Delaware
|
6770
|
84-1108035
|
||
(State or other
jurisdiction
of
incorporation)
|
(Primary Standard
Industrial
Classification Code
Number)
|
(I.R.S.
Employer
Identification
No.)
|
Large accelerated
filer
¨
|
Accelerated filer
¨
|
Non-accelerated filer
¨ (Do not check if
smaller reporting company)
|
Smaller reporting
company þ
|
CALCULATION OF REGISTRATION FEE
|
||||||||||||||||
Title of Each Class of
Securities to be Registered (1)
|
Amount to be
Registered
|
Proposed
Maximum
Offering Price
per
Share
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount of
Registration
Fee
|
||||||||||||
Common Stock, par value
$0.0001 per share
|
51,516,111 | $ | 0.065 | $ | 3,348,547 | (2) | $ | 238.75 | (3) |
(1)
|
This registration statement
relates to shares of our common stock, par value $0.0001 per share, deliverable upon the exercise of
the subscription rights.
|
(2)
|
Represents the gross proceeds from
the sale of shares of our common stock assuming the exercise of all
non-transferable subscription rights
to be distributed and additional over-subscriptions up to the maximum
amount contemplated in this registration
statement.
|
(3)
|
Note that $236.93 has already been
paid.
|
The information in this prospectus
is not complete and may be amended. These securities may not be sold until
the Registration Statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not
permitted.
|
Page
|
|
QUESTIONS AND ANSWERS RELATED TO
THE RIGHTS OFFERING
|
1
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
|
4
|
PROSPECTUS SUMMARY
|
4
|
RISK
FACTORS
|
10
|
USE OF
PROCEEDS
|
17
|
DETERMINATION OF OFFERING
PRICE
|
17
|
DILUTION
|
17
|
CAPITALIZATION
|
18
|
THE RIGHTS
OFFERING
|
19
|
MATERIAL U.S. FEDERAL INCOME
TAX CONSEQUENCES
|
25
|
PLAN OF
DISTRIBUTION
|
27
|
DESCRIPTION OF
SECURITIES TO BE
REGISTERED
|
28
|
EXPERTS
|
28
|
LEGAL
REPRESENTATION
|
28
|
DESCRIPTION OF
BUSINESS
|
29
|
DESCRIPTION OF
PROPERTY
|
37
|
LEGAL
PROCEEDINGS
|
38
|
MARKET PRICE OF AND DIVIDENDS ON
COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
|
39
|
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
41
|
CHANGES AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|
61
|
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
|
62
|
EXECUTIVE
COMPENSATION
|
64
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
|
73
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
76
|
DISCLOSURE OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
|
79
|
WHERE YOU CAN GET MORE
INFORMATION
|
79
|
FINANCIAL
STATEMENTS
|
80
|
|
·
|
The sale of business management
systems comprised of proprietary software applications, implementation and
training; and
|
|
·
|
Providing subscription-based
services, including software support and maintenance, information
(content) products and online services for a
fee.
|
Rights
Granted
|
|
We
will distribute to each stockholder of record on September 7, 2010, at no
charge, one non-transferable subscription right for each share of our
common stock then owned. The rights will be evidenced by rights
certificates. If and to the extent that our stockholders exercise their
right to purchase our common stock we will issue up to 51,516,111
shares and receive gross proceeds of up to $3.348 million in cash in the
rights offering.
|
Subscription
Rights
|
|
Each
subscription right will entitle the holder to purchase 0.6 shares of our
common stock for $0.065 per share, the subscription price, which shall be
paid in cash. We will not issue fractional shares, but rather will round
down the aggregate number of shares you are entitled to receive to the
nearest whole number.
|
Subscription
Price
|
|
$0.065
per share, which shall be paid in cash.
|
Record
Date
|
|
September
7, 2010
|
Expiration
Date
|
|
5:00
p.m., New York City time, on October 15, 2010, subject to extension or
earlier termination
|
Oversubscription
Rights
|
|
We
do not expect that all of our stockholders will exercise all of their
basic subscription rights. If you fully exercise your basic subscription
right, the oversubscription right entitles you to subscribe for additional
shares of our common stock unclaimed by other holders of rights in this
offering at the same subscription price per share. If an insufficient
number of shares is available to fully satisfy all oversubscription right
requests, the available shares will be distributed proportionately among
rights holders who exercise their oversubscription right based on the
number of shares each rights holder subscribed for under the basic
subscription right. The subscription agent will return any excess payments
by mail without interest or deduction promptly after the expiration of the
subscription period.
|
Non-Transferability of Rights
|
|
The
subscription rights are not transferable, other than to affiliates of the
recipient or by operation of law.
|
Amendment,
Extension and Termination
|
|
We
may extend the expiration date at any time after the record date. We may
amend or modify the terms of the rights offering. We also reserve the
right to terminate the rights offering at any time prior to the expiration
date for any reason, in which event all funds received in connection with
the rights offering will be returned without interest or deduction to
those persons who exercised their subscription rights.
|
Fractional
Shares
|
|
We
will not issue fractional shares, but rather will round down the aggregate
number of shares you are entitled to receive to the nearest whole
number.
|
Procedure
for Exercising Rights
|
|
You
may exercise your subscription rights by properly completing and executing
your rights certificate and delivering it, together with the subscription
price for each share of common stock for which you subscribe, to the
subscription agent on or prior to the expiration date. If you use the
mail, we recommend that you use insured, registered mail, return receipt
requested. If you cannot deliver your rights certificate to the
subscription agent on time, you may follow the guaranteed delivery
procedures described under “The Rights Offering — Guaranteed Delivery
Procedures” beginning on page 22.
|
No
Revocation
|
|
Once
you submit the form of rights certificate to exercise any subscription
rights, you may not revoke or change your exercise or request a refund of
monies paid. All exercises of rights are irrevocable, even if you
subsequently learn information about us that you consider to be
unfavorable.
