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EXCEL - IDEA: XBRL DOCUMENT - SIMON WORLDWIDE INC | Financial_Report.xls |
EX-32 - EX-32 - SIMON WORLDWIDE INC | b87030exv32.htm |
EX-31 - EX-31 - SIMON WORLDWIDE INC | b87030exv31.htm |
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2011
OR
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 Number: 0-21878
SIMON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE (State or other jurisdiction of incorporation or organization) |
04-3081657 (I.R.S. Employer Identification No.) |
5200 WEST CENTURY BOULEVARD, LOS ANGELES, CALIFORNIA 90045
(Address of principal executive offices)
(Address of principal executive offices)
(310) 417-4660
(Registrants telephone number, including area code)
(Registrants 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 þ No o
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
o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company þ | |||
(Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act): Yes o No þ
At August 5, 2011, 50,611,879 shares of the registrants common stock were outstanding.
SIMON WORLDWIDE, INC.
FORM 10-Q
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FORM 10-Q
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PART I FINANCIAL INFORMATION
Item 1. | Condensed Financial Statements |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 9,874 | $ | 10,625 | ||||
Prepaid expenses and other current assets |
70 | 190 | ||||||
Total current assets |
9,944 | 10,815 | ||||||
Investments |
7 | 66 | ||||||
Other assets |
398 | 409 | ||||||
Total non-current assets |
405 | 475 | ||||||
$ | 10,349 | $ | 11,290 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 121 | $ | 135 | ||||
Accrued expenses and other current liabilities |
35 | 59 | ||||||
Total current liabilities |
156 | 194 | ||||||
Stockholders equity: |
||||||||
Common stock, $.01 par value; 100,000,000 shares authorized;
50,611,879 shares issued and outstanding net of 4,002,070 treasury shares
at par value at June 30, 2011 and December 31, 2010 |
506 | 506 | ||||||
Additional paid-in capital |
152,083 | 152,083 | ||||||
Deficit |
(142,401 | ) | (141,500 | ) | ||||
Accumulated other comprehensive income |
5 | 7 | ||||||
Total stockholders equity |
10,193 | 11,096 | ||||||
$ | 10,349 | $ | 11,290 | |||||
See the accompanying Notes to Condensed Consolidated Financial Statements.
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SIMON WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
For the Three Months | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
$ | | $ | | $ | | $ | | ||||||||
General and administrative expenses |
433 | 528 | 932 | 1,134 | ||||||||||||
Operating loss from continuing operations |
(433 | ) | (528 | ) | (932 | ) | (1,134 | ) | ||||||||
Interest income |
7 | 13 | 15 | 31 | ||||||||||||
Other income, net |
15 | 2 | 15 | 2 | ||||||||||||
Loss from continuing operations before income taxes |
(411 | ) | (513 | ) | (902 | ) | (1,101 | ) | ||||||||
Income tax benefit |
| | 1 | | ||||||||||||
Net loss from continuing operations |
(411 | ) | (513 | ) | (901 | ) | (1,101 | ) | ||||||||
Loss from discontinued operations, net of tax |
| (27 | ) | | (27 | ) | ||||||||||
Net loss |
$ | (411 | ) | $ | (540 | ) | $ | (901 | ) | $ | (1,128 | ) | ||||
Loss per share from continuing operations: |
||||||||||||||||
Loss per common share basic and diluted |
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
Weighted average shares outstanding basic and diluted |
50,612 | 51,637 | 50,612 | 52,912 | ||||||||||||
Loss per share from discontinued operations: |
||||||||||||||||
Loss per common share basic and diluted |
$ | | $ | | $ | | $ | | ||||||||
Weighted average shares outstanding basic and diluted |
50,612 | 51,637 | 50,612 | 52,912 | ||||||||||||
Net loss per share: |
||||||||||||||||
Loss per common share basic and diluted |
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
Weighted average shares outstanding basic and diluted |
50,612 | 51,637 | 50,612 | 52,912 | ||||||||||||
See the accompanying Notes to Condensed Consolidated Financial Statements.
