. The term of the Master Distributor
Agreement is from October 1, 2008 through July 31, 2011, subject to earlier
termination by either party for cause. Under the Master Distributor
Agreement, We have agreed to compensate Beta Germany a percentage of gross
annual license and maintenance and support services revenue collected by Beta
Germany under the Master Distributor Agreement. Beta Germany has
guaranteed certain revenue minimums which it will be obligated to pay us
annually.
10
6.
|
Purchased
Software and Customer Relationships
|
Purchased
software and customer relationships include software and customer relationships
purchased in a prior year for an original cost of $1,501,774 and $1,199,078,
respectively. Purchased software is net of accumulated amortization
of $1,443,666 and $1,368,576 at October 31, 2009 and July 31, 2009,
respectively. Customer relationships are net of accumulated amortization of
$1,152,683 and $1,092,728 at October 31, 2009 and July 31, 2009,
respectively. Purchased software and customer relationships are being
amortized over a period of five years. Amortization expense charged to
operations for purchased software is $75,090 for the three months ended October
31, 2009 and 2008. Amortization expense charged to operations for customer
relationships is $59,955 for the three months ended October 31, 2009 and 2008.
These assets are expected to be fully amortized by the end of Fiscal
2010.
7.
|
Accrued
Expense
|
October
31,
2009
|
July
31,
2009
|
|||||||
Salaries,
commissions and benefits
|
$ | 170,962 | $ | 227,624 | ||||
Severance
|
66,255 | 148,261 | ||||||
Distributor
payable
|
128,910 | 304,914 | ||||||
Private
placement costs
|
0 | 19,055 | ||||||
Professional
fees
|
67,666 | 91,945 | ||||||
Other
|
45,982 | 74,020 | ||||||
Total
Accrued Expense
|
479,775 | 865,819 |
8.
|
Income
(Loss) Per Share
|
Basic
income (loss) per common share (“EPS”) is computed by dividing net income (loss)
by the weighted average number of common shares outstanding during the
period. Diluted EPS is calculated by dividing net income (loss) by
the weighted average number of shares outstanding plus the dilutive effect, if
any, of outstanding stock options and warrants using the “treasury stock”
method. During periods of net loss diluted net loss per share does
not differ from basic net loss per share since potential shares of common stock
from stock options and warrants are anti-dilutive and therefore are excluded
from the calculation.
11
The
following table sets forth the computation of basic and diluted income (loss)
per share:
Three
months ended
|
||||||||
October
31,
|
||||||||
2008
|
2009
|
|||||||
Numerator:
|
||||||||
Net
income (loss)
|
$ | 78,519 | $ | (3,252 | ) | |||
Denominator:
|
||||||||
Weighted
average number of common shares (basic)
|
16,737,905 | 14,808,022 | ||||||
Effect
of dilutive securities:
|
||||||||
Stock
Options
|
467,333 | - | ||||||
Weighted
average number of common shares (diluted)
|
17,205,238 | 14,808,022 | ||||||
Basic
and diluted income (loss) per share
|
$ | - | $ | - |
Potential
common shares of 1,756,735 and 1,839,735 for the three months ended October 31,
2009 and 2008 are excluded in computing basic and diluted net loss per share as
their effects would be anti-dilutive.
12
9.
|
Equity
|
We follow
the provisions of Statement of Financial Accounting Standards No. 123 (revised
2004), “Share-Based Payment” (SFAS No.123R) (currently within the scope of FASB
ASC Subtopic 718-10) requiring that compensation cost relating to share-based
payment transactions be recognized in the financial statements. The cost is
measured at the grant date, based on the calculated fair value of the award, and
is recognized as an expense over the employee’s requisite service period
(generally the vesting period of the equity award). The impact on our results of
operations of recording share-based compensation expense for the three months
ended October 31, 2009 and 2008 were $38,456 and 0 respectively. This expense
was recorded to “General and administrative” on the Statement of
Operations.
