Form 10-Q
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 2009
Commission File Number 0-13898
Veramark Technologies, Inc.
(Exact name of registrant as specified in its charter)
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| Delaware
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16-1192368 |
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| (State or other jurisdiction of
Incorporation or Organization)
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(IRS Employer Identification Number) |
3750 Monroe Avenue, Pittsford, NY 14534
(Address of principal executive offices)(Zip Code)
(585) 381-6000
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company.
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| Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller Reporting Company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). YES o NO þ
The number of shares of Common Stock, $.10 par value, outstanding on March 31, 2009 was 9,814,729.
PART I — FINANCIAL INFORMATION
VERAMARK TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
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|
|
|
|
|
|
|
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(Unaudited) |
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|
|
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March 31, |
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December 31, |
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| |
|
2009 |
|
|
2008 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Cash and cash equivalents |
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$ |
647,780 |
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|
$ |
1,014,669 |
|
Investments |
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|
971,858 |
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|
982,331 |
|
Accounts receivable, trade (net
of allowance for doubtful accounts
of $17,000 and $30,000, respectively) |
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|
1,110,693 |
|
|
|
1,047,527 |
|
Inventories, net |
|
|
28,285 |
|
|
|
35,055 |
|
Prepaid expenses and other current assets |
|
|
460,493 |
|
|
|
244,511 |
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|
|
|
|
|
|
|
Total Current Assets |
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|
3,219,109 |
|
|
|
3,324,093 |
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|
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|
|
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|
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PROPERTY AND EQUIPMENT |
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|
|
|
|
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|
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Cost |
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|
3,987,179 |
|
|
|
3,862,879 |
|
Less accumulated depreciation |
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|
(3,495,993 |
) |
|
|
(3,406,882 |
) |
|
|
|
|
|
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|
Property and Equipment (Net) |
|
|
491,186 |
|
|
|
455,997 |
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OTHER ASSETS: |
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Software development costs (net of
accumulated amortization of $3,649,988
and $3,332,886, respectively) |
|
|
2,700,668 |
|
|
|
2,719,787 |
|
Pension assets |
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|
3,168,139 |
|
|
|
3,160,639 |
|
Deposits and other assets |
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|
905,761 |
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|
905,761 |
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|
|
|
|
|
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Total Other Assets |
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6,774,568 |
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6,786,187 |
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TOTAL ASSETS |
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$ |
10,484,863 |
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|
$ |
10,566,277 |
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|
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|
The accompanying notes are an integral part of these financial statements.
3
VERAMARK TECHNOLOGIES, INC.
CONDENSED BALANCE SHEETS
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(Unaudited) |
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March 31, |
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December 31, |
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2009 |
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2008 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
378,222 |
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|
$ |
270,842 |
|
Accrued compensation and related taxes |
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|
516,806 |
|
|
|
466,150 |
|
Deferred revenue |
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|
3,709,973 |
|
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|
3,746,488 |
|
Current portion of pension obligation |
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|
498,059 |
|
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|
486,059 |
|
Other accrued liabilities |
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|
68,937 |
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|
94,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total Current Liabilities |
|
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5,171,997 |
|
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|
5,064,493 |
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|
|
|
|
|
|
|
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Pension obligation |
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|
4,866,178 |
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|
5,000,010 |
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Total Liabilities |
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10,038,175 |
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10,064,503 |
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STOCKHOLDERS’ EQUITY: |
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Common Stock, par value $.10; shares authorized,
40,000,000; shares issued and outstanding,
9,894,954 and 9,852,954 |
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|
989,495 |
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|
985,295 |
|
Additional paid-in capital |
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|
22,316,555 |
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22,293,688 |
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Accumulated deficit |
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|
(22,219,315 |
) |
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|
(22,039,196 |
) |
Treasury stock (80,225 shares, at cost) |
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(385,757 |
) |
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|
(385,757 |
) |
Accumulated other comprehensive income |
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|
(254,290 |
) |
|
|
(352,256 |
) |
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Total Stockholders’ Equity |
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446,688 |
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|
501,774 |
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|
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|
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
10,484,863 |
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|
$ |
10,566,277 |
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|
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|
The accompanying notes are an integral part of these financial statements.
4
VERAMARK TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
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Three Months Ended March 31, |
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2009 |
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2008 |
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NET SALES |
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Product sales |
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$ |
468,269 |
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$ |
611,500 |
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Service sales |
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2,054,410 |
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2,060,146 |
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Total Net Sales |
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2,522,679 |
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2,671,646 |
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COSTS AND OPERATING EXPENSES: |
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Cost of sales |
|
|
644,219 |
|
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|
714,963 |
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Engineering and software development |
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294,516 |
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|
297,858 |
|
Selling, general and administrative |
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1,773,627 |
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1,871,673 |
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Total Costs and Operating Expenses |
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|
2,712,362 |
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|
2,884,494 |
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LOSS FROM OPERATIONS |
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|
(189,683 |
) |
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|
(212,848 |
) |
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|
|
|
|
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NET INTEREST INCOME |
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|
9,564 |
|
|
|
18,721 |
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|
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|
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|
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LOSS BEFORE INCOME TAXES |
|
|
(180,119 |
) |
|
|
(194,127 |
) |
|
|
|
|
|
|
|
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|
INCOME TAXES |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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NET LOSS |
|
$ |
(180,119 |
) |
|
$ |
(194,127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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NET LOSS PER SHARE |
|
|
|
|
|
|
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|
Basic |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
Diluted |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
|
|
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|
The accompanying notes are an integral part of these financial statements.