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For the Three Months | For the Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net loss |
$ | (411 | ) | $ | (540 | ) | $ | (901 | ) | $ | (1,128 | ) | ||||
Other comprehensive loss: |
||||||||||||||||
Unrealized loss on investments |
(1 | ) | (1 | ) | (2 | ) | (1 | ) | ||||||||
Comprehensive loss |
$ | (412 | ) | $ | (541 | ) | $ | (903 | ) | $ | (1,129 | ) | ||||
See the accompanying Notes to Condensed Consolidated Financial Statements.
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For the Six Months | ||||||||
Ended June 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (901 | ) | $ | (1,128 | ) | ||
Less: Loss from discontinued operations |
| (27 | ) | |||||
Loss from continuing operations |
(901 | ) | (1,101 | ) | ||||
Adjustments to reconcile net loss to net
cash used in operating activities: |
||||||||
Gain on sale of investment |
(14 | ) | | |||||
Charge for impaired investment |
| 1 | ||||||
Non-cash asset charge |
8 | 53 | ||||||
Increase (decrease) in cash from changes
in working capital items: |
||||||||
Prepaid expenses and other current assets |
120 | 70 | ||||||
Accounts payable |
(14 | ) | 58 | |||||
Accrued expenses and other current liabilities |
(23 | ) | (17 | ) | ||||
Cash used by continuing operations |
(824 | ) | (936 | ) | ||||
Operating activities from discontinued operations |
| (27 | ) | |||||
Net cash used in operating activities |
(824 | ) | (963 | ) | ||||
Net cash provided by investing activities: |
||||||||
Proceeds from sale of investment |
73 | | ||||||
Cash provided by investing activities |
73 | | ||||||
Cash flows from financing activities: |
||||||||
Payment to reacquire common stock |
| (1,256 | ) | |||||
Cash used in financing activities |
| (1,256 | ) | |||||
Net decrease in cash and cash equivalents |
(751 | ) | (2,219 | ) | ||||
Cash and cash equivalents, beginning of period |
10,625 | 14,765 | ||||||
Cash and cash equivalents, end of period |
$ | 9,874 | $ | 12,546 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid during the period for: |
||||||||
Income taxes |
$ | 3 | $ | 4 | ||||
See the accompanying Notes to Condensed Consolidated Financial Statements.
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SIMON WORLDWIDE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by Simon
Worldwide, Inc. (the Company or Simon) pursuant to the rules and regulations of the Securities
and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all
of the information and footnotes in accordance with accounting principles generally accepted in the
United States of America for complete financial statements and should be read in conjunction with
the consolidated financial statements included in the Companys Annual Report on Form 10-K for the
year ended December 31, 2010.
In the opinion of management, the accompanying unaudited condensed consolidated financial
statements contain all adjustments, consisting only of those considered necessary for fair
presentation of the Companys financial position, results of operations, and cash flows at the
dates and for the periods presented. Certain prior period amounts have been reclassified to conform
with current period presentation.
Prior to August 2001, the Company was a multi-national, full service promotional marketing company.
In August 2001, McDonalds Corporation (McDonalds), the Companys principal customer, terminated
its 25-year relationship with the Company as a result of the embezzlement by a former Company
employee of winning game pieces from McDonalds promotional games administered by the Company.
Other customers also terminated their relationships with the Company, resulting in the Company no
longer having a business. By April 2002, the Company had effectively eliminated a majority of its
ongoing promotions business operations and was in the process of disposing of its assets and
settling its liabilities related to the promotions business and defending and pursuing litigation
with respect thereto. As a result of these efforts, the Company has been able to resolve a
significant number of outstanding liabilities that existed in August 2001 or arose subsequent to
that date.
The operating results for the three and six months ended June 30, 2011, are not necessarily
indicative of the results to be expected for the full year.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update
(ASU) No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU
No. 2011-05 provides an entity the option to present the total of comprehensive income, the
components of net income, and the components of other comprehensive income either in a single
continuous statement of comprehensive income or in two separate but consecutive statements. In both
choices, an entity is required to present each component of net income along with total net income,
each component of other comprehensive income along with a total for other comprehensive income, and
a total amount for comprehensive income. In a single continuous statement, the entity is required
to present the components of net income and total net income, the components of other comprehensive
income and a total for other comprehensive income, along with the total of comprehensive income in
that statement. In the two-statement approach, an entity is required to present components of net
income and total net income in the statement of net income. The statement of other comprehensive
income should immediately follow the statement of net income and include the components of other
comprehensive income and a total for other comprehensive income, along with a total for
comprehensive income.