|
Payment
Adjustments
|
|
If
you send a payment that is insufficient to purchase the number of shares
requested, or if the number of shares requested is not specified in the
rights certificate, the payment received will be applied to exercise your
subscription rights to the extent of the payment. If the payment exceeds
the amount necessary for the full exercise of your subscription rights,
including any oversubscription rights exercised and permitted, the excess
will be returned to you as soon as practicable in cash. You will not
receive interest or a deduction on any payments refunded to you under the
rights offering.
|
How
Rights Holders Can Exercise Rights Through Others
|
|
If
you hold our common stock through a broker, custodian bank or other
nominee, we will ask your broker, custodian bank or other nominee to
notify you of the rights offering. If you wish to exercise your rights,
you will need to have your broker, custodian bank or other nominee act for
you. To indicate your decision, you should complete and return to your
broker, custodian bank or other nominee the form entitled “Beneficial
Owners Election Form.” You should receive this form from your broker,
custodian bank or other nominee with the other rights offering materials.
You should contact your broker, custodian bank or other nominee if you
believe you are entitled to participate in the rights offering but you
have not received this form.
|
How
Foreign Stockholders and Other Stockholders Can Exercise
Rights
|
|
The
subscription agent will not mail rights certificates to you if you are a
stockholder whose address is outside the United States or if you have an
Army Post Office or a Fleet Post Office address. Instead, we will have the
subscription agent hold the subscription rights certificates for your
account. To exercise your rights, you must notify the subscription agent
prior to 11:00 a.m., New York City time, at least three business days
prior to the expiration date, and establish to the satisfaction of the
subscription agent that it is permitted to exercise your subscription
rights under applicable law. If you do not follow these procedures by such
time, your rights will expire and will have no value.
|
Material
United States Federal Income Tax Consequences
|
|
A
holder will not recognize income or loss for United States Federal income
tax purposes in connection with the receipt or exercise of subscription
rights in the rights offering. For a detailed discussion, see “Material
United States Federal Income Tax Consequences” beginning on page 25. You
should consult your tax advisor as to the particular consequences to you
of the rights offering.
|
Issuance
of Our Common Stock
|
|
We
will issue certificates representing shares purchased in the rights
offering as soon as practicable after the expiration of the rights
offering.
|
Conditions
|
|
See
“The Rights Offering—Conditions to the Rights
Offering.”
|
No
Recommendation to Rights Holders
|
|
An
investment in shares of our common stock must be made according to your
evaluation of our business and the rights offering and after considering
all of the information herein, including the “Risk Factors” section of
this prospectus. Neither we nor our Board of Directors are making any
recommendation regarding whether you should exercise your subscription
rights.
|
Use
of Proceeds
|
|
The
proceeds from the rights offering will be used for (i) repayment of the term loan
with the Company’s senior secured lender, ComVest Capital LLC (“ComVest’);
and (ii) working capital needs. In the event that we do not
obtain all or a portion of the maximum proceeds from this rights offering,
we will need to obtain additional financing.
|
Subscription
Agent
|
|
Corporate
Stock Transfer
|
Information
Agent
|
|
Corporate
Stock Transfer
|
(In thousands, except per share
data)
|
Fiscal Years Ended
(audited)
|
|||||||
June 30, 2010
|
June 30, 2009
|
|||||||
Total
revenue
|
$
|
24,156
|
$
|
21,119
|
||||
Costs and operating
expenses
|
$
|
24,783
|
$
|
28,742
|
||||
Net loss
|
$
|
(627
|
)
|
$
|
(7,623
|
)
|
||
Loss per share attributed to common
stockholders basic and diluted:
|
||||||||
Net loss per
share
|
$
|
(0.01
|
)
|
$
|
(0.09
|
)
|
||
Weighted average number of shares
- basic and diluted
|
83,970,278
|
86,272,712
|
(In
thousands)
|
June 30, 2010
|
June 30, 2009
|
||||||
Total
assets
|
$
|
18,559
|
$
|
20,654
|
||||
Cash and cash
equivalents
|
$
|
1,196
|
$
|
1,663
|
||||
Total
liabilities
|
$
|
13,227
|
$
|
14,154
|
||||
Working capital
(deficiency)
|
$
|
(6,735
|
)
|
$
|
(2,972
|
)
|
||
Shareholders’
equity
|
$
|
5,332
|
$
|
6,500
|
|
•
|
|
actual or anticipated variations
in our operating results and cash
flow;
|
|
•
|
|
the nature and content of our
earnings releases, and our competitors’ and customers’ earnings
releases;
|
|
•
|
|
changes in financial estimates by
securities analysts;
|
|
•
|
|
business conditions in our
markets, the general state of the securities markets and the market for
common stock in companies similar to
ours;
|
|
•
|
|
the number of shares of our common
stock outstanding;
|
|
•
|
|
changes in capital markets that
affect the perceived availability of capital to companies in our
industries;
|
|
•
|
|
governmental legislation or
regulation;
|
|
•
|
|
currency and exchange rate
fluctuations; and
|
|
•
|
|
general economic and market
conditions.
|
|
•
|
implement and successfully execute
our business and marketing
strategy;
|
|
•
|
continue to develop new products
and upgrade our existing
products;
|
|
•
|
respond to industry and
competitive developments;
|
|
•
|
attract, retain, and motivate
qualified personnel; and
|
|
•
|
obtain equity and debt financing
on satisfactory terms and in timely fashion in amounts adequate to
implement our business plan and meet our
obligations.
|
|
•
|
difficulty in establishing or
managing distribution
relationships;
|
|
•
|
different standards for the
development, use, packaging and marketing of our products and
technologies;
|
|
•
|
our ability to locate qualified
local employees, partners, distributors and
suppliers;
|
|
•
|
the potential burden of complying
with a variety of foreign laws and trade standards;
and
|
|
•
|
general geopolitical risks, such
as political and economic instability, changes in diplomatic and trade
relations, and foreign currency risks and
fluctuations.