5
VERAMARK TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
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|
|
|
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|
Three
Months Ended March 31, |
|
| |
|
2009 |
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|
2008 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(180,119 |
) |
|
$ |
(194,127 |
) |
Adjustments to reconcile net loss to net cash flows
provided by operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
406,213 |
|
|
|
331,589 |
|
Bad debt expense |
|
|
(14,000 |
) |
|
|
3,000 |
|
Share based compensation expense |
|
|
27,067 |
|
|
|
21,500 |
|
Pension assets |
|
|
(7,500 |
) |
|
|
(23,823 |
) |
Loss on disposal of fixed assets |
|
|
0 |
|
|
|
14,571 |
|
Unrealized gain (loss) on sales of investments |
|
|
(5,351 |
) |
|
|
41,060 |
|
Changes in assets and liabilities |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(49,166 |
) |
|
|
187,615 |
|
Inventories |
|
|
6,770 |
|
|
|
17,970 |
|
Prepaid expenses and other current assets |
|
|
(215,982 |
) |
|
|
(5,324 |
) |
Deposits and other assets |
|
|
0 |
|
|
|
15,000 |
|
Accounts payable |
|
|
107,380 |
|
|
|
(58,854 |
) |
Accrued compensation and related taxes |
|
|
50,656 |
|
|
|
(339,643 |
) |
Deferred revenue |
|
|
(36,515 |
) |
|
|
122,340 |
|
Other accrued liabilities |
|
|
(26,017 |
) |
|
|
(89,143 |
) |
Pension obligation |
|
|
(18,515 |
) |
|
|
29,467 |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
44,921 |
|
|
|
73,198 |
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Sale (purchase) of investments |
|
|
10,473 |
|
|
|
(184,626 |
) |
Capitalized software development costs |
|
|
(297,983 |
) |
|
|
(200,464 |
) |
Additions to property and equipment |
|
|
(124,300 |
) |
|
|
(55,345 |
) |
|
|
|
|
|
|
|
Net cash flows used by investing activities |
|
|
(411,810 |
) |
|
|
(440,435 |
) |
|
|
|
|
|
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|
FINANCING ACTIVITY: |
|
|
|
|
|
|
|
|
Exercise of stock options |
|
|
0 |
|
|
|
25,905 |
|
|
|
|
|
|
|
|
Net cash flows provided by financing activities |
|
|
0 |
|
|
|
25,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(366,889 |
) |
|
|
(341,332 |
) |
|
|
|
|
|
|
|
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|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
1,014,669 |
|
|
|
713,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ |
647,780 |
|
|
$ |
372,010 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
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| |
|
2009 |
|
|
2008 |
|
SUPPLEMENTAL CASH FLOW INFORMATION |
|
|
|
|
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Cash Transactions: |
|
|
|
|
|
|
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|
Income taxes paid,net |
|
$ |
2,750 |
|
|
$ |
4,425 |
|
Interest paid |
|
$ |
226 |
|
|
$ |
1,401 |
|
The accompanying notes are an integral part of these financial statements.
6
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) GENERAL
The accompanying unaudited financial statements include all adjustments of a normal and
recurring nature which, in the opinion of Company’s management, are necessary to present fairly the
Company’s financial position as of March 31, 2009, the results of its operations for the three
months ended March 31, 2009 and 2008, and cash flows for the three months ended March 31, 2009 and
2008.
Certain information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission. These condensed financial
statements should be read in conjunction with the financial statements and related notes contained
in the Company’s Annual Report on Form 10-K to the Securities and Exchange Commission for the year
ended December 31, 2008.
The results of operations and cash flows for the three months ended March 31, 2009 are not
necessarily indicative of the results to be expected for the full year’s operation.
(2) PROPERTY AND EQUIPMENT
The major classifications of property and equipment at March 31, 2009, and December 31, 2008
were:
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|
|
|
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|
|
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March 31, |
|
|
December 31, |
|
| |
|
2009 |
|
|
2008 |
|
| |
Machinery and equipment |
|
$ |
128,390 |
|
|
$ |
128,390 |
|
Computer hardware and software |
|
|
1,245,275 |
|
|
|
1,224,343 |
|
Furniture and fixtures |
|
|
1,227,717 |
|
|
|
1,124,349 |
|
Leasehold improvements |
|
|
1,385,797 |
|
|
|
1,385,797 |
|
|
|
|
|
|
|
|
|
|
$ |
3,987,179 |
|
|
$ |
3,862,879 |
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2009, the Company recorded depreciation expense of $89,111.
Depreciation expense for the quarter ended March 31, 2008 was $68,125.
(3) STOCK-BASED COMPENSATION
The Company’s share-based compensation consists of restricted stock and stock options,
generally vesting over periods ranging from one to four years. For the quarter ended March
31, 2009, the company awarded restricted stock grants totaling 50,000 shares vesting over
three years, and 16,500 of stock options vesting over four years. During the first quarter of
2008 the Company awarded 320,000 restricted shares. There were no grants of stock options in
first quarter of 2008.
