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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

  

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FORM 10-Q 

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(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2014

 

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from              to

 

COMMISSION FILE NUMBER 000-29637

 

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SELECTICA, INC.

(Exact Name of Registrant as Specified in Its Charter) 

 

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DELAWARE	77-0432030
(State of Incorporation)	(IRS Employer Identification No.)

 

2121 South El Camino Real, 10th Floor, San Mateo, CA  94403

(Address of Principal Executive Offices)

 

(650) 532-1500

 (Registrant’s Telephone Number, Including Area Code)

 

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Indicate by a 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  ☒    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 (§232.405 of this chapter) 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 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	☐	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☒

 

 

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.    YES  ☐    NO  ☒

 

The number of shares outstanding of the registrant’s common stock, par value $0.0001 per share, as of November 10, 2014, was 7,782,178.

 

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FORM 10-Q

 

SELECTICA, INC.

 

INDEX

 

PART I FINANCIAL INFORMATION
ITEM 1: Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2014 and March 31, 2014	5
	Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2014 and 2013	6
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2014 and 2013	7
	Notes to Condensed Consolidated Financial Statements	8
ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
ITEM 3: Quantitative and Qualitative Disclosures about Market Risk		32
ITEM 4: Controls and Procedures		32
PART II OTHER INFORMATION		32
ITEM 1: Legal Proceedings		32
ITEM 1A: Risk Factors		32
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds		32
ITEM 3: Defaults Upon Senior Securities		32
ITEM 4: Mine Safety Disclosures		32
ITEM 5: Other Information		32
ITEM 6: Exhibits		33
Signatures		33

   

  

Cautionary Statement Pursuant to Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995

 

The words “Selectica”, “we”, “our”, “ours”, “us”, and the “Company” refer to Selectica, Inc. In addition to historical information, this quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in Item 1A to Part 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014.  You should carefully review the risks described in other documents the Company files from time to time with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding the Company’s expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report on Form 10-Q.  The Company undertakes no obligation to release publicly any updates to the forward-looking statements included herein after the date of this document.

   

 

SELECTICA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited) 

 

		September 30,				March 31,
		2014				2014
ASSETS
Current assets
Cash and cash equivalents		$	10,132			$	16,907
Accounts receivable, net of allowance for doubtful accounts of $188 and $247 as of September 30, 2014 and March 31, 2014, respectively			4,445				3,006
Prepaid expenses and other current assets			1,516				689
Total current assets			16,093				20,602
Property and equipment, net			427				312
Capitalized software development costs, net			1,783				856
Goodwill			8,253				-
Other Intangibles, net			7,151				-
Other assets			273				30
Total assets		$	33,980			$	21,800
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities
Credit facility		$	7,000			$	6,949
Accounts payable			1,734				1,371
Accrued payroll and related liabilities			1,060				648
Other accrued liabilities			1,355				345
Deferred revenue			6,682				5,131
Total current liabilities			17,831				14,444
Long-term deferred revenue			227				618
Other long-term liabilities			33				-
Total liabilities			18,091				15,062
Redeemable Convertible Preferred Stock:
Series D redeemable convertible preferred stock, $.0001 par value, designated, issued and outstanding shares: 0 shares at September 30, 2014 and 680,470 at March 31, 2014, respectively			-				3,653
Stockholders' Equity:
Common stock, $0.0001 par value: Authorized: 15,000 shares at September 30, 2014 and March 31, 2014; Issued: 7,853 and 4,722 shares at September 30, 2014 and March 31, 2014, respectively; Outstanding: 7,757 and 4,694 shares at September 30, 2014 and March 31, 2014, respectively			4				4
Additional paid-in capital			296,537				278,083
Treasury stock at cost - 96 shares at September 30, 2014 and March 31, 2014			(472	)			(472	)
Accumulated deficit			(280,180	)			(274,530	)
Total stockholders' equity			15,889				3,085
Total liabilities, redeemable convertible preferred stock and stockholders' equity		$	33,980			$	21,800

 

 

SELECTICA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data)

(Unaudited) 

 

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Revenues:
Recurring revenues		$	4,038			$	3,020			$	6,732			$	6,186
Non-recurring revenues			1,165				908				2,233				2,114
Total revenues			5,203				3,928				8,965				8,300
Cost of revenues:
Cost of recurring revenues			1,376				694				2,147				1,366
Cost of non-recurring revenues			2,076				1,256				3,559				2,492
Total cost of revenues			3,452				1,950				5,706				3,858
Gross profit:
Recurring gross profit			2,662				2,326				4,585				4,820
Non-recurring gross (loss)			(911	)			(348	)			(1,326	)			(378	)
Total gross profit			1,751				1,978				3,259				4,442
Operating expenses:
Research and development			997				450				1,439				1,553
Sales and marketing			3,923				2,129				6,293				4,202
General and administrative			2,005				733				3,430				2,288
Acquisition related costs			450				-				668				-
Restructuring costs			-				227				-				227
Total operating expenses			7,375				3,539				11,830				8,270
Loss from operations			(5,624	)			(1,561	)			(8,571	)			(3,828	)
Decrease in fair value of warrant liability			-				1,121				-				982
Interest and other income (expense), net			(28	)			(26	)			(29	)			(41	)
Net loss before income tax			(5,652	)			(466	)			(8,600	)			(2,887	)
Benefit for income taxes			2,950				-				2,950				-
Net Loss		$	(2,702	)		$	(466	)		$	(5,650	)		$	(2,887	)
Preferred stock accretion			2,744				1,144				2,744				1,621
Net loss applicable to common stockholders		$	(5,446	)		$	(1,610	)		$	(8,394	)		$	(4,508	)
Basic and diluted net loss per share		$	(0.71	)		$	(0.45	)		$	(1.29	)		$	(1.35	)
Weighted average shares outstanding for basic and diluted net loss per share			7,700				3,591				6,522				3,343

 

 

SELECTICA, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)

 

			Six Months Ended
			September 30,				September 30,
			2014				2013
Operating activities
Net loss			$	(5,650	)		$	(2,887	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization				589				99
Loss on disposition of property and equipment				-				23
Stock-based compensation expense				1,289				455
Deferred tax liability				(2,989	)			-
Increase in fair value of warrant liability				-				(982	)
Changes in assets and liabilities:
	Accounts receivable (net)			1,178				8
	Prepaid expenses and other current assets			(375	)			(36	)
	Other assets			97				(39	)
	Accounts payable			5				46
	Accrued restructuring costs			-				(78	)
	Accrued payroll and related liabilities			(462	)			(435	)
	Other accrued liabilities and long term liabilities			87				(70	)
	Deferred revenue			(839	)			(1,792	)
Net cash used in operating activities				(7,070	)			(5,688	)
Investing activities
	Purchase of property and equipment			(52	)			(65	)
	Capitalized Software			(1,040	)			(382	)
	Purchase of business, net of cash acquired			(5,003	)			-
Net cash used in investing activities				(6,095	)			(447	)
Financing activities
	Proceeds from sale of preferred stock and warrants, net of issuance costs			7,178				5,837
	Employee taxes paid in exchange for restricted stock awards released			-				(201	)
	Issuance of common stock under employee stock plan			93				207
	Borrowings under credit facility			51				(6	)
	Credit facility payment			(655	)			-
	Repayment of note payable			(277	)			-
Net cash provided by financing activities				6,390				5,837
Net decrease in cash and cash equivalents				(6,775	)			(298	)
Cash and cash equivalents at beginning of the period				16,907				12,098
Cash and cash equivalents at end of the period			$	10,132			$	11,800
Supplemental disclosure of non-cash investing and financing activities:
Issuance of shares in business combination			$	6,610			$	-
Assumption of debt in connection with business combination			$	932			$	-
Supplemental cash flow disclosure:
Cash paid for interest			$	28			$	17

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

  

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1.   Basis of Presentation

   

The condensed consolidated balance sheet as of September 30, 2014, the condensed consolidated statements of operations for the three and six months ended September 30, 2014 and 2013, and the condensed consolidated statements of cash flows for the six months ended September 30, 2014 and 2013 have been prepared by the Company and are unaudited. In the opinion of management, all necessary adjustments (which include normal recurring adjustments) have been made to present fairly the financial position at September 30, 2014, and the results of operations and cash flows for the three and six months ended September 30, 2014 and 2013, respectively. Interim results are not necessarily indicative of the results for a full fiscal year. The condensed consolidated balance sheet as of March 31, 2014 has been derived from the audited consolidated financial statements at that date.

