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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the Registrant x

Filed by a Party other than the Registrant o

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TIGERLOGIC CORPORATION

1532 SW Morrison Street, Suite 200

Portland, Oregon 97205

NOTICE OF CONSENT REQUESTED FROM STOCKHOLDERS

WITHOUT A SPECIAL MEETING

AND

IMPORTANT NOTICE REGARDING AVAILABILITY OF CONSENT MATERIALS

March 11, 2016

Dear Stockholders:

NOTICE IS HEREBY GIVEN that the Board of Directors of TigerLogic Corporation, a Delaware corporation (“we,” “our”, “us” or “TigerLogic”), is soliciting the written consent and approval from the holders of our issued and outstanding common stock to take corporate action approving and consenting to the following matter without the necessity of holding a special meeting of our stockholders, as permitted by Delaware law and our Certificate of Incorporation.

As previously announced, on February 17, 2016, we entered into an Asset Purchase Agreement with Sprinklr,  Inc., a Delaware corporation (“Sprinklr”), as amended by an amendment dated March 4, 2016 (the “Asset Purchase Agreement”). Pursuant to the Asset Purchase Agreement, we will sell substantially all of our assets associated with our Postano social media content curation and visualization business to Sprinklr in exchange for cash consideration of $2,400,000 and the assumption by Sprinklr of certain liabilities under contracts being assumed by Sprinklr (the “Asset Sale”). The Board of Directors unanimously approved the Asset Purchase Agreement and the transactions contemplated thereby on February 5, 2016. The Asset Sale requires the approval of stockholders holding a majority of the issued and outstanding shares of our common stock.

Your attention is directed to the Consent Statement accompanying this Notice, which more fully describes the foregoing proposal. Our Board of Directors has fixed the close of business on February 18, 2016, as the record date for the determination of the stockholders entitled to vote on the corporate action for which consent and approval is being solicited.

This Notice, together with the Consent Statement and the accompanying consent card, is first being mailed or otherwise distributed to our stockholders on or about March 11, 2016. Your consent can only be given if you complete, sign and return the consent card concerning the proposal for which approval is being solicited by our Board of Directors.

Our Board of Directors unanimously recommends that you consent to the proposal.

YOU MAY REVOKE YOUR CONSENT IN THE MANNER DESCRIBED IN THE ACCOMPANYING CONSENT STATEMENT.

The Consent Statement is also available at www.edocumentview.com/TIGR.

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TIGERLOGIC CORPORATION

CONSENT STATEMENT

Introduction

This Consent Statement is being furnished to the stockholders of TigerLogic Corporation, a Delaware corporation (“TigerLogic” or the “Company”), in connection with the prior approval of our Board of Directors of, and the solicitation written of consents from our stockholders approving, the sale of substantially all of the assets associated with our Postano social media content curation and visualization business (the “Asset Sale”) to Sprinklr, Inc. (“Sprinklr”). The Asset Sale will be effected pursuant to an Asset Purchase Agreement, dated as of February 17, 2016, by and between TigerLogic and Sprinklr as amended by First Amendment to Asset Purchase Agreement, dated March 4, 2016. (the “Asset Purchase Agreement”). A copy of the Asset Purchase Agreement, as amended, is included as Appendix A to this Consent Statement.

The Board of Directors believes that the approval and consummation of the Asset Purchase Agreement and the transactions contemplated thereby are in the best interest of TigerLogic and its stockholders. Accordingly, on February 5, 2016, the Board approved the Asset Purchase Agreement and the transactions contemplated thereby, and directed that these items be presented to our stockholders. The Board is asking the Company’s stockholders to consent in writing and approve the Asset Purchase Agreement and the transactions contemplated thereby.

Under Delaware law and our Certificate of Incorporation, the affirmative vote of a majority of the issued and outstanding shares of our Common Stock, par value $0.10 per share (“Common Stock”), as of the close of business on February 18, 2016, the record date, is required to approve the Asset Purchase Agreement and the transactions contemplated thereby. Under our Certificate of Incorporation, each share of Common Stock is entitled to one vote per share. As of February 18, 2016, there were issued and outstanding 30,960,013 shares of Common Stock.

Stockholder approval will become effective at such time as we have received affirmative written consent of stockholders holding a majority of our issued and outstanding Common Stock approving the Asset Sale. The Asset Sale will not become effective until at least 20 calendar days following the date of mailing of this Consent Statement to our stockholders.

This Consent Statement, together with the Notice and the accompanying Consent card is first being mailed on or about March 11, 2016 to holders of record of Common Stock as of the close of business on February 18, 2016.

THE INFORMATION IN THIS CONSENT STATEMENT REGARDING SPRINKLR HAS BEEN SUPPLIED BY SPRINKLR.

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A NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Consent Statement contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may generally be identified by the use of such words as “expect,” “anticipate,” “believe,” “intend,” “plan,” “will,” or “shall,” or the negative of those terms. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking those safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that are subject to change at any time and from time to time and that could cause our actual results, performance or achievements to differ materially from our expectations of future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements contained in this Consent Statement include, but are not limited to statements about the anticipated sale of our Postano assets to Sprinklr, our intention to sell our Omnis business and other business assets, plans to dissolve and liquidate our company, and the timing and expected results of these actions. Factors that could cause actual results or developments to differ materially from those described in or contemplated or implied by such forward-looking statements include, without limitation, the risk that the assumptions upon which the forward-looking statements are based ultimately may prove to be incorrect or incomplete, the inability of the parties to the Asset Purchase Agreement to satisfy the conditions to the closing of the Asset Sale and to consummate the Asset Sale transaction, that we may incur additional liabilities that we do not now anticipate, that we may be unable to negotiate and consummate a sale of our assets associated with our Omnis business on reasonable terms, or at all, the costs of dissolving our Company and winding up our business, as well as other risks and uncertainties that are described in our filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future events or results. Except as may be required under federal law, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur.

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SOLICITATION OF CONSENTS

The Consent Procedure

Pursuant to Section 271 of the Delaware General Corporation Law (the “DGCL”), stockholder approval is required for a transaction resulting in the sale of all or substantially all of our assets.  Our ability to sell substantially all of our assets without a meeting of our stockholders is authorized by Section 228 of the DGCL. That section generally provides that a Delaware corporation may substitute for action on a matter by its stockholders at a meeting the written consent of the holders of outstanding shares of capital stock holding at least the minimum number of votes which would be necessary to authorize or take the action at a meeting at which all shares entitled to vote on the matter are present and voted.

Under Delaware law and our Certificate of Incorporation, the affirmative vote of a majority of the issued and outstanding shares of our common stock as of the record date is required to approve the Asset Purchase Agreement and the transactions contemplated thereby. Under our Certificate of Incorporation, each share of common stock is entitled to one vote per share.

The Record Date

Our Board of Directors fixed the close of business on February 18, 2016, as the record date for the determination of stockholders entitled to approve the Asset Sale. Only stockholders of the Company as of the record date are entitled to submit to us written consents approving the Asset Sale. As of the close of business on February 18, 2016, there were 30,960,013 issued and outstanding shares of our common stock.

Solicitation of Consents

Solicitation of consents by our Board of Directors will initially be made by mail, but may also be made in person or by mail, telephone, telecopy, telegram, facsimile or other means of communication by our directors and officers for no additional or special compensation. In addition, brokerage houses, banks, nominees, trustees, custodians and other fiduciaries may be requested by us to forward solicitation materials for shares of voting stock held of record by them to the beneficial owners of such shares, and such fiduciaries will, upon request, be reimbursed by us for their reasonable out of pocket expenses incurred in connection therewith. The cost of solicitation of written consents to approve and consent to the corporate action described herein will be borne by us.

Effectiveness and Revocation of Consents

The corporate action proposed herein will be adopted when properly completed, unrevoked consents are signed by stockholders holding a majority of the issued and outstanding shares of our common stock and submitted to us. The failure to execute or return a consent has the same effect as the withholding of consent for the Asset Sale.  The executed consents will be deemed to be effective when we have received executed consents from stockholders holding a majority of our issued and outstanding common stock.

Stockholders are requested to tender and submit their completed consents in the postage paid envelope included with your consent card or to us at the following address:

TIGERLOGIC CORPORATION

1532 SW Morrison Street, Suite 200

Portland, Oregon 97205

Telephone: (503) 488-6988
Attention:  Roger Rowe

Abstentions and “broker non-votes” (shares held of record by brokers or nominees which are not voted on a particular matter because the broker or nominee has not received voting instructions from the beneficial owner of such shares and does not have discretionary voting power with respect to that matter) will be treated as votes against the Asset Sale.

If a consent is properly signed and returned to us, unless properly revoked, the shares represented by that consent will be voted as approving the proposals contained therein.

An executed consent may be revoked by a stockholder by marking, dating, signing and delivering to us a written revocation at any time before the action authorized by the executed consent becomes effective. A revocation may be in any written form validly signed by the record holder as long as it clearly states that the consent previously delivered is no longer effective.

All consents, regardless of when dated, will expire unless valid, unrevoked consents constituting the requisite number of shares of our outstanding Common Stock are delivered to us on or before 60 days after the date that the earliest-dated consent is delivered to us.

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SUMMARY

This Consent Statement is being furnished to the stockholders of TigerLogic Corporation, a Delaware corporation, in connection with the solicitation of written consents of our stockholders to approve the sale of substantially all of the assets associated with our Postano social media content curation and visualization business (the “Asset Sale”) pursuant to an Asset Purchase Agreement, dated as of February 17, 2016, by and between TigerLogic and Sprinklr, Inc., as amended by First Amendment to Asset Purchase Agreement, dated March 4, 2016 (the “Asset Purchase Agreement”). The terms “we,” “our,” “TigerLogic,” and the “Company” in this Consent Statement refer collectively to TigerLogic Corporation.  References to “you” are to the stockholders of TigerLogic.

The summary that follows highlights the material terms and provisions of the Asset Purchase Agreement and selected information contained elsewhere in this Consent Statement. It may not contain all of the information that is important to you. To fully understand the Asset Sale, and for a more complete description of the Asset Sale and related matters, you should carefully read this Consent Statement in its entirety, including the Asset Purchase Agreement included as Appendix A.

Parties To The Asset Sale (see page 11)

TigerLogic Corporation

TigerLogic Corporation is a Delaware corporation engaged in the design, development, sale and support of Omnis, a rapid application development software platform that allows application developers the ability to build a software code once and quickly deploy an application cross-platform in any environment, and Postano, a real-time social media content aggregation, activation, and visualization platform used by our customers for fan engagement.

Sprinklr, Inc.

Sprinklr, Inc., is a privately held Delaware corporation providing an enterprise software platform that helps brands manage and create better experiences with their customers across social channels and branded websites.

The Asset Sale (see page 11)

Our Board of Directors adopted and approved the Asset Purchase Agreement and the transactions contemplated thereby at a special meeting held on February 5, 2016. Pursuant to the Asset Purchase Agreement, we intend to sell and Sprinklr intends to purchase substantially all of the assets associated with our Postano social media content curation and visualization business (the “Postano Assets”). We will sell the Postano Assets to Sprinklr in exchange for cash consideration of $2,400,000 and the assumption by Sprinklr of certain liabilities of the Company under contracts being assumed by Sprinklr.  The assets excluded from the Asset Sale include the assets associated with our Omnis rapid application development software platform business, cash and cash equivalents, bank accounts, securities, tax assets (including refunds and prepayments), and assets associated with our corporate and administrative functions.