Regardless of whether an entity chooses to present comprehensive income in a single continuous
statement or in two separate but consecutive statements, the entity is required to present on the
face of the financial statements reclassification adjustments for items that are reclassified from
other comprehensive income to net income in the statement(s) where the components of net income and
the components of other comprehensive income are presented.
ASU No. 2011-05 is effective for fiscal years, and interim periods within those years, beginning
after December 15, 2011 and should be applied retrospectively. The Company does not expect its
adoption will have a material effect on the Companys consolidated statements of financial position
or results of operations.
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Table of Contents
2. Absence of Operating Business
As a result of the loss of its customers, the Company no longer has any operating business. Since
August 2001, the Company has concentrated its efforts on reducing its costs and settling numerous
claims, contractual obligations, and pending litigation. By April 2002, the Company had effectively
eliminated a majority of its ongoing promotions business operations and was in the process of
disposing of its assets and settling its liabilities related to the promotions business and
defending and pursuing litigation with respect thereto. In essence, the Company discontinued its
promotions business and changed the nature of its operation to focus on its pending litigation and
winding down its contracted obligations. As a result of these efforts, the Company has been able to
resolve a significant number of outstanding liabilities that existed in August 2001 or arose
subsequent to that date. As of June 30, 2011, the Company had reduced its workforce to 4 employees
from 136 employees as of December 31, 2001.
With no revenues from operations, the Company closely monitors and controls its expenditures within
a reasonably predictable range. Cash used by continuing operating activities was $2.3 million and
$2 million in the years ended December 31, 2010 and 2009, respectively. The Company continues to
incur losses in 2011 for the general and administrative expenses incurred to manage the affairs of
the Company. By utilizing cash available at June 30, 2011 to maintain its scaled back operations,
management believes it has sufficient capital resources and liquidity to operate the Company for at
least one year.
As of December 31, 2010, the Company has federal net operating loss carryforwards (NOLs) of
approximately $70.2 million and state NOLs of approximately $46.7 million that may, subject to
applicable tax rules, be used to reduce certain income tax obligations in the future. Because of
its current lack of operations, the Company has established a valuation allowance for the entire
amount of federal and state NOLs as it is unlikely that the Company can realize these deferred tax
benefits in the future.
3. Discontinued Operations
The discontinued activities of the Company have been classified as discontinued operations in the
accompanying condensed consolidated financial statements. As of June 30, 2011, and December 31,
2010, the Company had no liabilities within its discontinued operations.
In October 2010, the Company settled the remaining liability in its discontinued operations which
was a post-employment obligation dating back to the Companys decision to discontinue its marketing
operations. The Company used cash from continuing operations of $0.6 million to satisfy this
obligation. The Company had planned to use the cash surrender value (CSV) associated with the
post-employment obligation to settle the liability. The terms of the settlement agreement entitle
the Company to the CSV in future periods.
The Company had a loss from discontinued operations totaling $27,000 for the three and six months
ended June 30, 2010.
4. Long-term Investments
YUCAIPA AEC ASSOCIATES
At June 30, 2011, the Company held an investment in Yucaipa AEC, a limited liability company that
is controlled by The Yucaipa Companies. The Company owns 18.23% of and has significant influence
over Yucaipa AEC and, accordingly, accounts for its investment under the equity method.
The carrying value of the Companys investment in Yucaipa AEC totals approximately $7,000 at June
30, 2011, and December 31, 2010, respectively, and is included in the investments line item in the
consolidated balance sheets.
OTHER INVESTMENTS
In the past, with its excess cash, the Company had made strategic and venture investments in a
portfolio of privately held companies. These investments were in technology and internet related
companies that are at varying stages of development, and are intended to provide the Company with
an expanded technology and internet presence, to enhance the Companys position at the leading edge
of e-business, and to provide venture investment returns. These companies in which the Company has
invested are subject to all the risks inherent in technology and the internet. In addition, these
companies are
8
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subject to the valuation volatility associated with the investment community and capital markets.
The carrying value of the Companys investments in these companies is subject to the aforementioned
risks.