|
Subscription
price
|
$ | 0.065 | ||
Net tangible book value per
share prior to the rights offering
|
$ | (0.091 | ) | |
Increase per share attributable
to the rights offering
|
$ | 0.058 | ||
Pro forma net tangible book
value per share after the rights offering
|
$ | (0.033 | ) | |
Dilution in net tangible book
value per share to purchasers
|
$ | (0.098 | ) |
|
August 26, 2010
|
|||||||
|
Actual
|
Pro Forma(1)
|
||||||
|
(Dollars in
Thousands)
|
|||||||
Cash and cash
equivalents
|
|
$
|
1,076
|
|
$
|
1,076
|
|
|
|
||||||||
Short-term credit
facilities
|
|
$
|
1,000
|
|
$
|
1,000
|
|
|
Current portion of long-term bank
debt,
net
|
|
4,174
|
|
936
|
|
|||
Long-tem bank
debt
|
|
560
|
|
560
|
|
|||
|
||||||||
Total debt
|
|
5,734
|
|
2,496
|
|
|||
Common stock - $0.0001 par value, 150,000,000 shares authorized,
85,860,185 shares and 137,376,296 shares issued on an actual and
pro forma basis, respectively
|
|
8
|
|
13
|
|
|||
Additional paid-in
capital
|
|
29,532
|
|
32,825
|
|
|||
Accumulated other comprehensive
income
|
|
(1,000
|
)
|
(1,000
|
)
|
|||
Accumulated
deficit
|
|
(23,650
|
)
|
(23,710
|
)
|
|||
|
||||||||
Total stockholders’
equity
|
|
4,890
|
|
8,128
|
|
|||
|
||||||||
Total
capitalization
|
|
$
|
10,624
|
|
$
|
10,624
|
|
(1)
|
Pro forma balance reflects
$3.348 million of gross proceeds from
the rights offering, less $50,000 of offering costs. In addition to the issued shares
as disclosed above, as of August 26, 2010, we have 11,720,134 shares that can be issued pursuant
to outstanding warrants.
|
|
•
|
U.S. currency
by:
|
|
•
|
check or bank draft drawn on a
U.S. bank, or postal telegraphic or express, payable to “Corporate Stock
Transfer, as Subscription
Agent”;
|
|
•
|
money order payable to “Corporate
Stock Transfer, as Subscription Agent”;
or
|
|
•
|
wire
transfer of immediately available funds directly to the account maintained
by Corporate Stock Transfer , as Subscription Agent, for
purposes of accepting subscriptions in this Rights Offering
at:
|
|
•
|
clearance of any uncertified
check deposited by the subject
agent;
|
|
•
|
receipt by the subscription agent
of any certified bank check draft drawn upon a U.S.
bank;
|
|
•
|
receipt by the subscription agent
of any U.S. Postal money order;
or
|
|
•
|
receipt by the subscription agent
of any appropriately executed wire
transfer.
|
|
•
|
your subscription rights
certificate provides that shares are to be delivered to you as record
holder of those subscription rights;
or
|
|
•
|
you are an eligible
institution.
|
|
•
|
An
individual who is a citizen or resident of the United States for U.S.
federal income tax purposes;
|
|
•
|
A
corporation (or other business entity treated as a corporation for U.S.
federal income tax purposes) created or organized in or under the laws of
the United Sates, any state thereof or the District of
Columbia;
|
|
•
|
An
estate the income of which is subject to U.S. federal income tax
regardless of its source; or
|
|
•
|
A
trust (a) if a court within the United States can exercise primary
supervision over its administration and one or more U.S. persons are
authorized to control all substantial decisions of the trust or
(b) that has a valid election in effect under applicable Treasury
Regulations to be treated as a U.S.
person.
|
|
·
|
The
sale of business management systems comprised of proprietary software
applications, implementation and training;
and
|
|
·
|
Providing
subscription-based services, including software support and maintenance,
information (content) products and online services for a
fee.
|
|
·
|
gradual
growth in the aggregate number of vehicles in
use;
|
|
·
|
an
increase in the average age of vehicles in
operation;
|
|
·
|
fewer
new vehicles being purchased due to uncertainty in the economy, especially
available credit;
|
|
·
|
growth
in the total number of miles driven per vehicle per year;
and
|
|
·
|
increased
vehicle complexity.
|
|
1.
|
Business
Management Systems comprised of the Company’s proprietary software
applications, implementation and training and third-party hardware and
peripherals;
|
|
2.
|
Information
Products such as an accessible catalog database related to parts,
tires, labor estimates, scheduled maintenance, repair information,
technical service bulletins, pricing and product features and benefits
that are used by the different participants in the automotive
aftermarket;
|
|
3.
|
Online
Services and products that provide online connectivity between
manufacturers, warehouse distributors, retailers and automotive service
providers. These products enable electronic data interchange throughout
the automotive aftermarket supply chain between the different trading
partners. They also enable procurement and business services to be
projected over the Web to an expanded business audience;
and
|
|
4.
|
Customer
Support, Consulting and Training that provide phone and online
support, implementation and
training.
|
|
·
|
Phone
and online support. Customers can call dedicated support lines to speak
with knowledgeable personnel who provide support and perform on-line
problem solving as required.
|
|
·
|
Implementation,
education and training consulting. Our consulting and training teams work
together to minimize the disruption to a customer’s business during the
implementation process of a new system and to maximize the customer’s
benefit from the use of the system through
training.
|
|
·
|
Traditional
Wholesale Channel. The wholesale channel is the predominant distribution
channel in the automotive aftermarket. It is characterized by the
distribution of parts from the manufacturer to a warehouse distributor, to
parts stores and then to automotive service providers. Warehouse
distributors sell to automotive service providers through parts stores,
which are positioned geographically near the automotive service providers
they serve. This distribution method provides for the rapid distribution
of parts. The Company has products and services that meet the needs of the
warehouse distributors, parts stores and the automotive service
providers.