Reasons for the Asset Sale (see page 15)

In reaching its decision to adopt and approve the Asset Purchase Agreement and the transactions contemplated thereby, our Board of Directors, in consultation with management, as well as its financial and legal advisors, considered a number of factors that the board members believed supported their decision. The Board of Directors reviewed the strategic alternatives available to us, including sale of the business and operations of TigerLogic as a whole and entrance into strategic partnerships with third parties whose businesses are potentially complementary to the Postano business. Based on the available strategic and liquidity alternatives, and considering our losses from operations, negative cash flows from operations, accumulated deficit and limited cash to fund future operations, our Board of Directors concluded that it would be in the best interest of the Company and its stockholders to sell the Postano Assets, and that the Asset Sale and the Asset Purchase Agreement reflects the highest value for the Postano Assets reasonably attainable for our stockholders.

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Approval and Recommendation of the Board of Directors (see page 11)

The Board of Directors of TigerLogic, after careful consideration, adopted and approved the Asset Purchase Agreement and the transactions contemplated thereby by at a meeting held on February 5, 2016. THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS CONSENT TO AND APPROVE THE ASSET SALE.

Structure of the Company After the Asset Sale; Sale of Remaining Assets (see page 16)

If the proposed Asset Sale is consummated:

·                  Our ongoing operations will be limited to our Omnis rapid application development software platform business.

·                  We will continue to be a public company and our common stock will continue to trade on the OTCQX marketplace immediately following completion of the Asset Sale; however, if we are eligible to do so, we may determine to deregister our shares and cease reporting as a public company in order to reduce our expenses and preserve capital for eventual distribution to stockholders.

·                  We intend also to sell the assets associated with our Omnis business and any other saleable asset as soon as possible following the Asset Sale.  We have begun negotiations with potential acquirer of the Omnis assets, but have not yet reached a definitive agreement with any interested party.

·                  Following the completion of the sale of the assets associated with the Omnis business, we expect to file a certificate of dissolution with the Secretary of State for the State of Delaware, and to proceed to wind our business and liquidate our assets to stockholders.

Use of Proceeds (see page 16)

The Asset Purchase Agreement provides that, at closing, we will receive a total cash consideration of $2,400,000.  We anticipate that approximately $500,000 will be used to pay transaction expenses associated with the Asset Sale. We will use the remaining proceeds for general corporate purposes and to pursue the sale of our remaining assets.

Dissenters’ Rights (see page 22)

Our stockholders are not entitled to seek dissenters’ or appraisal rights under Delaware law in connection with the Asset Sale.

Certain Federal Income Tax Consequences (see page 22)

We will treat the Asset Sale as a taxable transaction for federal income tax purposes. It is anticipated that any gain resulting from the Asset Sale will be offset against our net operating loss carryforwards. However, utilization of these carryforwards generates an alternative minimum tax for federal income tax purposes. At this time, we are unable to determine the alternative tax liability generated due to the utilization of these carryforwards.

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Accounting Treatment (see page 22)

Upon completion of the Asset Sale, we will remove from our consolidated balance sheet all of the assets associated with the Postano business sold to Sprinklr and will reflect therein the effect of the receipt and the use of the proceeds of the Asset Sale. We will record a gain on the sale of assets to Sprinklr equal to the difference between the purchase price received and the book value of the assets sold in our consolidated statement of operations.

Government Approval (see page 22)

Except for compliance with the applicable regulations of the Securities and Exchange Commission in connection with this Consent Statement and with the Delaware General Corporation Law in connection with the Asset Sale, we are not required to comply with any federal or state regulatory requirements, and no federal or state regulatory approvals are required in connection with Asset Sale.

Interests of the Continuing Stockholders (see page 24)

Following the Asset Sale, our current stockholders will continue to own 100% of our outstanding common stock.

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QUESTIONS AND ANSWERS ABOUT THE ASSET SALE

The following information, in question and answer format, summarizes many of the material terms of the Asset Sale. For a complete description of the material terms of the Asset Sale, you are advised to carefully read this entire Consent Statement and the other documents referred to herein. The actual terms and conditions of the Asset Sale are contained in the Asset Purchase Agreement and the exhibits thereto. The Asset Purchase Agreement is included as Appendix A to this Consent Statement.

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THE ASSET SALE

General

The terms and conditions of the Asset Sale, which is the sale of substantially all the assets of our Postano social media content curation and visualization business, are set forth in the Asset Purchase Agreement, dated as of February 17, 2016, between us and Sprinklr, Inc. A copy of the Asset Purchase Agreement, excluding the schedules thereto, is included as Appendix A to this Consent Statement. The description in this Consent Statement of the terms and conditions of the Asset Sale and of the Asset Purchase Agreement is a summary only and may not contain all of the information that is important to you. To fully understand the Asset Sale and the terms of the Asset Purchase Agreement, you should carefully read in its entirety the copy of the Asset Purchase Agreement included as Appendix A hereto.

Parties To The Asset Purchase Agreement

TigerLogic Corporation

The business of TigerLogic Corporation, a Delaware corporation, consists of the design, development, sale and support of Omnis, a rapid application development software platform that allows application developers the ability to build a software code once and quickly deploy an application cross-platform in any environment, and Postano, a real-time social media content aggregation, activation, and visualization platform used by our customers for fan engagement.

Our principal executive offices are located at 1532 SW Morrison St., Suite 200, Portland, Oregon 97205. Our telephone number is (503) 488-6988.  We maintain an Internet website at www.tigerlogic.com. The information contained on our website shall not be deemed part of this Consent Statement.

Sprinklr, Inc.

Sprinklr, Inc., is a privately held Delaware corporation providing an enterprise software platform that helps brands manage and create better experiences with their customers across social channels and branded websites.

Sprinklr’s principal executive offices are located at 29 West 35th Street, 8th Floor, New York, New York 10001. Its telephone number is (917) 933-7800.  Sprinklr maintains an Internet website at www.sprinklr.com. The information contained on Sprinklr’s website shall not be deemed part of this Consent Statement.

Approval and Recommendation of the Board of Directors

The Board of Directors of TigerLogic, after careful consideration, adopted and approved the Asset Purchase Agreement and the transactions contemplated thereby at a meeting held on February 5, 2016. The Board unanimously recommends that the stockholders consent to and approve the Asset Sale.

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Background of the Asset Sale

As part of its oversight of the business and affairs of the Company, TigerLogic’s Board of Directors (the “Board”) reviews on an ongoing basis trends and conditions affecting the Company’s business and prospects in light of its corporate objectives and the delivery of stockholder value.

In light of continued losses from operations and negative cash flows, during 2015 our management and Board of Directors (the “Board”) explored various business development initiatives designed to improve revenue growth within the Company’s Postano business, including the possible establishment of strategic relationships with industry partners.

As part of this initiative, in June 2015, Roger Rowe, our Acting Chief Executive Officer and Chief Financial Officer, and Justin Garrity, our President, contacted representatives of Sprinklr and indicated a desire to explore a business relationship between TigerLogic and Sprinklr.  The parties signed a Proprietary Information Nondisclosure Agreement on June 5, 2015.  Discussions regarding the manner in which TigerLogic and Sprinklr could collaborate to make the Postano visualization platform available to enterprises using Sprinklr’s social media management products and platforms ensued.  During July and August 2015, members of the Postano and Sprinklr technical teams met to evaluate the Postano technology and explore technical avenues to enable a potential collaboration.  Between approximately August 15, 2015 and September 15, 2015 the parties explored a range of possible structures and economic terms for a commercial collaboration, ranging from a simple reseller arrangement to a licensed integration of the Postano technology within the Sprinklr platform.

On September 17, 2015, the Board of Directors was presented with an update on the discussions with Sprinklr and the range of collaboration structures being explored.  At the same meeting, the Board of Directors received a financial report forecasting continued net losses from operations, negative cash flows and depleting cash balances.  Based on the continued losses, slower than expected growth in revenues from the Postano business, and the Company’s limited capital remaining available for operations, the Board determined to explore additional strategic alternatives for the Company, including the possible sale of one or more operating businesses.

We continued to discuss a potential strategic partnership with Sprinklr, but the parties were unable to reach a commercial agreement. By September 28, 2015 discussions with Sprinklr regarding a potential strategic partnership were ended.

Between September 28 and October 7, 2015, we met with several investment banking firms, including D.A. Davidson & Co. (“D.A. Davidson”), to solicit input on how to maximize stockholder value and on strategies for potential market outreach in connection with evaluation of transactions involving one or both of our operating divisions.

On October 15, 2015, our Board met to review materials received from the investment banking firms in relation to each firm’s preliminary evaluation of our business and the potential process and timeline for conduct of a market outreach process.

On October 20, 2015, Mr. Rowe contacted Ragy Thomas, Sprinklr’s Chief Executive Officer, to indicate that the Company anticipated engaging in a process to explore transaction alternatives and to gauge Sprinklr’s interest in purchasing the Postano assets.  Mr. Thomas indicated that Sprinklr would be interested in exploring this opportunity and further indicated that Murali Swaminathan, Sprinklr’s EVP, Client Success and Engineering, and Chris Lynch, Sprinklr’s Chief Financial Officer, would be following up.  Between October 29 and November 13, 2015, Mr. Rowe provided summary level information regarding the Postano business and assets to Messrs. Swaminathan and Lynch.

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On November 5, 2015, we issued a press release reporting a net loss for the second fiscal quarter ended September 30, 2015 of $1.3 million, or $0.04 per share, and a net loss for the fiscal year to date of $2.9 million, or $0.09 per share.  We had cash on hand of $7.7 million as of September 30, 2015, down $1.8 million from June 30, 2015.

On November 9, 2015, our Board met to consider engagement proposals received from candidate investment banking firms and selected D.A. Davidson for engagement as our financial advisor in relation to transaction alternatives involving the Postano business.

On November 17, 2015, Mr. Lynch of Sprinklr contacted Mr. Rowe to indicate Sprinklr’s interest in pursuing a potential acquisition of the Postano business.  Mr. Lynch orally indicated to Mr. Rowe the purchase price then being contemplated by Sprinklr.

On November 19, 2015, D.A. Davidson provided our Board of Directors an assessment of the market for a transaction involving the sale of the Postano business.  The discussion included a proposed plan and timeline for approaching the relevant acquirers for the Postano Assets in addition to advancing the conversations with Sprinklr.

During the weeks of November 23 and November 30, 2015, D.A. Davidson contacted a defined list of parties identified as potentially having interest in acquiring the Postano business. As of a December 3, 2015 update from D.A. Davidson to the Board of Directors, several parties had expressed preliminary interest in acquiring Postano, three of which executed a non-disclosure and confidentiality agreement as of December 3, 2015 and subsequently began the due diligence process.  At the same meeting, the Board of Directors considered Sprinklr’s oral indication of a contemplated purchase price for the Postano assets.

On December 4, 2015, D.A. Davidson contacted Mr. Lynch to discuss the process for submission of offers and, at the direction of the Board of Directors, requested an increase in the cash purchase price from that previously conveyed to Mr. Rowe.

On December 7, 2015, we received an indicative term sheet from Sprinklr. Among other terms, the term sheet reflected an increase in the cash purchase price from the previously indicated price.

On December 11, 2015, our Board of Directors held a telephonic meeting during which D.A. Davidson provided an update on the status of on-going discussions with Sprinklr and each of the other interested parties. As of that meeting, five parties (other than Sprinklr) had expressed interest in a transaction. However, two of those parties had indicated that they would not continue to pursue a transaction involving the Postano assets. Three parties continued in active due diligence, in addition to Sprinklr.

