x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
DELAWARE
(State
of incorporation)
|
13-3861628
(I.R.S.
employer identification number)
|
462
SEVENTH AVENUE, 3rd FLOOR
|
10018
|
NEW
YORK, NEW YORK
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title
of each class
|
Name
of each exchange on which registered
|
Common
Stock, par value $0.001 per share
|
The
Nasdaq Stock Market LLC
|
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated filer o |
PART
I
|
2
|
|
Item
1.
|
BUSINESS
|
2
|
Item
1A.
|
RISK
FACTORS
|
11
|
Item
1B.
|
UNRESOLVED
STAFF COMMENTS
|
24
|
Item
2.
|
PROPERTIES
|
24
|
Item
3.
|
LEGAL
PROCEEDINGS
|
25
|
Item
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
25
|
PART
II
|
26
|
|
Item
5.
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
26
|
Item
6.
|
SELECTED
CONSOLIDATED FINANCIAL DATA
|
28
|
Item
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
30
|
Item
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
41
|
Item
8.
|
CONSOLIDATED
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
43
|
Item
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
71
|
Item
9A.
|
CONTROLS
AND PROCEDURES
|
71
|
Item
9B.
|
OTHER
INFORMATION
|
74
|
|
||
PART
III
|
74
|
|
Item
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
74
|
Item
11.
|
EXECUTIVE
COMPENSATION
|
74
|
Item
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
74
|
Item
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
75
|
Item
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
75
|
|
||
PART
IV
|
75
|
|
Item
15.
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
75
|
ITEM 1. |
BUSINESS
|
·
|
improve
online conversion rates and reduce abandonment rates by providing
customer
assistance, including live help on
demand;
|
·
|
acquire
and retain customers across multiple online
channels;
|
·
|
utilize
a more cost-effective means of providing sales assistance and
customer
service; and
|
·
|
increase
customer satisfaction, retention and loyalty by offering real-time
help
online.
|
·
|
Timpani
Chat.
Timpani Chat enhances customer service with live support, while
reducing
interaction costs and churn. A real-time service, it strengthens
customer
loyalty and increases satisfaction levels while improving agent
productivity and lowering service costs. The solution’s single agent
desktop promotes multi-tasking and includes productivity tools
that speed
time to resolution.
|
·
|
Timpani
Voice.
Timpani Voice is an enterprise click-to-talk solution that
helps
E-commerce organizations proactively address consumer buying
concerns and
increase conversions from website visitors. Leveraging real-time
analytics
and business rules, Timpani Voice identifies targeted visitor
segments
while those visitors are online and establishes an immediate
connection
with telephone agents, bypassing conventional voice recognition
and
automated phone menu options.
|
·
|
Timpani
Email.
Timpani Email efficiently manages inbound email traffic and
Web form
queries while improving customer satisfaction and increasing
agent
productivity. This extensive email management solution funnels
all
messages through an automated process that evaluates the business
requirement and triggers a related action — such as generating an
auto-response, routing to an agent queue, deleting spam or
escalating to
another channel — for each message.
|
·
|
Timpani
Self-Service.
Timpani Self-Service delivers relevant and immediate answers
to website
visitors searching for information while optimizing the user
experience
and lowering support costs. The sophisticated knowledgebase
learns
dynamically and automatically updates based on visitor searches
and
behavior. It also allows issues that require further attention
to be
escalated to other communication channels, such as live chat,
email or
telephone.
|
Apple
|
EarthLink
|
NETELLER
|
AT&T
|
eLuxury.com
|
Overstock.com
|
Bank
of America
|
FXCM
(Forex Capital Markets)
|
QVC
|
Bell
Canada
|
Hewlett-Packard
|
Qwest
|
Bell
South
|
Intel
|
Rackspace
|
Cingular
Wireless
|
Kaplan
Education
|
SunTrust
Banks
|
Citibank
Home Equity
|
Maersk
|
Verizon
|
Computer
Associates
|
Microsoft
|
Washington
Mutual
|
·
|
Direct
Sales.
Our sales process focuses on how our solutions and domain
expertise
deliver financial and operational value that support our
clients’
strategic initiatives. The Timpani Sales and Marketing value
proposition
is targeted to business executives whose primary responsibility
is to
maximize online customer acquisition. These executives have
a vested
interest in improving conversion rates, increasing application
completion
rates and increasing average order value. The value proposition
for
Timpani Contact Center is designed to appeal to professionals
who hold
top- and bottom-line responsibility for customer service
and technical
support functions within their organization. Timpani Contact
Center,
primarily our Proactive Service Chat solution, enables these
organizations
to provide effective customer service using the online channel
while
deflecting costly phone calls and shifting service interactions
to more
cost efficient channels. Whether we typically engage with
individuals or
teams responsible for online sales or service, LivePerson’s Timpani
platform supports any organization with a companywide strategic
initiative
to improve the overall online customer
experience.
|
·
|
Indirect
Sales.
Our New Markets sales organization is focused on developing
partnerships
with call centers and industry vertical channels to generate
revenues
outside the focus of the direct sales team. This organization
also
provides leverage to the direct team with strategic partnerships
that
allow us to extend our core solution offering and increase
our value
proposition. By maximizing market coverage via partners who
provide
complementary products and services, we believe this channel
will increase
our revenue opportunities and accelerate market penetration
without
incurring the traditional costs associated with direct
sales.
|
·
|
online
consumer purchasing habits;
|
·
|
methodologies
to correctly engage customers;
|
·
|
metrics
proving return on investment; and
|
·
|
technology
innovation opportunities.
|
·
|
greater
brand recognition;
|
·
|
more
diversified lines of products and services;
and
|
·
|
significantly
greater financial, marketing and research and development
resources.
|
·
|
undertake
more extensive marketing campaigns;
|
·
|
adopt
more aggressive pricing policies;
and
|
·
|
make
more attractive offers to businesses to induce them to use
their products
or services.
|
·
|
Our
clients are supported by a secure, scalable server infrastructure.