|
|
·
|
Retail
Channel. The retail channel is comprised of large specialty retailers,
small independent parts stores and regional chains that sell to
“do-it-yourself” customers. Larger specialty retailers, such as Advance
Discount Auto Parts, AutoZone, Inc., O’Reilly Automotive, Inc. and CSK
Auto Corporation carry a greater number of parts and accessories at more
attractive prices than smaller retail outlets and are gaining market
share. The business management systems used in this channel are either
custom developed by the large specialty retailers or purchased from
business systems providers by small to medium-sized businesses. The
Company has products and services that support the retail
channel.
|
|
·
|
Integrating
all of the Company’s products so that its software solutions work together
seamlessly, thereby eliminating the need to switch between
applications;
|
|
·
|
Enhancing
the Company’s current products and services to support its changing
customers needs; and
|
|
·
|
Providing
a migration path to the Company’s business management systems, reducing a
fear that many customers have that changing systems will disrupt
business.
|
2008
|
||||||||
High
|
Low
|
|||||||
1st
Quarter ended September 30
|
$ | 0.47 | $ | 0.20 | ||||
2nd
Quarter ended December 31
|
$ | 0.30 | $ | 0.16 | ||||
3rd
Quarter ended March 31
|
$ | 0.45 | $ | 0.23 | ||||
4th
Quarter ended June 30
|
$ | 0.25 | $ | 0.10 |
2009
|
||||||||
High
|
Low
|
|||||||
1st
Quarter ended September 30
|
$ | 0.51 | $ | 0.10 | ||||
2nd
Quarter ended December 31
|
$ | 0.34 | $ | 0.07 | ||||
3rd
Quarter ended March 31
|
$ | 0.10 | $ | 0.03 | ||||
4th
Quarter ended June 30
|
$ | 0.11 | $ | 0.03 |
2010
|
||||||||
High
|
Low
|
|||||||
1st
Quarter ended September 30
|
$ | 0.14 | $ | 0.05 | ||||
2nd
Quarter ended December 31
|
$ | 0.11 | $ | 0.06 | ||||
3rd
Quarter ended March 31
|
$ | 0.09 | $ | 0.06 | ||||
4th
Quarter ended June 30
|
$ | 0.09 | $ | 0.06 |
Plan Category
|
Number of
Securities to Be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
|
|
Number of
Securities
Remaining
Available for
Future Issuance
under the Plan (2)
|
||||
(a)
|
(b)
|
(c)
|
||||||
Equity compensation plans
approved by security holders (1)
|
0
|
N/A
|
12,729,432
|
|||||
Equity
compensation plans not approved by security holders
|
0
|
0
|
0
|
|||||
Total
|
0
|
0
|
12,729,432
|
(1)
|
Represents
the shares authorized for issuance under the Aftersoft Group Inc. 2007
Long-Term Incentive Plan, which was approved by the Company’s shareholders
at the Annual Meeting held on June 12, 2008. The maximum aggregate number
of shares of Common Stock that may be issued under the Plan, including
Stock Options, Stock Awards, and Stock Appreciation Rights is limited to
15% of the shares of Common Stock outstanding on the first trading day of
any fiscal year, or 12,729,432
for fiscal 2011.
|
(2)
|
As
of July 1, 2010.
|
·
|
Level 1 – Fair value based on
quoted prices in active markets for identical assets or
liabilities.
|
|
·
|
Level 2 – Fair value based on
significant directly observable data (other than Level 1 quoted prices) or
significant indirectly observable data through corroboration with
observable market data. Inputs would normally be (i) quoted prices in
active markets for similar assets or liabilities, (ii) quoted prices in
inactive markets for identical or similar assets or liabilities or (iii)
information derived from or corroborated by observable market
data.
|
·
|
Level 3 – Fair value based on
prices or valuation techniques that require significant unobservable data
inputs. Inputs would normally be a reporting entity’s own data and
judgments about assumptions that market participants would use in pricing
the asset or liability.
|
1.
|
When customer acceptance can be
estimated, expenditures are capitalized as work in process and deferred
until completion of the contract at which time the costs and revenues are
recognized.
|
2.
|
When customer acceptance cannot be
estimated based on historical evidence, costs are expensed as incurred and
revenue is recognized at the completion of the contract when customer
acceptance is obtained.
|
For the Twelve Months Ended
June 30,
|
||||||||||||||||
2010
|
2009
|
$ Variance
|
% Variance
|
|||||||||||||
Research and
development
|
$
|
3,012,000
|
$
|
2,860,000
|
$
|
152,000
|
5.3
|
%
|
||||||||
Sales and
marketing
|
2,181,000
|
2,211,000
|
(30,000
|
)
|
(1.4
|
)%
|
||||||||||
General and
administrative
|
6,462,000
|
5,651,000
|
811,000
|
14.4
|
%
|
|||||||||||
Depreciation and
amortization
|
1,116,000
|
1,082,000
|
34,000
|
3.1
|
%
|
|||||||||||
Impairment of goodwill
|
-
|
850,000
|
(850,000
|
)
|
(100.0
|
)%
|
||||||||||
Total Operating
Expenses
|
$
|
12,771,000
|
$
|
12,654,000
|
$
|
117,000
|
0.9
|
%
|
(a)
|
Maximum limits for capital
expenditures of $600,000 per fiscal
year;
|
(b)
|
Limitation on future borrowings,
other than in certain circumstances, including to finance capital
expenditures;
|
(c)
|
Limitation on guaranteeing any
obligation, except for obligations in the ordinary course of business and
obligations of our wholly owned subsidiaries incurred in the ordinary
course of business;
|
(d)
|
Limitation on entering
Sales-Leaseback Transactions with respect to the sale or transfer of
property used or useful in our business
operations;
|
|
(e)
|
Limitation on acquiring securities
or making loans;
|
(f)
|
Limitation on acquiring real
property;
|
(g)
|
Limitation on selling assets of
the Company or permitting any reduction in our ultimate ownership position
of any subsidiary;
|
(h)
|
Limitation on paying
dividends;
|
(i)
|
Limitation on selling any accounts
receivable; and
|
|
(j)
|
Requiring that, at the end of any
quarter of any fiscal year, the ratio of (a) Earnings Before Interest,
Depreciation, and Amortization (“EBIDA”) minus capital expenditures
incurred to maintain or replace capital assets, to (b) debt service (all
interest and principle payments), for the four (4) consecutive quarters
then ended, to be not less than 1.25 to 1.00 (the “EBIDA Ratio
Covenant”).