 

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014 , as supplemented by the consolidated financial statements of Iasta.com, Inc. and Iasta Resources, Inc. included in the Company’s Current Report on Form 8-K/A filed with the SEC on August 7, 2014, as amended by the Company’s Current Report on Form 8-K/A filed with the SEC on August 8, 2014.

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

 

2.   Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include all accounts of the Company and those of its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP) requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of stock-based awards, inventory valuations, income taxes, and contingent liabilities, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

 

Fair value of financial instruments

 

The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate their fair values.

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, short-term investments, and accounts receivable. The Company places its short-term investments in high-credit quality financial institutions. The Company is exposed to credit risk in the event of default by these institutions to the extent of the amount recorded on the balance sheet. The Company’s cash balances periodically exceed the FDIC insured amounts.  Accounts receivable are derived from revenue earned from customers primarily located in the United States. The Company performs ongoing credit evaluations of its customers’ financial condition and generally does not require collateral. The Company maintains reserves for potential credit losses, and historically, such losses have not been significant.

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

Business Combinations

 

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

 

Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and acquired patents and developed technology; and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

 

Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

 

Goodwill

 

Goodwill is allocated to reporting units expected to benefit from the business combination. The Company tests goodwill for impairment at the reporting unit level at least annually, or more frequently if events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company evaluates our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill impairment tests require judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. As of September 30, 2014, no impairment of goodwill has been identified.

 

Cash Equivalents and Short-term Investments

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company’s cash equivalents consist of money market funds, certificates of deposits, and commercial paper.  Fair values of cash equivalents approximated original cost due to the short period of time to maturity. The cost of securities sold is based on the specific identification method. The Company’s investment policy limits the amount of credit exposure to any one issuer of debt securities.

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

The Company monitors its investments for impairment on a quarterly basis and determines whether a decline in fair value is other-than-temporary by considering factors such as current economic and market conditions, the credit rating of the issuers, the length of time an investment has been below the Company’s carrying value, and the Company’s ability and intent to hold the investment to maturity. If a decline in fair value, caused by factors other than changes in interest rates, is determined to be other-than-temporary, an adjustment is recorded and charged to operations.

 

Restricted Cash 

 

The Company maintains funds in bank accounts that are restricted to use. Amounts of restricted cash are $0.1 million and are included in “Other current assets” in the condensed consolidated balance sheet as of September 30, 2014.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

The Company evaluates the collectability of its accounts receivable based on a combination of factors. When the Company believes a collectability issue exists with respect to a specific receivable, the Company records an allowance to reduce that receivable to the amount that it believes to be collectible. In making the evaluations, the Company will consider the collection history with the customer, the customer’s credit rating, communications with the customer as to reasons for the delay in payment, disputes or claims filed by the customer, warranty claims, non-responsiveness of customers to collection calls, and feedback from the responsible sales contact. In addition, the Company will also consider general economic conditions, the age of the receivable and the quality of the collection efforts.

 

Property and Equipment

 

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives. The estimated useful lives for computer software and equipment is three years, furniture and fixtures is five years, and leasehold improvements is the shorter of the applicable lease term or estimated useful life.

 

Intangible Assets and Impairment of Long-Lived Assets

 

Intangible assets consist of customer relationships, trade names, and acquired technology. Intangible assets are recorded at fair values at the date of the acquisition and, for those assets having finite useful lives, are amortized using the straight-line method over their estimated useful lives, which generally range from two to five years. The Company periodically reviews its intangible and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. No impairment charges were recorded in the three months ending September 30, 2014.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed and assembled workforce. The Company tests goodwill for impairment at least annually or more frequently if events or changes in circumstances indicate that this asset may be impaired. The Company has elected to first assess the qualitative factors to determine whether it is more likely than not that the fair value of our single reporting operating unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test will be performed. The first step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the carrying amount exceeds its fair value, the second step will be performed; otherwise, no further step is required. The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount of the goodwill. Any excess of the goodwill carrying amount over the applied fair value is recognized as an impairment loss, and the carrying value of goodwill is written down to fair value. As of September 30, 2014, no impairment of goodwill has been identified. 

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

  

Customer Concentrations

 

A limited number of customers have historically accounted for a substantial portion of the Company’s revenues. The following table presents customers that accounted for more than 10% of revenue:

  

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Revenues from Customer A			10%				15%				12%				14%

 

 As of September 30, 2014 no customers accounted for at least 10% of net accounts receivable. As of March 31, 2014, Customer B accounted for 29% of net accounts receivable.

 

Revenue Recognition

 

The Company generates revenues by providing its software as a service solutions through subscription license arrangements and related professional services, as well as through perpetual and term licenses and related software maintenance and professional services. The Company presents revenue net of sales taxes and any similar assessments. 

 

Revenue recognition criteria. The Company recognizes revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) fees are fixed or determinable and (4) collectability is probable. If the Company determines that any one of the four criteria is not met, the Company will defer recognition of revenue until all the criteria are met. 

 

Multiple-Deliverable Arrangements. The Company enters into arrangements with multiple-deliverables that generally include subscription, support and professional services. If a deliverable has standalone value, and delivery is probable and within the Company’s control, the Company accounts for the deliverable as a separate unit of accounting. Subscriptionsto use our software solutions have standalone value as such services are often sold separately, primarily through renewals. Professional services have standalone value as such services are often sold separately, and are available from other vendors.

 

Upon separating the multiple-deliverables into separate units of accounting, the arrangement consideration is allocated to the identified separate units based on a relative selling price hierarchy. The Company determines the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (“VSOE”), if available, or its best estimate of selling price (“BESP”), if VSOE is not available. The Company has determined that third-party evidence of selling price (“TPE”) is not a practical alternative due to differences in its service offerings compared to other parties and the availability of relevant third-party pricing information. The amount of revenue allocated to delivered items is limited by contingent revenue, if any.

 

For professional services, the Company has established VSOE as a consistent number of standalone sales of this deliverable have been priced within a reasonably narrow range. The Company has not established VSOE for its subscription services due to lack of pricing consistency, and other factors. Accordingly, the Company uses its BESP to determine the relative selling price.

 

The Company determined BESP by considering its price list, as well as overall pricing objectives and market conditions. Significant pricing practices taken into consideration include the Company’s discounting practices, contract prices per user, the size and volume of the Company’s transactions, the customer demographic, and its market strategy.