Also on December 11, 2015, we sent a revised draft of the indicative term sheet to Sprinklr. The revision included an additional increase in the cash purchase price, various modifications to the indemnification terms, and a provision to ensure that we would be permitted under the Asset Purchase Agreement, subject to customary limitations, to (i) engage in discussions with any party from whom we receive an unsolicited acquisition proposal and (ii) terminate the definitive Asset Purchase Agreement if the unsolicited proposal is determined by our Board of Directors to be a superior proposal.  During this time, D.A. Davidson and our management continued to provide due diligence information and engage in discussions with the three additional interested parties.  Each of these parties were strategic in nature and expressed varying levels of interest.

On December 14, 2015, we received a revised draft term sheet from Sprinklr. Among other terms, the revised draft included a cash purchase price of $2.4 million, lower than the price contemplated by our December 11, 2015 revision to the term sheet, but higher than the price reflected in Sprinklr’s December 7, 2015 offer.

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On December 16, 2015, our Board of Directors held a telephonic meeting during which the Company’s management and D.A. Davidson summarized the terms of the indicative term sheet provided by Sprinklr. D.A. Davidson also provided management and the Board with an update on the content and direction of the discussions with the three remaining interested parties.  D.A. Davidson noted that of the remaining three parties in active discussions regarding Postano, (i) one party had indicated an inability to provide an indicative proposal in the near term, if at all; (ii) the second party indicated that any purchase consideration offered would almost certainly consist of the acquirer’s private company stock, and that it could take some time to get approval to issue a preliminary term sheet; and (iii) the third party’s interest level appeared to be waning.

At the conclusion of the December 16, 2015 meeting the Board authorized us to finalize and execute the indicative term sheet with Sprinklr. We executed the term sheet on December 18, 2015 with a 30 day exclusivity provision, subject to 15 day extension upon mutual agreement of the parties.

Starting on December 24, 2015, Sprinklr and its representatives and advisors were provided access to a virtual data site containing diligence information in relation to the Company and the Postano assets and interactions between representatives of Sprinklr, the Company and their respective representatives and advisors occurred on a nearly daily basis.

On January 6, 2016, we received from Sprinklr and its counsel an initial draft of the Asset Purchase Agreement.

On January 12, 2016, we and our counsel, Garvey Schubert Barer, provided a revised draft of the Asset Purchase Agreement to Sprinklr and its counsel.

On January 14, 2016, Mr. Rowe, Mr. Lynch, representatives of D.A. Davidson, and representatives of the respective counsel for Sprinklr and TigerLogic participated in a teleconference to identify and discuss unresolved issues in the draft Asset Purchase Agreement.

On January 20, 2016, Sprinklr and its counsel provided a revised draft of the Asset Purchase Agreement. Between January 20, 2016 and February 2, 2016, representatives of TigerLogic, D.A. Davidson and Garvey Schubert Barer discussed with representatives of Sprinklr and its counsel on numerous occasions the remaining unresolved issues in the draft Asset Purchase Agreement and related documents. On February 2, 2016, we granted Sprinklr a seven day extension of the exclusivity period under the indicative term sheet. On February 3, 2016, we and Garvey Schubert Barer provided a revised and substantially final draft of the Asset Purchase Agreement to Sprinklr and its counsel.

On January 9, 2016, we issued a press release reporting a net loss for the third fiscal quarter ended December 31, 2015 of $0.9 million, or $0.03 per share, and a net loss for the fiscal year to date of $3.7 million, or $0.12 per share.  We had cash on hand of $6.5 million as of December 31, 2015, down $1.3 million from September 30, 2015.

On February 5, 2016, our Board met to review and discuss the proposed transaction with Sprinklr and the proposed Asset Purchase Agreement. At the meeting, representatives of Garvey Schubert Barer summarized the principal terms and conditions of the proposed Asset Purchase Agreement and reviewed the Board’s previously discussed fiduciary duties in this context. After careful consideration and deliberation, the Board unanimously determined that it is in the best interests of the Company to enter into the Asset Purchase Agreement and directed that the Asset Purchase Agreement be submitted to the Majority Shareholders for approval.

On February 17, 2016, the Company and Sprinklr entered into the Asset Purchase Agreement.

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Reasons for the Asset Sale

The Company has incurred losses from operations and experienced negative cash flows over an extended period and has limited capital available to fund its operations. For the years ended March 31, 2015 and 2014, the Company recorded net losses from continuing operations of approximately $28.7 million and $7.3 million, respectively. For the nine months ended December 31, 2015 and 2014, the Company recorded operating losses of approximately $3.7 million and $26.4 million, respectively. As of March 31, 2015 and 2014, the Company’s accumulated deficit totaled approximately $139.1 million and $110.4 million, respectively. As of December 31, 2015, the Company’s accumulated deficit totaled approximately $142.8 million. As of December 31, 2015 the Company had cash of $6.5 million, down $1.3 million and $3.8 million from September 30, 2015 and March 31, 2015, respectively.

In reaching its decision to adopt and approve the Asset Purchase Agreement and the transactions contemplated thereby, our Board of Directors, in consultation with management, as well as its financial and legal advisors, considered a number of factors that the board members believed supported their decision.  Factors considered by the Board of Directors included:

·                  the possible alternatives to the sale of Postano, including sale of the business and operations of TigerLogic as a whole, or entrance into strategic partnerships with third parties whose businesses are potentially complementary to the Postano business, and our Board’s assessment that none of these alternatives was reasonably likely to present superior opportunities to create value for stockholders;

·                  the price to be paid by Spinklr for the Postano assets, which reflects extensive negotiation between the parties and represents, to the best knowledge of our Board, could receive, for the Postano assets;

·                  the fact that the purchase price is all cash, providing a certainty of value to be received for the Postano assets, and that Sprinklr would not require a financing condition;

·                  the business reputation of Sprinklr and its management, as well as Spinklr’s expressed desire and ability to complete a transaction promptly, which the Board believed supported the conclusion that a transaction could be completed in an orderly and timely manner and would enable us to stem our operating losses and preserve capital;

·                  the inclusion of provisions in the Asset Purchase Agreement that allow the Board, under certain circumstances and even though the Company stockholder approval has already been obtained, to consider and respond to unsolicited bona fide third party acquisition proposals received prior to the date that is 20 days after the mailing of this Consent Statement to stockholders, or engage in discussions with or negotiations with any person making such acquisition proposal and terminate the Asset Purchase Agreement to accept a superior proposal, subject to certain notice requirements and other conditions and the requirement that the Company pay a termination fee of $480,000 to Sprinklr; and

·                  the terms of the Asset Purchase Agreement and the related agreements, including the limited number and nature of the conditions to Sprinklr’s obligation to consummate the Asset Sale and the absence of a provision requiring any portion of the purchase price to be placed in escrow to secure our indemnification obligations under the Asset Purchase Agreement, which were the product of extensive arms-length negotiations among the parties and were designed to provide a high degree of certainty that the Asset Sale would ultimately be consummated on a timely basis and the Company would retain the entire purchase price for the Postano Assets.

The Board also considered a variety of potential risks and other potentially negative factors relating to the Asset Sale, including the following, but concluded that the anticipated benefits of the transaction substantially outweigh these considerations:

·                  that we may continue to incur losses associated with the operation of our Omnis business and maintenance of other assets and may be unable to sell our remaining assets in a timely manner or at all, which will reduce the amount of cash ultimately available for liquidation and distribution to our stockholders;

·                  the risk of incurring substantial expenses related to the Asset Sale;

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·                  the risk that one or more conditions to the parties’ obligations to complete the Asset Sale will not be satisfied, and the related risk that the Asset Sale may not be completed; and

·                  the risk that we may be required to indemnify Sprinklr for breaches of our representations and warranties included in the Asset Purchase Agreement, or may incur substantial expenses in resisting an indemnification claim.

In addition, the Board was aware of and considered the interests that our directors and executive officers may have with respect to the transaction that differ from, or are in addition to, their interests as stockholders of the Company generally, as described in “Interests of Certain Persons in the Asset Sale”.

The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but includes the material factors considered by the Board in reaching its determination approve and adopt the Asset Purchase Agreement and transactions contemplated thereby. In view of the variety of factors considered in connection with its evaluation of the Asset Sale, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation.

Based on these and other factors, and considering the Company’s losses from operations, negative cash flows from operations, accumulated deficit and limited cash to fund future operations, our Board of Directors concluded that it would be in the best interest of the Company to sell the Postano Assets, and that the Asset Sale and the Asset Purchase Agreement reflects the highest value reasonably attainable for the Postano Assets.

Assets Subject To Sale

The assets to be sold to Sprinklr consist of substantially all the assets associated with our Postano business, and include the following:

·                  assets, properties and rights used primarily in connection with the real-time social media content aggregation, activation, and visualization platform used by our customers for fan engagement;

·                  all goodwill associated with the Postano business;

·                  all customer data, vendor data, subscriber lists, manuals and business procedures related to the Postano business; and

·                  intangible property related to the Postano business.

Use of Proceeds

The Asset Purchase Agreement provides that, at closing, we will receive total cash consideration in the amount of $2,400,000. The Company anticipates that approximately $500,000 will be used to pay transaction expenses, including legal and accounting fees and the fees of our financial advisor, D.A. Davidson & Co. We will use the remaining proceeds for general corporate purposes and to pursue the sale of our remaining assets.

Structure of the Company After The Asset Sale; Sale of Remaining Assets

If the proposed Asset Sale is consummated:

·                  Our ongoing operations will be limited to our Omnis rapid application development software platform business.

·                  We will continue to be a public company and our common stock will continue to trade on the OTCQX marketplace immediately following completion of the Asset Sale; however, if we are eligible to do so, we may determine to deregister our shares and cease reporting as a public company in order to reduce our expenses and preserve capital for eventual distribution to stockholders.

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·                  We intend also to sell the assets associated with our Omnis business and any other saleable asset of the Company as soon as possible following the Asset Sale.  We have begun negotiations with potential acquirers of the Omnis assets, but have not yet reached a definitive agreement with any interested party.

·                  Following the completion of the sale of the assets associated with the Omnis business, we expect to file a certificate of dissolution with the Secretary of State for the State of Delaware, and to proceed to wind our business and liquidate our assets to stockholders.

Interests of Certain Persons in the Asset Sale

The Asset Purchase Agreement provides that prior to the closing Justin Garrity, our President, will enter into an offer letter with Sprinklr pursuant to which he will be employed by Sprinklr as its Associate Vice President, Product Management, following (and contingent upon) the consummation of the Asset Sale. Mr. Garrity is expected to receive a base salary substantially equivalent to the base salary he received as an officer of TigerLogic, and to be eligible for certain bonus incentives in connection with his employment by Sprinklr.  Mr. Garrity is also expected to receive options to purchase Sprinklr’s common stock.

The Asset Purchase Agreement also provides that, prior to the closing, Sprinklr would enter into a lease agreement with Astoria Capital Management (“ACM”) pursuant to which Sprinklr would rent certain of ACM’s furniture in TigerLogic’s Portland headquarters on substantially the same rental terms as TigerLogic currently rents such furniture from ACM. Sprinklr will pay ACM a rental fee of $1,000 per month for the use of the furniture. Richard Koe, a member of our Board of Directors, is the President and sole stockholder of ACM.