|
June 30,
|
||||
2011
|
$
|
459,000
|
||
2012
|
375,000
|
|||
2013
|
349,000
|
|||
2014
|
344,000
|
|||
2015
|
326,000
|
|||
Thereafter
|
2,535,000
|
|||
$
|
4,388,000
|
·
|
Business management systems
comprised of our proprietary software applications, implementation and
training and third-party hardware and
peripherals;
|
·
|
Information products such as an
accessible catalog database related to parts, tires, labor estimates,
scheduled maintenance, repair information, technical service bulletins,
pricing and product features and benefits, which are used by the different
participants in the automotive
aftermarket;
|
·
|
Online services and products that
connect manufacturers, warehouse distributors, retailers and automotive
service providers via the internet. These products enable electronic data
interchange throughout the automotive aftermarket supply chain among the
different trading partners. They also enable procurement and business
services to be projected over the internet to an expanded business
audience. Some UK clients use our information products on their own
websites and intranets; some clients in North America and the UK use our
systems and branded software to obtain relevant and up-to-date information
via the internet; and
|
·
|
Customer support and consulting services that
provide phone and
online support, implementation and
training.
|
·
|
gradual growth in the aggregate
number of vehicles in use;
|
·
|
an increase in the average age of
vehicles in operation;
|
·
|
fewer new vehicles being purchased
due to a slow down in the
economy;
|
·
|
growth in the total number of
miles driven per vehicle per year;
and
|
·
|
increased vehicle
complexity.
|
Name
|
Age
|
Position
|
||
Michael
Jamieson
|
43
|
Chief
Executive Officer and Director
|
||
Charles
F. Trapp
|
60
|
Chief
Financial Officer of the Company
|
||
Dwight
B. Mamanteo
|
41
|
Director
|
||
Marcus
Wohlrab
|
47
|
Director
|
||
Frederick
Wasserman
|
56
|
Director
|
||
Gerald
M. Czarnecki
|
69
|
Chairman
of the Board of Directors of the Company
|
||
W.
Austin Lewis IV
|
34
|
Director
|
Compensation Committee:
|
Audit Committee
|
Governance and
Nomination Committee
|
||
Dwight
B. Mamanteo – Chair
|
Dwight
B. Mamanteo
|
Dwight
B. Mamanteo
|
||
Marcus
Wohlrab
|
Frederick
Wasserman** – Chair
|
Marcus
Wohlrab – Chair
|
||
Gerald
M. Czarnecki -ex officio member
|
Gerald
M. Czarnecki -ex officio member
|
Frederick
Wasserman
|
||
W.
Austin Lewis IV
|
W.
Austin Lewis IV
|
Gerald
M. Czarnecki -ex officio
member
|
**
|
The
Board of Directors has determined that Frederick Wasserman is a financial
expert as defined in Regulation S-K promulgated under the Securities
Act.
|
Name and
Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
Non-
qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||||
Michael G. Jamieson,
(1)
Chief Executive
Officer,
President and
Director
|
2010
|
80,428
|
—
|
17,600
|
(5)
|
—
|
—
|
—
|
—
|
98,028
|
|||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||
Ian Warwick
(2)
|
2010
|
475,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Former Chief Executive
Officer, President
|
2009
|
292,828
|
—
|
—
|
—
|
—
|
—
|
—
|
292,828
|
||||||||||||||||||||||||
and
Director
|
2008
|
349,195
|
—
|
—
|
—
|
—
|
—
|
—
|
349,195
|
||||||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||||||||||||||
Simon Chadwick
(3)
|
2010
|
356,250
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Former
Chief Operating
|
2009
|
218,780
|
—
|
—
|
—
|
—
|
—
|
—
|
218,780
|
||||||||||||||||||||||||
Officer and
Director
|
2008
|
259,402
|
—
|
—
|
—
|
—
|
—
|
—
|
259,402
|
||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
Charles F. Trapp
(4)
|
2010
|
220,000
|
—
|
13,200
|
(6)
|
—
|
—
|
—
|
—
|
233,200
|
|||||||||||||||||||||||
Executive Vice
President,
|
2009
|
224,166
|
—
|
5,775
|
(6)
|
—
|
—
|
—
|
—
|
229,941
|
|||||||||||||||||||||||
and Chief Financial
Officer
|
2008
|
214,583
|
—
|
25,500
|
(6)
|
—
|
—
|
—
|
—
|
240,083
|
(1)
|
Reflects salary paid to Mr.
Jamieson for services rendered to us and our subsidiaries during fiscal
2010 as MAM’s Chief Executive Officer and President. Salary was
paid by a subsidiary of the Company in British pounds at an annual salary
of 122,000 GPB per year. Mr. Jamieson became Interim Chief
Executive Officer and Interim President on February 1, 2010 and was paid
50,830 GBP for the period from February 1, 2010 to June 30, 2010 pursuant
to the terms of Mr. Jamieson’s employment agreement with our
subsidiary. The amount shown for 2010 was translated to US
dollars based on a June 30, 2010 currency conversion rate of 1 GBP =
$1.5823 (or $80,428). Mr. Jamieson did not receive any additional
compensation for his services as a director on our Board of
Directors.