 

Recurring revenues. Recurring revenues consist of subscription license sales, maintenance revenues from previously sold perpetual licenses, and hosting revenues. Recurring revenues are recognized ratably over the stated contractual period.

 

Non-recurring revenues.  Non-recurring revenues are comprised of revenues from professional services for system implementations, enhancements, and training, and perpetual license sales prior to fiscal 2015. For professional services arrangements billed on a time-and-materials basis, services are recognized as revenue as the services are rendered. For fixed-fee professional service arrangements, the Company recognizes revenue under the proportional performance method of accounting and estimates the proportional performance utilizing hours incurred to date as a percentage of total estimated hours to complete the project. If the Company does not have a sufficient basis to measure progress toward completion, revenue is recognized upon completion. The Company recognizes a loss for a fixed-fee professional service if the total estimated project costs exceed project revenues. Perpetual license sales are recognized upon delivery of the product, assuming all the other conditions for revenue recognition have been met.

 

  

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

In certain arrangements with non-standard acceptance criteria, the Company defers the revenue until the acceptance criteria are satisfied. Reimbursements, including those related to travel and out-of-pocket expenses are included in non-recurring revenues, and an equivalent amount of reimbursable expenses is included in non-recurring cost of revenues.

 

Foreign Currency

 

For the Company’s UK subsidiary, the functional currency is the U.S. dollar. Non-monetary assets and liabilities are translated into U.S. dollar equivalents at the exchange rate in effect on the balance sheet date and revenues and expenses are translated into U.S. dollars using the average exchange rate over the period. Resulting currency translation adjustments and net gains and losses resulting from foreign exchange transactions are recorded in other income (expense), net in the consolidated statement of operations.

 

Capitalized Software Development Costs

 

Software development costs incurred prior to the establishment of technological feasibility are included in research and development expenses. The Company defines establishment of technological feasibility as the completion of a working model. Software development costs incurred subsequent to the establishment of technological feasibility through the period of general market availability of the products are capitalized, if material, after consideration of various factors, including net realizable value.

 

Capitalized software will be amortized once the product is available for general release, using the straight-line method over the estimated useful lives of the assets, which has been determined to be three years based on Management’s discussion and industry average. Capitalized software developments costs are evaluated for recoverability based on estimated future gross revenues reduced by the associated costs. If gross revenues were to be significantly less than estimated, the net realizable value of the capitalized software intended for sale would be impaired, which could result in the write-off of all or a portion of the unamortized balance of such capitalized software. Management has performed the net realizable value analysis and that no impairment of capitalized costs is deemed necessary as of September 30, 2014.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued an accounting standard which completes the joint effort by the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and improve financial reporting by creating common revenue recognition guidance for GAAP and International Financial Reporting Standards. The core principle of this update is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company intends to adopt this update in the first quarter of fiscal year 2018 at which point it will begin to affect us. The standard allows for full retrospective adoption applied to all periods presented or retrospective adoption with the cumulative effect of initially applying this update recognized at the date of initial application. The Company is currently evaluating the impact of adopting this update on our consolidated financial statements.

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) 

 

3.	Private Placement Fundings with Redeemable Convertible Preferred Stock and Warrants

 

On January 24, 2014, in connection with the closing of an additional private placement equity financing (the “January 2014 Financing”), the Company sold and issued 765,605 shares of its common stock and 68,047.0 shares of its newly created Series D Convertible Preferred Stock (“Series D Stock”) to certain institutional funds and other accredited investors (the “2014 Investors”) at a purchase price of $6.00 per share of common stock and $60.00 per whole share of Series D Stock (or $6.00 per one-tenth (1/10) of a share of Series D Stock). In addition, the Company issued to the 2014 Investors warrants to purchase common stock, initially exercisable for an aggregate of 723,030 shares of common stock (the “January 2014 Warrants”). The exercise price of the January 2014 Warrants is $7.00 per share. The January 2014 Warrants have a five-year term and became exercisable on July 24, 2014, six months following the date of issuance.

 

In connection with the January 2014 Financing, the Company issued to Lake Street Capital Markets, LLC (“Lake Street”), who served as the placement agent in the financing, 11,029 shares of common stock, 980.4 shares of Series D Stock, and a warrant to purchase 10,416 shares of common stock.

 

In addition, on July 2, 2014, the Company completed a private placement equity financing (the “2014 Second Financing”) with certain institutional and other accredited investors (the “2014 Second Investors”), pursuant to a Purchase Agreement, dated June 5, 2014, in which the 2014 Second Investors purchased 124,890.5 shares of Series E Convertible Preferred Stock, par value $0.0001 per share (the “Series E Stock”), at a purchase price of $60.00 per whole share (or $6.00 per one-tenth (1/10) of a share of Series E Stock). In addition, the Company issued to the 2014 Second Investors warrants to purchase common stock, initially exercisable for an aggregate of 312, 223 shares of common stock (the “July 2014 Warrants”). The exercise price of the July 2014 Warrants is $7.00 per share. The July 2014 Warrants have a five-year term and became exercisable upon stockholder approval on August 27, 2014. The total proceeds raised in the 2014 Second Financing equal approximately $7.5 million.

 

In connection with the July 2014 Financing, the Company issued to Lake Street, who served as the placement agent in the financing, a warrant to purchase 37,467 shares of common stock.

 

(a)

Presentation of  January 2014 Warrants and July 2014 Warrants

 

The Company has evaluated the January 2014 Warrants and the July 2014 Warrants and has concluded that equity classification is appropriate as all such January 2014 Warrants and July 2014 Warrants are considered to be indexed to the Company’s equity and there are no settlement provisions that would result in classification as a debt instrument.

 

(b)

Presentation of Redeemable Convertible Preferred Stock

 

On April 10, 2014, following approval by the Company’s stockholders, each whole share of Series D Stock converted automatically into ten shares of common stock at an initial conversion price of $6.00 per share of common stock, for a total of 690,274 shares of Common Stock issued upon such conversion (including the conversion of the shares of Series D Stock issued to Lake Street as described above).

 

Because the Series E Stock was redeemable at the option of the holder (had the stockholders not approved conversion), the Company recorded the Series E Stock in temporary equity until conversion on August 27, 2014 when the redemption value of $7.5 million was reclassified to stockholders’ equity.

 

On August 27, 2014, following approval by the Company’s stockholders, each whole share of Series E Stock converted automatically into ten shares of common stock at an initial conversion price of $6.00 per share of common stock, for a total of 1,248,905 shares of Common Stock issued upon such conversion.

 

(c)

Beneficial Conversion Feature (“BCF”)

 

The Series D and Series E Stock were assessed under ASC 470, “Debt,” and the Company determined that the conversion to common stock qualifies as a BCF since it had a nondetachable conversion feature that was in the money at the commitment date. The BCF computation compares the carrying value of the preferred stock after the value of any derivatives has been allocated from the proceeds (in this case, the warrant value) to the transaction date value of the number of shares that the holder can convert into. The calculation resulted in a BCF of $1.3 million for Series D and $1.6 million for Series E stock. The BCF was recorded in additional paid-in capital.

 

(d)

Carrying Values

  

The proceeds of the 2014 Financing for Series D Stock were allocated to the common stock, the January 2014 Warrants and Series D Stock sold on a pro rata basis. The proceeds of the Series E Stock were allocated to the July 2014 Warrants and Series E stock on a pro rata basis.  