In
North America, our primary servers are hosted in a fully-secured,
third-party server center in the Eastern United States and
are supported
by a backup server facility located in the Southwestern United
States. In
Europe, our primary servers are hosted in a fully-secured,
third-party
server center in London.
|
·
|
Our
network, hardware and software are designed to accommodate
our clients’
demand for secure, high-quality 24-hours per day/seven-days
per week
service.
|
·
|
As
a hosted service, we are able to add additional capacity
and new features
quickly and efficiently. This has enabled us to immediately
provide these
benefits simultaneously to our entire client base. In addition,
it allows
us to maintain a relatively short development and implementation
cycle.
|
·
|
Java
|
·
|
XML
(Extensible Mark-up Language)
|
·
|
HTML
(Hypertext Mark-up Language)
|
·
|
SQL
(Structured Query Language)
|
·
|
HTTP
(Hypertext Transfer Protocol)
|
·
|
continued
adoption by companies doing business online of real-time sales,
marketing and customer service
solutions;
|
·
|
our
clients’ business success;
|
·
|
our
clients’ demand for our services;
|
·
|
our
ability to attract and retain
clients;
|
·
|
the
amount and timing of capital expenditures and other costs
relating to the
expansion of our operations, including those related to
acquisitions;
|
·
|
the
introduction of new services by us or our competitors;
and
|
·
|
changes
in our pricing policies or the pricing policies of our
competitors.
|
·
|
economic
conditions specific to the Internet, electronic commerce
and online media;
and
|
·
|
general
economic and political conditions.
|
·
|
enhance
the features and performance of the LivePerson
services;
|
·
|
develop
and offer new services that are valuable to companies doing
business
online and Internet users; and
|
·
|
respond
to technological advances and emerging industry standards
and practices in
a cost-effective and timely manner.
|
·
|
online
consumer purchasing habits;
|
·
|
methodologies
to correctly engage customers;
|
·
|
metrics
proving return on investment; and
|
·
|
technology
innovation opportunities.
|
·
|
greater
brand recognition;
|
·
|
more
diversified lines of products and services;
and
|
·
|
significantly
greater financial, marketing and research and development
resources.
|
·
|
undertake
more extensive marketing campaigns;
|
·
|
adopt
more aggressive pricing policies;
and
|
·
|
make
more attractive offers to businesses to induce them to use
their products
or services.
|
·
|
damage
to our reputation;
|
·
|
lost
sales;
|
·
|
delays
in or loss of market acceptance of our products;
and
|
·
|
unexpected
expenses and diversion of resources to remedy
errors.
|
·
|
difficulties
in integrating operations, technologies, products and personnel
with
LivePerson;
|
·
|
diversion
of financial and management resources from efforts related
to the
LivePerson services or other then-existing operations; risks
of entering
new markets beyond providing real-time sales, marketing and
customer
service solutions for companies doing business
online;
|
·
|
potential
loss of either our existing key employees or key employees
of any
companies we acquire; and
|
·
|
our
inability to generate sufficient revenue to offset acquisition
or
investment costs.
|
·
|
any
issued patent or patents issued in the future may not be
broad enough to
protect our intellectual property
rights;
|
·
|
any
issued patent or any patents issued in the future could be
successfully
challenged by one or more third parties, which could result
in our loss of
the right to prevent others from exploiting the inventions
claimed in the
patents;
|
·
|
current
and future competitors may independently develop similar
technologies,
duplicate our services or design around any patents we may
have;
and
|
·
|
effective
patent protection may not be available in every country in
which we do
business, where our services are sold or used, where the
laws may not
protect proprietary rights as fully as do the laws of the
U.S. or where
enforcement of laws protecting proprietary rights is not
common or
effective.
|
·
|
continued
growth in the number of users;
|
·
|
concerns
about transaction security;
|
·
|
continued
development of the necessary technological
infrastructure;
|
·
|
development
of enabling technologies;
|
·
|
uncertain
and increasing government regulation;
and
|
·
|
the
development of complementary services and
products.
|
·
|
variations
in our quarterly operating results;
|
·
|
changes
in market valuations of publicly-traded companies in general
and Internet
and other technology companies in
particular;
|
·
|
our
announcements of significant client contracts, acquisitions
and our
ability to integrate these acquisitions, strategic partnerships,
joint
ventures or capital commitments;
|
·
|
our
failure to complete significant
sales;
|
·
|
additions
or departures of key personnel;
|
·
|
future
sales of our common stock;
|
·
|
changes
in financial estimates by securities analysts;
and
|
·
|
terrorist
attacks against the United States or in Israel, the engagement
in
hostilities or an escalation of hostilities by or against
the United
States or Israel, or the declaration of war or national emergency
by the
United States or Israel.
|