|
(2) |
Mr. Warwick resigned his position as Chief Executive Officer, President and Director effective as of January 31, 2010. Reflects salary paid to Mr. Warwick for services rendered to us and our subsidiaries during fiscal 2010, 2009 and 2008 as MAM’s Chief Executive Officer and President. The salary for the period from July 1, 2009 to January 31, 2010 was paid in US dollars at an annual base rate of $300,000 (or $175,000 for the period), pursuant to the terms of Mr. Warwick’s employment agreement. Pursuant to the terms of Mr. Warwick’s Separation Agreement he was paid $300,000 in six equal monthly installments of $50,000 per month. Mr. Warwick was paid in British pounds at an annual salary of 175,000 GPB for each of the 2008 fiscal year, and for the period from July 1, 2008 to November 30, 2008 (or 72,916 GBP). Salary for the period from December 1, 2008 through June 30, 2009 was paid in US dollars at an annual base rate of $300,000 (or $175,000 for the period), pursuant to the terms of Mr. Warwick’s employment agreement. The amount shown for 2008 was translated to US dollars based on a June 30, 2008 currency conversion rate of 1 GBP = $1.9954. The portion of Mr. Warwick’s salary for fiscal 2009 which was paid in British pounds (for the period from July 1, 2008 through November 30, 2008) was translated to US dollars based on the June 30, 2009 currency conversion rate of 1 GBP= $1.61593 (or $117,828). Mr. Warwick did not receive any additional compensation for his services as a director on our Board of Directors.. |
(3)
|
Mr. Chadwick resigned his position as Chief
Operating Officer and Director effective as
of January 31, 2010. Reflects salary paid to Mr.
Chadwick for services rendered to us and our subsidiaries during fiscal
2010, 2009 and 2008 as MAM’s Chief Operating Officer. The
Salary for the period from July 1, 2009 to January 31, 2010 was paid in US
dollars at an annual base rate of $225,000 (or $131,250 for the period),
pursuant to the terms of Mr. Chadwick’s employment
agreement. Pursuant to the terms of Mr. Chadwick’s Separation
Agreement he was paid $225,000 in six equal monthly installments of
$37,500 per month. Salary was paid in British pounds at an annual salary
of 130,000 GPB for each of the 2008 fiscal year, and for the period from
July 1, 2008 to November 30, 2008 (or 54,167 GBP). Salary for
the period from December 1, 2008 through June 30, 2009 was paid in US
dollars at an annual base rate of $225,000 (or $131,250 for the period),
pursuant to the terms of Mr. Chadwick’s employment agreement.
The amount shown for 2008 was translated to US dollars based on a June 30,
2008 currency conversion rate of 1 GBP = $1.9954. The portion
of Mr. Chadwick’s salary for fiscal 2009 which was paid in British pounds
(for the period from July 1, 2008 through November 30, 2008) was
translated to US dollars based on the June 30, 2009 currency conversion
rate of 1 GBP= $1.61593 (or $87,530). Mr. Chadwick did not receive any
additional compensation for his services as a director on our Board of
Directors.
|
(4)
|
Mr. Trapp was appointed Vice
President Finance and Chief Financial Officer effective as of December 1,
2007. For the year ended June 30, 2010, the amount shown in the table
reflects salary in the amount of $91,667 earned for services in these
capacities between July 1, 2009 and November 30, 2009, pursuant to the
terms of Mr. Trapp’s employment agreement, as well as salary in the amount
of $128,333 earned for services between December 1, 2009 and June 30, 2010
pursuant to a month to month verbal agreement. The salary for fiscal 2010
also includes $22,000 that was deferred and contributed by Mr. Trapp to
the Company’s plan established under section 401(k) of the Internal
Revenue Code of 1986, as amended. For the year ended June 30,
2009, the amount shown in the table reflects salary in the amount of
$95,833 earned for services in these capacities between July 1, 2008 and
November 30, 2008, as well as salary in the amount of $128,333 earned for
services between December 1, 2008 and June 30, 2009 pursuant to the terms
of Mr. Trapp’s employment agreement. The salary for fiscal 2009 also
includes $20,500 that was deferred and contributed by Mr. Trapp to the
Company’s plan established under section 401(k) of the Internal Revenue
Code of 1986, as amended. For the year ended June 30, 2008, the
amount shown in the table reflects salary in the amount of $134,167 earned
for services between December 1, 2007 and June 30, 2008, as well as salary
in the amount of $80,416 earned for services as an accountant prior to his
appointment as an officer. The salary for fiscal 2008 also includes
$20,500 that was deferred and contributed by Mr. Trapp to the Company’s
plan established under section 401(k) of the Internal Revenue Code of
1986, as amended.
|
(5)
|
The amount shown in the “Stock
Awards” column reflects the dollar amount recognized for fiscal 2010
financial statement reporting purposes of the outstanding stock awards
held by Mr. Jamieson in accordance with FAS 123R. Stock award represent an
award on May 13, 2008 of 1,000,000 shares of Common Stock with a grant
date closing price of $0.10 per share, of which 34% or 340,000 shares
vested immediately on the date of grant. The remaining 66% of the shares
or 660,000 shares will vest in three equal installments of 220,000 shares
on each of the first, second and third anniversaries of the grant date.
The shares were not issued pursuant to any existing compensation plan.
Refer to the Company’s Consolidated Financial Statements for the Fiscal
Years Ended June 30, 2010 and 2009, Note 1 “Stock Based Compensation” and
Note 9 “Stockholders Equity” included in this Annual Report on Form
10-K, with respect to valuation assumptions for this stock grant. Mr.
Jamieson held no other stock or option awards at June 30, 2010 and 2009,
respectively.
|
(6) |
The amount shown in the “Stock
Awards” column reflects the dollar amount recognized for fiscal 2010, 2009
and 2008 financial statement reporting purposes of the outstanding stock
awards held by Mr. Trapp in accordance with FAS 123R. Stock award
represent an award on May 13, 2008 of 750,000 shares of Common Stock with
a grant date closing price of $0.10 per share, of which 34% or 255,000
shares vested immediately on the date of grant. The remaining 66% of the
shares or 495,000 shares will vest in three equal installments of 165,000
shares on each of the first, second and third anniversaries of the grant
date. The shares were not issued pursuant to any existing compensation
plan. Refer to the Company’s Consolidated Financial Statements for the
Fiscal Years Ended June 30, 2010 and 20097, Note 1 “Stock Based
Compensation” and Note 9 “Stockholders Equity” included in this
Annual Report on Form 10-K, with respect to valuation assumptions for this
stock grant. Mr. Trapp held no other stock or option awards at June 30,
2010 and 20098,
respectively.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(# Exercisable)
|
Number of
Securities
Underlying
Unexercised
Option
(# Unexercisable)
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
Or
Other
Rights
That
Have
Not
Vested
($)
|
|||||||||||||||||||||||||||
Michael G.