The Company holds an investment in available-for-sale equity securities with a fair value of
approximately $23,000 and $26,000 at June 30, 2011, and December 31, 2010, respectively, which is
included in the other assets in the accompanying consolidated balance sheets. The cost basis in our
available-for-sale securities was approximately $21,000 at June 30, 2011 and December 31, 2010.
Total unrealized gain in accumulated other comprehensive income approximated $5,000 at June 30,
2011. This investment is recorded at fair value using quoted prices in active markets for identical
assets or liabilities (Level 1).
At December 31, 2010, the Company held a cost method investment in the equity securities of a
technology related company, which is privately-held, totaling $59,000. During June 2011, the
Company redeemed its entire interest in this investment and, accordingly, the balance of such
investment at June 30, 2011 is $0.
5. Earnings Per Share
The Company calculates its earnings per share in accordance with ASC 260-10, Earnings Per Share.
There were 50,611,879 and 51,637,365 weighted average shares outstanding for the three months ended
June 30, 2011 and 2010, respectively, and 50,611,879 and 52,912,140 weighted average shares
outstanding for the six months ended June 30, 2011 and 2010, respectively. In addition, there were
55,000 and 60,000 weighted average shares related to stock options exercisable for the three months
ended June 30, 2011 and 2010, respectively, and 56,648 and 62,486 weighted average shares related
to stock options exercisable for the six months ended June 30, 2011 and 2010, respectively, that
were not included in the computation of diluted earnings per share because to do so would have been
antidilutive as the Company has a net loss for each period presented.
On April 26, 2010, the Company purchased 3,589,201 shares of its outstanding common stock from
Everest Special Situations Fund L.P., formerly the Companys second largest shareholder, for
$1,256,220. The shares are held by the Company as treasury stock resulting in 50,611,879 shares
outstanding at June 30, 2011 and December 31, 2010.
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6. Income Taxes
The Company had a current state benefit for income taxes of $0 and $1,000 for the three and six
months ended June 30, 2011, respectively. The Company had no provision or benefit for income taxes
for the three and six months ended June 30, 2010.
The Company periodically evaluates the positive and negative evidence bearing upon the
realizability of its deferred tax assets. The Company, however, has considered results of
operations and concluded that it is more likely than not that the deferred tax assets will not be
realizable. As a result, the Company has determined that a valuation allowance of $35.0 million and
$34.6 million is required at June 30, 2011, and December 31, 2010, respectively. The increase in
valuation allowance is primarily due to an increase in deferred tax assets arising from current
years net operating losses. The tax effects of temporary differences that gave rise to deferred
tax assets as of June 30, 2011, and December 31, 2010, were as follows (in thousands):
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Deferred tax assets: |
||||||||
Net operating losses |
$ | 28,407 | $ | 27,989 | ||||
Capital losses |
6,201 | 6,201 | ||||||
Other asset reserves |
2,261 | 2,261 | ||||||
AMT credit |
649 | 649 | ||||||
Accrued expenses |
10 | 48 | ||||||
Total deferred tax assets |
37,528 | 37,148 | ||||||
Valuation allowance |
(34,957 | ) | (34,604 | ) | ||||
2,571 | 2,544 | |||||||
Deferred tax liabilities: |
||||||||
State deferreds |
(2,571 | ) | (2,544 | ) | ||||
Total deferred tax liabilities |
(2,571 | ) | (2,544 | ) | ||||
Net deferred taxes |
$ | | $ | | ||||
As of December 31, 2010, the Company had federal and state NOLs of approximately $70.2 million and
$46.7 million, respectively. The federal NOLs will begin to expire in 2022 through 2031 and the
state NOLs begin to expire in 2012 through 2031. In connection with the September, 18, 2008,
recapitalization of the Company, the Company completed a review of any potential limitation on the
use of its NOLs under Section 382 of the Internal Revenue Code. Because of our current lack of
operations, we have established a valuation allowance for the entire amount of federal and state
NOLs as it is unlikely that we can realize these deferred tax benefits in the future. Based on such
review, the Company does not believe Section 382 of the Internal Revenue Code will adversely impact
its ability to use its current net operating losses.