Neither Mr. Rowe nor Mr. Garrity, our named executive officers, will receive compensation that is based on or otherwise relates to the Asset Sale. Messrs. Garrity and Rowe hold options to purchase our common stock that are subject to accelerated vesting if, within 12 months after the occurrence of a “change of control” (including a sale of substantially all of our assets), Mr. Garrity or Mr. Rowe, as applicable, is terminated without “cause” or resigns for “good reason” (as such terms are defined in the applicable employment agreement).  None of the stock options held by Messrs. Garrity and Rowe are currently in-the-money and we do not expect that such options will be in-the-money as of or following consummation of the Asset Sale.

Terms of the Asset Purchase Agreement

The following is a summary of the significant provisions of the Asset Purchase Agreement. To fully understand the transactions contemplated by the Asset Purchase Agreement, you should carefully read in its entirety the copy of the Asset Purchase Agreement that is included as Appendix A to this Consent Statement and is incorporated herein by reference.

Purchase Price

The Asset Purchase Agreement provides that at closing Sprinklr will (i) pay us $2,400,000 in cash, and (ii) assume certain of our liabilities under contracts being assumed by Sprinklr.

Liabilities

Sprinklr will assume, pursuant to the Asset Purchase Agreement, certain of our trade payable obligations and our executory obligations under customer contracts.  Sprinklr also intends to accept the assignment of the remaining term of the lease for our Portland headquarters and assume our obligations under the lease. Except as specified in the Asset Purchase Agreement Sprinklr is not assuming any other obligations of TigerLogic.

Representations And Warranties

The representations and warranties of each party set forth in the Asset Purchase Agreement have been made solely for the benefit of the other party thereto for the purpose of allocating contractual risk between the parties and not for the purpose of establishing matters as to fact. In particular, the assertions embodied in the representations and warranties contained in the Asset Purchase Agreement (i) may have been qualified, modified, or excepted by confidential disclosures made to the other party in connection with the Asset Sale for the purpose of allocation of contractual risk, (ii) are subject to materiality qualifications contained in the Asset Purchase Agreement which may differ from what may be viewed as material by investors and (iii) were made only as of the date of the Asset Purchase Agreement or such other date as is specified in the therein. Accordingly, the representations and warranties in the Asset Purchase Agreement should not be viewed or relied upon as characterizations of the actual state of facts about us or Sprinklr.

The Asset Purchase Agreement contains various representations and warranties made by us for the benefit of Sprinklr relating to, among other things:

(a)         our corporate organization, good standing, qualification to do business, corporate power and authority;

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(b)         our corporate authorization in relation to the Asset Purchase Agreement, the related transactions and related transaction documents to which it is a party;

(c)          the enforceability of the Asset Purchase Agreement and each of the transaction documents related to the Asset Purchase Agreement;

(d)         the absence of conflict with our organizational documents, material contracts or material permits and applicable law as a result of the execution and delivery of, and performance under, the Asset Purchase Agreement;

(e)          except for D.A. Davidson & Co., the absence of any finders’, brokers’ or agents’ fees or commissions or similar compensation in connection with the transactions contemplated by the Asset Purchase Agreement;

(f)           the absence of certain changes, events and conditions;

(g)          the absence of undisclosed liabilities;

(h)         the absence of litigation;

(i)             real estate;

(j)            good and valid title to and lack of encumbrances upon such purchased assets;

(k)         compliance with laws and permits;

(l)             employment matters;

(m)     employee benefit plans;

(n)         tax matters;

(o)         material agreements;

(p)         personal property;

(q)         receivables;

(r)            intellectual property matters; and

(s)           customers and suppliers.

The Asset Purchase Agreement also contains various representations and warranties made by Sprinklr for our benefit relating to, among other things:

(a)         Sprinklr’s organization and good standing;

(b)         Sprinklr’s corporate authorization in relation to the Asset Purchase Agreement, the related transactions and related transaction documents to which it is a party;

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(c)          the absence of conflict with Sprinklr’s organizational documents, material contracts or material permits and applicable law as a result of the execution and delivery of, and performance under, the Asset Purchase Agreement;

(d)         the enforceability of the Asset Purchase Agreement and each of the transaction documents contemplated by the Asset Purchase Agreement; and

(e)          the absence of any finders’, brokers’ or agents’ fees or commissions or similar compensation in connection with the transactions contemplated by the Asset Purchase Agreement.

Covenants and Agreements of the Company and Sprinklr

The Asset Purchase Agreement sets forth various covenants and agreements between us and Sprinklr, including the following:

Further Assurances and Commercially Reasonable Efforts. We and Sprinklr will take further actions as may be reasonably necessary to consummate the closing, and to effectuate and comply with all of the terms of the Asset Purchase Agreement and the transactions contemplated thereby.

Conduct of Business Pending Closing. Until the closing, except as otherwise provided in the Asset Purchase Agreement or consented to in writing by Sprinklr, we will operate the Postano business as in the ordinary course of business and use commercially reasonable efforts to maintain and preserve intact its current organization and business.

Access to Information.  Until the earlier of the closing or the termination of the Asset Purchase Agreement, we will give Sprinklr and its representatives and advisors reasonable access to all records of the Company related to the Postano business necessary to consummate the Asset Purchase Agreement.

Certain Tax Returns and Indemnity. All transfer, documentary, sales, use, registrations and other taxes, all penalties, interest and additions to such tax, and all fees incurred in connection with the sale and transfer of the assets to be purchased by Sprinklr pursuant to the Asset Purchase Agreement will be paid 50% by Sprinklr and 50% by us.

No Solicitation; Other Bids.  The Asset Purchase Agreement prohibits us and our directors, officers, employees and other representatives from, among other things, directly or indirectly, soliciting, initiating, encouraging or facilitating the submission of an alternative proposal for the acquisition of the Company or the Postano Assets (an “Alternative Proposal”).  Notwithstanding the foregoing, the Asset Purchase Agreement provides that we may, prior to the date that is 20 days after the mailing of this Consent Statement to our stockholders (the “Earliest Closing Date”), engage or participate in discussions and negotiations with any third party that has made an Alternative Proposal if certain conditions set forth in the Asset Purchase Agreement are satisfied, including that any such Alternative Proposal was not solicited by us, and our Board of Directors determines, in good faith after consulting with outside counsel and financial advisors, that the Alternative Proposal constitutes or would reasonably be expected to result in a Superior Proposal (as defined in the Asset Purchase Agreement), and the failure to do so would be reasonably likely to constitute a breach of the Board of Director’s fiduciary duties to our stockholders.  The Asset Purchase Agreement also contains a “fiduciary-out” provision that provides that, in the event that the Board of Directors determines in good faith that such Alternative Proposal constitutes a Superior Proposal and we comply with certain notice and other conditions set forth in the Asset Purchase Agreement (including providing Sprinklr with a five day period to match or improve upon such Superior Proposal), we may, prior to Earliest Closing Date, terminate the Asset Purchase Agreement, provided that we enter into a definitive agreement with respect to such Superior Proposal substantially concurrently with such termination and pay Sprinklr a termination fee in the amount of $480,000.

Employee Matters. Prior to closing, Sprinklr will offer employment or consulting agreements to certain of our employees on such terms and conditions as agreed upon by Sprinklr.

Use of Name. From and after closing, we will not use the name “Postano” or any similar name and will take certain steps to update our website to direct users accessing www.postano.com to a website selected by Sprinklr.

Confidentiality. The Confidentiality Agreement we previously entered into with Sprinklr in connection with the negotiations of the Asset Purchase Agreement remains in effect until closing (except as related to our other businesses and the assets not purchased by Sprinklr, which will remain in effect after closing), and we will treat and hold as confidential information or data concerning the business of Sprinklr, the purchased assets and assumed liabilities.

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Books and Records. For a period of seven (7) years after closing, Sprinklr will retain all books and records relating to operation of the Postano business during periods prior to closing, and afford us and our representatives reasonable access to such books and records.

Notice of Dissolution.  In the event that we decide to file a certificate of dissolution with the Secretary of State of the State of Delaware within twelve (12) months of the closing, we will give Sprinklr at least three days’ prior written notice of such a filing.

Conditions To Closing; Closing Date

The closing of the transactions contemplated by the Asset Purchase Agreement is scheduled to take place as soon as possible after the satisfaction or waiver of the conditions precedent to closing, unless the parties otherwise consent thereto.

The obligations of both parties to complete the transactions contemplated by the Asset Purchase Agreement are subject to the satisfaction or waiver of, among others, the following conditions:

(a)         No governmental authority shall have enacted, issued or entered any order that makes the transactions contemplated by the Asset Purchase Agreement illegal or otherwise restrains or prohibits the consummation of the transaction; and

(b)         At least 20 calendar days have passed since this Consent Statement has been mailed to stockholders.

Sprinklr’s obligation to complete the transactions contemplated by the Asset Purchase Agreement are subject to the satisfaction or waiver of, among others, the following conditions:

(a)         Our representations and warranties in the Asset Purchase Agreement must be true and correct in all respects, except where failure of such representations and warranties to be true and correct would not have a material adverse effect;

(b)         We will have duly performed and complied in all material respects with all agreements, covenants and conditions required by the Asset Purchase Agreement;

(c)          We will have delivered to Sprinklr certain agreements, assignments, approvals and consents as described in the Asset Purchase Agreement, and shall have filed this Consent Statement and all applicable waiting periods shall have expired;

(d)         No action, suit, litigation or other proceeding is pending to restrain, prevent, change or materially delay the closing; and

(e)          Justin Garrity, our President, and certain other employees of TigerLogic shall each have signed an employment offer letter in the form provided by Sprinklr and executed Sprinklr’s customary non-solicitation and confidentiality agreement.

Our obligations to complete the transactions contemplated by the Asset Purchase Agreement are subject to the satisfaction or waiver of, among others, the following conditions:

(a)         Sprinklr’s representations and warranties in the Asset Purchase Agreement are true and correct in all respects, except where failure of such representations and warranties to be true and correct would not have a material adverse effect;

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(b)         Sprinklr has duly performed and complied in all material respects with all agreements, covenants and conditions required by the Asset Purchase Agreement; and

(c)          Sprinklr has delivered to us certain agreements, assignments, and consents as described in the Asset Purchase Agreement.

This Consent Statement is being sent to you on or about March 11, 2016. We currently expect that the transactions contemplated by the Asset Purchase Agreement will close on or after March 31, 2016, which is twenty (20) calendar days following the anticipated mailing date of this Consent Statement.

Termination

The Asset Purchase Agreement and the transactions contemplated thereby may be terminated at any time prior to closing in the following instances:

·                  The mutual written agreement of the parties;

·                  by Sprinklr, at its option, if there has been a material breach, inaccuracy in or failure to perform any of the representations, warranties, covenants, or agreements made by the Company that would give rise to the failure of any of the closing conditions specified in the Asset Purchase Agreement and such breach, inaccuracy or failure is incapable of being cured by us within ten (10) business days following the execution of the Asset Purchase Agreement;

·                  by us, at our option, if there has been a material breach, inaccuracy in or failure to perform any of the representations, warranties, covenants, or agreements made by Sprinklr that would give rise to the failure of any of the closing conditions specified in the Asset Purchase Agreement and such breach, inaccuracy or failure is incapable of being cured by Sprinklr within ten (10) business days following the execution of the Asset Purchase Agreement;

·                  by either party, at its option, if the closing has not occurred by May 31, 2016;

·                  by us, at our option, and upon payment of the termination fee described below, to enter into a transaction agreement with a third-party in connection with an acquisition proposal that was not solicited by us and which our Board of Directors has determined, in compliance with the terms of the Asset Purchase Agreement, constitutes a Superior Proposal (as defined in the Asset Purchase Agreement); and

·                  by the Sprinklr, at its option, if our Board of Directors shall have approved or we shall have entered into a third-party acquisition agreement, or if we fail to take certain actions upon the receipt of a third-party acquisition proposal.