Jamieson
|
—
|
—
|
—
|
—
|
—
|
220,000
|
(1)
|
$
|
17,600
|
(3)
|
—
|
—
|
||||||||||||||||||||||||
Charles F.
Trapp
|
—
|
—
|
—
|
—
|
—
|
165,000
|
(2)
|
$
|
13,200
|
(3)
|
—
|
—
|
||||||||||||||||||||||||
Ian
Warwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||
Simon
Chadwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
Stock awards represent an award
on May 13, 2008 to Mr. Jamieson of 1,000,000 shares of Common Stock with a
grant date fair value of $0.10 per share, of which 34%, or 340,000 shares,
vested immediately on the date of grant, 220,000 shares valued at $.035
per share vested on May 13, 2009 and 220,000 shares valued at $.08 per
share vested on May 13, 2010 The remaining 220,000 shares reflected in the
table, will vest on May 13, 2011. The shares were not issued pursuant to
any existing compensation plan.
|
|
(2) |
Stock awards represent an award
on May 13, 2008 to Mr. Trapp of 750,000 shares of Common Stock with a
grant date fair value of $0.10 per share, of which 34%, or 255,000 shares,
vested immediately on the date of grant and 165,000 shares valued at $.035
per share vested on May 13, 2009 and 165,000 shares valued at $.08 per
share vested on May 13, 2010. The remaining 165,000 shares reflected in
the table, will vest on may 13, 2011. The shares were not issued pursuant
to any existing compensation plan.
|
|
(3)
|
Based on the closing price of
$0.08 of the Company’s Common Stock on June 30,
2010.
|
Fees
Earned
or
Paid in
Cash
($)
|
Stock
Awards
($)(1)
|
Options
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compen-
sation
($)
|
Total
($)
|
||||||||||||||||||||||
Michael G.
Jamieson
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Ian
Warwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Simon
Chadwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||
Dwight B.
Mamanteo
|
26,000
|
(2)
|
6,785
|
(3)
|
—
|
—
|
—
|
—
|
32,785
|
|||||||||||||||||||
Marcus
Wohlrab
|
21,000
|
7,987
|
(4)
|
—
|
—
|
—
|
—
|
28,987
|
||||||||||||||||||||
Frederick
Wasserman
|
22,500
|
8,518
|
(5)
|
—
|
—
|
—
|
—
|
31,018
|
||||||||||||||||||||
Gerald M.
Czarnecki
|
35,000
|
(6)
|
8,359
|
(7)
|
—
|
—
|
—
|
—
|
43,359
|
|||||||||||||||||||
W. Austin Lewis
IV
|
20,000
|
(8)
|
8,353
|
(9)
|
—
|
—
|
—
|
—
|
28,353
|
(1)
|
The amount shown in the table
reflects the dollar amount recognized for fiscal 2010 financial statement
reporting purposes of the outstanding stock awards held by the directors
in accordance with FAS 123R. Refer to the Company’s Consolidated Financial
Statements for the Fiscal Years Ended June 30, 2010 and 2009, Note 1
“Stock Based Compensation” and Note 9 “Stockholders Equity” included in
the Company’s Annual Report on Form 10-K for the fiscal year ended June
30, 2010, with respect to valuation assumptions for this stock grant. The
directors held no other stock or option awards at June 30,
2010.
|
||||
(2)
|
Includes 176,312 shares of
Common Stock valued at market price on the date of issuance, net of income
taxes of $4,550, and received in lieu of $19,500 of cash
compensation.
|
||||
(3)
|
Includes 83,674 shares valued
at market price on the date of issuance, net of income taxes of
$2,433.
|
||||
(4)
|
Includes 98,304 shares valued
at market price on the date of issuance.
|
||||
(5)
|
Includes 104,850 shares valued
at market price on the date of issuance.
|
||||
(6)
|
Includes 280,313 shares of
Common Stock valued at market price on the date of issuance, net of income
taxes of $12,250, and received in lieu of $22,750 of cash
compensation.
|
||||
(7)
|
Includes 102,885 shares valued
at market price on the date of issuance, net of income taxes of
$4,502.
|
||||
(8)
|
Includes 246,429 shares of
Common Stock valued at market price on date of issuance, and received in
lieu of $20,000 of cash compensation.
|
||||
(9)
|
Includes 101,276 shares valued
at market price on the date of issuance.
|
Name and address of beneficial owner
|
Amount and Nature of
Beneficial Ownership
|
Percent of class of
Common Stock (1)
|
||||||
Wynnefield
Persons (2)
c/o
Wynnefield Capital Inc.
450
Seventh Ave., Suite 509
New
York, NY 10123
|
10,829,479 | (3) | 12.61 | % | ||||
Quillen
Persons (4)
145
East 57th Street, 10th Floor
New
York, NY 10022
|
6,543,445 | (5) | 7.62 | % | ||||
ComVest
Capital LLC
105
S. Narcissus Ave.
West
Palm Beach, FL 33401
|
8,469,949 | (6) | 8.98 | % | ||||
Directors
and Officers:
|
||||||||
Michael
Jamieson
Chief
Executive Officer
|
1,460,000 | (7) | 1.71 | % | ||||
Charles
F. Trapp
Chief
Financial Officer
|
1,869,340 | (8) | 2.18 | % | ||||
Frederick
Wasserman,
Director
|
250,666 | (9) | 0.29 | % | ||||
Dwight
B. Mamanteo,
Director
|
781,866 | (10) | 0.91 | % | ||||
Marcus
Wohlrab,
Director
|
198,923 | (11) | 0.23 | % | ||||
Gerald
M. Czarnecki,
Chairman
|
1,211,983 | (12) | 1.41 | % | ||||
W.