Stock
Option activity during the three months ended October 31, 2009, is as
follows:
Number
of
options
|
Weighted
Average
exercise
price
|
Weighted
Average
Remaining
Contracted
term
(years)
|
Aggregate
intrinsic
value
|
|||||||||||||
Outstanding
at August 1, 2009
|
3,481,235 | $ | .74 | - | - | |||||||||||
Granted
|
- | - | - | - | ||||||||||||
Exercised
|
(142,500 | ) | .31 | - | - | |||||||||||
Forfeited
|
(63,000 | ) | .95 | - | - | |||||||||||
Options
outstanding at October 31, 2009
|
3,275,735 | $ | .76 | 6.20 | $ | 355,370 | ||||||||||
Options
exercisable at October 31, 2009
|
2,444,733 | $ | .81 | 5.22 | $ | 212,310 |
The
impact on our results of operations of recording share-based compensation
expense for the three months ended October 31, 2009 and 2008 were $38,456 and 0
respectively.
13
Item
2. Management's Discussion and
Analysis of Financial Condition and Results
of Operations
General
Unless the context otherwise requires, “we,”
“our,” “us” and similar expressions refer to Proginet
Corporation. You should read the following discussion in conjunction
with our financial statements and the notes thereto included elsewhere
herein. Certain statements under the captions “Business”,
“Management's Discussion and Analysis of Financial Condition and Results of
Operations” and elsewhere in this Form 10-Q contain “forward-looking statements”
within the meaning of the Securities Exchange Act of 1934. Words such
as “may”, “should”, “could”, “believe”, “expect”, “anticipate”, “estimate”,
“intend”, “strategy”, “likely” and similar expressions are intended to identify
forward-looking statements about our future plans, objectives, performance,
intentions and expectations. Such forward-looking statements are
subject to a number of known and unknown risks, uncertainties and other factors
which may cause our actual results of operations and future financial condition
to differ materially from those expressed or implied in or by any such
forward-looking statements. Such factors include factors that may be
beyond our control and include, among others, the risks described in our latest
Form 10-K for the year ended July 31, 2009. We caution that the foregoing list
of important factors is not exclusive. We do not undertake to update any
forward-looking statements contained herein or that may be made from time to
time by us or on our behalf.
Use
of Estimates and Critical Accounting Policies
In
preparing our financial statements, we make estimates, assumptions and judgments
that can have a significant impact on our revenues, income from operations, and
net income, as well as on the value of certain assets on our balance sheet. We
believe that there are several accounting policies that are critical to an
understanding of our historical and future performance, as these policies affect
the reported amounts of revenues, expenses, and significant estimates and
judgments applied by management. While there are a number of accounting
policies, methods and estimates affecting our financial statements, areas that
are particularly significant include revenue recognition and capitalized
software development costs. These policies are described in detail below. In
addition, please refer to Note 1 to the accompanying financial statements for
further discussion of our accounting policies.
In
addition to the estimates and assumptions that we use to prepare our historical
financial statements, we monitor our sales pipeline in order to estimate the
timing and amount of future revenues. If we are unable to properly estimate the
timing and amount of revenues, our future operations could be significantly
impacted. Our sales pipeline may not consistently relate to revenues in a
particular period, as the data upon which the assumptions and estimates were
made by management may change. For example, information technology spending
trends may cause customers to delay and reduce purchasing decisions.
Accordingly, it may be harder to close contracts with customers, the size of the
transactions may decrease, and many of our license contracts are pushed to the
very end of the quarter, making it difficult for us to forecast revenues for the
quarter, and adjust spending to respond to variations in revenue growth during
the quarter, all of which may adversely affect our business, financial condition
and results of operations.
14
Revenue
Recognition
We
recognize revenue in accordance with FASB Accounting Standards Codification
(ASC) 985-605. We recognize software license revenues when all of the following
criteria are met: persuasive evidence of an arrangement exists, the fee is fixed
or determinable, collectability is probable, delivery of the product has
occurred and the customer has accepted the product (including the expiration of
an acceptance period) if the terms of the contract include an acceptance
requirement. In instances when any of the criteria are not met, we will either
defer recognition of the software license revenue until the criteria are met or
we will recognize the software license revenue on a ratable basis, as required
by ASC 985-605. We generally utilize written contracts as the means
to establish the terms and conditions by which our products support and services
are sold to our customers.