7
A summary of the status of the Company’s stock option plan as of March 31, 2009 is presented
below:
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| |
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Weighted |
|
|
Weighted |
|
|
|
|
|
|
|
| |
|
|
|
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Average |
|
|
Average |
|
|
Remaining |
|
|
|
|
| |
|
|
|
|
|
Exercise |
|
|
Grant-Date |
|
|
Contractual |
|
|
Intrinsic |
|
| |
|
Shares |
|
|
Price |
|
|
Fair Value |
|
|
Term (Yrs) |
|
|
Value |
|
Outstanding as of December 31, 2008 |
|
|
1,899,583 |
|
|
$ |
1.28 |
|
|
$ |
1.07 |
|
|
|
4.7 |
|
|
$ |
344,300 |
|
Granted |
|
|
16,500 |
|
|
$ |
0.35 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
Canceled |
|
|
(113,415 |
) |
|
|
6.11 |
|
|
|
|
|
|
|
|
|
|
|
(122,584 |
) |
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Outstanding as of March 31, 2009 |
|
|
1,802,668 |
|
|
$ |
0.97 |
|
|
$ |
0.87 |
|
|
|
4.8 |
|
|
$ |
221,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at March 31, 2009 |
|
|
1,655,168 |
|
|
$ |
1.00 |
|
|
$ |
0.90 |
|
|
|
4.4 |
|
|
$ |
221,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2009, there was $49,278 of total unrecognized compensation cost related to
non-vested stock options granted under the Plan and $212,289 of unrecognized compensation cost
related to non-vested restricted stock grants. The compensation cost for stock options will be
recognized over a weighted-average period of 1.5 years. The compensation costs of restricted stock
will be recognized over a weighted-average period of 1.1 years.
(4) TOTAL COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) for the first quarter of 2009 and 2008 was as follows:
| |
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|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(180,119 |
) |
|
$ |
(194,127 |
) |
Reclassification to net periodic benefit cost |
|
|
— |
|
|
|
22,122 |
|
Unrealized change — pension |
|
|
103,317 |
|
|
|
(36,247 |
) |
Unrealized change on investments |
|
|
(5,351 |
) |
|
|
41,060 |
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
$ |
(82,153 |
) |
|
$ |
(167,192 |
) |
|
|
|
|
|
|
|
(5) NET INCOME (LOSS) PER SHARE (EPS)
SFAS 128 “Earnings Per Share” requires the Company to calculate net income (loss) per share
based on basic and diluted net income (loss) per share, as defined. Basic EPS excludes
dilution and is computed by dividing net income (loss) by the weighted average number of
shares outstanding for the period. Diluted EPS reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or converted into
common stock. The dilutive effect of outstanding options issued by the Company are reflected
in diluted EPS using the treasury stock method. Under the treasury stock method, options
will only have a dilutive effect when the average market price of common stock during the
period exceeds the exercise price of the options.
8
Calculations of Earnings (Loss) Per Share
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2009 |
|
|
2008 |
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(180,119 |
) |
|
$ |
(194,127 |
) |
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
9,784,729 |
|
|
|
9,346,912 |
|
|
|
|
|
|
|
|
Net loss per common share |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(180,119 |
) |
|
$ |
(194,127 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
9,784,729 |
|
|
|
9,346,912 |
|
|
|
|
|
|
|
|
|
|
Additional dilutive effect of stock options and
warrants after application of treasury stock method |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average dilutive shares outstanding |
|
|
9,784,729 |
|
|
|
9,346,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share assuming full obligation |
|
$ |
(0.02 |
) |
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
There were no dilutive effects of stock options in the first quarter of 2009 or 2008, as the effect
would have been anti-dilutive due to the net losses incurred.
(6) INDEMNIFICATION OF CUSTOMERS
Our agreements with customers generally require us to indemnify the customer against claims
that our software infringes third party patent, copyright, trademark or other proprietary
rights. Such indemnification obligations are generally limited in a variety of
industry-standard respects, including our right to replace an infringing product. As of
March 31, 2009 we had not experienced any material losses related to these indemnification
obligations and no material claims with respect thereto were outstanding. We do not expect
significant claims related to these indemnification obligations, and consequently, we have
not established any related reserves.
(7) BENEFIT PLANS
The Company sponsors an employee incentive savings plan under Section 401(k) for all eligible
employees. The Company’s contributions to the plan are discretionary. During the first
quarter of 2009 the Company contributed $23,868 to employee’s 401k accounts. There were no
contributions to the plan for the three months ended March 31, 2008.
9
The Company also sponsors an unfunded Supplemental Executive Retirement Program (“SERP”),
which is a non-qualified plan that provides certain key employees defined pension benefits.
Periodic pension expense for the three months ended March 31, 2009 and 2008 consists of the
following:
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Current Service Cost |
|
$ |
— |
|
|
$ |
14,438 |
|
Amortization of Prior Service Cost |
|
|
— |
|
|
|
22,122 |
|
Interest Cost |
|
|
(8,317 |
) |
|
|
82,688 |
|
Unrealized change |
|
|
103,317 |
|
|
|
(36,247 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Expense |
|
$ |
95,000 |
|
|
$ |
83,001 |
|
|
|
|
|
|
|
|
The Company paid pension obligations of $113,515 for the three months ended March 31, 2009
and $53,533 for the three months ended March 31, 2008.
The discount rate used in determining the actuarial present value of the projected benefit
obligation was 5.5% for the three months ended March 31, 2009 and 6% for the three months
ended March 31, 2008.
The Company maintains life insurance covering certain key employees under its Supplemental
Executive Retirement Program with the Company named as beneficiary. The Company intends to
use the death benefits of these policies, as well as loans against the accumulating cash
surrender value of the policies, to fund future pension obligations. The total death benefit
associated with these policies is $10.2 million, with an associated accumulated cash
surrender value of approximately $3,168,000 at March 31, 2009. The accumulated cash surrender
values of these policies at December 31, 2008 was approximately $3,161,000.