ITEM 1B. |
UNRESOLVED
STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
ITEM 3. |
LEGAL
PROCEEDINGS
|
ITEM 4. |
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM 5. |
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY
SECURITIES
|
High
|
Low
|
||||||
Year
ended December 31, 2005:
|
|||||||
First
Quarter
|
$
|
3.23
|
$
|
2.29
|
|||
Second
Quarter
|
$
|
3.30
|
$
|
2.24
|
|||
Third
Quarter
|
$
|
4.10
|
$
|
2.83
|
|||
Fourth
Quarter
|
$
|
5.71
|
$
|
3.79
|
|||
Year
ended December 31, 2006:
|
|||||||
First
Quarter
|
$
|
7.42
|
$
|
5.13
|
|||
Second
Quarter
|
$
|
7.84
|
$
|
4.05
|
|||
Third
Quarter
|
$
|
6.00
|
$
|
3.70
|
|||
Fourth
Quarter
|
$
|
6.00
|
$
|
4.27
|
ITEM 6. |
SELECTED
CONSOLIDATED FINANCIAL
DATA
|
Year
Ended December 31,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(in
thousands, except share and per share data)
|
||||||||||||||||
Consolidated
Statement of Operations Data:
|
||||||||||||||||
Revenue
|
$
|
33,521
|
$
|
22,277
|
$
|
17,392
|
$
|
12,023
|
$
|
8,234
|
||||||
Operating
expenses:
|
||||||||||||||||
Cost
of revenue (1)
|
7,621
|
4,297
|
2,888
|
2,028
|
1,604
|
|||||||||||
Product
development (1)
|
5,062
|
2,699
|
2,000
|
1,641
|
1,283
|
|||||||||||
Sales
and marketing (1)
|
11,864
|
6,975
|
5,183
|
3,555
|
2,177
|
|||||||||||
General
and administrative (1)
|
6,542
|
4,458
|
4,456
|
3,610
|
3,176
|
|||||||||||
Amortization
of goodwill and intangibles
|
1,383
|
931
|
792
|
1,014
|
357
|
|||||||||||
Restructuring
and impairment charges
|
—
|
—
|
—
|
1,024
|
1,186
|
|||||||||||
Total
operating expenses
|
32,472
|
19,360
|
15,319
|
12,872
|
9,783
|
|||||||||||
Income
(loss) from operations
|
1,049
|
2,917
|
2,073
|
(849
|
)
|
(1,549
|
)
|
|||||||||
Other
income (expense):
|
||||||||||||||||
Other
expense
|
—
|
—
|
—
|
(8
|
)
|
—
|
||||||||||
Interest
income
|
715
|
300
|
77
|
41
|
126
|
|||||||||||
Interest
expense
|
—
|
—
|
—
|
—
|
(10
|
)
|
||||||||||
Total
other income, net
|
715
|
300
|
77
|
33
|
116
|
|||||||||||
Income
(loss) before cumulative effect of accounting change
|
1,764
|
3,217
|
2,150
|
(816
|
)
|
(1,433
|
)
|
|||||||||
Cumulative
effect of accounting change (2)
|
—
|
—
|
—
|
—
|
(5,338
|
)
|
||||||||||
Income
(loss) before provision for income taxes
|
1,764
|
3,217
|
2,150
|
(816
|
)
|
(6,771
|
)
|
|||||||||
(Benefit
from) provision for income taxes
|
(438
|
)
|
675
|
58
|
—
|
—
|
||||||||||
Net
income (loss) attributable to common stockholders
|
$
|
2,202
|
$
|
2,542
|
$
|
2,092
|
$
|
(816
|
)
|
$
|
(6,771
|
)
|
||||
Basic
net income (loss) per common share:
|
||||||||||||||||
Income
(loss) before cumulative effect of accounting change
|
$
|
0.06
|
$
|
0.07
|
$
|
0.06
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
||||
Cumulative
effect of accounting change
|
—
|
—
|
—
|
—
|
(0.16
|
)
|
||||||||||
Net
income (loss)
|
$
|
0.06
|
$
|
0.07
|
$
|
0.06
|
$
|
(0.02
|
)
|
$
|
(0.20
|
)
|
||||
Diluted
net income (loss) per common share:
|
||||||||||||||||
Income
(loss) before cumulative effect of accounting change
|
$
|
0.05
|
$
|
0.06
|
$
|
0.05
|
$
|
(0.02
|
)
|
$
|
(0.04
|
)
|
||||
Cumulative
effect of accounting change
|
—
|
—
|
—
|
—
|
(0.16
|
)
|
||||||||||
Net
income (loss)
|
$
|
0.05
|
$
|
0.06
|
$
|
0.05
|
$
|
(0.02
|
)
|
$
|
(0.20
|
)
|
||||
Weighted
average shares outstanding used in basic net income (loss)
per common
share calculation
|
39,680,182
|
37,557,722
|
37,263,378
|
34,854,802
|
34,028,702
|
|||||||||||
Weighted
average shares outstanding used in diluted net income (loss)
per common
share calculation
|
43,345,232
|
39,885,328
|
39,680,304
|
34,854,802
|
34,028,702
|
(1)
|
For
the year ended December 31, 2006, includes stock-based
compensation
expense related to the adoption of SFAS No.
123(R).
|
(2) |
Cumulative
effect of accounting change relates to the impairment of
the carrying
value of goodwill.
|
December
31,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
21,729
|
$
|
17,117
|
$
|
12,425
|
$
|
10,898
|
$
|
8,004
|
||||||
Working
capital
|
19,233
|
15,668
|
11,283
|
8,486
|
6,137
|
|||||||||||
Total
assets
|
43,315
|
21,426
|
17,150
|
13,537
|
10,837
|
|||||||||||
Total
stockholders’ equity
|
34,549
|
17,213
|
13,554
|
9,336
|
7,888
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF
OPERATIONS
|
· |
compensation
costs relating to employees who provide customer support
and
implementation services to our
clients;
|
· |
compensation
costs relating to our network support
staff;
|
· |
allocated
occupancy costs and related overhead;
and
|
· |
the
cost of supporting our infrastructure, including expenses
related to
server leases, infrastructure support costs and Internet
connectivity, as
well as depreciation of certain hardware and
software.
|
2006
|
2005
|
2004
|
||||||||
|
(in
thousands)
|
|||||||||
Stock-based
compensation expense related to SFAS No. 123(R)
|
$
|
2,180
|
$
|
—
|
$
|
—
|
||||
May
2004 warrant granted for investor relations services
(discussed
below)
|
—
|
—
|
246
|
|||||||
Total
|
$
|
2,180
|
$
|
—
|
$
|
246
|
Payments
due by period
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
Operating
leases
|
$
|
4,818
|
$
|
1,441
|
$
|
3,044
|
$
|
333
|
$
|
—
|
||||||
Total
|
$
|
4,818
|
$
|
1,441
|
$
|
3,044
|
$
|
333
|
$
|
—
|
ITEM 7A. |
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM 8. |