We
consider a non-cancelable agreement signed by us and the customer to be evidence
of an arrangement. Delivery is considered to occur when media containing the
licensed programs is provided to a common carrier, or the customer is given
electronic access to the licensed software. Our typical end user license
agreements do not contain acceptance clauses. We consider the fee to be fixed or
determinable if the fee is not subject to refund or adjustment. If the fee is
not fixed or determinable, we recognize revenue as the amounts become due and
payable. Probability of collection is based upon our assessment of the
customer’s financial condition through review of its current financial
statements or credit reports. Collection is deemed probable if we expect that
the customer will be able to pay amounts under the arrangement as payments
become due. For follow-on sales to existing customers, prior payment history is
also used to evaluate probability of collection. If we determine that collection
is not probable, we defer the revenue and recognize the revenue upon cash
collection.
Our
revenues are derived from our direct sales force and channel partnerships (VARs,
OEMs, and distributors). Commission expense is recorded at the time
of sale. Commission rates to direct sales people are based on a graduating
scale, ranging from 2% to 15% of the sale, dependent upon the revenue volume
generated by the sales person. Distributors are typically compensated
at a commission rate of 40% to 50% and VARs are compensated at a commission rate
of 25% to 40% of the license revenue generated. The rates vary based upon their
level of effort, resources assigned and products sold. The OEM arrangements
include a commission structure similar to distributors and also may include
specific fixed pricing for the number of “users” the product is licensed for.
Revenues from sales through distributors are recorded at the gross amount
charged based on the economic risks and ongoing product support responsibilities
we assume.
When our
software licenses contain multiple elements, we allocate revenue to each element
based on the relative fair values of the elements. Multiple element arrangements
generally include post-contract support (PCS or support), software products and,
in some cases, service. Revenue from multiple-element arrangements is allocated
to undelivered elements of the arrangement, such as PCS, based on the relative
fair values of the elements specific to us. Our determination of fair value of
each element in multi-element arrangements is based on vendor-specific objective
evidence, which is generally determined by sales of the same element or service
to third parties or by reference to a renewal rate specified in the related
arrangement.
Where
vendor-specific objective evidence of fair value exists for all undelivered
elements, but evidence does not exist for one or more delivered elements, we
account for the delivered elements in accordance with the selling price method
prescribed by ASC 985-605. Under the selling price method, the estimated selling
price of the undelivered elements is deferred and the remaining portion of the
arrangement fee is recognized as revenue. In most cases, the bundled multiple
elements include PCS and the software product. In such cases, when
vendor-specific objective evidence of fair value exists for all of the
undelivered elements (most commonly PCS), the selling price amount is recognized
as revenue and the PCS is recognized ratable over the PCS term, which is
typically 12 months.
15
A
customer typically prepays maintenance revenues for the first 12 months and the
related maintenance revenues are recognized ratable monthly over the term of the
maintenance contract, which is generally 12 months. Maintenance contracts
include the right to unspecified upgrades on a when-and-if available basis and
ongoing support.
Deferred
revenues include amounts received from customers for which revenue has not yet
been recognized that generally results from deferred maintenance, consulting or
training services not yet rendered and license revenue deferred until all
requirements under ASC 985-605 are met. Revenue is recognized upon delivery of
our products, as services are rendered, or as other requirements requiring
deferral under ASC 985-605 are satisfied.
Based on
our interpretation of ASC 985-605, we believe that our current sales contract
terms and business arrangements have been properly reported. However,
the American Institute of Certified Public Accountants and its Software Revenue
Recognition Task Force continue to issue interpretations and guidance for
applying the relevant standards to a wide range of sales contract terms and
business arrangements that are prevalent in the software
industry. Future interpretations of existing accounting standards or
changes in our business practices could result in future changes in our revenue
accounting policies that could have a material adverse effect on our business,
financial condition and results of operations.