The following is a reconciliation of the statutory federal income tax rate to the actual effective
income tax rate for continuing operations:
June 30, | ||||||||
2011 | 2010 | |||||||
Federal tax (benefit) rate |
(34.0 | )% | (34.0 | )% | ||||
Increase (decrease) in taxes resulting from: |
||||||||
State income taxes |
(5.8 | ) | (5.8 | ) | ||||
Change in valuation allowance |
39.5 | 37.0 | ||||||
Permanent differences |
0.4 | 2.8 | ||||||
Other |
(0.1 | ) | | |||||
0.0 | % | 0.0 | % | |||||
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7. Subsequent Events
The Company has completed an evaluation of all subsequent events through the issuance date of these
financial statements, and concluded there were no subsequent events that required recognition or
disclosure.
ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following is a discussion of the financial condition and results of operations of the Company
for the three and six months ended June 30, 2011, as compared to the same periods in the previous
year. This discussion should be read in conjunction with the condensed consolidated financial
statements of the Company and related Notes included elsewhere in this Form 10-Q.
Forward-Looking Statements and Associated Risks
From time to time, the Company may provide forward-looking information such as forecasts of
expected future performance or statements about the Companys plans and objectives, including
certain information provided below. These forward-looking statements are based largely on the
Companys expectations and are subject to a number of risks and uncertainties, certain of which are
beyond the Companys control. The Company wishes to caution readers that actual results may differ
materially from those expressed in any forward-looking statements made by, or on behalf of, the
Company including, without limitation, as a result of factors described in Item 1A. Risk Factors
included in the Companys December 31, 2010, Form 10-K for Purposes of the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995.
General
Prior to August 2001, the Company was a multi-national, full service promotional marketing company.
In August 2001, McDonalds Corporation (McDonalds), the Companys principal customer, terminated
its 25-year relationship with the Company as a result of the embezzlement by a former Company
employee of winning game pieces from McDonalds promotional games administered by the Company.
Other customers also terminated their relationships with the Company.
As a result of the loss of its customers, the Company no longer has any operating business. Since
August 2001, the Company has concentrated its efforts on reducing its costs and settling numerous
claims, contractual obligations, and pending litigation. By April 2002, the Company had effectively
eliminated a majority of its ongoing promotions business operations and was in the process of
disposing of its assets and settling its liabilities related to the promotions business and
defending and pursuing litigation with respect thereto. In essence, the Company discontinued its
promotions business and changed the nature of its operation to focus on its pending litigation and
winding down its contracted obligations. As a result of these efforts, the Company has been able to
resolve a significant number of outstanding liabilities that existed in August 2001 or arose
subsequent to that date. As of June 30, 2011, the Company had reduced its workforce to 4 employees
from 136 employees as of December 31, 2001. The Company is currently managed by the Chief
Executive Officer and principal financial officer, Greg Mays, and an acting general counsel.
Outlook
The lack of any operating revenue has had and will continue to have a substantial adverse impact on
the Companys cash position. The Company incurred losses within its continuing operations in 2010
and continues to incur losses in 2011 for the general and administrative expenses incurred to
manage the affairs of the Company. Inasmuch as the Company no longer generates operating income,
the source of current and future working capital is expected to be cash on hand and proceeds from
the sale of certain long-term investments. Management believes it has sufficient capital resources
and liquidity to operate the Company for at least one year.
The Board of Directors continues to consider various alternative courses of action for the Company,
including possibly acquiring or combining with one or more operating businesses. The Board of
Directors has reviewed and analyzed a number of proposed transactions and will continue to do so
until it can determine a course of action going forward to best benefit all shareholders. The
Company cannot predict when the Board of Directors will have developed a proposed course of action
or whether any such course of action will be successful. Considering our current cash position of
$9.9 million at June 30, 2011 and our average spending to support continuing operations, management
believes it has sufficient capital resources and liquidity to operate the Company for at least one
year.
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RESULTS OF OPERATIONS
Three Months Ended June 30, 2011, Compared to Three Months Ended June 30, 2010
The Company generated no sales or gross profits in continuing operations during the three months
ended June 30, 2011 and 2010.
General and administrative expenses totaled $0.4 million during the three months ended June 30,
2011, compared to $0.5 million during the same period of the prior year. The decrease is primarily
due to a reduction in value of a cash surrender value related asset associated with a
post-employment obligation of a former employee.