CONSOLIDATED
FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
|
Report
of BDO Seidman, LLP, Independent Registered Public Accounting
Firm
|
42
|
Report
of KPMG LLP, Independent Registered Public Accounting
Firm
|
43
|
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
44
|
Consolidated
Statements of Income for the years ended December 31,
2006, 2005 and
2004
|
45
|
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2006,
2005 and 2004
|
46
|
Consolidated
Statements of Cash Flows for the years ended December
31, 2006, 2005 and
2004
|
47
|
Notes
to Consolidated Financial Statements
|
48
|
/s/
KPMG LLP
|
December
31,
|
|||||||
2006
|
2005
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
21,729
|
$
|
17,117
|
|||
Accounts
receivable, less allowance for doubtful accounts
of $105 and $67, in 2006
and 2005, respectively
|
4,269
|
1,727
|
|||||
Prepaid
expenses and other current assets
|
1,317
|
591
|
|||||
Total
current assets
|
27,315
|
19,435
|
|||||
Property
and equipment, net
|
1,124
|
575
|
|||||
Intangibles,
net
|
2,640
|
790
|
|||||
Goodwill
|
9,673
|
—
|
|||||
Deferred
tax assets, net
|
1,580
|
—
|
|||||
Security
deposits
|
299
|
180
|
|||||
Other
assets
|
684
|
446
|
|||||
Total
assets
|
$
|
43,315
|
$
|
21,426
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
813
|
$
|
346
|
|||
Accrued
expenses
|
3,754
|
1,803
|
|||||
Deferred
revenue
|
3,256
|
1,618
|
|||||
Deferred
tax liabilities, net
|
259
|
—
|
|||||
Total
current liabilities
|
8,082
|
3,767
|
|||||
Other
liabilities
|
684
|
446
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value per share; 5,000,000 shares
authorized, 0 issued
and outstanding at December 31, 2006 and 2005
|
—
|
—
|
|||||
Common
stock, $.001 par value per share; 100,000,000 shares
authorized,
41,078,156 shares issued and outstanding at December
31, 2006; 37,979,271
shares issued and outstanding at December 31, 2005
|
41
|
38
|
|||||
Additional
paid-in capital
|
133,693
|
118,556
|
|||||
Accumulated
deficit
|
(99,179
|
)
|
(101,381
|
)
|
|||
Accumulated
other comprehensive loss
|
(6
|
)
|
—
|
||||
Total
stockholders’ equity
|
34,549
|
17,213
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
43,315
|
$
|
21,426
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Revenue
|
$
|
33,521
|
$
|
22,277
|
$
|
17,392
|
||||
Operating
expenses:
|
||||||||||
Cost
of revenue
|
7,621
|
4,297
|
2,888
|
|||||||
Product
development
|
5,062
|
2,699
|
2,000
|
|||||||
Sales
and marketing
|
11,864
|
6,975
|
5,183
|
|||||||
General
and administrative
|
6,542
|
4,458
|
4,456
|
|||||||
Amortization
of intangibles
|
1,383
|
931
|
792
|
|||||||
Total
operating expenses
|
32,472
|
19,360
|
15,319
|
|||||||
Income
from operations
|
1,049
|
2,917
|
2,073
|
|||||||
Interest
income
|
715
|
300
|
77
|
|||||||
Income
before provision for income taxes
|
1,764
|
3,217
|
2,150
|
|||||||
Benefit
from (provision for) income taxes
|
438
|
(675
|
)
|
(58
|
)
|
|||||
Net
income
|
2,202
|
2,542
|
2,092
|
|||||||
Basic
net income per common share
|
$
|
0.06
|
$
|
0.07
|
$
|
0.06
|
||||
Diluted
net income per common share
|
$
|
0.05
|
$
|
0.06
|
$
|
0.05
|
||||
Weighted
average shares outstanding used in basic
net income per common share
calculation
|
39,680,182
|
37,557,722
|
37,263,378
|
|||||||
Weighted
average shares outstanding used in diluted
net income per common share
calculation
|
43,345,232
|
39,885,328
|
39,680,304
|
Common
Stock
|
Additional
Paid-in
Capital
|
Deferred
Compensation
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
loss
|
Total
|
|||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||
Balance
at December 31, 2003
|
36,816,415
|
$
|
36
|
$
|
115,315
|
$
|
—
|
$
|
(106,015
|
)
|
$
|
—
|
$
|
9,336
|
||||||||
Issuance
of common stock upon exercise of stock
options and
warrants
|
193,423
|
—
|
122
|
—
|
—
|
—
|
122
|
|||||||||||||||
Issuance
of common stock related to asset acquisition
|
370,894
|
1
|
1,749
|
—
|
—
|
—
|
1,750
|
|||||||||||||||
Deferred
stock based compensation
|
—
|
—
|
246
|
(246
|
)
|
—
|
—
|
—
|
||||||||||||||
Amortization
of deferred compensation
|
—
|
—
|
—
|
246
|
—
|
—
|
246
|
|||||||||||||||
Tax
benefit from exercise of employee stock
options
|
—
|
—
|
8
|
—
|
—
|
—
|
8
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
2,092
|
—
|
2,092
|
|||||||||||||||
Balance
at December 31, 2004
|
37,380,732
|
37
|
117,440
|
—
|
(103,923
|
)
|
—
|
13,554
|
||||||||||||||
Issuance
of common stock upon exercise of stock
options and
warrants
|
598,539
|
1
|
450
|
—
|
—
|
—
|
451
|
|||||||||||||||
Tax
benefit from exercise of employee stock
options
|
—
|
—
|
666
|
—
|
—
|
—
|
666
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
2,542
|
—
|
2,542
|
|||||||||||||||
Balance
at December 31, 2005
|
37,979,271
|
38
|
118,556
|
—
|
(101,381
|
)
|
—
|
17,213
|
||||||||||||||
Issuance
of common stock in connection with Proficient
acquisition
|
1,960,711
|
2
|
9,927
|
—
|
—
|
—
|
9,929
|
|||||||||||||||
Issuance
of common stock upon exercise of stock
options and
warrants
|
1,138,174
|
1
|
988
|
—
|
—
|
—
|
989
|
|||||||||||||||
Stock-based
compensation
|
—
|
—
|
2,180
|
—
|
—
|
—
|
2,180
|
|||||||||||||||
Tax
benefit from exercise of employee stock
options
|
—
|
—
|
2,042
|
—
|
—
|
—
|
2,042
|