Capitalized
Software Development Costs
We
capitalize our software development costs when the projects under development
reach technological feasibility as defined by Financial Accounting Standard
(“FAS”) No. 86 (currently within the scope of FASB Accounting Standards
Codification (ASC) Subtopic 985-20), and amortize these costs over the products’
estimated useful lives. Under FAS No. 86, we evaluate our capitalized software
costs at each balance sheet date to determine if the unamortized balance related
to any given product exceeds the estimated net realizable value of that product.
Any such excess is written off through accelerated amortization in the quarter
it is identified. Determining net realizable value as defined by FAS
No. 86 requires that we estimate future cash flows to be generated by the
products and use judgment in quantifying the appropriate amount to write off, if
any. Actual cash flows and amounts realized from the software
products could differ from our estimates. Also, any future changes to
our product portfolio could result in significant research and development
expenses related to software asset write-offs.
Goodwill,
Other Intangible Assets and Other Long-Lived Assets
We assess
the possible impairment of goodwill at least annually or when events occur or
circumstances change that would more likely than not reduce the fair value of
the asset below its carry amount. Impairment is the condition that
exists when the carrying amount of the goodwill exceeds its implied fair value.
The first step in the impairment process is to determine the fair value of the
reporting unit and then compare it to the carry value, including
goodwill. We determined that the market capitalization approach is
the most appropriate method of measuring fair value of the reporting unit,
assuming a controlling interest. Under this approach, fair value is
calculated based on the market price of common stock, multiplied by the number
of outstanding shares. A control premium, which is representative of
premiums paid to the marketplace to acquire a controlling interest in a company,
is then added to the market capitalization to determine the fair value of the
asset. If the fair value exceeds the carrying value, no further
action is required and no impairment loss is recognized. Additional
impairment assessments may be performed on an interim basis if we encounter
events or changes in circumstances that, more than likely than not, the carrying
value of goodwill has been impaired. There was no impairment of
goodwill in 2010 or 2009.
16
Stock
Options and Stock Based Compensation
Effective
August 1, 2006, we adopted the provisions of Statement of Financial Accounting
Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS No.123R)
(currently within the scope of FASB ASC Subtopic 718-10) requiring that
compensation cost relating to share-based payment transactions be recognized in
the financial statements. The cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employee’s requisite service period (generally the vesting period of the equity
award).
Results
of Operations
Corporate
Developments
On
October 31, 2008, we entered into an Asset Exchange Agreement (the “Asset
Exchange Agreement”), with Beta Systems Software of North America, Inc., a
Delaware corporation ("Beta America"), and Beta Systems Software of Canada Ltd.,
a Canadian body corporate ("Beta Canada"), effective as of October 1,
2008. Under the Asset Exchange Agreement, we (i) have transferred to
Beta Canada all of its intellectual property rights, and books and records,
relating to our Secur-Pass products, and (ii) has assigned to Beta America its
customer, maintenance and service agreements relating to our Secur-Pass
products, in exchange for Beta Canada’s transfer to us of all of its
intellectual property rights, and Beta America’s transfer to us of its customer,
maintenance and service agreements, each relating to the Harbor NSM and Harbor
HFT products. Such agreements were transferred on the effective date, however,
Beta Canada retained the maintenance and service requirements associated with
the Harbor NSM and HFT products, as such, no liability for these agreements was
recorded by us. The revenue associated with the customer, maintenance and
service agreements of the Secur-Pass products was applied by Beta America as
consideration for the Secur-Line License Agreement, discussed below. The Asset
Exchange Agreement contains customary representations and warranties and
indemnities of the parties. The Asset Exchange Agreement was accounted for as a
non-monetary exchange of assets in accordance with ASC 845, “Non-Monetary
Transactions”.
We also
entered into a Support Services Agreement (the “Services Agreement”), with Beta
Canada on October 31, 2008, under which Beta Canada provides to us certain
maintenance and support services for our CFI Suite and the Harbor NSM and Harbor
HFT products. The Services Agreement was effective October 1, 2008
and will continue in effect for two years with automatic one year renewal terms
thereafter, subject to certain non-renewal and termination rights. We
have agreed to compensate Beta Canada a percentage of the gross maintenance
revenue received by us in respect of the support services provided by Beta
Canada under the Services Agreement.