 

   

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED) 

 

The following table shows the allocation of proceeds from the 2014 Investors and carrying value of the Series D and Series E Stock. Series D Stock was reclassified to stockholders’ equity upon conversion to common stock on April 10, 2014 and Series E were classified to stockholder’s equity upon conversion to common stock on August 31, 2014 (in thousands, except per share amounts):  

 

Gross proceeds on January 24, 2014		$	8,676
Fair value of warrants on January 24,2014			(1,789	)
Gross proceeds to allocate to common stock and Series D Stock		$	6,887
Gross proceeds allocated to common shares sold		$	3,646
Related transaction costs allocated			(151	)
Net value allocated to common shares sold		$	3,495
Gross proceeds allocated to Series D Stock sold on January 24, 2014		$	3,241
Related transaction costs allocated			(135	)
Net value allocated to Series D Stock sold prior to BCF			3,106
Calculated BCF value			(1,345	)
Accretion of Series D Stock through January 24, 2014			1,892
Carrying value of Series D Stock as of March 31, 2014			3,653
Conversion of Series D stock into common stock			(3,653	)
Carrying value of Series D Stock as of June 30, 2014		$	-
Gross proceeds on July 2, 2014		$	7,493
Fair value of warrants on July 2,2014			(809	)
Gross proceeds allocated to Series E Stock sold on July 2, 2014		$	6,684
Related transaction costs allocated			(265	)
Net value allocated to Series E Stock sold prior to BCF			6,419
Calculated BCF value			(1,571	)
Accretion of Series E Stock through August 27, 2014			2,645
Carrying value of Series D Stock as of August 27, 2014			7,493
Conversion of Series D stock into common stock			(7,493	)
Carrying value of Series D Stock as of September 30, 2014		$	-

 

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

4.   Acquisition

 

Iasta, Inc.

 

On July 2, 2014, the Company completed its acquisition of Iasta.com, Inc. and Iasta Resources, Inc. Pursuant to the Merger Agreement, Iasta merged with and into Selectica Sourcing, with Selectica Sourcing (a wholly owned subsidiary) continuing as a wholly owned subsidiary of the Company (the “Acquisition”).

 

The aggregate purchase price for the Acquisition was 1,000,000 shares of common stock of the Company, par value $0.0001 (the “Acquisition Shares”), and $7.0 million in cash, less amounts related to the repayment of indebtedness of $0.6 million related to a line of credit, $0.3 million to a note payable and payment of transaction costs and certain other adjustments (collectively, the “Purchase Price”). The Purchase Price is subject to a $1.4 million cash escrow (the “Escrow”) to cover any post-closing adjustments to the Purchase Price and indemnification obligations of the Iasta Shareholders. A portion of the Escrow will be released on the 12-month anniversary of the closing of the Acquisition, and the remainder of the Escrow will be released on the 18-month anniversary of the closing of the Acquisition, in each case after deducting any claims or adjustments. In connection with the closing of the Acquisition, the Company entered into employment agreements with certain key employees of Iasta. Following the closing of the Acquisition, the Company issued options to certain Iasta employees to purchase up to an aggregate of 700,000 shares of Common Stock of the Company, which awards were employment inducement awards pursuant to NASDAQ Listing Rule 5635(c)(4). 

 

The combined Selectica and Iasta customers and partners are anticipated to directly benefit from the acquisition through easier access to contract management, strategic sourcing, spend management, and configuration solutions and market coverage in more locations worldwide.

 

The Company recorded the assets acquired and liabilities assumed at their estimated fair value, with the difference between the fair value of the net assets acquired and the purchase consideration reflected as goodwill. The working capital adjustment has not been finalized and may impact our goodwill amount in a future period. The acquisition consideration is comprised of the following:

 

(in thousands except for shares)
Cash Paid		$	6,494
Total Stock value			6,610
Total Purchase Price		$	13,104

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

The following table reflects the fair values of assets acquired and liabilities assumed as of the acquisition date (in thousands):

 

(in thousands)
Cash		$	1,491
Restricted cash			139
Accounts receivable			2,618
Prepaid and other Assets			314
Fixed assets, net			188
Customer relationships			4,210
Developed technology			3,170
Trade name			120
Goodwill			8,254
Other long term assets			340
Accounts payable and accrued expenses			(562	)
Accrued and payroll benefits			(506	)
Credit facility			(655	)
Notes payable			(277	)
Other current liabilities			(718	)
Deferred revenue			(2,033	)
Deferred tax asset - current			280
Deferred tax liability - non current			(3,269	)
Total value of assets acquired and liabilities assumed		$	13,104

 

The goodwill of $8.3 million is primarily attributed to the synergies expected to arise after the acquisition and fair value of assembled workforce. We record goodwill in connection with the acquisition of businesses when the purchase price exceeds the fair values of the assets acquired and liabilities assumed. Generally, the most significant intangible assets from the businesses that we acquire are the assembled workforces, which includes the human capital of the management, administrative, marketing and business development, engineering and technical employees of the acquired businesses. Since intangible assets for assembled workforces are part of goodwill in accordance with the accounting standards for business combinations, the substantial majority of the intangible assets for our business acquisitions are recognized as goodwill. No goodwill was deemed to be deductible for income tax purposes.

 

The following table reflects the condensed pro-forma financial information of Selectica, Inc and the acquired company as if the acquisition occurred on July 1, 2013. The unaudited pro forma consolidated financial information has been prepared for illustrative purposes only and does not purport to be indicative of the results that would have been achieved had the acquisition occurred on July 1, 2013, or of future results. The unaudited pro forma consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from integration of Iasta.

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

  

		Three Months Ended
		September 30,				September 30,
		2014				2013
		(Unaudited)
Revenue		$	5,203			$	6,439
Loss from operations		$	(5,624	)		$	(1,575	)
Net Loss		$	(2,702	)		$	(483	)
Basic and diluted net loss per share		$	(0.71	)		$	(0.13	)

   

5.   Goodwill and Other Intangible Assets

 

The changes in the carrying amount of goodwill are summarized below (in thousands):

 

Balance as of March 31, 2014		$	-
Goodwill acquired			8,254
Balance as of September 30, 2014		$	8,254

  

Intangible assets subject to amortization are summarized below (in thousands):

  

		September 30, 2014
		Gross				Accumulated				Net
		Carrying				Amortization				Carrying
		Amount								Value
Acquired developed technology		$	3,170			$	159			$	3,011
Customer relationships			4,210				175				4,035
Trade name			120				15				105
		$	7,500			$	349			$	7,151

 

Acquired developed technology, customer relationships, and trade name are amortized on a straight-line basis and have weighted-average useful lives from the date of purchase of 5.0 years, 6.0 years, and 2.0 years, respectively, as of as of September 30, 2014.

 

Amortization expense was $0.3 million for the three and six months ended September 30, 2014.

 

As of September 30, 2014, amortization expense for intangible assets for each of the next five years is as follows: $0.7 million in fiscal 2015, $1.4 million in fiscal 2016, $1.4 million in fiscal 2017, $1.3 million in fiscal 2018, $1.3 million in fiscal 2019, and $1.0 million thereafter.

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

6.   Property and Equipment

 

Property and equipment consist of the following:

  

		September 30,				March 31,
		2014				2014
		(in thousands)
Computers and software		$	1,070			$	2,381
Furniture and equipment			637				774
Leasehold improvements			205				117
			1,912				3,272
Less: accumulated depreciation			(1,485	)			(2,960	)
Total property and equipment, net		$	427			$	312

 

Depreciation expense related to property and equipment was approximately $0.08 million for the three months ended September 30, 2014 and 2013 and $0.1 million for the six months ended September 30, 2014 and 2013. 