The projected pension benefits paid or expected to be paid under this plan are as follows,
assuming retirement at 65 and a life expectancy of 80 years for all participants:
Period Ending December 31, Unless Stated Otherwise,
| |
|
|
|
|
Q2 – Q4 2009 |
|
|
372,544 |
|
2010 |
|
|
502,059 |
|
2011 |
|
|
471,925 |
|
2012 |
|
|
506,918 |
|
2013 |
|
|
522,159 |
|
2014 – 2018 |
|
|
2,607,898 |
|
10
The Company has a contractual obligation to maintain certain health benefits for two of its
former executive officers. These benefits are accounted for as Post Retirement Healthcare
Benefits, (“PRHB”). Periodic PRHB expensed and paid for the three months ended March 31,
2009 and 2008 consists of the following:
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Current Service Cost |
|
$ |
2,005 |
|
|
$ |
1,892 |
|
Interest Cost |
|
|
1,407 |
|
|
|
1,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRHB Expense |
|
$ |
3,412 |
|
|
$ |
3,413 |
|
|
|
|
|
|
|
|
The projected PRHB paid or expected to be paid are as follows:
Period Ending December 31, Unless Stated Otherwise,
| |
|
|
|
|
Q2 – Q4 2009 |
|
|
10,237 |
|
2010 |
|
|
13,649 |
|
2011 |
|
|
13,649 |
|
2012 |
|
|
13,649 |
|
2013 |
|
|
13,649 |
|
2014 – 2018 |
|
|
36,745 |
|
11
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Management’s Discussion and Analysis contains statements that are forward-looking. Such
statements are identified by the use of words like “plans,” “expects,” “intends,” “believes,”
“will,” “anticipates,” “estimates” and other words of similar meaning in conjunction with, among
other things, discussions of future operations, financial performance, the Company’s strategy for
growth, product development, regulatory approvals, market position and expenditures.
Forward-looking statements are based on management’s expectations as of the date of this report.
The Company cannot guarantee that any forward-looking statement will be accurate, although the
Company believes that it has been reasonable in its expectations and assumptions. Forward-looking
statements are subject to the risks identified in “Issues and Risks” and elsewhere in this report.
Readers are cautioned not to place undue reliance on forward-looking statements and are advised to
review the risks identified in “Issues and Risks” and elsewhere in this report. The Company has no
obligation to update forward-looking statements.
Overview
Sales for the first quarter ended March 31, 2009 were $2,523,000, or 6% less than sales of
$2,672,000 reported for the quarter ended March 31, 2008. Our net loss of $180,000, or $0.02 per
share, compares with a net loss of $194,000, also representing $0.02 per share, for the first
quarter of 2008.
Revenues and net income for the first quarter of 2009 do not reflect the significant progress that
has been made in transforming Veramark from solely a provider of premise based software solutions
to one offering a wide variety of telecommunications expense management (TEM) and Business Process
Outsourcing (BPO) solutions. Orders for the first quarter of $3,391,000, increased 38% from orders
of $2,454,000 received during the first quarter of 2008, and included a number of long term
contracts to provide TEM and BPO services. As a result, the revenues associated with those orders
are required to be recognized over the life of the contract, rather than recognized immediately
upon installation, as would be the case with a direct sale of software.
Due to the increased orders for TEM and BPO solutions, our embedded backlog grew 13% from
$6,401,000 at December 31, 2008 to $7,242,000 at March 31, 2009. Embedded backlog is a measure of
the unrecognized revenues associated with orders received that will be recognized in future periods
as contracted services are rendered.
Sales
Sales of premise based software products, which include the eCAS and VeraSMART product offerings
declined 23% from the first quarter of 2008. We are seeing indications that this decline is a by-
product of the general economic conditions we face today, conditions that have led many companies
to reduce capital spending. Maintenance and service revenues associated with our premise based
offerings however, increased slightly during the first quarter of 2009 as compared with 2008
results.
First quarter 2009 revenues generated from managed service, TEM and BPO contracts were 3% below the
revenues generated for the same quarter of 2008 due to a single component of our contract with
Sears Holding Corporation. Revenues derived from existing contracts are expected to increase for
the balance of the year.
12
Cost of Sales
Gross margin (sales minus cost of sales) of $1,878,000 for the quarter ended March 31, 2009,
representing 74% of sales, decreased $79,000 as compared with a gross margin of $1,957,000, or 73%
of sales for the same quarter of 2008. The reduction in gross margin results from lower revenues
recognized in the first quarter of 2009 as compared with the prior year, partially offset by
reductions in direct product and overhead costs.
Operating Expenses
Engineering and software developments costs, net of capitalization, of $295,000 for the first three
months of 2009 were nearly identical to the net engineering and software development costs of
$298,000 incurred for the first three months of 2008. The chart below illustrates however, that
despite only a small change in the net expense reported, significant resources were devoted to the
development of new products and services during the first three months of 2009 as compared with the
prior year, with costs before the effects of capitalization increasing 19% from 2008.
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2009 |
|
|
2008 |
|
|
|
|
|
|
|
|
|
|
Gross expenditures for engineering and software development |
|
$ |
593,000 |
|
|
$ |
498,000 |
|
|
|
|
|
|
|
|
|
|
Less: Software development costs capitalized |
|
|
(298,000 |
) |
|
|
(200,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net expenses for engineering and software development included in the
Company’s statement of operations |
|
$ |
295,000 |
|
|
$ |
298,000 |
|
|
|
|
|
|
|
|
Selling, general and administrative (SG&A) expenses of $1,774,000 for the first quarter of 2009
decreased $98,000, or 5%, from SG&A expenses of $1,872,000 for the first quarter of 2008. The
reduction in expenses reflects restructuring efforts undertaken during 2008 that produced increased
efficiencies and lower expense levels for marketing, sales, and customer support and service costs.
Liquidity and Capital Resources
The value of cash and short term investments at March 31, 2009 totaled $1,620,000, a decrease from
the balance of $1,997,000 at December 31, 2008. The decline in cash position (cash plus the value
of short-term investments) is largely attributable to an increase in prepaid expenses and capital
spending explained more fully below.