On
October 31, 2008, we entered into a Secur-Line Products License Agreement (the
“Secur-Line License Agreement”), with Beta America under which we have licensed
to Beta America, on a non-exclusive basis, intellectual property
rights relating to our Secur-Line products, effective October 1,
2008. The consideration for the license is certain retained customer
payments and receivables generated under various contracts assigned to Beta
America.
We have
assigned to Beta America, under the Asset Exchange Agreement, its customer,
maintenance and service agreements relating to the Secur-Line intellectual
property and technology rights licensed under the Secur-Line License
Agreement. The Secur-Line associated agreements have been assigned in
consideration of certain royalty fees, payable by Beta America to us, based on
gross revenue received by Beta America during the license term under such
agreements which is recorded at the gross amount received under the customer,
maintenance and service agreements in “Maintenance fee and other” in the
accompanying Statement of Operations. We have agreed, in turn, to pay
to Beta America commissions equal to a percentage of such gross revenue which is
recorded in “Costs of maintenance fees and other” in the accompanying Statement
of Operations. The term of the Secur-Line License Agreement expires
on October 1, 2028, at which point the underlying license grant will continue
but be deemed to be fully-paid and royalty-free. All requirements to
make royalty and commission payments will continue until October 1,
2028. The primary purpose of the license grant is to permit Beta
America to provide support services under the Secur-Line associated agreements
assigned under the Asset Exchange Agreement and to further license the relevant
intellectual property.
17
Under a
Master Distributor Agreement (the “Master Distributor Agreement”), entered into
on October 31, 2008 between Beta Systems Software AG, a German corporation
(“Beta Germany”), and ourselves, Beta Germany or any of its
distributors, subsidiaries or associated companies, has become the exclusive
distributor, subject to certain exceptions, for our CFI Suite and the Harbor NSM
and Harbor HFT products (our file transfer product suite) in Europe and certain
other countries specified therein. Beta has also agreed to provide
certain maintenance and support services to certain eligible customers under the
Master Distributor Agreement. The term of the Master Distributor
Agreement is from October 1, 2008 through July 31, 2011, subject to earlier
termination by either party for cause. Under the Master Distributor
Agreement, We have agreed to compensate Beta Germany a percentage of gross
annual license and maintenance and support services revenue collected by Beta
Germany under the Master Distributor Agreement. Beta Germany has
guaranteed certain revenue minimums which it will be obligated to pay us
annually.
Revenues
Total
revenues for the quarter ended October 31, 2009 amounted to $2,166,377,
representing a decrease of $696,989, or 24.3% compared to revenues of $2,863,366
for the quarter ended October 31, 2008. This increase is
due to the factors described below.
Software
license revenues for the quarter ended October 31, 2009 amounted to $631,255
representing a decrease of $823,351 or 56.6%, compared to software license
revenues of $1,454,606 for the quarter ended October 31,
2008. Software license revenue is sold directly through domestic
salespeople and indirectly through international distributors and OEM partners.
The decrease in software license revenue is primarily attributable to last
year’s Secur-Line License Agreement with Beta America, more fully
described above under “Corporate Developments”, under which certain deferred
maintenance revenue was recognized as license revenue in October 2008, and is
now being recognized as maintenance revenue. This decrease was partially offset
by the closing of one significant contract with approximately $230,000 of new
license revenue and several other insignificant contracts.
Software
maintenance fees and other increased by $106,500, or 8% to $1,439,122 compared
to such fees for the quarter ended October 31, 2008 of $1,332,622. The increase
in software maintenance fees and other is primarily due to last
year’s recognition of deferred maintenance revenue as a result of the
Secur-Line License Agreement with Beta America more fully described above under
“Corporate Developments”. As described above, per this agreement
certain deferred maintenance revenue was recognized as license revenue in
October 2008, and is now being recognized as maintenance revenue.