Six Months Ended June 30, 2011, Compared to Six Months Ended June 30, 2010
The Company generated no sales or gross profits during the six months ended June 30, 2011 and 2010.
General and administrative expenses totaled $0.9 million during the six months ended June 30, 2011,
compared to $1.1 million during the same period of the prior year. The decrease is primarily due to
a reduction in legal fees.
RESULTS OF DISCONTINUED OPERATIONS
Three Months Ended June 30, 2011, Compared to Three Months Ended June 30, 2010
The Company had no discontinued operations during the three months ended June 30, 2011 but did
incur a loss of $27,000 from discontinued operations during the three months ended June 30, 2010.
The Company generated no sales or gross profits in discontinued operations during the three months
ended June 30, 2010.
General and administrative expenses totaled $27,000 during the three months ended June 30, 2010,
which related to charges for a post-employment obligation.
Six Months Ended June 30, 2011, Compared to Six Months Ended June 30, 2010
The Company had no discontinued operations during the six months ended June 30, 2011 but did incur
a loss of $27,000 from discontinued operations during the six months ended June 30, 2010.
The Company generated no sales or gross profits during the six months ended June 30, 2010.
General and administrative expenses totaled $27,000 during the six months ended June 30, 2010,
which related to charges for a post-employment obligation.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was $9.8 million and $10.6 million at June 30, 2011, and December 31, 2010,
respectively.
Net cash used in operating activities during the six months ended June 30, 2011, totaled $0.8
million primarily due to a net loss in operating activities partially offset by a net change in
working capital items. Net cash used in operating activities during the six months ended June 30,
2010, totaled $0.9 million primarily due to a net loss in operating activities partially offset by
a net change in working capital items.
Net cash received from investing activities from investing activities during the six months ended
June 30, 2011, totaled $73,000 which related to the sale of one of the Companys equity
investments. There were no investing activities during the six months ended June 30, 2010.
There were no financing activities during the six months ended June 30, 2011. There were cash
outflows from financing activities of $1.3 million during the six months ended June 30, 2010, as
the Company purchased 3,589,201 shares of its outstanding common stock from Everest Special
Situations Fund L.P., formerly the Companys second largest shareholder, for $1,256,220, on April
26, 2010. The shares are held by the Company as treasury stock.
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The Company has a letter of credit totaling approximately $36,000 at June 30, 2011, which supports
the Companys periodic payroll obligations and is considered restricted.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The disclosure required by this Item is not material to the Company because the Company does not
currently have any exposure to market rate sensitive instruments, as defined in this Item.
ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
As of June 30, 2011, the Company evaluated the effectiveness and design and operation of its
disclosure controls and procedures. The Companys disclosure controls and procedures are the
controls and other procedures that the Company designed to ensure that it records, processes,
summarizes, and reports in a timely manner the information that it must disclose in reports that
the Company files with or submits to the Securities and Exchange Commission. Greg Mays, the
principal executive and principal financial officer of the Company, reviewed and participated in
this evaluation. Based on this evaluation, the principal executive and principal financial officer
of the Company concluded that the Companys disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There have not been any changes in the Companys internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended)
that occurred during the quarter ended June 30, 2011, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
ITEM 4T. | CONTROLS AND PROCEDURES |
Not applicable.
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PART II OTHER INFORMATION
Item 1. | Legal Proceedings |
Not applicable.
Item 1A. | Risk Factors |
In addition to the other information set forth in this Form 10-Q, you should carefully consider the
factors discussed in Part I, Item 1A: Risk Factors in our Annual Report on Form 10-K for the year
ended December 31, 2010, which could materially affect our business, financial condition or future
results. The risk factors described in our Annual Report on Form 10-K remain applicable to our
business, subject to the changes and the addition of the new risk factors set forth below. The
risks described below and in our Annual Report on Form 10-K are not the only risks that we face.
Additional risks and uncertainties not currently known to us or that we currently deem to be
immaterial also may materially adversely affect our business, financial condition and/or operating
results.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Not applicable.
Item 3. | Defaults Upon Senior Securities |
Not applicable.
Item 4. | (Removed and Reserved) |
Item 5. | Other Information |
None.