 

7.  Capitalized Software Development Costs

 

The Company capitalized $0.6 million and $1.0 million of research and development costs during the three months and six months ended September 30, 2014, respectively.

 

Amortization expense was $0.05 million and $0.1 million for the three months and six months ended September 30, 2014, respectively and is included in the product cost of revenue. Prior to the twelve months ended March 31, 2014, these costs were not capitalized due to the short length of time between technological feasibility and general availability of software versions. The unamortized balance of capitalized software was $1.8 million as of September 30, 2014.

 

8.  Stockholders’ Equity

 

Equity Incentive Program

 

The Company’s equity incentive program is a broad-based, retention program comprised of stock options, restricted stock units and an employee stock purchase plan designed to align stockholder and employee interests. For a description of the Company’s equity plans, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014.

 

The Company granted the following stock options and restricted units:

 

		Three Months Ended								Six Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
		(in thousands)								(in thousands)
Stock Options			750				50				750				50
Restricted Stock Units			127				50				204				211
Total Granted			877				100				954				261

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

Valuation Assumptions

 

For the three months and six ended September 30, 2014 and September 30, 2013, the Company calculated the fair value of its employee stock options at the date of grant with the following weighted average assumptions: 

 

		Period Ended
		September 30,
		Three Months				Six Months
Risk-free interest rate			1.97	%			1.97	%
Dividend yield			0	%			0	%
Expected volatility			60.45	%			60.45	%
Expected term in years			6.05				6.05
Weighted average fair value at grant date		$	3.74			$	3.74

 

 

		Period Ended
		September 30, 2013
		Three Months				Six Months
Risk-free interest rate			0.73	%			0.73	%
Dividend yield			0	%			0	%
Expected volatility			59.39	%			59.39	%
Expected term in years			3.21				3.21
Weighted average fair value at grant date		$	2.36			$	2.36

 

 

 

 

The following tables summarize activity under the equity incentive plans: 

  

										Restricted Stock Units
		Options Outstanding								Outstanding
						Weighted								Weighted
		Number of				average				Number of				average fair
		shares				exercise				shares				value
						price
Outstanding at June 30, 2014			383			$	6.40				571			$	6.44
Granted			50				5.83				127			$	5.81
Granted outside of plan			700				6.61				-				-
Exercised			-				-				(80	)		$	6.26
Cancelled			-			$	-				(1	)		$	3.99
Outstanding at September 30, 2014			1 ,133			$	6.50				617			$	6.33
Vested and expected to vest			975			$	6.50

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

		Shares
		Available
		for Grant
Balance at June 30, 2014			528
Options:
Granted – approved plan			(50	)
Restricted Stock Units:
Granted			(128	)
Cancelled			-
Released shares repurchased			38
Balance at September 30, 2014			388

 

The weighted average remaining contractual term for exercisable options is 7.3 years. The intrinsic value is calculated as the difference between the market value as of September 30, 2014 and the exercise price of the shares. The market value of the Company’s common stock as of September 30, 2014 was $5.99 as reported by the NASDAQ Capital Market. The aggregate intrinsic value of stock options outstanding at September 30, 2014 and 2013 was $74,000 and $41,000, respectively. The aggregate intrinsic value of restricted stock units outstanding at September 30, 2014 and 2013 was $3.5 million and $2.5 million, respectively.

 

The options outstanding and exercisable at September 30, 2014 were in the following exercise price ranges:

 

					Options Outstanding								Options Vested
Range of Exercise Prices per share					Number of Shares (in thousands)				Weighted-Average Remaining Contractual Life (in years)				Number of Shares				Weighted-Average Exercise Price per share
$3.70	—	$5.72				106				7.61				77			$	5.29
$5.83	—	$5.83				50				9.92				-				-
$6.28	—	$6.28				187				9.17				-				-
$6.30	—	$31.30				788				9.62				41				8.30
$34.00	—	$34.00				2				0.30				2				34.00
$3.70	—	$34.00				1,133				9.36				118			$	6.70

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

The effect of recording stock-based compensation expense (including expense related to the ESPP discussed below) for each of the periods presented was as follows (in thousands):

  

		Three Months Ended								Six Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
Cost of revenues		$	144			$	48			$	272			$	114
Research and development			56				(3	)			111				89
Sales and marketing			218				30				358				130
General and administrative			286				(105	)			548				122
Impact on net loss		$	704			$	(30	)		$	1,289			$	455

 

Upon the departures of our CEO and COO in August 2013, previously recognized stock-based compensation expense in the amount of $0.5 million was reversed due to the non-achievement of certain performance-based restricted stock grants. As of September 30, 2014, the unrecorded share-based compensation balance related to stock options and restricted stock units outstanding excluding estimated forfeitures was $3.2 million and $3.4 million, respectively and will be recognized over an estimated weighted average amortization period of 3.52 years and 2.55 years, respectively. The amortization period is based on the expected remaining vesting term of the options and restricted stock units.  

 

1999 Employee Stock Purchase Plan (“ESPP”)

 

The price paid for the Company’s common stock purchased under the ESPP is equal to 85% of the lower of the fair market value of the Company’s common stock at the beginning of each offering period or at the end of each offering period. The compensation expense in connection with the ESPP for the three months ended September 30, 2014 and 2013 was $31,000 and $35,000, respectively. During the three months ended September 30, 2014 and 2013, there were 18,202 and 28,901 shares issued under the ESPP.

 

9.  Computation of Basic and Diluted Net Loss per Share

 

Basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period.

 

The Company excludes securities from its diluted net loss per share computation when their effect would be antidilutive to net loss per share amounts. The following common stock equivalents were excluded from the net loss per share computation:

 

		Three Months Ended								Six Months Ended
		September 30,								September 30,
		2014				2013				2014				2013
		(in thousands)								(in thousands)
Options			12				167				12				162
Unvested restricted stock units			60				483				52				651
Warrants			350				432				350				290
Total common stock equivalents excluded from diluted net loss per common share			422				1.082				414				1,103

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

In fiscal 2015, under the 2001 Long-Term Equity Incentive Plan, the Company provided issuance of phantom stock rights to the Odessa consultants in Ukraine. To date, the Company has issued 11,350 shares under phantom stock rights for the exercise price of $6.76. The shares vest over one year starting from the grant date of April 1, 2014. The contractors will get 50 more shares at every anniversary of their employment. The Company reserves the right to modify this over time. The Company did not book any expense for the three months ended as of September 30, 2014.

 

10.  Operating Lease Commitments

 

On May 15, 2014, Selectica, Inc. (the “Company”) entered into a First Amendment to Lease (the “Lease Amendment”) with SKBGS I, L.L.C. amending the Office Lease dated July 8, 2011 whereby the Company is leasing approximately 10,516 square feet of office space at a premises located at 2121 South El Camino Real, Suite 1000, San Mateo, California where the Company maintains its headquarters. The Lease Amendment extends the lease term to cover a 25 month period expiring January 31, 2017 and carries a base rent of $2.85 per rentable square foot, escalating 3% each year.

 

11.  Litigation and Contingencies

 

From time to time the Company is subject to certain routine legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of its business. The Company believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not materially affect its financial position, results of operations or liquidity.

 

Warranties and Indemnifications

 

The Company’s products are generally warranted to perform substantially in accordance with the functional specifications set forth in the associated product documentation for a period of 90 days. In the event there is a failure of such warranties, the Company generally is obligated to correct the product to conform to the product documentation or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product or service. The Company has not provided for a warranty accrual as of the three months ended September 30, 2014 or 2013, respectively. To date, the Company has not refunded any amounts in relation to the warranty.