Fees for
professional services for the quarter ended October 31, 2009 amounted to $96,000
an increase of $19,862, or 26.1%, compared to fees for professional services of
$76,138 for the quarter ended October 31, 2008. Such revenue is related to
ad-hoc consulting services that are typically provided in response to requests
for support from existing customers. Consequently, consulting revenue
can vary considerably from period to period.
Operating
Expenses
Operating
expenses decreased to $2,089,156 from $2,873,543 for quarter ended October 31,
2009 and October 31, 2008 respectively, a decrease of $784,387 or 27.3%. The
decrease in operating expenses for the quarter is primarily a combined result of
the following factors:
Cost of
software licenses (which primarily includes amortization of capitalized software
costs) for the quarter ended October 31, 2009 amounted to $402,001, representing
a decrease of $41,717 or 9.4%, compared to cost of software licenses of
$443,718, for the quarter ended October 31, 2008. The decrease in cost of
software sales and licenses is due to the decrease in amortization expense for
internally developed software completed and announced available for sale during
the quarter.
18
Cost of
maintenance fees and other (which principally consists of technical support
payroll) for the quarter ended October 31, 2009 amounted to $322,311,
representing an increase of $38,494 or 13.6%, compared to cost of maintenance
fees and other of $283,817 for the quarter ended October 31, 2008. The increase
in cost of maintenance fees and other is primarily due to the implementation of
the Services Agreement with Beta Canada more fully described under “Corporate
Developments” above offset by a decrease in the employee headcount and payroll
allocated costs associated with the technical services rendered directly by
us.
Commissions
amounted to $149,172 for the quarter ended October 31, 2009 representing a
decrease of $20,877 or 12.3% compared to $170,049 for the quarter ended October
31, 2008. The decrease in commission expense for the three months
ended October 31, 2009 is primarily due to our no longer incurring distributor
commission expense related to the Secur-Pass products as a result of the Asset
Exchange Agreement with Beta America, more fully described under “Corporate
Developments” above.
Selling
and marketing expense for the quarter ended October 31, 2009 amounted to
$437,086 representing a decrease of $381,724 or 46.6%, compared to selling and
marketing expense of $818,810 for the quarter ended October 31, 2008. The
decrease in selling and marketing for the three months ended October 31, 2009 is
primarily due to a decrease in employee payroll and employee related expenses,
the termination of the our public relations firm as we underwent a cost
reduction initiative in November 2008 and decreases in other marketing
initiatives such as trade show and conference attendance and sales related
travel.
General
and administrative expense for the quarter ended October 31, 2009 amounted to
$709,494, representing a decrease of $364,343 or 33.9% compared to $1,073,837 in
general and administrative expense for the quarter ended October 31, 2008. The
decrease in general and administrative expenses is primarily due to a decrease
in professional fees, a decrease in consulting fees and a reduction in
payroll.
We
reported net income of $78,519 and net loss of $3,252 for the three months ended
October 31, 2009 and 2008, respectively.
Liquidity,
Capital Resources and Financial Condition
At
October 31, 2009, we had a cash balance of $1,545,619.
Operating
activities provided cash of $652,654 for the three months ended October 31,
2009. This resulted primarily from a decrease to trade accounts
receivable of $1,311,296, non-cash charges for depreciation and amortization of
$429,598, offset by a decrease in deferred revenue of $712,539 and a decrease in
accounts payable and accrued expenses of $459,485 based on the timing of cash
disbursements.
Investing
activities used cash of $307,635 for the three months ended October 31, 2009
primarily for costs associated with the development of our software
products.
Financing
activities provided cash of $94,250 from proceeds of our common stock in a
private placement and the exercise of stock options.
On
September 25, 2009, we entered into an asset based credit facility (the “Credit
Agreement”) with Bridge Bank, N.A (the “Lender”). The Credit Agreement provides
for advances of up to $800,000 against 80% of eligible accounts
receivable. The finance charge, which is assessed against the amount
of receivables financed from time to time, is equal to the greater of 4.00% per
annum or Lender’s Prime Rate, as announced, plus 0.64%. We are also
required to pay the Lender a monthly maintenance fee equal to between 0.2% and
0.3% of the receivables financed. The credit facility is secured by a general
pledge of our assets. Under the terms of the Credit Agreement, the obligors on
the accounts receivable are to pay Lender directly through a lock box
arrangement. If the amount advanced is not paid by the obligors
within 90 days of the earlier of the advance or invoice date, we are required to
pay the amount.