Accounts receivable at March 31, 2009 of $1,111,000 increased 6% from the December 31, 2008 balance
of $1,048,000. Despite the increase in accounts receivable, the reserve for bad debts was reduced
from $30,000 at December 31, 2008 to $17,000 at March 31, 2009 based on a more favorable aging of
individual accounts. There were no write-offs of significance during the first quarter.
Prepaid expenses of $460,000 at March 31, 2009 increased 88% or $215,000 from the December 31, 2008
balance of $245,000. The change includes an increase in prepaid commissions based on the level of
first quarter orders, advance payments for conferences and speaking engagements to occur during the
second and third quarters of 2009, and prepayments to a third party contractor for services to be
provided in the second quarter.
13
Capital equipment additions totaled $124,000 for the quarter ended March 31, 2009, the majority of
which involved upgrades to the company’s telecommunications infrastructure. Capital spending for
the second quarter is expected to approximate the first quarter level and then decline over the
second half of the year. Capital spending for the first three months of 2008 was $55,000.
Software development costs capitalized and included on our balance sheet at March 31, 2009 are
$2,701,000, a decrease of $19,000 from the December 31, 2008 balance of $2,720,000. During the
first quarter, $298,000 of software development costs were capitalized, up from $200,000
capitalized during the first quarter of 2008. Amortization of prior capitalized costs totaled
$317,000 for the quarter, a 20% increase over amortization charges of $264,000 for the same quarter
of 2008.
Total current liabilities at March 31, 2009 of $5,172,000 increased 2% from current liabilities of
$5,064,000 at the end of 2008. This includes a $107,000 increase in accounts payable directly
attributable to the capital equipment additions discussed above. Deferred revenues declined
slightly from $3,746,000 at December 31, 2008 to $3,710,000 at March 31, 2009. Deferred revenues,
which constitute a portion of the embedded backlog referred to in the overview section of this
report consist largely of the unused portions of customer maintenance agreements and will be
recognized as revenues over subsequent quarters.
Pension obligations of $4,866,000 at March 31, 2009 decreased from $5,000,010 at December 31, 2008.
The recovery of 100% of past and projected future pension obligations is designed through a
program of Company-owned life insurance policies, the associated death benefits and cash surrender
values of which will provide funding of the total obligation.
Stockholders equity at March 31, 2009 totals $447,000, down from $502,000 at December 31, 2008 and
includes the first quarter operating loss.
Given the Company’s current cash position, ready access to short term investments and credit lines
combined with the absence of debt, it is the opinion of management that sufficient resources exist
to fund current operations and strategic initiatives for the next twelve months and beyond.
14
Accounting Pronouncements
| |
1) |
|
In December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (“SFAS”) No. 141(R), “Business Combinations”. SFAS 141(R)
establishes principles and requirements for how the acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase, and determines what information
to disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. SFAS 141(R) is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December 15, 2008. As
such, the Company is adopted these provisions at the beginning of the fiscal year ending
December 31, 2009. Adoption of SFAS 141(R) did not have a material effect on the Company’s
financial statements. |
| |
2) |
|
In December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated
Financial Statements, an amendment of ARB No. 51”. SFAS 160 establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008. As such, the
Company adopted these provisions at the beginning of the fiscal year ending December 31,
2009. Adoption of SFAS 160 did not have a material effect on the Company’s financial
statements. |
| |
3) |
|
In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standard (“SFAS”) No. 161, “Disclosures about Derivative Instruments
and Hedging Activities—an amendment of FASB Statement No. 133”. SFAS 161 requires
enhanced disclosures about an entity’s derivative and hedging activities. SFAS 161 is
effective for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008 with early application encouraged. As such, the Company adopted
these provisions at the beginning of the fiscal year ended December 31, 2009. Adoption of
SFAS 161 did not have a material effect on the Company’s financial statements. |
| |
4) |
|
In May 2008, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standard (“SFAS”) No. 162, “The Hierarchy of Generally Accepted Accounting
Principles”. SFAS 162 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting principles
(GAAP) in the United States. SFAS 162 is effective 60 days following the SEC’s approval of
the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company is
currently evaluating the impact of SFAS 162 on its financial statements, but does not
expect it to have a material effect. |
15
| |
5) |
|
In May 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standard (“SFAS”) No. 163, “Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60” (“SFAS 163”). SFAS 163
interprets Statement 60 and amends existing accounting pronouncements to clarify their
application to the financial guarantee insurance contracts included within the scope of
that Statement. SFAS 163 is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and all interim periods within those fiscal years. As
such, the Company adopted these provisions at the beginning of the fiscal year ended
December 31, 2009. Adoption of SFAS 163 did not have a material effect on the Company’s
financial statements. |
| |
6) |
|
In June 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position (FSP) EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment
Transactions are Participating Securities”. FSP EITF 03-6-1 clarifies that share-based
payment awards that entitle their holders to receive nonforfeitable dividends or dividend
equivalents before vesting should be considered participating securities. We have granted
and expect to continue to grant restricted stock that contain non-forfeitable rights to
dividends and will be considered participating securities upon adoption of FSP EITF 03-6-1.
As participating securities, we will be required to include these instruments in the
calculation of our basic earnings per share (“EPS”), and we will need to calculate basic
EPS using the “two-class method.” Restricted stock is currently included in our dilutive
EPS calculation using the treasury stock method. The two-class method of computing EPS is
an earnings allocation formula that determines EPS for each class of common stock and
participating security according to dividends declared (or accumulated) and participation
rights in undistributed earnings. FSP EITF 03-6-1 is effective for financial statements
issued for fiscal years beginning after December 15, 2008, and all interim periods within
those fiscal years. As such, the Company adopted these provisions at the beginning of the
fiscal year ended December 31, 2009. Adoption of FSP EITF 03-6-1 did not have a material
effect on the Company’s financial statements. |
16
Critical Accounting Policies
The preparation of financial statements requires management to make estimates and assumptions
that affect amounts reported therein. The most significant of these involving difficult or complex
judgments include:
| |
• |
|
Revenue recognition |
| |
| |
• |
|
Capitalization of software development costs |
| |
| |
• |
|
Allowance for Doubtful Accounts |
| |
| |
• |
|
Pension liability |
In each situation, management is required to make estimates about the effects of matters or
future events that are inherently uncertain.