In the event of the termination of the Asset Purchase Agreement in connection with a Superior Proposal, the Company may be required to pay Sprinklr a termination fee in the amount of $480,000.  Certain of the parties’ obligations will survive a termination of the Asset Purchase Agreement, including confidentiality provisions, and certain expenses and publicity provisions, as well as the termination provisions themselves.

Indemnification

We are obligated to defend, indemnify and hold harmless Sprinklr and its affiliates, successors and assigns from and against any and all losses, damages, costs, expenses, suits, actions, claims, deficiencies, liabilities or obligations related to, caused by or arising from certain breaches by the Company of the Asset Purchase Agreement and the Excluded Liabilities, as such terms are defined in the Asset Purchase Agreement.  Other than with respect to claims for indemnification arising from breaches of the Fundamental Representations (defined below) we will not have liability: (i) for indemnification claims in which the losses arising from the individual item (or series of related items) giving rise to the claim is less than $5,000; (ii) unless and until the aggregate amount of all indemnifiable losses exceed a deductible amount of $30,000; (iii) for any amount in excess of $240,000; or (iv) for indemnification claims made after the expiration of the survival period described below.  Our indemnification obligations for breach of its representations regarding (A) authorization/due execution, (B) organization, (C) non-contravention of our Certificate of Incorporation or Bylaws, (D) taxes, (E) title to assets and (F) intellectual property (collectively, the “Fundamental Representations”) are capped at the amount of the cash purchase price.  Our indemnity obligation for fraud and excluded liabilities are not subject to any cap.

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Sprinklr has agreed to defend, indemnify and hold us and our affiliates, successors and assigns harmless from and against any and all losses, damages, costs, expenses, suits, actions, claims, deficiencies, liabilities or obligations related to, caused by or arising from certain breaches by Sprinklr of the Asset Purchase Agreement and the Assumed Liabilities, as such terms are defined in the Asset Purchase Agreement.

The representations and warranties, and certain covenants and agreements included in the Asset Purchase Agreement shall survive the closing of the transactions contemplated by the Asset Purchase Agreement for a period equal to the later of (i) the six (6) month anniversary of the closing and (ii) the date we file a certificate of dissolution with the Secretary of State of the State of Delaware, but in no event later than the twelve (12) month anniversary of the closing.  Claims for indemnification may not be made after the expiration of the survival period, except that the obligations of each party to indemnify and hold harmless the other party for losses arising from fraud, willful misconduct and intentional misrepresentation shall continue past the survival period.

Dissenters’ Rights

In accordance with the Delaware General Corporation Law, our stockholders do not have dissenters’ or appraisal rights in connection with the Asset Sale.

Certain Federal Income Tax Consequences

We expect to treat the Asset Sale as a taxable transaction for federal income tax purposes. It is anticipated that any gain resulting from the Asset Sale will be offset against our net operating loss carryforwards. However, utilization of these carryforwards generates an alternative minimum tax for federal income tax purposes. At this time, we are unable to determine the alternative tax liability generated due to the utilization of these carryforwards.

Accounting Treatment

Upon completion of the Asset Sale, we will remove from our consolidated balance sheet all of the assets of our Postano business sold to Sprinklr and will reflect therein the effect of the receipt and the use of the proceeds of the Asset Sale. We will record a gain on the sale of assets to Sprinklr equal to the difference between the purchase price received and the book value of the assets sold in our consolidated statement of operations.

Government Approval

Except for compliance with the applicable regulations of the Securities and Exchange Commission in connection with this Consent Statement and with the Delaware General Corporation Law in connection with the Asset Sale, we are not required to comply with any federal or state regulatory requirements, and no federal or state regulatory approvals are required in connection with Asset Sale.

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Voting Securities and Principal Holders Thereof

As of February 1, 2016, there were outstanding 30,960,013 shares of Common Stock.

The following table sets forth, as of February 1, 2016, certain information with respect to the beneficial ownership of the Company’s voting securities by (i) any person (including any “group” as set forth in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) known by us to be the beneficial owner of more than five percent (5%) of any class of our voting securities, (ii) each director, (iii) each of the named executive officers (defined below), and (iv) all of our directors and executive officers as a group. Shares which the person or group has the right to acquire within 60 days of February 1, 2016, are deemed to be outstanding in calculating the percentage ownership of the person or group, but are not deemed to be outstanding as to any other person or group.

* Represents less than 1%

(1)      Except as otherwise indicated below, we believe the persons whose names appear in the table above have sole voting and investment power with respect to all shares of stock shown as beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated below, the address of each beneficial owner listed in the table is c/o TigerLogic Corporation, 1532 SW Morrison St, Suite 200, Portland, Oregon 97205.

(2)      Consists of 14,894,956 shares of Common Stock beneficially owned by Astoria, and 64,600 shares of Common Stock beneficially owned by Mr. Koe and ACM through an investment fund managed by ACM. Mr. Koe is the President and sole stockholder of ACM, and Mr. Koe and ACM are the General Partners of Astoria.

(3)      The principal address of Astoria is 2316 SE Clatsop St., Milwaukie, Oregon 97202.

(4)      Consists of: (i) 205,394 shares of Common Stock owned by the Philip and Debra Barrett Charitable Trust; (ii) 32,888 shares of Common Stock owned by the Philip Barrett Family Charitable Trust; (iii) options to purchase 114,165 shares of Common Stock exercisable within 60 days of February 1, 2016, held by Mr. Barrett; and (iv) 48,550 shares of Common Stock held in trusts for the benefit of Mr. Barrett’s children as to which Mr. Barrett shares investment power and disclaims beneficial ownership.

(5)      Includes options to purchase 484,165 shares of Common Stock exercisable within 60 days of February 1, 2016, held by Mr. Chew.

(6)      Consists of options to purchase 114,165 shares of Common Stock exercisable within 60 days of February 1, 2016, held by Mr. Ballinger.

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(7)      Consists of options to purchase 94,165 shares of Common Stock exercisable within 60 days of February 1, 2016, held by Ms. Harvey.

(8)      Consists of options to purchase 14,721 shares of Common Stock exercisable within 60 days of February 1, 2016, held by Mr. Singer.

(9)      Includes 356,387 shares of Common Stock issuable under options exercisable within 60 days of February 1, 2016, held by Mr. Garrity.

(10)     Includes 162,500 shares of Common Stock issuable under options exercisable within 60 days of February 1, 2016, held by Mr. Rowe.

(11)     Includes an aggregate of 1,340,268 shares of Common Stock issuable under options exercisable within 60 days of February 1, 2016.

Interests of the Continuing Stockholders

Following the Asset Sale, our current stockholders will continue to own 100% of the outstanding common stock of the Company.

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CERTAIN INFORMATION CONCERNING TIGERLOGIC

Organization

Overview

We were incorporated in the State of Delaware in August 1987. We were originally incorporated as Blyth Holdings, Inc. and our name was changed to Omnis Technology Corporation in September 1997. Effective December 1, 2000, we completed the acquisition of PickAx, Inc., a Delaware corporation (“PickAx”). Concurrent with the acquisition, we changed our name to Raining Data Corporation. On April 17, 2008, we changed our name to TigerLogic Corporation.

In January 2013, we acquired Storycode, Inc., a privately held mobile application publishing company.  We incorporated Storycode’s expertise in mobile applications development, user experience and design into our Postano social media visualization platform and continued to offer Storycode digital publishing services.  During the quarter ended December 31, 2014, we wound down the Storycode digital publishing services to focus our resources on the Postano and Omnis product lines. We do not expect any future revenues related to Storycode services.

In November 2013, we completed the sale of our assets dedicated to our multidimensional database management system (“MDMS”) to Rocket Software, Inc. (“Rocket”) for a total sale price of approximately $22 million, of which $19.8 million was received at closing and the remaining $2.2 million was released from escrow and received in November 2014.  The divested assets included D3, mvBase, and mvEnterprise systems and solutions, the Pick connectivity products, and the related enterprise resource planning platform required to support the MDMS Business. As a result of this divestiture, the historical results of the MDMS Business through the disposition date have been reclassified and presented as discontinued operations for the prior periods presented.

Nature of Business

The business of TigerLogic Corporation, a Delaware corporation, consists of the design, development, sale and support of Omnis, a rapid application development software platform that allows application developers the ability to build a software code once and quickly deploy an application cross-platform in any environment, and Postano, a real-time social media content aggregation, activation, and visualization platform used by our customers for fan engagement. We expect to close the sale of the Postano assets contemplated by the Asset Purchase Agreement during the last quarter of our 2016 financial year. Upon the sale of the assets associated with the Postano business, we will continue to be a public company and our common stock will continue to trade on the OTCQX marketplace. We intend to use the proceeds from these sales to pay transaction expenses and for general corporate purposes.

After completion of the Asset Sale, our ongoing operations will consist of our Omnis business.  The Company intends to sell the assets associated with our Omnis business and consummate such a sale as soon as possible following the Asset Sale.  The Company has begun negotiations with an unaffiliated third party for substantially all of the assets associated with our Omnis business, but as of the date of this Consent Statement, the Company has not executed a definitive agreement.  Following the completion of the sale of the assets associated with the Omnis business, the Company expects to file a certificate of dissolution with the Secretary of State for the State of Delaware, and to proceed to wind up its business and liquidate its assets to stockholders.

Products

Our business consists of the design, development, sale and support of Omnis, a rapid application development software platform that allows application developers the ability to build a software code once and quickly deploy an application cross-platform in any environment, and Postano, a real-time social media content aggregation, activation, and visualization platform used by our customers for fan engagement.

We primarily sell our Omnis software products through established distribution channels consisting of original equipment manufacturers (“OEMs”), system integrators, consulting organizations and specialized vertical application software developers, as well as through our sales personnel in the United States and Europe. We maintain direct sales offices in the United Kingdom, France and Germany, which are primarily focused on the sale of Omnis products. We generally license our Omnis software on a per-CPU, per-server, per-port or per-user basis. Postano is generally sold through our sales personnel located in the United States, as well as through co-marketing arrangements with third parties. We generally license our hosted Postano platform as a time-based subscription.

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In addition to software product sales and subscriptions, we provide continuing software maintenance, support and other professional services to our Omnis and Postano customers.

Postano

Postano is a real-time hosted social content aggregation, activation, and visualization platform, bringing together social media conversations and content streams from around the web to strengthen fan engagement. Postano aggregates social content from multiple sources including Twitter, Facebook, Instagram, Tumblr, Pinterest and others. Within Postano, these content streams can be moderated, curated, analyzed, and then displayed in venues ranging from retail stores to stadiums, at events to increase brand awareness, on website social hubs to amplify engagement, and on hashtag campaign landing pages to create brand conversation and increased participation. Major Postano features include native mobile moderation apps for iPhone and Android, and advanced social visualizations built entirely with customizable HTML5 for content that can be displayed on every size screen from smartphones to the largest LED screen arrays. Postano is designed primarily for commercial use, with pricing based on a number of factors, including the type and number of Postano visualizations displayed, and the specific features, display customization and support levels desired.

In October 2015, we launched a new Postano product, the Hashtag Analytics dashboard, a self-service solution that provides brand marketers and agencies with deep, visual, cross-network social analytics, specifically around hashtags, in real-time to help them better track and analyze social campaigns.