19
The Credit Agreement includes usual and
customary events of default for facilities of this nature and provides that,
upon the occurrence of an event of default, all amounts payable under the Credit
Agreement may be accelerated. The Credit Agreement also restricts our
ability to incur other indebtedness, other than payables in the ordinary course
of business. Either party can terminate the Credit Agreement at any
time, with a required payment of $10,000 if terminated by us in the first year
after the date of execution. We are also required to pay a variety of
fees aggregating approximately $35,000 in connection with entering into the
facility. We have not yet used the Credit Agreement as of the date of
this filing.
We
believe that our present cash, the cash generated from operations and amounts
available under its present line of credit agreements will be sufficient to meet
our cash needs for at least the next twelve months.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
Item
3. Quantitative and
Qualitative Disclosures about Market Risk.
Not
applicable.
20
Item
4T. Controls and Procedures
a.
|
Evaluation
of Disclosure Controls and
Procedures
|
Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of
1934), as of the end of the period covered by this Quarterly Report on Form
10-Q. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are
effective to ensure that information we are required to disclose in reports that
we file or submit under the Securities Exchange Act of 1934 (i) is recorded,
processed, summarized and reported within the times periods specified in the
Securities and Exchange Commission rules and forms and (ii) is accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
b.
|
Changes
in Internal Controls
|
There
were no changes in our internal controls over financial reporting that occurred
during the period covered by this Quarterly Report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
21
PART
II. OTHER INFORMATION
Item
1A. Risk Factors
There
were no material changes from the risk factors previously disclosed in our
Report on Form 10-K for the year ended July 31, 2009. For a full description of
these risk factors, please refer to Item 1A (Risk Factors) in our Report on
Form 10-K for the year ended July 31, 2009.
Item
4. Submission of Matters To
A Vote Of Security Holders
We held
our 2009 Annual Meeting of Stockholders on November 17, 2009 in Garden City, New
York. At the annual meeting, the stockholders voted on the election
of nominees to our six person Board of Directors. Each of Amit Basak,
George T. Hawes, Dr. E. Kelly Hyslop, Sandison Weil, Stephen Kezirian and Allen
Wolpert received a plurality of the votes cast for the nominees for director by
the shares represented at the annual meeting and each was elected as a member of
the Board of Directors to serve until the annual meeting of stockholders to be
held in the year 2010, and until their respective successors are elected and
qualified. The votes for directors were as follows:
Votes
|
||
For
|
Withheld
|
|
Amit
Basak
|
11,488,987
|
43,749
|
George
T. Hawes
|
11,438,987
|
93,749
|
Dr.
E. Kelly Hyslop
|
11,488,987
|
43,749
|
Stephen
Kezirian
|
11,438,987
|
93,749
|
Sandison
Weil
|
11,488,987
|
43,749
|
Allen
Wolpert
|
11,488,987
|
43,749
|
There
were no other matters submitted to a vote of the stockholders.
Item
6. Exhibits
(a)
Exhibits
Exhibit
31.1 – Rule 13a-14(a) Certification (Chief Executive Officer)
Exhibit
31.2 – Rule 13a-14(a) Certification (Chief Financial Officer)
Exhibit
32.1 – Section 1350 Certification of Chief Executive Officer
Exhibit
32.2 – Section 1350 Certification of Chief Financial Officer
22
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.
PROGINET
CORPORATION
|
|||
(Registrant)
|
|||
Date December 14,
2009
|
/s/
Sandison Weil
|
||
Sandison
Weil, President and
|
|||
Chief
Executive Officer
|
|||
Date December 14,
2009
|
/s/
Joseph Christel
|
||
Joseph
Christel
|
|||
Chief
Financial Officer
|
23