The Company’s revenue consists of revenues from the licensing of software to resellers and end
user customers; fees for services rendered to include installation, training, implementation, and
customer maintenance contracts; and the outsourcing or hosting of services.
The Company recognizes software license revenue under Statement of Position No 97-2 “Software
Revenue Recognition” as amended by Statement of Position No. 98-9, “Software Revenue Recognition
With Respect to Certain Transactions”, Emerging Issues Task Force 00-21, “Revenue Arrangements with
Multiple Deliverables”, and related interpretations.
Sales of licensed software sold directly to an end user customer are recognized as revenue
upon delivery and installation of the software at the customer site. Sales of licensed software to
a reseller are recognized as revenue when delivery is made to the reseller. Regardless of the form
of sale no revenue is recognized without persuasive evidence of an arrangement existing. Persuasive
evidence is determined to be a signed purchase order received from the customer or an equivalent
form for those customers lacking a formalized purchase order system. In the case of VeraSMART
sales, a software license agreement signed by both parties is often required in addition to a
purchase order or equivalent. Additionally, revenue is only recognized when a selling price is
fixed or determinable and collectability of the receivable is deemed to be probable.
Service revenues such as training, installation and implementation are recognized when the
service is complete and acknowledged by the customer, regardless as to whether the sale is on a
direct basis or through a reseller arrangement.
Fees charged to customers for post-contract Customer Support are recognized ratably over the
term of the contract. Costs related to maintenance obligations are expensed as incurred.
Sales which constitute a multiple-element arrangement are accounted for by determining if the
elements can be accounted for as separate accounting units, and if so, by applying values to those
units for which there is vendor specific objective evidence of their fair value. We use the
residual method to apply any remaining balance to the remaining elements of the arrangement. More
specifically, this methodology applies when there is embedded maintenance (post-contract customer
support) involved in the sale of a software license, or when the sale of a software license is made
in conjunction with installation services. In the latter case, the recognition of the software
license is deferred until installation is completed.
17
The Company’s revenues generated through hosting solutions are recognized using the
proportional performance method. Revenues are recognized in the month services are rendered and
earned under service agreements with clients where service fees are fixed or determinable.
Contracts can be terminated with 90 days written notice. All services provided by us through the
date of cancellation are due and payable under the contract terms.
The Company believes its revenue recognition policies are appropriate, in all circumstances,
and that its policies are reflective of complexities arising from customer arrangements involving
such features as maintenance, warranty agreements, license agreements, and other normal course of
business arrangements.
The Company capitalizes software development costs when technological feasibility has been
established for the software in accordance with SFAS No. 86, “Accounting for the Costs of Computer
Software to be Sold, Leased, or Otherwise Marketed.” Such capitalized costs are amortized on a
product-by-product basis over their economic life or the ratio of current revenues to current and
anticipated revenues from such software, whichever provides the greater amortization. The Company
periodically reviews the carrying value of capitalized software development costs and impairments
are recognized in the results of operations when the expected future undiscounted operating cash
flow derived from the capitalized software is less than its carrying value. Should the Company
inaccurately determine when a product reaches technological feasibility or the economic life of a
product, results could differ materially from those reported. Veramark uses what it believes are
reasonable assumptions and where applicable, established valuation techniques in making its
estimates.
The Company maintains allowances for doubtful accounts for estimated losses resulting from the
potential inability of its customers to make required payments. Management specifically analyzes
accounts receivable, historical bad debts, credit concentrations and customer payment terms when
evaluating the adequacy of the allowance for doubtful accounts.
The Company sponsors an unfunded Supplemental Executive Retirement Program (SERP), which is a
nonqualified plan that provides certain key employees a defined pension benefit. In order to
properly record the net present value of future pension obligations a number of assumptions are
required to be made by Company’s management. These assumptions include years of service, life
expectancies, and projected future salary increases for each participant. In addition, management
must make assumptions with regard to the proper long-term interest and liability discount rates to
be applied to these future obligations.
Should the Company need to alter any of these assumptions, there is the potential for
significant adjustments to future projected pension liabilities.
18
Risk Factors
The following factors, among others discussed herein and in the Company’s filings under the Act,
could cause actual results and future events to differ materially from those set forth or
contemplated in this report: economic, competitive, governmental and technological factors,
increased operating costs, failure to obtain necessary financing, risks related to natural
disasters and financial market fluctuations. Such factors also include:
Intellectual Property Rights
Veramark regards its products as proprietary and attempts to protect them with a combination of
copyright, trademark and trade secret protections, employee and third-party non-disclosure
agreements and other methods
of protection. Despite those precautions, it may be possible for unauthorized third parties to copy
certain portions of Veramark’s products, reverse engineer or obtain and use information that
Veramark regards as proprietary. The laws of some foreign countries do not protect Veramark’s
proprietary rights to the same extent as the laws of the United States. Any misappropriation of
Veramark’s intellectual property could have a material adverse effect on its business and results
of operations. Furthermore, although Veramark take steps to prevent unlawful infringement of
other’s intellectual property, there can be no assurance that third parties will not assert
infringement claims against Veramark in the future with respect to current or future products. Any
such assertion could require Veramark to enter into royalty arrangements or result in costly
litigation.