|||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
2,202
|
—
|
2,202
|
|||||||||||||||
Other
comprehensive loss
|
—
|
—
|
—
|
—
|
—
|
(6
|
)
|
(6
|
)
|
|||||||||||||
Comprehensive
income
|
2,196
|
|||||||||||||||||||||
Balance
at December 31, 2006
|
41,078,156
|
$
|
41
|
$
|
133,693
|
$
|
—
|
$
|
(99,179
|
)
|
$
|
(6
|
)
|
$
|
34,549
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Cash
flows from operating activities:
|
||||||||||
Net
income
|
$
|
2,202
|
$
|
2,542
|
$
|
2,092
|
||||
Adjustments
to reconcile net income to net cash provided
by operating
activities:
|
||||||||||
Non-cash
compensation expense, net
|
2,180
|
—
|
246
|
|||||||
Depreciation
|
555
|
171
|
217
|
|||||||
Loss
on disposal of fixed assets
|
111
|
—
|
—
|
|||||||
Amortization
of intangibles
|
1,383
|
931
|
792
|
|||||||
Provision
for doubtful accounts, net
|
38
|
30
|
30
|
|||||||
Deferred
income taxes
|
(2,581
|
)
|
666
|
8
|
||||||
Changes
in operating assets and liabilities,
net of
acquisition:
|
||||||||||
Accounts
receivable
|
(2,329
|
)
|
(116
|
)
|
(432
|
)
|
||||
Prepaid
expenses and other current assets
|
(629
|
)
|
(116
|
)
|
(157
|
)
|
||||
Security
deposits
|
(54
|
)
|
(14
|
)
|
(37
|
)
|
||||
Other
assets and liabilities
|
—
|
—
|
19
|
|||||||
Accounts
payable
|
293
|
84
|
146
|
|||||||
Accrued
expenses
|
665
|
137
|
(911
|
)
|
||||||
Deferred
revenue
|
771
|
288
|
54
|
|||||||
Net
cash provided by operating activities
|
2,605
|
4,603
|
2,067
|
|||||||
Cash
flows from investing activities:
|
||||||||||
Purchases
of property and equipment, including
capitalized software
|
(652
|
)
|
(362
|
)
|
(260
|
)
|
||||
Acquisition
of Base Europe customer list
|
(233
|
)
|
—
|
(8
|
)
|
|||||
Acquisition
of Proficient, net of cash acquired
|
(133
|
)
|
—
|
—
|
||||||
Acquisition
of FaceTime customer contracts
|
—
|
—
|
(394
|
)
|
||||||
Net
cash used in investing activities
|
(1,018
|
)
|
(362
|
)
|
(662
|
)
|
||||
Cash
flows from financing activities:
|
||||||||||
Excess
tax benefit from the exercise of employee
stock options
|
2,042
|
—
|
—
|
|||||||
Proceeds
from issuance of common stock in connection
with the exercise of options
and warrants
|
989
|
451
|
122
|
|||||||
Net
cash provided by financing activities
|
3,031
|
451
|
122
|
|||||||
Effect
of foreign exchange rate changes on cash
and cash
equivalents
|
(6
|
)
|
—
|
—
|
||||||
Net
increase in cash and cash equivalents
|
4,612
|
4,692
|
1,527
|
|||||||
Cash
and cash equivalents at the beginning
of the year
|
17,117
|
12,425
|
10,898
|
|||||||
Cash
and cash equivalents at the end of the
year
|
$
|
21,729
|
$
|
17,117
|
$
|
12,425
|
||||
Supplemental
disclosures:
|
||||||||||
Cash
paid during the year for income taxes:
|
—
|
18
|
88
|
|||||||
(1)
|
Summary
of Operations and Significant
Accounting
Policies
|
(a)
|
Summary
of Operations
|
(b)
|
Principles
of Consolidation
|
(c)
|
Use
of Estimates
|
(d)
|
Cash
and Cash Equivalents
|
(e)
|
Property
and Equipment
|
(f)
|
Impairment
of Long-Lived Assets
|
(g)
|
Accounts
Receivable
|
(h)
|
Revenue
Recognition
|
(i)
|
Income
Taxes
|
(j)
|
Advertising
Costs
|
(k)
|
Financial
Instruments and Concentration
of Credit
Risk
|
(l)
|
Stock-based
Compensation
|
December
31, 2006
|
||||
Cost
of revenue
|
$
|
228
|
||
Product
development expense
|
537
|
|||
Sales
and marketing expense
|
680
|
|||
General
and administrative expense
|
735
|
|||
Total
stock based compensation included
in operating expenses
|
$
|
2,180
|
December
31, 2006
|
||||
Dividend
yield
|
0.0
|
%
|
||
Risk-free
interest rate
|
4.8
|
%
|
||
Expected
life (in years)
|
4
|
|||
Historical
volatility
|
77.0
|
%
|
Year
Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Net
income as reported
|
$
|
2,542
|
$
|
2,092
|
|||
Add:
Stock-based compensation expense
included in net income as
reported
|
—
|
—
|
|||||
Deduct:
Pro forma stock-based compensation
cost
|
(2,055
|
)
|
(1,308
|
)
|
|||
Pro
forma net income
|
$
|
487
|
$
|
784
|
|||
Basic
net income per common share:
|
|||||||
As
reported
|
$
|
0.07
|
$
|
0.06
|
|||
Pro
forma
|
$
|
0.01
|
$
|
0.02
|
|||
Diluted
net income per common share:
|
|||||||
As
reported
|
$
|
0.06
|
$
|
0.05
|
|||
Pro
forma
|
$
|
0.01
|
$
|
0.02
|
Options
|
Weighted
Average
Exercise
Price
|
||||||
Options
outstanding at December 31,
2005
|
8,300,053
|
$
|
2.16
|
||||
Options
granted
|
1,238,000
|
$
|
5.26
|
||||
Options
exercised
|
(1,138,174
|
)
|
$
|
0.88
|
|||
Options
cancelled
|
(384,375
|
)
|
$
|
2.65
|
|||
Options
outstanding at December 31,
2006
|
8,015,504
|
$
|
2.78
|
||||
Options
exercisable at December 31,
2006
|
4,754,754
|
$
|
2.07
|
Shares
|
Weighted
Average
Grant-Date
Fair
Value
|
||||||
Nonvested
Shares at January 1, 2006
|
3,827,250
|
$
|
1.65
|
||||
Granted
|
1,238,000
|
$
|
5.26
|
||||
Vested
|
(1,532,625
|
)
|
$
|
2.25
|
|||
Cancelled
|
(271,875
|
)
|
$
|
3.24
|
|||
Nonvested
Shares at December 31, 2006
|
3,260,750
|
$
|
3.81
|
(m)
|
Basic
and Diluted Net Income Per
Share
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Basic
|
39,680,182
|
37,557,722
|
37,263,378
|
|||||||
Effect
of assumed exercised options
|
3,665,050
|
2,327,606
|
2,416,926
|
|||||||
Diluted
|
43,345,232
|
39,885,328
|
39,680,304
|
(n)
|
Segment
Reporting
|
(o)
|
Comprehensive
Loss
|
(p)
|
Computer
Software
|
(q)
|