 

The Company generally agrees to indemnify its customers against legal claims that the Company’s software infringes certain third-party intellectual property rights. In the event of such a claim, the Company is obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of the infringement, the Company agrees to modify or replace the infringing product, or, if those options are not reasonably possible, to refund the purchase price of the software. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers. As such, the Company has not provided for an indemnification accrual as of September 30, 2014 or 2013.

 

   

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

 12.  Income Taxes

 

The provision for income taxes is based upon income (loss) before income taxes as follows (in thousands): 

 

		Six Months Ended
		September 30, 2014
Domestic Pre-tax Income (Loss)		$	(8,522	)
Foreign Pre-tax Income (Loss)			(78	)
		$	(8,600	)

 

The components of the provision for income taxes/(benefit) are as follows:

 

		Six Months Ended
		September 30, 2014
US		$	(2,950	)
Foreign			-
Total provision for income taxes		$	(2,950	)

  

The Company is required to recognize in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position.  The Company policy is to record interest and penalties related to unrecognized tax benefits in income tax expense. At September 30, 2014, there was no liability for unrecognized tax benefits. 

 

The tax benefit of $3 million relates solely to release of valuation allowance to offset the deferred tax liability resulting from the Iasta acquisition and is a one-time event.

 

At September 30, 2014 there was no material increase in the liability for unrecognized tax benefits nor any accrued interest and penalties related to uncertain tax positions.

 

At September 30, 2014, the Company had approximately $2 million of unrecognized tax benefits which was netted against deferred tax assets with a full valuation allowance. If these amounts are recognized there will be no effect on the Company’s effective tax rate due to the full valuation allowance.

 

The Company’s Federal, state, and foreign tax returns may be subject to examination by the tax authorities for fiscal years ended from 1998 to 2013 due to net operating losses and tax carry forwards unutilized from such years.

 

 

SELECTICA, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(UNAUDITED)

 

13. Credit Facility

 

On September 29, 2011, the Company entered into a Business Financing Agreement with Bridge Bank, National Association, which was modified during fiscal 2013 (as amended, the “Credit Facility”).  The Credit Facility provides a revolving receivables financing facility in an amount up to $3.0 million (the “Receivables Financing Facility”) and a revolving cash secured financing facility in an amount up to $4.0 million (the “Working Capital Facility”), for an aggregate revolving credit facility of up to $7.0 million.

 

The Receivables Financing Facility may be drawn in amounts up to $3.0 million in the aggregate, subject to a minimum borrowing base requirement equal to 80% of the Company’s eligible accounts receivable as determined under the Credit Facility. The Working Capital Facility may be drawn in such amounts as requested by the Company, not to exceed $4.0 million in the aggregate. The Credit Facility terminates on March 20, 2016, provided, however, that in the event of an early termination by the Company, a penalty of 1.0% of the total credit facility would be triggered.

 

All amounts borrowed under the Credit Facility are secured by a general security interest on the assets of the Company and are subject to a 1.75 Current Ratio of (i) cash and cash equivalents plus all eligible receivables in relation to (ii) the Company’s current liabilities excluding current deferred revenue.

 

Except as otherwise set forth in the Credit Facility, borrowings made under the Receivables Financing Facility will bear interest at a rate equal to the prime rate or 3.25%, whichever is greater, plus 0.25%, and borrowings made under the Working Capital Facility will bear interest at a rate equal to the financial institution’s certificate of deposit 30-day rate plus 200 basis points, with the total minimum monthly interest to be charged being $4,000.

 

As of September 30, 2014 and March 31, 2014, the Company owed $7.0 million under the Credit Facility, and no amounts were available for future borrowings.

 

  

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

In addition to historical information, this quarterly report contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in the “Risk Factors” in Item 1A to Part 1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2014 (the “Form 10-K”). They include the following: the level of demand for Selectica’s products and services; the intensity of competition; Selectica’s ability to effectively manage product transitions and to continue to expand and improve internal infrastructure; the impact of current economic conditions on our customers and our business; and our reliance on a relatively small number of customers for a substantial portion of our revenue. For a more detailed discussion of the risks relating to our business, readers should refer to Item 1A to Part 1 in the Form 10-K entitled “Risk Factors.” Readers are cautioned not to place undue reliance on the forward-looking statements, including statements regarding our expectations, beliefs, intentions or strategies regarding the future, which speak only as of the date of this quarterly report. We assume no obligation to update these forward-looking statements 

 

Overview

 

We provide cloud-based software solutions that help growing companies to close deals faster, more profitably, and with lower risk.

 

Selectica Contract Lifecycle Management (CLM) combines a single, company-wide contract repository with a flexible workflow engine capable of supporting each organization’s unique contract management processes. Our cloud-based solution streamlines contract processes, from request, authoring, negotiation, and approval through ongoing obligations management, analysis, reporting, and renewals.  It helps companies take control of their contract management processes by converting from paper-based to electronic repositories and by unlocking multiple layers of critical business data, making it available for the evaluation of risk, the exposure of lost revenue, the evaluation of supplier performance, and other purposes.  The solution helps to improve the customer buying experience for sales organizations, improve the control of risk and decrease time spent drafting, monitoring and managing contracts, and gain access to previously hidden discounts through the exposure and elimination of unfavorable agreements for procurement and sourcing organizations.

 

Selectica Configuration Software streamlines the management and dissemination of complex product information enabling companies to streamline the opportunity-to-order process for manufacturers, service providers, and financial services companies. Our Configuration Software solution can be seamlessly integrated with leading CRM systems, as well as ERP systems like Oracle and SAP, to ensure that the latest product, customer, and pricing data is always being used.  This helps to simplify and automate the configuration, pricing, and quoting of complex products and services.  By empowering customers, product management, marketing, sales leadership, sales operations, salespeople, and channel partners to generate error-free sales proposals for their unique requirements, we believe our cloud-based solution helps companies to close sales faster, accelerate revenue generation and enhance customer relationships. 

 

We acquired Iasta.com, Inc. and Iasta Resources, Inc. (together, “Iasta”) on July 2, 2014. Iasta is an industry leading SaaS-based sourcing and spend management solutions company focused improving spend analysis, procurement intelligence, sourcing, and supplier lifecycle management. We believe the acquisition positions Selectica to provide easier access to contract management, strategic sourcing, spend management, and configuration solutions and market coverage in more locations worldwide to the combined customers of Selectica and Iasta.

 

Quarterly Financial Overview

 

For the three months ended September 30, 2014, our total revenues increased by 32%, or $1.3 million, to $5.2 million compared with total revenues of $3.9 million for the three months ended September 30, 2013. Recurring revenues, comprised of subscription license sales, maintenance revenues from previously sold perpetual licenses, and hosting revenues, totaled $4.0 million, or 78% of total revenues, representing an increase of $1.0 million, or 34%, over the three months ended September 30, 2013. Non-recurring revenues, comprised of perpetual license sales and revenues from professional services for system implementations, enhancements, and training, totaled $1.2 million, or 22% of total revenues, representing an increase of $0.2 million, or 28%, over the three months ended September 30, 2013. The increase in recurring and non-recurring revenues year over year resulted primarily from the new customers from our acquisition of Iasta.