Existing Customer Base
We derive an increasingly significant portion of our revenues from multi- year managed service
contracts. As a result, if we lose a major customer, or if a managed service contract is delayed,
reduced, or cancelled, our revenues could be adversely affected. In addition, customers who have
accounted for significant revenues in the past may not generate the same amount of revenues in
future periods.
Product Development
Veramark has made significant investments in research, development and marketing for new products,
services and technologies, including the VeraSMART software offering and its hosted or managed
solutions. Significant revenue from new product and service investments may not be achieved for a
number of years, if at all. Moreover, if such products or services are profitable,
operating margins may not be as high as the margins historically experienced by Veramark. The
development of software products is a complex and time-consuming process. New products and
enhancements to existing products can require long development and testing periods. Significant
delays in new product releases or significant problems in creating new products, particularly any
delays in future releases of the VeraSMART suite of products or services, could adversely affect
Veramark revenues.
Declines in Demand for Software
If overall market demands for software and computer devices generally, as well as call accounting
software or enterprise level products and services specifically, declines, or corporate spending
for such products declines, Veramark’s revenue will be adversely affected. Additionally, Veramark’s
revenues would be unfavorably impacted if customers reduce their purchases of new software products
or upgrades to existing products.
New Products and Services
Veramark is in the process of transforming it’s business model from a company providing largely
premise based software products and services to one offering hosted solutions providing a wide
variety of TEM processes, such as wireless management, invoice processing, and reporting — as
managed services under multi year arrangements. The effect of this transformation will be a
reduction in the amount of revenues recognized initially on any given contract than would be
realized from a one- time sale of software, but higher embedded future revenues over the life of
the contract. Since major components of our cost structure including personnel and facility costs
are relatively fixed based on anticipated revenues, period to period comparisons of our operating
results should not be relied upon as an indicator of future performance.
19
Competition
Veramark experiences intense competition across all markets for its products and services. Some
competing firms have greater name recognition and more financial, marketing and technological
resources than Veramark. These competitive pressures may result in decreased sales volumes, price
reductions, and/or increased operating costs, such as for marketing and sales incentives, resulting
in lower revenues, gross margins and operating income.
Marketing and Sales
Veramark’s marketing and distribution strategy is founded on building mutually beneficial
relationships with companies that have established distribution networks. Some sell privately
labeled, customized products developed and manufactured by Veramark to their specific
specifications, while others resell Veramark’s products. Any loss of the continued availability of
those relationships could have a material adverse effect on Veramark’s business and results of
operations.
Security and Privacy Breaches in our Systems May Damage Client Relations and Inhibit our Growth
The uninterrupted operation of our hosted solutions and the confidentiality of third party
information that resides on our systems is critical to our business. We have what we believe to be
sufficient security in place to prevent major interruptions in service and to prevent unauthorized
access. Any failure in our security and privacy measures could have a material adverse impact on
our financial position and results of operations.
20
Item 3 Quantitative and Qualitative Disclosures About Market Risk
The Company has no long-term bank debt obligations. The Company has no foreign currency
exchange risk and has no foreign currency exchange contracts.
Item 4 Controls and Procedures
Based upon an evaluation as of the end of the period covered by this report, the Company’s
Chief Executive Officer and Treasurer (Chief Accounting Officer) concluded that the Company’s
disclosure controls and procedures are effective to provide reasonable assurance that information
required to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported, within the
time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the
Company’s management, including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure. There have been no changes in the Company’s internal controls over financial reporting,
that occurred during the period covered by this report, that have materially affected, or are
reasonably likely to materially affect the Company’s internal controls over financial reporting.
The Company’s disclosure controls and procedures and internal controls over financial
reporting provide reasonable, but not absolute, assurance that all deficiencies in design or
operation of those control systems, or all instances of errors or fraud, will be prevented or
detected. Those control systems are designed to provide reasonable assurance of achieving the goals
of those systems in light of the Company’s resources and nature of the Company’s business
operations. The Company’s disclosure controls and procedures and internal control over financial
reporting remain subject to risks of human error and the risk that controls can be circumvented for
wrongful purposes by one or more individuals in management or non-management positions.