Omnis

Our Omnis products support the full life cycle of software application development and are designed for rapid prototyping, development, and deployment of graphical user interface (“GUI”) client/server and web applications. The Omnis products—Omnis Studio and Omnis Classic—are object-oriented and component-based, providing the ability to deploy applications across operating system platforms and database environments. Omnis Studio’s JavaScript Client platform enables developers to create and deploy highly interactive web and mobile enterprise applications for Android, iOS, BlackBerry, and Windows-based devices, all from one code base. Omnis Studio 6.0 uses scripting compatible with HTML5 and CSS3 to enable support for all popular browsers and devices, including tablets, smartphones, desktops, and web-enabled TVs. Omnis-based applications are developed once and deployed to any device, on any platform, with no plug-in installation required.

Omnis Studio 6.1 offers an advanced Omnis development environment with greater overall performance for building and deploying highly interactive enterprise web and mobile applications across multiple platforms and operating systems, including Android and iOS based devices. In addition to its support of representational state transfer (REST) based web services, Omnis Studio 6.1 includes a new 64-bit implementation, creating faster access for developers and end users to deployed Omnis web and mobile applications. Additional enhancements to the already feature-rich Omnis JavaScript Client technology include new native JavaScript components that firmly adapt to the familiar look and feel of the device on which they are running, resulting in a richer and more engaging mobile application experience for end users.

Technical Support

Our Omnis products are used by our customers to build and deploy applications that may become a critical component of their business operations. As a result, continuing to provide customers with technical support services is an important element of our product offering. Customers who participate in our Omnis support programs receive periodic maintenance and update releases on a when-and-if available basis, discounts on major upgrades on a when-and-if available basis, and direct technical support when required.

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Our Postano products are used by our customers for fan engagement leveraging user generated content on social media channels to create conversation, amplify messaging, and increase brand loyalty.  Postano customers may take advantage of various professional services offerings including custom design services, campaign strategy services, on-site moderation and curation services and telephone support services.

Sales and Distribution

In the United States, we sell our Postano products and services through our direct sales personnel as well as through co-marketing arrangements with third parties. We sell our Omnis products through established distribution channels consisting of OEMs, system integrators, specialized vertical application software developers and consulting organizations, as well as through our sales personnel located in the United States and Europoe. Outside the United States, we maintain direct sales offices in the United Kingdom, France and Germany focused on selling the Omnis products. Approximately 39% and 49% of our revenues came from sales through our offices located outside the United States for the fiscal years ended March 31, 2015 and 2014, respectively.

We sell our products in U.S. Dollars in North America, British Pounds Sterling in the United Kingdom and Euros in France and Germany. Because we recognize revenue and expense in these various currencies but report our financial results in U.S. Dollars, changes in exchange rates cause variances in our period-to-period revenue and results of operations.

We generally sell our hosted Postano platform as a time-based subscription and sell associated professional services including set-up, display customization, and content moderation and curation services. We generally license Omnis on a per-CPU, per-server, per-port or per-user basis. Therefore, the addition of CPUs, servers, ports or users to existing systems increases our revenue from our installed base of Omnis licensees.

Customers

Target customers for Postano are primarily innovative brands who are active in social media channels and who want a platform to aggregate social media conversations and content streams into engaging experiences for events, retail spaces, sports venues, websites, mobile applications, and executive dashboards.

Our Omnis customers may be classified into two general categories:

·                  Independent Software Vendors and Software Developers. The majority of our revenue is derived from independent software vendors, who typically develop their own vertical application software that they sell as a complete package to end user customers.

·                  Corporate Information Technology (“IT”) Departments.

For the years ended March 31, 2015 and 2014, no single customer accounted for more than 10% of our revenue.

Research and Development

We have devoted significant resources to the research and development of our products and technology. We believe that our future success depends on our ability to continue to enhance our current products and introduce new products. Our development efforts have resulted in updates and upgrades to existing Postano and Omnis products. New product updates and upgrades in our Postano and Omnis product lines are currently in progress and we expect to continue our research and development efforts in these product lines for the foreseeable future. We intend for these efforts to improve our future operating results and increase cash flow. However, such efforts may not result in additional new products or revenue, and we can make no assurances that any announced products or future products will be successful. We spent approximately $4.0 million and $4.4 million on research and development in fiscal years 2015 and 2014, respectively.

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Competition

Our Postano product competes with products developed by companies such as Facebook and Twitter, as well as a number of smaller companies in the emerging social media marketplace. The application development tools software market is rapidly changing and intensely competitive. Our Omnis products currently encounter competition from several direct competitors, including Microsoft, and competing development environments, including JAVA. Most of our competitors have significantly more financial, technical, marketing, and other resources than we do. As a result, our competitors may be able to respond more quickly to new or emerging technologies, evolving markets, and changes in customer requirements, and may devote greater resources to the development, promotion, and sale of their products. We believe that our ability to compete in the various product markets depends on factors both within and outside our control, including the timing of release, performance, and price of new products developed by both us and our competitors.

Intellectual Property and Other Proprietary Rights

We rely primarily on a combination of trade secret, patent, copyright and trademark laws and contractual provisions to protect our intellectual property and proprietary rights. Our trademarks include TigerLogic, Postano, Omnis and Omnis Studio, among others. We have three pending U.S. patent applications related to Postano as of February 1, 2016. We have fifteen U.S. patents and two pending U.S. patent applications as of February 1, 2016 related to yolink, a former product offering of the Company.

We generally sell time-based subscriptions to access our hosted Postano platform on a “terms of service” basis. We generally rely on “click-through” licenses that become effective when the subscription begins and to a lesser extent, master services agreements. We protect our Postano technology by controlling access to the hosted platform; without such access, any links to the platform, such as those in our Postano Social Hub offering, would not function.

We generally license Omnis to end users on a “right to use” basis pursuant to license agreements that restrict use of products to a specified number of users or a specified usage. We generally rely on “click-wrap” licenses that become effective when a customer downloads and installs the software on its system or accesses and uses our software. In order to retain exclusive ownership rights to our software and technology, we generally provide our software in object code only, with contractual restrictions on copying, disclosure, and transferability.

Backlog

We generally download or ship our Omnis products as orders are received and activate subscriptions to our Postano platform based on agreed upon start date, and have historically operated with little backlog. As a result, our license revenue in any given quarter is dependent upon orders received and product delivered during the quarter. Historically, there has been a short cycle between receipt of an order and delivery or activation. Consequently, we do not believe that our backlog as of any particular date is meaningful.

Employees

At February 1, 2016, we had 49 employees worldwide, of which 23 were in the United States and 26 were in our international offices. Of the 49 employees, 44 are full-time and approximately 43% are in research and development, 18% in technical support, 18% in sales and marketing and 21% in general and administrative functions. None of our employees are represented by a labor union, and we consider our employee relations to be good. Competition for qualified personnel in our industry is intense. We believe that our future success will continue to depend, in part, on our continued ability to attract, hire and retain qualified personnel.

Properties

On January 23, 2014, we entered into a lease agreement with The Irvine Company LLC, as landlord, relating to space in Irvine, California. Upon completion of tenant improvements, we relocated our headquarters to this new location in April 2014. The base rent over the five-year term of the lease is approximately $7,000 per month for the first year, with annual increases to approximately $8,400 per month for the final year. In the second fiscal quarter of 2016, we transitioned our headquarters to Portland, Oregon, vacated the Irvine office and subleased the facility for the remainder of the lease term. As a result, we recorded a lease loss during the second fiscal quarter totaling $109,000, which amount reflects the difference between ongoing committed operating lease costs for the facility and sublease income expected to be received over the life of the lease.

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Effective April 1, 2011, we entered into a 49-month term lease for approximately 7,500 square feet of office space in Portland, Oregon. Total base rent over the 49-month term was approximately $321,000. In April 2015, we entered into a one-year extension to this space in Portland, Oregon through April 30, 2016 that increased total monthly rent to $18,400.  This office now serves as our corporate headquarters.

We own a building consisting of approximately 5,900 total square feet located on approximately six acres of land in Suffolk, England. The facility houses engineering, marketing, technical support, sales and administrative personnel related to the Omnis business. We also lease a sales and support office in France and Germany.

We believe that our facilities are suitable and adequate for our current needs.

Legal Proceedings

On July 2, 2015, we were sued for patent infringement by Monster Patents, LLC (“Monster”) in the United States District Court Southern District of New York. The complaint alleged that our Postano products infringe a single patent owned by Monster. On January 14, 2016, we entered into a settlement agreement with Monster (the “Settlement Agreement”), pursuant to which all outstanding litigation with Monster was settled and the parties stipulated to dismissal of the action with prejudice.  Under the terms of the Settlement Agreement, Monster granted us a fully paid, worldwide, perpetual license to the Monster patent portfolio in exchange for a cash payment and a limited subscription to the Postano platform for a two-year period. The remaining terms of the Settlement Agreement are confidential. We included the costs of settlement in our financial results for the quarter ended December 31, 2015.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and notes thereto included elsewhere in this Consent Statement.

Overview

TigerLogic’s principal business is the design, development, sale, and support of rapid application development software known as Omnis and a hosted social media visualization platform known as Postano. The Company’s Omnis software tools are sold to in-house corporate development teams, commercial application developers, system integrators, independent software vendors, value added resellers and independent consultants. The Company’s Postano product line, which is sold as a subscription, is a real-time social media content aggregation, activation, and visualization platform used by our customers for fan engagement. In addition, the Company provides continuing maintenance and customer support and, to a lesser extent, professional services and training.

As discussed throughout this Consent Statement, in February 2016 we entered into the Asset Purchase Agreement to sell substantially all of our assets associated with the Postano business to Sprinklr.  We expect to complete the sale of the Postano assets as soon as practicable after the date that is 20 days after the mailing of this Consent Statement. However, if the sale of the Postano assets is not consummated, our cash position and continuing operating losses would require that we significantly improve the operating results of the business, raise additional capital or cease operations.

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. These accounting policies involve critical accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made. Although we have used our best estimates based on facts and circumstances available to us at the time, different estimates reasonably could have been used. Changes in the accounting estimates we use are reasonably likely to occur from time to time, which may have a material effect on the presentation of our financial condition and results of operations.

Our most critical accounting estimates include revenue recognition and goodwill and other intangible assets. We also have other policies that we consider to be key accounting policies as identified in the footnotes to our financial statements, however, these policies either do not meet the definition of critical accounting estimates described above or are not currently material items in our financial statements. We review our estimates, judgments, and assumptions periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, actual results could differ from these estimates.

Revenue Recognition

Revenue attributable to an element in a customer arrangement is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. If, at the outset of the customer arrangement, we determine that the arrangement fee is not fixed or determinable, we defer the revenue and recognize the revenue when the arrangement fee becomes due and payable. We do not have price protection programs or conditional acceptance agreements, and sales of our products are made without right of return.

For contracts with multiple software and software-related elements, we recognize revenue for the delivered elements, generally software licenses, using the residual value method when vendor-specific objective evidence (VSOE) of fair value exists for all undelivered elements, consisting primarily of post-contract customer support (PCS).  PCS is recognized ratably over the support term.

For our hosted software subscription arrangements, services revenue is recognized ratably over the subscription period.  We also have services revenue consisting of consulting and training services that are either recognized as the services are performed or upon the completion of the services depending on the nature of the services. When subscription arrangements involve multiple elements that qualify as separate units of accounting, we allocate arrangement consideration to all deliverables based on the relative stand-alone selling price method in accordance with the selling price hierarchy, which includes: (i) VSOE if available; (ii) third-party evidence (TPE) if VSOE is not available; and (iii) best estimate of selling price (BESP) if neither VSOE nor TPE is available.  Revenue allocated to each deliverable, limited to the amount not contingent on future performance, is then recognized when the basic revenue recognition criteria are met for the respective deliverables. When subscription arrangements involve multiple elements that do not qualify as separate units of accounting, the entire arrangement consideration is recognized over the subscription period.