Goodwill
and Intangible Assets
|
(r)
|
Deferred
Rent
|
(s)
|
Product
Development Costs
|
(t)
|
Foreign
Currency Translation
|
(u)
|
Recently
Issued Accounting
Pronouncements
|
(v)
|
Fair
Value of Financial
Instruments
|
(w)
|
Intangible
Assets
|
As
of December 31, 2006
|
||||||||||
Gross
Carrying
Amount
|
Weighted
Average
Amortization
Period
|
Accumulated
Amortization
|
||||||||
Amortizing
intangible assets:
|
||||||||||
Proficient
Systems
|
$
|
3,000
|
2.7
years
|
$
|
535
|
|||||
Customer
list of Base Europe
|
233
|
2.0
years
|
58
|
|||||||
Certain
identifiable assets of Island
Data
|
2,119
|
3.0
years
|
2,119
|
|||||||
Certain
identifiable assets of FaceTime
|
394
|
2.0
years
|
394
|
|||||||
Total
|
$
|
5,746
|
$
|
3,106
|
As
of December 31, 2005
|
||||||||||
Gross
Carrying
Amount
|
Weighted
Average
Amortization
Period
|
Accumulated
Amortization
|
||||||||
Amortizing
intangible assets:
|
||||||||||
Certain
identifiable assets of Island
Data
|
$
|
2,119
|
3.0
years
|
$
|
1,434
|
|||||
Certain
identifiable assets of FaceTime
|
394
|
2.0
years
|
289
|
|||||||
Total
|
$
|
2,513
|
$
|
1,723
|
(2)
|
Asset
Acquisitions
|
Cash
|
$
|
382
|
||
Accounts
receivable
|
250
|
|||
Other
currents assets
|
97
|
|||
Property
and equipment
|
563
|
|||
Other
assets
|
66
|
|||
Intangible
assets
|
3,000
|
|||
Goodwill
|
9,673
|
|||
14,031
|
||||
Liabilities
assumed
|
(548
|
)
|
||
Deferred
revenue
|
(867
|
)
|
||
Restructuring
liability
|
(911
|
)
|
||
Deferred
tax liability
|
(1,260
|
)
|
||
Total
purchase price consideration
|
$
|
10,445
|
Balance
as of
January
1, 2006
|
Provision
for
the
year ended
December
31, 2006
|
Net
utilization
during
the year ended
December
31, 2006
|
Balance
as of
December
31, 2006
|
||||||||||
Severance
|
$
|
—
|
$
|
741
|
$
|
(573
|
)
|
$
|
168
|
||||
Contract
terminations
|
—
|
170
|
(21
|
)
|
149
|
||||||||
Total
|
$
|
—
|
$
|
911
|
$
|
(594
|
)
|
$
|
317
|
Weighted
Average
Useful
Life
(months)
|
Amount
|
||||||
Customer
relationships
|
36
|
$
|
2,400,000
|
||||
Technology
|
18
|
500,000
|
|||||
Non-compete
agreements
|
24
|
100,000
|
|||||
$
|
3,000,000
|
Year
Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Revenue
|
$
|
35,506
|
$
|
24,470
|
|||
Net
loss
|
$
|
(921
|
)
|
$
|
(3,007
|
)
|
|
Basic
and diluted net loss per common
share
|
$
|
(0.02
|
)
|
$
|
(0.08
|
)
|
|
Weighted
average shares outstanding
- basic and diluted
|
40,979,501
|
39,513,061
|
(3)
|
Balance
Sheet Components
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Computer
equipment and software
|
$
|
2,794
|
$
|
1,936
|
|||
Furniture,
equipment and building improvements
|
393
|
182
|
|||||
3,187
|
2,118
|
||||||
Less
accumulated depreciation
|
2,063
|
1,543
|
|||||
Total
|
$
|
1,124
|
$
|
575
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Payroll
and related costs
|
$
|
2,455
|
$
|
1,182
|
|||
Professional
services and consulting fees
|
432
|
461
|
|||||
Sales
commissions
|
440
|
99
|
|||||
Restructuring
(see note 2)
|
317
|
—
|
|||||
Other
|
110
|
61
|
|||||
Total
|
$
|
3,754
|
$
|
1,803
|
(4)
|
Capitalization
|
(5)
|
Stock
Options and Employee Stock
Purchase
Plan
|
Options
|
Weighted
Average
Exercise
Price
|
||
Options
outstanding at December 31,
2003
|
5,723,000
|
$1.46
|
|
Options
granted
|
2,090,000
|
$2.80
|
|
Options
exercised
|
(171,225)
|
$0.71
|
|
Options
cancelled
|
(255,500)
|
$2.25
|
|
Options
outstanding at December 31,
2004
|
7,386,275
|
$1.83
|
|
Options
granted
|
2,178,000
|
$3.19
|
|
Options
exercised
|
(603,277)
|
$0.78
|
|
Options
cancelled
|
(660,945)
|
$3.20
|
|
Options
outstanding at December 31,
2005
|
8,300,053
|
$2.16
|
|
Options
granted
|
1,238,000
|
$5.26
|
|
Options
exercised
|
(1,138,174)
|
$0.88
|
|
Options
cancelled
|
(384,375)
|
$2.65
|
|
Options
outstanding at December 31,
2006
|
8,015,504
|
$2.78
|
|
Options
exercisable at December 31,
2004
|
3,710,795
|
$1.79
|
|
Options
exercisable at December 31,
2005
|
4,472,803
|
$1.72
|
|
Options
exercisable at December 31,
2006
|
4,754,754
|
$2.07
|
2006
|
2005
|
2004
|
||||||||
Stock-based
compensation expense related
to SFAS No. 123(R)
|
$
|
2,180
|
$
|
—
|
$
|
—
|
||||
May
2004 warrant granted for investor
relations services
|
—
|
—
|
246
|
|||||||
Total
|
$
|
2,180
|
$
|
—
|
$
|
246
|
(6)
|
Valuation
and Qualifying Accounts
|
Balance
at
Beginning
of
Period
|
Additions
Charged
to
Costs
and
Expenses
|
Deductions/
Write-offs
|
Balance
at
End
of
Period
|
||||||||||
For
the year ended December 31,
2006
Allowance
for doubtful accounts
|
$
|
67
|
$
|
38
|
$
|
--
|
$
|
105
|
|||||
For
the year ended December 31,
2005
Allowance
for doubtful accounts
|
$
|
54
|
$
|
30
|
$
|
(17
|
)
|
$
|
67
|
||||
For
the year ended December 31,
2004
Allowance
for doubtful accounts
|
$
|
64
|
$
|
30
|
$
|
(40
|
)
|
$
|
54
|
(7)
|
Income
Taxes
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
United
States
|
$
|
1,577
|
|
$
|
2,973
|
|
$
|
1,955
|
||
Foreign
|
187
|
|
244
|
|
195
|
|
||||
$
|
1,764
|
$
|
3,217
|
$
|
2,150
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Current
income taxes:
|
||||||||||
U.S.
Federal
|
$
|
1,697
|
$
|
675
|
$
|
58
|
||||
State
and local
|
346
|
—
|
—
|
|||||||
Foreign
|
100
|
—
|
—
|
|||||||
Total
current income taxes
|
2,143
|
675
|
58
|
|||||||
Deferred
income taxes:
|
||||||||||
U.S.