21
PART II — OTHER INFORMATION
Item 5: Other Information
None
Item 6: Exhibits
| |
(a) |
|
Financial Statements as set forth under Item 1 of this report on Form 10-Q |
| |
| |
(b) |
|
Exhibits required to be filed by Item 601 of Regulation S-K |
| |
|
|
|
|
| |
3.1 |
|
|
Restated Certificate of Incorporation (incorporated by reference to
Exhibit 4.1 to the Company’s Registration Statement on Form S-18
(File No. 2-96787) filed on March 22, 1985) |
| |
|
|
|
|
| |
3.2 |
|
|
Bylaws (incorporated by reference to Exhibit 3 to the Company’s
Registration Statement on Form S-8 filed on October 5, 1992) |
| |
|
|
|
|
| |
10.2 |
|
|
Letter Agreement dated as of March 29, 2007 by and between the
Company and David G. Mazzella (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on April 3,
2007) |
| |
|
|
|
|
| |
10.3 |
|
|
Letter Agreement dated as of July 30, 2007 by and between the
Company and Martin LoBiondo (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on August 3,
2007) |
| |
|
|
|
|
| |
10.4 |
* |
|
Amended and Restated Board of Directors Deferred Compensation Plan
(incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on November 26, 2007) |
| |
|
|
|
|
| |
10.5 |
|
|
Consulting Agreement dated as of December 12, 2007 by and between
the Company and David G. Mazzella (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
December 13, 2007) |
| |
|
|
|
|
| |
10.6 |
* |
|
Employment Agreement dated as of December 17, 2007 by and between
the Company and Anthony C. Mazzullo (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
December 19, 2007) |
| |
|
|
|
|
| |
10.7 |
* |
|
Letter Agreement dated as of February 4, 2008 by and between the
Company and Douglas F. Smith (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on February
4, 2008) |
| |
|
|
|
|
| |
10.8 |
* |
|
Restricted Stock Award Agreement dated as of January 1, 2008 by and
between the Company and Anthony C. Mazzullo (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed on March 25, 2008) |
| |
|
|
|
|
| |
10.9 |
* |
|
2008 Incentive Plan for Management and Key Employees (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on April 2, 2008) |
22
| |
|
|
|
|
| |
|
|
|
|
| |
10.10 |
* |
|
2008 Employee Stock Purchase Plan (incorporated by reference to
Exhibit F to the Company’s Proxy Statement for its 2008 Annual
Meeting of Shareholders filed on April 29, 2008) |
| |
|
|
|
|
| |
10.11 |
* |
|
Description of non-employee director compensation (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed on August 18, 2008) |
| |
|
|
|
|
| |
10.12 |
* |
|
Amended Salary Continuation Agreement dated as of October 10, 2008
by and between the Company and Ronald C. Lundy (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed on October 17, 2008) |
| |
|
|
|
|
| |
10.13 |
* |
|
Form of 2008 Employee Stock Purchase Plan Enrollment Agreement
(incorporated by reference to Exhibit 4.2 to the Company’s
Registration Statement on Form S-8 (File No. 333-155286) filed on
November 12, 2008) |
| |
|
|
|
|
| |
14 |
|
|
Code of Business Conduct and Ethics (incorporated by reference to
Exhibit E to the Company’s Proxy Statement for its 2008 Annual
Meeting of Shareholders filed on April 29, 2008) |
| |
|
|
|
|
| |
31.1 |
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
| |
31.2 |
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
| |
32.1 |
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
| |
32.2 |
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 |
| |
|
|
| * |
|
Management contract or compensatory plan or arrangement |
| |
(c) |
|
Schedules required to be filed by Regulation S-X |
| |
|
|
All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto. |
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
VERAMARK TECHNOLOGIES, INC.
REGISTRANT
Date: May 13, 2009
| |
|
|
/s/ Anthony C. Mazzullo
Anthony C. Mazzullo
|
|
|
President and CEO |
|
|
Date: May 13, 2009
| |
|
|
/s/ Ronald C. Lundy
Ronald C. Lundy
|
|
|
Vice President of Finance and CFO |
|
|
24
EXHIBIT INDEX
| |
|
|
|
|
| Exhibit No. |
|
Description |
| |
|
|
|
|
| |
3.1 |
|
|
Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to the Company’s
Registration Statement on Form S-18 (File No. 2-96787) filed on March 22, 1985) |
| |
|
|
|
|
| |
3.2 |
|
|
Bylaws (incorporated by reference to Exhibit 3 to the Company’s Registration Statement on Form
S-8 filed on October 5, 1992) |
| |
|
|
|
|
| |
10.2 |
|
|
Letter Agreement dated as of March 29, 2007 by and between the Company and David G. Mazzella
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
April 3, 2007) |
| |
|
|
|
|
| |
10.3 |
|
|
Letter Agreement dated as of July 30, 2007 by and between the Company and Martin LoBiondo
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
August 3, 2007) |
| |
|
|
|
|
| |
10.4 |
* |
|
Amended and Restated Board of Directors Deferred Compensation Plan (incorporated by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 26, 2007) |
| |
|
|
|
|
| |
10.5 |
|
|
Consulting Agreement dated as of December 12, 2007 by and between the Company and David G.
Mazzella (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed on December 13, 2007) |
| |
|
|
|
|
| |
10.6 |
* |
|
Employment Agreement dated as of December 17, 2007 by and between the Company and Anthony C.
Mazzullo (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K
filed on December 19, 2007) |
| |
|
|
|
|
| |
10.7 |
* |
|
Letter Agreement dated as of February 4, 2008 by and between the Company and Douglas F. Smith
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on
February 4, 2008) |
| |
|
|
|
|
| |
10.8 |
* |
|
Restricted Stock Award Agreement dated as of January 1, 2008 by and between the Company and
Anthony C. Mazzullo (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on March 25, 2008) |
| |
|
|
|
|
| |
10.9 |
* |
|
2008 Incentive Plan for Management and Key Employees (incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K filed on April 2, 2008) |
| |
|
|
|
|
| |
10.10 |
* |
|
2008 Employee Stock Purchase Plan (incorporated by reference to Exhibit F to the Company’s Proxy
Statement for its 2008 Annual Meeting of Shareholders filed on April 29, 2008) |
| |
|
|
|
|
| |
10.11 |
* |
|
Description of non-employee director compensation (incorporated by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed on August 18, 2008) |
| |
|
|
|
|
| |
10.12 |
* |
|
Amended Salary Continuation Agreement dated as of October 10, 2008 by and between the Company and
Ronald C. Lundy (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed on October 17, 2008) |
| |
|
|
|
|
| |
10.13 |
* |
|
Form of 2008 Employee Stock Purchase Plan Enrollment Agreement (incorporated by reference to
Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (File No. 333-155286) filed on
November 12, 2008) |
| |
|
|
|
|
| |
14 |
|
|
Code of Business Conduct and Ethics (incorporated by reference to Exhibit E to the Company’s
Proxy Statement for its 2008 Annual Meeting of Shareholders filed on April 29, 2008) |
| |
|
|
|
|
| |
31.1 |
|
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
| |
31.2 |
|
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
| |
32.1 |
|
|
Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
|
|
| |
32.2 |
|
|
Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| |
|
|
| * |
|
Management contract or compensatory plan or arrangement |
25