 

During the quarter ended September 30, 2014, our net loss totaled approximately $2.7 million, representing an increase in net loss of $2.2 million, or over 100%, more than our net loss of $0.5 million for the three months ended September 30, 2013.  The increase in net loss relates primarily to a $3.8 million of increase in operating expenses and acquisition related costs incurred during the three months ended September 30, 2014. During the first six months of fiscal year 2015, net loss totaled $5.7 million, an increase of $2.8 million or 96% from year over year. See “Results of Operations” below for further discussion on the components of net loss.

 

    

Critical Accounting Policies and Estimates

 

Other than the significant policies added below, there have been no material changes to any of our significant accounting policies and estimates as disclosed in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014.

 

Capitalized Software Development Costs

 

The Company capitalizes software development costs related to software developed for external use in accordance with ASC 985-20, Costs of Software to Be Sold, Leased, or Marketed upon achieving technological feasibility of the related products. Software development costs incurred prior to achieving technological feasibility are charged to engineering and product development expense as incurred.

 

Capitalized software will be amortized once the product is available for general release, using the straight-line method over the estimated useful lives of the assets, which is three years. The recoverability of capitalized software is evaluated for recoverability based on estimated future gross revenues reduced by the associated costs. If gross revenues were to be significantly less than estimated, the net realizable value of the capitalized software intended for sale would be impaired, which could result in the write-off of all or a portion of the unamortized balance of such capitalized software.

 

Capitalized costs are amortized on a straight-line basis over the economic lives of the related products, generally three years. Amortization expense was $0.05 million and $0.1 million for the three months and six months ended September 30, 2014 and is included in the product cost of revenue. Prior to the twelve months ended March 31, 2014, these costs were not capitalized due to the short length of time between technological feasibility and general availability of software versions. The unamortized balance of capitalized software was $1.8 million as of September 30, 2014.

 

Business Combinations

 

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

 

Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and acquired patents and developed technology; and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

 

Other estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed.

 

Goodwill

 

Goodwill is allocated to reporting units expected to benefit from the business combination. We test goodwill for impairment at the reporting unit level at least annually, or more frequently if events or changes in circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill impairment tests require judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. As of September 30, 2014, no impairment of goodwill has been identified.

 

Foreign Currency

 

For the Company’s UK subsidiary, the functional currency is the U.S. dollar. Assets and liabilities are translated into U.S. dollar equivalents at the exchange rate in effect on the balance sheet date and revenues and expenses are translated into U.S. dollars using the average exchange rate over the period. Resulting currency translation adjustments and net gains and losses resulting from foreign exchange transactions are recorded in other income (expense), net in the consolidated statement of operations.

 

  

Factors Affecting Operating Results

 

A small number of customers continue to account for a significant portion of our total revenues. We expect that our revenues will continue to depend upon a limited number of customers. If we were to lose a large customer, it would have a significant impact upon future revenues. Customers who accounted for at least 10% of total revenues were as follows:

 

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Revenues from Customer A			10%				15%				12%				14%

 

Sales to foreign customers accounted for only 22% and 14% of total revenue during the first three months and six months of fiscal 2015, respectively, of which the majority is denominated in US dollars. We don't anticipate that any exposure to foreign currency fluctuations will be significant in the foreseeable future.

  

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
International revenues			22	%			8	%			14	%			12	%
Domestic revenues			78	%			92	%			86	%			88	%
Total revenues			100	%			100	%			100	%			100	%

 

Results of Operations:

 

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Revenues:
Recurring revenues		$	4,038			$	3,020			$	6,732			$	6,186
Percentage of total revenues			78	%			77	%			75	%			75	%
Non-recurring revenues			1,165				908				2,233				2,114
Percentage of total revenues			22	%			23	%			25	%			25	%
Total revenues		$	5,203			$	3,928			$	8,965			$	8,300

  

 

Recurring revenues.  Recurring revenues consist of subscription license sales, maintenance revenues from previously sold perpetual licenses, and hosting revenues. Our recurring revenues during the three months ended September 30, 2014 increased by $1.0 million, or 34%, and $0.5 million or 9% year over year. Subscription revenues grew by $1.0 million due to the acquisition of Iasta and were offset by a $0.5 million decrease in maintenance revenues due to some non-renewals during the six months ended September 30, 2014. During the first six months of fiscal year 2015, recurring revenues continue to account for over 75% of our total revenues and we expect this trend to continue going forward.

 

Non-recurring revenues. Non-recurring revenues are comprised of revenues from professional services for system implementations, enhancements, and training. Non-recurring revenues during the three months ended September 30, 2014 increased by $0.3 million compared to the three months ended September 30, 2013. This increase was primarily due to the acquisition of Iasta. Our non-recurring revenues during the six months ended September 30, 2014 increased by $0.1 million, or 6%, year over year, which relates to the acquisition mentioned above.

 

We expect non-recurring revenues to continue to fluctuate in future periods as a percentage of total revenues and in absolute dollars. This will depend on the number and size of new software implementations and follow-on services to our existing customers. We expect recurring revenues to increase in absolute dollars and as a percentage of total revenues as we continue to emphasize our cloud-based solutions. This will depend in part on the number of maintenance renewals, and the number and size of new subscription license contracts. In addition, maintenance renewals are extremely dependent upon economic conditions, customer satisfaction and the level of need to make changes or upgrade versions of our software by our customers. Fluctuations in revenue are also due to timing of revenue recognition, achievement of milestones, customer acceptance, changes in scope or renegotiated terms and additional services.

 

Cost of revenues  

  

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Cost of Revenue:
Cost of recurring revenues		$	1,376			$	694			$	2,147			$	1,366
Percentage of total cost of revenue			40	%			36	%			38	%			35	%
Cost of non-recurring revenues			2,076				1,256				3,559				2,492
Percentage of total cost of revenue			60	%			64	%			62	%			65	%
Total cost of revenue		$	3,452			$	1,950			$	5,706			$	3,858

 

Cost of recurring revenues. Cost of recurring revenues consist of costs associated with supporting our data centers, the cost of bug fixes, maintenance and support, and salaries and related expenses of our support organization. During the three and six months ended September 30, 2014, cost of recurring revenues increased $0.7 million and $0.8 million, respectively, compared to the same periods in the prior year, primarily due to an increase in overall cost as a result of an increase in revenue from the acquisition and support costs in our data centers, certain acquisition related intangible assets, as well as higher compensation expenses in our support organization.

  

We expect cost of recurring revenues to remain relatively flat as a percentage of recurring revenues throughout the remainder of fiscal 2015.

 

Cost of non-recurring revenues. Non-recurring cost of revenues is comprised mainly of salaries and related expenses of our services organization, fees paid to resellers, costs of purchased third party licenses sold to customers as part of a bundled arrangement, and certain allocated corporate expenses. During the three and six months ended September 30, 2013, these costs increased $0.8 million and $1.0 million, respectively, compared to the same periods in the prior year. Although non-recurring revenues increased, we experienced a consistency in costs due to efforts spent on some engagements which were not billable during the second quarter of fiscal 2015 and the lack of costs associated with the consulting revenues during the second quarter of fiscal 2015.

 

We expect cost of non-recurring revenues to remain relatively flat as a percentage of recurring revenues throughout the remainder of fiscal 2014.