Federal
|
(2,132
|
)
|
—
|
—
|
||||||
State
and local
|
(449
|
)
|
—
|
—
|
||||||
Foreign
|
—
|
—
|
—
|
|||||||
Total
deferred income taxes
|
(2,581
|
)
|
—
|
—
|
||||||
Total
income taxes
|
$
|
(438
|
)
|
$
|
675
|
$
|
58
|
Year
Ended December 31,
|
|||||||
2006
|
2005
|
||||||
Federal
Statutory rate
|
34.00
|
%
|
34.00
|
%
|
|||
State
taxes, net of federal benefit
|
15.31
|
%
|
11.27
|
%
|
|||
Non-deductible
expenses - ISO
|
23.73
|
%
|
0.00
|
%
|
|||
Non-deductible
expenses - Other
|
8.56
|
%
|
4.31
|
%
|
|||
Change
in state effective rate
|
23.45
|
%
|
(7.21
|
)%
|
|||
Release
of valuation allowance
|
(133.59
|
)%
|
(21.39
|
)%
|
|||
Foreign
Taxes
|
5.67
|
%
|
0.00
|
%
|
|||
Other
|
(1.97
|
)%
|
0.00
|
%
|
|||
Total
(benefit) provision
|
(24.84
|
)%
|
20.98
|
%
|
2006
|
2005
|
||||||
Deferred
tax assets:
|
|||||||
Net
operating loss carryforwards
|
$
|
12,395
|
$
|
3,500
|
|||
Accounts
payable and accrued expenses
|
86
|
90
|
|||||
Non-cash
compensation
|
2,390
|
2,059
|
|||||
Goodwill
and intangibles amortization
|
3,269
|
3,431
|
|||||
Allowance
for doubtful accounts
|
55
|
30
|
|||||
Plant
and equipment, principally
due to differences in
depreciation
|
22
|
—
|
|||||
Other
|
75
|
76
|
|||||
Total
deferred tax assets
|
18,292
|
9,186
|
|||||
Less:
valuation allowance
|
(15,936
|
)
|
(9,163
|
)
|
|||
Net
deferred tax assets
|
2,356
|
23
|
|||||
Deferred
tax liabilities:
|
|||||||
Intangibles
related to the Proficient acquisition
|
(1,035
|
)
|
—
|
||||
Plant
and equipment, principally
due to differences in
depreciation
|
—
|
(23
|
)
|
||||
Total
deferred tax liabilities
|
(1,035
|
)
|
(23
|
)
|
|||
Net
deferred assets
|
$
|
1,321
|
$
|
—
|
(8)
|
Commitments
and Contingencies
|
Year
ending December 31,
|
Operating
Leases
|
|||
2007
|
$
|
1,441
|
||
2008
|
1,337
|
|||
2009
|
1,109
|
|||
2010
|
598
|
|||
2011
|
333
|
|||
Thereafter
|
—
|
|||
Total
minimum lease payments
|
$
|
4,818
|
(9)
|
Legal
Matters
|
(10)
|
Unaudited
Supplementary Financial Information
- Quarterly Results of
Operations
|
Quarter
Ended
|
|||||||||||||||||||||||||
Dec.
31,
2006
|
Sept.
30,
2006
|
June
30,
2006
|
Mar.
31,
2006
|
Dec.
31,
2005
|
Sept.
30,
2005
|
June
30,
2005
|
Mar.
31,
2005
|
||||||||||||||||||
Revenue
|
$
|
10,347
|
$
|
8,881
|
$
|
7,416
|
$
|
6,877
|
$
|
6,316
|
$
|
5,724
|
$
|
5,283
|
$
|
4,954
|
|||||||||
Operating
expenses:
|
|||||||||||||||||||||||||
Cost
of revenue
|
2,375
|
2,142
|
1,642
|
1,462
|
1,300
|
1,114
|
1,019
|
863
|
|||||||||||||||||
Product
development
|
1,783
|
1,381
|
1,018
|
880
|
672
|
663
|
688
|
675
|
|||||||||||||||||
Sales
and marketing
|
3,258
|
3,104
|
2,856
|
2,646
|
2,086
|
1,715
|
1,690
|
1,485
|
|||||||||||||||||
General
and administrative
|
1,854
|
1,750
|
1,437
|
1,501
|
1,058
|
1,034
|
1,096
|
1,271
|
|||||||||||||||||
Amortization
of intangibles
|
472
|
447
|
232
|
232
|
232
|
232
|
232
|
235
|
|||||||||||||||||
Total
operating expenses
|
9,742
|
8,824
|
7,185
|
6,721
|
5,348
|
4,758
|
4,725
|
4,529
|
|||||||||||||||||
Income
from operations
|
605
|
57
|
231
|
156
|
968
|
966
|
558
|
425
|
|||||||||||||||||
Other
income (expense), net:
|
|||||||||||||||||||||||||
Interest
income
|
202
|
200
|
170
|
143
|
117
|
81
|
59
|
43
|
|||||||||||||||||
Total
other income, net
|
202
|
200
|
170
|
143
|
117
|
81
|
59
|
43
|
|||||||||||||||||
Income
before (benefit from) provision
for income taxes
|
807
|
257
|
401
|
299
|
1,085
|
1,047
|
617
|
468
|
|||||||||||||||||
(Benefit
from) provision for income
taxes
|
(438
|
)
|
--
|
--
|
--
|
(63
|
)
|
358
|
216
|
164
|
|||||||||||||||
Net
income
|
$
|
1,245
|
$
|
257
|
$
|
401
|
$
|
299
|
$
|
1,148
|
$
|
689
|
$
|
401
|
$
|
304
|
|||||||||
Basic
net income per common
share
|
$
|
0.03
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
$
|
0.03
|
$
|
0.02
|
$
|
0.01
|
$
|
0.01
|
|||||||||
Diluted
net income per common
share
|
$
|
0.03
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
$
|
0.03
|
$
|
0.02
|
$
|
0.01
|
$
|
0.01
|
|||||||||
Weighted
average shares outstanding
used in basic net income
per common share
calculation
|
40,979,922
|
40,547,309
|
38,900,328
|
38,253,681
|
37,750,875
|
37,555,696
|
37,487,015
|
37,433,446
|
|||||||||||||||||
Weighted
average shares outstanding
used in diluted net income
per common share
calculation
|
44,591,617
|
43,854,202
|
42,818,687
|
40,504,248
|
40,616,738
|
39,839,001
|
39,400,983
|
39,448,922
|
ITEM 9. |
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM 9A. |
CONTROLS
AND PROCEDURES
|
ITEM
9B.