We determine whether VSOE can be established based on our historical pricing and discounting practices for the specific deliverable when sold separately.  In determining VSOE, we require that a substantial majority of the selling prices fall within a reasonably narrow pricing range.  We have established VSOE for our PCS included in our software arrangements, but have not yet been able to establish VSOE for our subscription or other services as they have not been sold at sufficiently consistent pricing.

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When VSOE cannot be established for our subscription and other services, we apply judgment with respect to whether we can establish a selling price based on TPE.  TPE is determined based on third party pricing practices for similar deliverables when sold separately.  Generally, our pricing strategy differs from that of our peers and our offerings contain a significant level of differentiation such that the comparable pricing of services with similar functionality cannot be obtained.  Furthermore, typically, we are unable to reliably determine what similar competitors services’ selling prices are on a stand-alone basis.  As a result, we have not been able to establish selling prices based on TPE.

When we are unable to establish a selling price for our subscription and other services using VSOE or TPE, we use BESP in our allocation of arrangement consideration.  The objective of BESP is to determine the price at which we would transact a sale if the respective elements were sold on a stand-alone basis.  We estimate BESP for services by considering multiple factors including, but not limited to, prices charged for similar offerings, market conditions, competitive landscape, costs of providing the services, and our overall pricing practices.  We currently use BESP in order to allocate the selling price to our deliverables in multiple element subscription arrangements.

Goodwill and Other Intangible Assets

We generally assess goodwill for potential impairments in the fourth quarter of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset.  In evaluating goodwill for impairment, we first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then no further testing of the goodwill assigned to the reporting unit is required. However, if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then perform a two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment to be recognized, if any.

In the first step of the review process, we compare the estimated fair value of the reporting unit with its carrying value. If the estimated fair value of the reporting unit exceeds its carrying amount, no further analysis is needed.

If the estimated fair value of the reporting unit is less than its carrying amount, we proceed to the second step of the review process to calculate the implied fair value of the reporting unit goodwill in order to determine whether any impairment is required. We calculate the implied fair value of the reporting unit goodwill by allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss for that excess amount. In allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit, we use industry and market data, as well as knowledge of the industry and our past experiences.

Determining the fair value of a reporting unit under the first step of the goodwill impairment test is judgmental in nature and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and the magnitude of any such charge. We base our calculation of the estimated fair value of a reporting unit on multiple approaches: market approach under the guideline public company method, market approach under the market capitalization method, and income approach. For the income approach, we use internally developed discounted cash flow models that include, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, third-party appraisals, industry projections, micro and macro general economic condition projections, and our expectations.

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For purposes of our goodwill analysis, we consider ourselves a single reporting unit.  Factors we consider to be important that would trigger an impairment review include the following:

· Significant underperformance relative to expected historical or projected future operating results;

· Timing of our revenue, significant changes in the manner of use of the acquired assets or the strategy for the overall business;

· Significant negative industry or economic trends;

· Significant decline in our stock price for a sustained period; and

· Our market capitalization falling below our net book value for a sustained period.

Given our single reporting unit structure, a key input in estimating of our reporting unit fair value is our stock price as reported by the NASDAQ Capital Market (“NASDAQ”) and the OTCQX marketplace, as well as our related market capitalization. During the fiscal quarter ended December 31, 2014, our market capitalization fell below our net book value for an extended period of time. As a result, we conducted the first step of a goodwill impairment test as of December 31, 2014 with the assistance of an independent valuation consultant utilizing both a market capitalization approach, including an estimated control premium, as well as a discounted cash flow approach, with key assumptions including projected future cash flows and a risk-adjusted discount rate.  Both approaches resulted in an estimated fair value of our reporting unit below net book value as of December 31, 2014. As such, we initiated the second step of the goodwill impairment test to measure the amount of impairment. We analyzed the fair value of certain assets including our developed technology, trade names, customer relationships, and property. Based on the work performed, we concluded that an impairment loss existed as of December 31, 2014 and, when measuring the amount of impairment loss, we determined that goodwill was fully impaired. Accordingly, we recorded a non-cash goodwill impairment charge to fully write-off the book value of our goodwill in the amount of approximately $18.2 million during the quarter ended December 31, 2014. Also, prior to performing our second step in the goodwill impairment analysis, we assessed long-lived assets including property and equipment and intangible assets for impairment. Our conclusion was that such long-lived assets were not impaired as of December 31, 2014.

Intangible assets with finite useful life are amortized using the straight-line method over their estimated period of economic benefit. We evaluate our intangible assets for impairment whenever events and change in circumstances occur which may warrant revised estimate of useful lives or recognition of an impairment loss. In connection with the wind down of the Storycode services as more fully explained in Note 4 to the accompanying consolidated financial statements below, we assigned all of the intellectual property rights related to the name “Storycode” and certain rights related thereto to two former employees.  As a result, we wrote off the remaining net book value associated with this intangible asset in the amount of approximately $65,000 during the quarter ended December 31, 2014.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which provides guidance for revenue recognition. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance 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 exchanged for those goods or services. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU No. 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.  In April 2015, the FASB issued an exposure draft proposing to defer the effective date of this ASU for one year.  The new standard is effective for our fiscal year 2018, or fiscal year 2019 if the effective date is deferred by one year.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). This ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016, with early adoption permitted. We are evaluating the effect that ASU No. 2014-15 will have on our consolidated financial statements and related disclosures.

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Results of Operations

Years Ended March 31, 2015 and 2014

The following table sets forth certain Consolidated Statement of Operations data from continuing operations in total dollars, as a percentage of total net revenues and as a percentage change from the same period in the prior year. Cost of license revenues and cost of service revenues are expressed as a percentage of the related revenues. This information should be read in conjunction with the Consolidated Financial Statements included elsewhere in this Consent Statement.

Revenues

NET REVENUES. Net revenues include software licensing, hosted subscription services, post contract technical support, and professional services for our Omnis and Postano products and services. We generally sell our hosted Postano platform on a time-based subscription basis and offer our customers related professional services for additional fees. We license our Omnis software primarily on a per-CPU, per-server, per-port or per-user basis. Therefore, the addition of CPUs, servers, ports or users to existing systems increases our revenue from our installed base of licenses. Similarly, the reduction of CPUs, servers, ports or users from existing systems decreases our revenue from our installed base of customers. Effective December 1, 2014, we no longer provide Storycode digital publishing professional services as a result of our decision to wind down this portion of our business. These services were generally sold on a project basis and revenue from this portion of the business has not been significant historically.

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The timing of orders and customer ordering patterns has resulted in fluctuations in our revenues between quarters and year-to-year. Total net revenues increased by approximately $1.5 million, or 27%, for the year ended March 31, 2015, when compared to the prior year, primarily due to an increase in Postano subscription revenue. License revenues from our Omnis software remained consistent with prior year at approximately $2.3 million. Subscriptions revenue from our Postano product increased by approximately $1.2 million, or 104%, when compared to the prior year. This increase was mainly due to both the growth in number of new customers, subscription renewals, and an increase in the average size of subscriptions. Services revenue increased by approximately $0.3 million, or 14%, for the year ended March 31, 2015, when compared to the same period in the prior year, primarily due to higher Postano professional services revenue.

Operating Expenses

COST OF SUBSCRIPTION REVENUE. Cost of subscription revenue is comprised of direct costs for Postano subscriptions associated with data center hosting and personnel costs relating to platform access, web embed displays, social content analytic reports and phone support. Cost of subscription revenue increased approximately $0.4 million, or 155%, for the year ended March 31, 2015, when compared to the prior year. This increase was due to higher data center costs due to more bandwidth needed to accommodate an increase in the number of subscriptions and higher personnel costs due to additional headcount.

COST OF SERVICE REVENUE. Cost of service revenue primarily includes personnel costs relating to consulting, professional and training services, and service royalties for our Omnis, Storycode, and Postano products. Effective December 1, 2014, we no longer provide Storycode professional services as a result of our decision to wind down this portion of our business. Historically, cost of service revenue from Storycode services has not been significant. Cost of service revenue for the year ended March 31, 2015 decreased by approximately $1.0 million, or 70%, from the prior year mainly related to a decrease in costs associated with a revenue sharing arrangement that was terminated in the prior fiscal year.

SELLING AND MARKETING. Selling and marketing expense consists primarily of salaries, benefits, advertising, trade shows, travel and overhead costs for our sales and marketing personnel. Selling and marketing expense for the year ended March 31, 2015 decreased by approximately $0.3 million, or 5%, when compared to the prior year mainly due to lower headcount as we wound down the Storycode business in the current year, and lower stock-based compensation expense.

We anticipate that selling and marketing costs related to our Postano product lines will continue to increase as we further develop the sales channels for these products and as customer acceptance of these products increases.

RESEARCH AND DEVELOPMENT. Research and development expense consists primarily of salaries and other personnel-related expenses and overhead costs for engineering personnel, including employees in the United States and the United Kingdom and contractors in the United States. Research and development expense for the year ended March 31, 2015 decreased by approximately $0.5 million, or 10%, when compared to the prior year mainly due to lower headcount related to development efforts of our Postano and Omnis products and lower stock-based compensation expense.

We believe that our future success will depend largely on strong development efforts with respect to both our existing and new products. These development efforts have resulted in updates and upgrades to existing Omnis products and the launch of new products including the Postano social media platform. New product updates and upgrades in our Omnis and Postano product lines are currently in progress and we expect to continue our research and development efforts in these product lines for the foreseeable future.

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GENERAL AND ADMINISTRATIVE. General and administrative expense consists primarily of costs associated with our executive, finance, human resources, legal and other administrative functions. These costs consist principally of salaries and other personnel-related expenses, professional fees, depreciation and overhead costs. General and administrative expense for the year ended March 31, 2015 increased by approximately $2.3 million, or 53%, when compared to the prior year mainly due to higher salary expense due to added headcount, severance expense related to terminated employees, and higher legal and financial advisory services expense related to goodwill impairment valuation and the evaluation of any proposed sale of our common stock by our largest stockholder, as well as the evaluation of other strategic alternatives available to the Company.

IMPAIRMENT OF GOODWILL. During the fiscal quarter ended December 31, 2014, our market capitalization fell below our net book value. As a result, we conducted the first step of a goodwill impairment test as of December 31, 2014 with the assistance of an independent valuation consultant utilizing both a market capitalization approach, including an estimated control premium, as well as a discounted cash flow approach, with key assumptions including projected future cash flows and a risk-adjusted discount rate.  Both approaches resulted in an estimated fair value of our reporting unit below net book value as of December 31, 2014. As such, we initiated the second step of the goodwill impairment test to measure the amount of impairment. We analyzed the fair value of certain assets including our developed technology, trade names, customer relationships, and property. Based on the work performed, we concluded that an impairment loss existed as of December 31, 2014 and, when measuring the amount of impairment loss, we determined that goodwill was fully impaired. Accordingly, we recorded a non-cash goodwill impairment charge to fully write-off the book value of our goodwill in the amount of approximately $18.2 million during the quarter ended December 31, 2014. Also, prior to performing our second step in the goodwill impairment analysis, we assessed long-lived assets including property and equipment and intangible assets for impairment. Our conclusion was that such long-lived assets were not impaired as of December 31, 2014.