Item 6. | Exhibits |
Exhibit | ||
Number | Description | |
2.1(4)
|
Securities Purchase Agreement dated September 1, 1999, between the Registrant and Overseas Toys, L.P. | |
2.2(6)
|
Purchase Agreement between the Company and Rockridge Partners, Inc., dated January 20, 2001, as amended by Amendment No. 1 to the Purchase Agreement, dated February 15, 2001 | |
2.3(7)
|
March 12, 2002, Letter Agreement between Cyrk and Simon, as amended by Letter Agreement dated as of March 22, 2002 | |
2.4(7)
|
Mutual Release Agreement between Cyrk and Simon | |
2.5(8)
|
Letter Agreement Between Cyrk and Simon, dated December 20, 2002 | |
2.6(10)
|
Settlement Agreement and Mutual General Release between Cyrk and Simon dated January 31, 2006 | |
2.7(10)
|
Subordinated Promissory Note in the principal amount of $1,410,000 from Cyrk to Simon dated January 31, 2006 | |
3.1(11)
|
Restated Certificate of Incorporation of the Registrant | |
3.2(10)
|
Amended and Restated By-laws of the Registrant, effective March 27, 2006 | |
4.1(1)
|
Specimen certificate representing Common Stock |
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Exhibit | ||
Number | Description | |
10.1(2)(3)
|
1993 Omnibus Stock Plan, as amended | |
10.10(5)
|
Registration Rights Agreement between the Company and Overseas Toys, L.P. | |
10.18(6)
|
Subordinated Promissory Note by Rockridge Partners, Inc. in favor of the Company dated February 15, 2001 | |
10.28(9)
|
February 7, 2003, letter agreement with Greg Mays regarding 2002 and 2003 compensation | |
10.29(9)
|
May 30, 2003, Executive Services Agreements with Joseph Bartlett, Allan Brown, Gregory Mays, and Terrence Wallock | |
10.30(10)
|
May 3, 2004, Amendment No. 1 to Executive Services Agreements with Messrs. Bartlett and Brown, (replaces previously filed copies of these amendments) | |
10.31(10)
|
March 27, 2006, Amendment No. 2 to Wallock Executive Services Agreement | |
10.32(10)
|
March 27, 2006, New Executive Services Agreement with Mr. Mays | |
31
|
Certifications pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 (the Exchange Act), filed herewith | |
32
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes- Oxley Act of 2002, filed herewith | |
101.INS*
|
XBRL Instance Document | |
101.SCH*
|
XBRL Taxonomy Extension Schema Document | |
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB*
|
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document |
* | XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
Footnotes:
(1) | Filed as an exhibit to the Registrants Registration Statement on Form S-1 (Registration No. 33-63118) or an amendment thereto and incorporated herein by reference. | |
(2) | Management contract or compensatory plan or arrangement. | |
(3) | Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 1994, and incorporated herein by reference. | |
(4) | Filed as an exhibit to the Registrants Report on Form 8-K dated September 1, 1999, and incorporated herein by reference. | |
(5) | Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 1999, and incorporated herein by reference. | |
(6) | Filed as an exhibit to the Registrants Report on Form 8-K dated February 15, 2001, and incorporated herein by reference. |
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(7) | Filed as an exhibit to the Registrants original Report on Form 10-K for the year ended December 31, 2001, filed on March 29, 2002, and incorporated herein by reference. | |
(8) | Filed as an exhibit to the Registrants Report on Form 10-K/A for the year ended December 31, 2001, filed on April 18, 2003, and incorporated herein by reference. | |
(9) | Filed as an exhibit to the Registrants Report on Form 10-K for the year ended December 31, 2002, filed on July 29, 2003, and incorporated herein by reference. | |
(10) | Filed as an exhibit to the Registrants Report on Form 10-K for the year ended December 31, 2005, filed on March 31, 2006, and incorporated herein by reference. | |
(11) | Filed as an exhibit to the Registrants Report on Form 8-K, filed on September 23, 2008, and incorporated herein by reference. |
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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.
Date: August 15, 2011 | SIMON WORLDWIDE, INC. |
|||
/s/ Greg Mays | ||||
Greg Mays | ||||
Chief Executive Officer and Chief Financial Officer (duly authorized signatory) |
||||
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