 

 

Gross Margin

   

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Gross margin, recurring revenues			51%				59%				51%				58%
Gross margin, non-recurring revenues			(18%)				(9%)				(15%)				(5%)
Gross margin, total revenues			34%				50%				36%				54%

 

Gross profit was $1.8 million, or 34%, during the three months ended September 30, 2014, compared with $2.0 million, or 51%, during the three months ended September 30, 2013. This decrease in our gross margin was primarily due to a increase in non-recurring cost of revenue as discussed above. Additionally, gross margins on recurring revenues decreased from the prior year as we continued to invest in our data center. 

 

We expect that our overall gross margins will continue to fluctuate primarily due to the timing of service revenue recognized and will continue to be adversely affected by lower margins associated with service revenues. The impact on our gross margin will depend on the mix of services we provide, whether the services are performed by our professional services employees or third party consultants, and the overall utilization rates of our professional services organization.

 

Operating Expenses

 

Research and Development Expenses

 

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Total research and development		$	997			$	450			$	1,439			$	1,553
Percentage of total revenues			19	%			11	%			16	%			19	%

 

Research and development expenses consist primarily of salaries and related costs of our engineering, quality assurance, technical publication efforts and certain allocated expenses.  Research and development expenses increased $0.5 million during the three months ended September 30, 2014 compared to the same period in 2013 while the expenses decreased by $0.1 million for the six months ended September 30, 2014 compared to the same period in the prior year. This decrease relates to capitalization of $1.0 million of software development costs. Previously, these costs were not capitalized due to the short length of time between technological feasibility and general availability of software versions.  

 

We expect research and development expenditures to increase modestly during the remainder of fiscal 2015 due to increased headcount.

  

Sales and Marketing

  

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Total sales and marketing		$	3,923			$	2,129			$	6,293			$	4,202
Percentage of total revenues			75	%			54	%			70	%			51	%

 

Sales and marketing expenses consist primarily of salaries and related costs for our sales and marketing organization, sales commissions, expenses for travel and entertainment, trade shows, public relations, collateral sales materials, advertising and certain allocated expenses. For the three and six months ended September 30, 2013, sales and marketing expenses increased $1.8 million, or 84%, and $2.1 million, or 50%, respectively, compared to the same periods in 2013. The increases are primarily due to higher employee compensation expenses and acquisition-related costs.

 

We expect sales and marketing expenses to remain relatively flat during the remainder of fiscal 2015.

 

 

General and Administrative

 

		Three Months Ended								Six Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Total general and administrative		$	2,005			$	733			$	3,430			$	2,288
Percentage of total revenues			39	%			19	%			38	%			28	%

  

General and administrative expenses consist mainly of personnel and related costs for general corporate functions, including finance, accounting, legal, human resources, bad debt expense and certain allocated expenses.  General and administrative expense increased $1.3 million during the three months ended September 30, 2014 compared to the same period in 2013. Spending was similar in each period, with the exception of increased in stock-based compensation expense which was offset by the decrease in bad debt expense in the second quarter of fiscal 2015.

 

Acquisition Related Costs

 

We incurred significant expenses in connection with our Iasta acquisition. Acquisition related expenses consist of transaction costs, legal fees, costs for transitional employees, facilities consolidation, and integration related professional services.

 

Interest and Other Income (Expense), Net

 

Interest and other income (expense), net consists primarily of interest expense on the credit facility, foreign currency fluctuations, and other miscellaneous expenditures. During the three months ended September 30, 2014 and 2013, interest and other income (expense), net was immaterial for all periods presented.

  

Provision for Income Taxes 

 

As part of the Iasta acquisition, a net deferred tax liability of approximately $3.0 million was generated relating primarily to intangible assets where book basis was increased and tax basis remained at carryover amounts. Under ASC 740, this net deferred tax liability provides a source for the realization of the Company’s deferred tax assets which have previously been subject to valuation allowance. After assessing the recoverability of the Company’s deferred tax assets due to the acquisition, the Company has released the valuation allowance on $3.0 million of the deferred tax assets which are then netted against the deferred tax liability of $3.0 million. The tax benefit of $3.0 million from release of valuation allowance, in accordance with ASC 740, is a one-time event.

 

Liquidity and Capital Resources  

 

		Six Months Ended
		September 30,				September 30,
		2014				2013
		(in thousands)
Cash, cash equivalents and short-term investments		$	10,132			$	16,907
Working capital		$	(1,837	)		$	6,158

 

		Six Months Ended
		September 30,				September 30,
		2014				2013
		(in thousands)
Net cash used for operating activities		$	(7,070	)		$	(2,906	)
Net cash used for investing activities		$	(6,095	)		$	(44	)
Net cash (used for) provided by financing activities		$	6,390			$	4,765

 

Our primary sources of liquidity consisted of approximately $10.1 million in cash and cash equivalents as of September 30, 2014, $7.0 million of which was received from our short-term credit facility which expires in March 2016.  This compares to approximately $16.9 million in cash, cash equivalents and short-term investments as of March 31, 2014, $6.9 million of which was also received from our short-term credit facility.

 

 

Net cash used in operating activities was $7.1 million for the six months ended September 30, 2014, resulting primarily from our year-to-date net loss of $5.7 million and a $3.0 million decrease in deferred tax liability offset by $1.2 million increase in accounts receivable, as well as other changes in working capital items.

 

Net cash used in investing activities for the six months ended September 30, 2014 includes $6.1 million primarily related to $5 million in acquisition of Iasta and $1 million related to capitalized software during the quarter ended September 30, 2014. Other activity was not significant for the six months ended September 30, 2014 or 2013, resulting primarily from capital asset purchases in the prior year period.

 

Net cash used in financing activities was $6.4 million for the six months ended September 30, 2014, resulting primarily due to $7.2 million from the proceeds of Series E Convertible preferred stock and warrants offset by repayment of credit facility and note payable of $0.9 million as of September 30, 2014. 

 

We expect to incur significant operating costs for the foreseeable future. We expect to fund our operating costs, as well as our future capital expenditures and liquidity needs, from a combination of available cash balances, internally generated funds, additional equity financing, and our short-term credit facility. We have no outside debt other than our short-term credit facility. As a result, our net cash flows will depend heavily on the level of future sales, our ability to manage costs , the continued availability of borrowings under our credit facility and our ability raise additional capital. 

 

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.

  

ITEM 4: CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the period ending September 30, 2014. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2014.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of the Exchange Act that was conducted during the quarter ended September 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II: OTHER INFORMATION

 

ITEM 1: LEGAL PROCEEDINGS

 

Not applicable.

 

ITEM 1A: RISK FACTORS

 

Not applicable.

 

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

Not applicable.

 

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4: MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5: OTHER INFORMATION

 

Not applicable. 

 

 

ITEM 6: EXHIBITS

 

Exhibit No.		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.INS**

XBRL Instance

	101.SCH**	XBRL Taxonomy Extension Schema
	101.CAL**	XBRL Taxonomy Extension Calculation

101.DEF**

XBRL Taxonomy Extension Definition

101.LAB**

XBRL Taxonomy Extension Labels

101.PRE**

XBRL Taxonomy Extension Presentation

 

** XBRL

information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. 

 

Date: November 12, 2014	By:	/s/ TODD SPARTZ
		Todd Spartz
		Chief Financial Officer

   

  

EXHIBIT INDEX

 

Exhibit No.		Description

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

101.INS**

XBRL Instance

101.SCH**

XBRL Taxonomy Extension Schema

101.CAL**

XBRL Taxonomy Extension Calculation

101.DEF**

XBRL Taxonomy Extension Definition

101.LAB**

XBRL Taxonomy Extension Labels

101.PRE**

XBRL Taxonomy Extension Presentation

 

** XBRL

information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

 

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