|
OTHER
INFORMATION
|
ITEM 10. |
DIRECTORS,
EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE
|
ITEM 11. |
EXECUTIVE
COMPENSATION
|
ITEM 12. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
Plan
Category
|
Number
of Securities to be Issued Upon
Exercise
of Outstanding
Options,
Warrants and Rights
(a)
|
Weighted-Average
Exercise Price of Outstanding
Options, Warrants and
Rights
(b)
|
Number
of Securities Remaining Available
for Future Issuance Under
Equity
Compensation
Plans (3)
(c)
|
|||||||
Equity
compensation plans approved by
stockholders (1)
|
8,079,254
|
$
|
2.78
|
5,000,083
|
||||||
Equity
compensation plans not approved
by stockholders (2)
|
124,500
|
$
|
0.69
|
—
|
||||||
Total
|
8,203,754
|
$
|
2.75
|
5,000,083
|
(1)
|
Our
equity compensation plans which
were approved by our stockholders
are the
2000 Stock Incentive Plan, as
amended and restated, and the
Employee Stock
Purchase Plan.
|
(2) |
On
December 11, 2002, we issued
a warrant to purchase 150,000
shares of
common stock at $0.69 per share
to Genesis Select Corp. in exchange
for
investor relations services.
Because approval was not required
at the
time, our stockholders did not
approve the issuance of the
warrant.
|
(3) |
Excludes
securities reflected in column
(a). The number of shares of
common stock
available for issuance under
the 2000 Stock Incentive Plan
automatically
increases on the first trading
day in each calendar year by
an amount
equal to three percent (3%) of
the total number of shares of
our common
stock outstanding on the last
trading day of the immediately
preceding
calendar year, but in no event
shall such annual increase exceed
1,500,000
shares. The number of shares
of common stock available for
issuance under
our Employee Stock Purchase Plan
automatically increases on the
first
trading day in each calendar
year by an amount equal to one-half
of one
percent (0.5%) of the total number
of shares of our common stock
outstanding on the last trading
day of the immediately preceding
calendar
year, but in no event shall such
annual increase exceed 150,000
shares.
Effective October 2001, we suspended
our Employee Stock Purchase Plan
until further notice. Also see
Note 5 to our consolidated financial
statements.
|
ITEM 13. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
|
ITEM 14. |
PRINCIPAL
ACCOUNTANT FEES AND
SERVICES
|
ITEM 15. |
EXHIBITS
AND FINANCIAL STATEMENT
SCHEDULES
|
1. |
Financial
Statements.
|
2. |
Financial
Statement Schedules.
|
3. |
Exhibits.
|
LIVEPERSON, INC. | ||
|
|
|
By: | /s/ ROBERT P. LOCASCIO | |
Name: Robert P. LoCascio |
||
Title: Chief Executive Officer |
Signature
|
Title(s)
|
/s/
ROBERT P. LOCASCIO
Robert
P. LoCascio
|
Chief
Executive Officer and Chairman
of the Board of Directors (principal
executive officer)
|
/s/
TIMOTHY E. BIXBY
Timothy
E. Bixby
|
President,
Chief Financial Officer, Secretary
and Director (principal financial
and
accounting officer)
|
/s/
STEVEN BERNS
Steven
Berns
|
Director
|
/s/
EMMANUEL GILL
Emmanuel
Gill
|
Director
|
/s/
KEVIN C. LAVAN
Kevin
C. Lavan
|
Director
|
/s/
WILLIAM G. WESEMANN
William
G. Wesemann
|
Director
|
Number
|
Description
|
2.1
|
Agreement
and Plan of Merger, dated as
of June 22, 2006, among LivePerson,
Inc.,
Soho Acquisition Corp., Proficient
Systems, Inc. and Gregg Freishtat
as
Shareholders’ Representative (incorporated
by reference to the identically
numbered exhibit in the Current
Report on Form 8-K filed on June
22,
2006)
|
3.1
|
Fourth
Amended and Restated Certificate
of Incorporation (incorporated
by
reference to the identically-numbered
exhibit to LivePerson’s Annual
Report on Form 10-K for the fiscal
year ended December 31, 2000 and
filed March 30, 2001 (the “2000 Form 10-K”))
|
3.2
|
Second
Amended and Restated Bylaws,
as amended (incorporated by reference
to the
identically-numbered exhibit
to the 2000 Form 10-K)
|
4.1
|
Specimen
common stock certificate (incorporated
by reference to the
identically-numbered exhibit
to LivePerson’s Registration Statement on
Form S-1, as amended (Registration
No. 333-96689) (“Registration
No. 333-96689”))
|
4.2
|
Second
Amended and Restated Registration
Rights Agreement, dated as of
January 27, 2000, by and among LivePerson,
the several persons and
entities named on the signature
pages thereto as Investors, and
Robert
LoCascio (incorporated by reference
to the identically-numbered exhibit
to
Registration No. 333-96689)
|
4.3
|
See
Exhibits 3.1 and 3.2 for further
provisions defining the rights
of holders
of common stock of LivePerson
|
10.1
|
Employment
Agreement between LivePerson
and Robert P. LoCascio, dated
as of
January 1, 1999 (incorporated by reference
to the
identically-numbered exhibit
to Registration
No. 333-96689)*
|
10.2
|
Employment
Agreement between LivePerson
and Timothy E. Bixby, dated as
of June 23,
1999 (incorporated by reference
to Exhibit 10.3 to Registration
No. 333-96689)*
|
10.2.1
|
Modification
to Employment Agreement between
LivePerson, Inc. and Timothy
E. Bixby,
dated as of April 1, 2003 (incorporated
by reference to the
identically-numbered exhibit
to LivePerson’s Quarterly Report on Form 10-Q
for the quarter ended June 30,
2003 and filed August 13,
2003)*
|
10.3
|
Amended
and Restated 2000 Stock Incentive
Plan, amended as of April 21,
2005
(incorporated by reference to
the identically-numbered exhibit
to
LivePerson’s Quarterly Report on Form 10-Q
for the quarter ended June 30,
2005 and filed August 8, 2005)*
|
10.4
|
Employee
Stock Purchase Plan (incorporated
by reference to the identically-numbered
exhibit to the 2000 Form 10-K)*
|
21.1
|
Subsidiaries
|
23.1
|
Consent
of BDO Seidman, LLP
|
23.2
|
Consent
of KPMG LLP
|
31.1
|
Certification
by Chief Executive Officer pursuant
to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302
of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant
to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302
of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
by 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
by Chief Financial Officer pursuant
to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of
2002
|