OTHER INCOME (EXPENSE)-NET. Other income (expense)-net consists primarily of interest income (expense) and gains and losses on foreign currency transactions and is not significant for any period presented.

PROVISION FOR INCOME TAXES. Our effective tax rate from continuing operations was (0.3)% and (35.4)% for the years ended March 31, 2015 and 2014, respectively. For the year ended March 31, 2014, we reported a tax benefit on our loss from continuing operations to the extent these losses would be utilized from income from discontinued operations. Our total effective tax rate was (0.3)%  and 32.8% for the years ended March 31, 2015 and 2014, respectively. The provision for income taxes for the year ended March 31, 2015 reflected the income tax on net earnings from our foreign subsidiaries in France and Germany.  In addition, we accrued additional expense of $55,000 related to a potential assessment from the German tax authorities in the year ended March 31, 2015.  Due to uncertainties surrounding the timing and likelihood of realizing the benefits of the net operating loss carryforwards in the future, we continue to carry a full valuation allowance against net deferred tax assets related to our operations in the United States and United Kingdom.

Realization of deferred tax assets depends upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, we have offset our net deferred tax assets in our U.S. and UK subsidiaries, with a valuation allowance. The utilization of our net operating losses could be subject to substantial annual limitations as a result of certain future events, such as an acquisition or other significant events, which may be deemed as a “change in ownership” under the provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating losses and tax credits before utilization.

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Three and Nine Months Ended December 31, 2015

Results of Operations

The following table sets forth certain unaudited Condensed Consolidated Statement of Operations data in total dollars, as a percentage of total net revenues and as a percentage change from the same periods in the prior year. Cost of subscription revenues and cost of service revenues are expressed as a percentage of the related revenues. This information should be read in conjunction with the unaudited Condensed Consolidated Financial Statements included elsewhere in this Consent Statement.

Revenues

NET REVENUES. Net revenues include software licensing, hosted subscription services, post-contract technical support, and professional services for our Omnis and Postano products and services. We generally sell our hosted Postano platform on a time-based subscription basis and offer our customers related professional services for additional fees. We license our Omnis software primarily on a per-CPU, per-server, per-port or per-user basis. Therefore, the addition of CPUs, servers, ports or users to existing systems increases our revenue from our installed base of licenses. Similarly, the reduction of CPUs, servers, ports or users from existing systems decreases our revenue from our installed base of customers.

Total net revenues decreased by approximately $0.1 million, or 5%, and $0.5 million, or 9%, for the three and nine month periods ended December 31, 2015, when compared to the same periods in the prior year. License revenues from our Omnis software increased approximately $0.1 million, or 16%, for the three months ended December 31, 2015 and decreased $0.5 million, or 25%, for the nine month period ended December 31, 2015. Omnis license revenues are driven by the timing of customer purchases of additional licenses as well as upgrades to newer versions of the Omnis platform.  This timing drives fluctuations in license revenues from period to period. Subscriptions revenue from our Postano product increased by approximately $0.3 million, or 53%, and $0.9 million, or 67%, when compared to the same three and nine month periods in the prior year. This increase was due to growth in number of new customers, subscription renewals, and an increase in the average size of subscriptions.  Services revenue decreased approximately $0.5 million, or 54%, and $1.0 million, or 44%, for the three and nine month periods ended December 31, 2015, respectively, primarily due to the discontinuance of a discrete Postano services offering in the quarter ended December 31, 2014.

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Operating Expenses

COST OF SUBSCRIPTION REVENUE. Cost of subscription revenue is comprised of direct costs for Postano subscriptions associated with data center hosting and personnel costs relating to platform access, web embed displays, social content analytic reports and phone support. Cost of subscription revenue decreased approximately $7,000, or 3% and $72,000, or 13%, for the three and nine months ended December 31, 2015, when compared to the same period in the prior year. This decrease was due to savings in hosting cost resulted from bundled pricing obtained from our vendor as well as lower headcount in the current year.

COST OF SERVICE REVENUE. Cost of service revenue primarily includes personnel costs relating to consulting, professional and training services, and service royalties for our Omnis and Postano products. Cost of service revenue increased by approximately $39,000, or 38%, for the three months ended December 31, 2015 compared to the prior year and decreased by approximately $36,000, or 9%, for the nine months ended December 31, 2015 compared to the prior year.  The decrease in cost of service revenue results from the decline in service revenues described above.

SELLING AND MARKETING. Selling and marketing expense consists primarily of salaries, benefits, advertising, trade shows, travel and overhead costs for our sales and marketing personnel. Selling and marketing expense for the three and nine months ended December 31, 2015 decreased by approximately $0.6 million, or 45% and $2.2 million, or 48%, when compared to the same period in the prior year mainly due to efforts to control expenses, which included reductions in headcount, advertising media expense and travel expenses compared to the prior year.

RESEARCH AND DEVELOPMENT. Research and development expense consists primarily of salaries and other personnel-related expenses and overhead costs for engineering personnel, including employees in the United States and the United Kingdom. Research and development expense for the three and nine months ended December 31, 2015 decreased by approximately $0.1 million, or 12% and $1.0 million, or 35%, when compared to the same periods in the prior year, mainly due to lower employee headcount and consulting costs related to development efforts of our Postano and Omnis products.

We continue to invest in developing enhancements to our existing products for the benefit of our current and future customers. Historically, our development efforts have resulted in updates and upgrades to existing Omnis products and the launch of new product offerings and features within the Postano social media platform. New product updates and upgrades in our Omnis and Postano product lines are currently in progress and we expect to continue our research and development efforts in these product lines.

GENERAL AND ADMINISTRATIVE. General and administrative expense consists primarily of costs associated with our executive, finance, human resources, legal and other administrative functions. These costs consist principally of salaries and other personnel-related expenses, professional fees, depreciation and overhead costs. General and administrative expense for the three and nine months ended December 31, 2015 decreased by approximately $0.8 million, or 48%, and $1.7 million, or 33%, when compared to the same periods in the prior year, primarily due to lower headcount, legal, professional services, and financial advisory services related expenses partially offset by higher facility related costs associated with the closure of the Irvine office.

IMPAIRMENT OF GOODWILL. During the fiscal quarter ended December 31, 2014, our market capitalization fell below our net book value for an extended period of time. As a result, we conducted the first step of a goodwill impairment test as of December 31, 2014 with the assistance of an independent valuation consultant utilizing both a market capitalization approach, including an estimated control premium, as well as a discounted cash flow approach, with key assumptions including projected future cash flows and a risk-adjusted discount rate.  Both approaches resulted in an estimated fair value of our reporting unit below net book value as of December 31, 2014. As such, we initiated the second step of the goodwill impairment test to measure the amount of impairment. Based on the work performed, we concluded that an impairment loss is probable and can be reasonably estimated. Accordingly, we recorded a non-cash goodwill impairment charge to fully write-off the book value of our goodwill in the amount of approximately $18.2 million during the quarter ended December 31, 2014. Also, prior to performing our second step in the goodwill impairment analysis, we assessed long-lived assets including property and equipment and intangible assets for impairment. Our conclusion was that such long-lived assets were not impaired as of December 31, 2014.

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OTHER INCOME (EXPENSE)-NET: Other income (expense)-net consists primarily of interest income (expense) and gains and losses on foreign currency transactions and is not significant for any period presented.

PROVISION FOR INCOME TAXES. Our effective tax rate from continuing operations was 6.8% and 1.8% for the three and nine months ended December 31, 2015, respectively.  Our effective tax rate from continuing operations was 0.4% and 0.4% for the three and nine months ended December 30, 2014, respectively. The provision for income taxes reflects the income tax on net earnings from foreign subsidiaries.  Due to uncertainties surrounding the timing of realizing the benefits of the net operating loss carryforwards in the future, we continue to carry a full valuation allowance against net deferred tax assets for our subsidiaries in the United States and United Kingdom.

Realization of deferred tax assets depends upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, we have offset our net deferred tax assets in our U.S. and UK subsidiaries, with a valuation allowance. The utilization of our net operating losses could be subject to substantial annual limitations as a result of certain future events, such as an acquisition or other significant events, which may be deemed as a “change in ownership” under the provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating losses and tax credits before utilization.

Liquidity and Capital Resources

As of December 31, 2015, we had approximately $6.5 million in cash, of which approximately $0.3 million was held by our foreign subsidiaries and, if repatriated, would not be subject to material tax consequences due to our net operating loss carry forwards. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our anticipated cash needs for at least the next twelve months.

We continue to invest in research and development and marketing efforts intended to allow us to further penetrate our target markets and grow our revenues and improve operating results. However, our research and development and marketing efforts have required, and will continue to require, cash outlays without the immediate or short-term receipt of related revenue. Our ability to meet our future expenditure requirements is dependent upon our future financial performance, and this will be affected by, among other things, prevailing economic conditions, success in penetrating new markets, our ability to attract new customers, and achieving market acceptance of our new and existing products and services, the success of research and development efforts and other factors beyond our control.

We had no material commitments for capital expenditures as of December 31, 2015.

Net cash used in operating activities was approximately $3.6 million and $7.6 million for the nine months ended December 31, 2015 and 2014, respectively. The decrease in net cash used in operating activities for the nine month period ended December 31, 2015 as compared to the same period in the prior year was primarily due to lower net loss due to lower selling and marketing, general and administrative, and research and development expenses. Net cash used in investing activities was $0.2 million for the nine months ended December 31, 2015 and was primarily due to payments made for a software license.  Net cash used in investing activities was $0.3 million for the nine months ended December 31, 2014, primarily due to the purchases of furniture and equipment related to the relocation of our former headquarters in April 2014.  Net cash provided by financing activities for the nine months ended December 31, 2015 was immaterial and included proceeds from the issuance of common stock under our employee stock purchase plan. Net cash provided from financing activities for the nine months ended December 31, 2014 was approximately $2.2 million and was mainly due to proceeds released from escrow from the sale of our MDMS Business in the prior year.

We did not have an outstanding line of credit or other borrowings during the three and nine month periods ended December 31, 2015 or 2014.

Off-Balance Sheet Arrangements

As of December 31, 2015 we did not have any off-balance sheet arrangements, as defined in the SEC regulations, which have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources.

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PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma consolidated financial statements have been derived from the historical financial statements of the Company, as adjusted, to give effect to the Asset Sale pending pursuant to the Asset Purchase Agreement.

The unaudited pro forma consolidated balance sheet as of December 31, 2015 reflects adjustments as if the Asset Sale had occurred on December 31, 2015.  The unaudited pro forma consolidated statements of operations for the nine months ended December 31, 2015 and the year ended March 31, 2015 reflect adjustments as if the Asset Sale had occurred on April 1, 2015 and 2014, respectively.

The unaudited pro forma consolidated financial statements do not purport to present the financial position or results of operations of the Company had the Asset Sale and events assumed therein occurred on the dates specified, nor are they necessarily indicative of the results of operations that may be achieved in the future, in light of the fact that, if consummated, the Company will have significantly fewer assets and will have limited business operations.

These unaudited pro forma consolidated financial statements should be read in conjunction with our historical consolidated financial statements and accompanying notes included elsewhere in this Consent Statement.

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TigerLogic Corporation
Unaudited Condensed Consolidated Statement of Operations

For the Year Ended March 31, 2015
(in thousands except per share data)

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TigerLogic Corporation
Unaudited Condensed Consolidated Statement of Operations

For the Nine Months Ended December 31, 2015
(in thousands except per share data)