Austin Lewis IV (13)
c/o
Lewis Asset Management Corp.
45
Rockefeller Plaza
New
York, NY 10111
|
10,335,037 | (14) | 12.03 | % | ||||
Directors
and Officers as a group (7 persons)
|
16,107,815 | 18.75 | % | |||||
Former
Officers and Directors:
|
||||||||
Ian
Warwick
Chief
Executive Officer
and
Chairman
|
4,561,452 | 5.31 | % | |||||
Simon
Chadwick
Chief
Operating Officer
|
1,961,084 | 2.28 | % |
|
(1)
|
Based
on a total of 85,860,185 shares of Common Stock outstanding as of July 26,
2010. In accordance with Securities and Exchange Commission rules, each
person’s percentage interest is calculated by dividing the number of
shares that person owns by the sum of (a) the total number of shares
outstanding as of July 26, 2010 plus (b) the number of shares such person
has the right to acquire within sixty (60) days of July 26,
2010.
|
|
(2)
|
Comprised
of Wynnefield Partners Small Cap Value, LP (“Wynnefield Partners”) and
Wynnefield Partners Small Cap Value LP I (“Wynnefield Partners I”), and
the general partner of each of these entities, Wynnefield Capital
Management, LLC (“Wynnefield LLC”); Wynnefield Small Cap Value Offshore
Fund Ltd. (“Wynnefield Offshore”) and its investment manager, Wynnefield
Capital, Inc. (“Wynnefield Capital”); Wynnefield Capital, Inc. Profit
Sharing & Money Purchase Plan (the “Plan”); Channel Partnership II, LP
(“Channel”); Nelson Obus, who serves as principal and co-managing member
of Wynnefield Capital Management, LLC, principal executive officer of
Wynnefield Capital, Inc. and general partner of Channel Partnership II,
LP; and Joshua H. Landes, who serves as principal and co-managing member
of Wynnefield Capital Management, LLC and executive officer of Wynnefield
Capital, Inc. (collectively, the “Wynnefield Persons”). Dwight Mamanteo,
one of the Company’s directors, is an investment analyst with Wynnefield
Capital. Mr. Mamanteo exercises neither voting nor dispositive control
over the shares beneficially owned by Wynnefield Capital. The Company has
been informed that Nelson Obus and Joshua H. Landes share voting and
investment control over the shares beneficially owned by Wynnefield
Partners, Wynnefield Partners I, Wynnefield Offshore, Wynnefield LLC,
Wynnefield Capital and the Plan, and that Nelson Obus exercises sole
voting and investment control over the shares beneficially owned by
Channel. Based upon information provided in a Schedule 13D/A
filed with the SEC on April 3, 2009 and a Form 4 filed on May 22,
2009. Note
that the Wynnefield Persons’ shareholdings have been reduced by an
aggregate of 3,125,002 shares to reflect the surrender of the Exchange
Warrants by the Wynnefield Partners Small Cap Value, LP, Wynnefield
Partners Small Cap Value, LP I, Wynnefield SmallCap Offshore Fund, Ltd and
Channel Partnership II, LP to the Company as part of the Company’s
proposed Exchange Offer.
|
|
(3)
|
Represents
an aggregate of 10,829,479 shares of common stock, which are beneficially
owned as follows: (i) 3,102,885 shares of common stock are beneficially
owned by Wynnefield Partners; (ii) 2,525,615 shares of common stock are
beneficially owned by Wynnefield Partners I; (iii) 4,559,115 shares of
common stock; (iv) 16,864 shares of common stock are beneficially owned by
the Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan; and
(v) 625,000 shares of common stock are beneficially owned by
Channel. Based upon information provided in a Form 4 filed with
the SEC on May 22, 2009.
|
|
(4)
|
Comprised
of Little Wing, L.P. (“Little Wing”); Quilcap Corp., the general partner
of Little Wing (“Quilcap Corp.”); Tradewinds Fund, Ltd. (“Tradewinds”);
Quilcap Management, LLC, the investment manager of Little Wing and
Tradewinds (“Quilcap Management”); and Parker Quillen, the President of
Quilcap Corp. and the Sole Managing Member of Quilcap Management
(collectively, the “Quillen Persons”). Based upon information
provided in a Schedule 13G/A filed with the SEC on February 13,
2009.
|
|
(5)
|
Represents
(i) 5,976,508 shares of common stock owned by Little Wing, with respect to
which Little Wing has the power to vote and dispose, which power may be
exercised by Mr. Quillen, as President of Quilcap Corp and as Sole
Managing Member of Quilcap Management; and (ii) 540,879 shares of common
stock owned by Tradewinds, with respect to which Tradewinds has the power
to vote and dispose, which power may be exercised by Mr. Quillen, as the
Sole Managing Member of Quilcap Management; and (iii) 26,058 shares of
common stock with respect to which Mr. Quillen has sole voting and
dispositive power. Based upon information provided in a
Schedule 13G/A filed with the SEC on February 13,
2009.
|
|
(6)
|
Includes
the following shares owned by ComVest Capital LLC: (i) 1,000,000 shares
issuable upon exercise of warrants to purchase shares of Common Stock,
which are currently exercisable at $0.1097 per share and expire December
31, 2013; (ii) 2,083,333 shares issuable upon exercise of warrants to
purchase shares of Common Stock, which are currently exercisable at
$0.3595 per share and expire December 31, 2013; (iii) 2,000,000 shares
issuable upon exercise of warrants to purchase shares of Common Stock,
which are currently exercisable at $0.1097 per share and expire December
31, 2013, and (iv) 3,386,616 shares of common stock issuable upon
conversion of the $5,000,000 principal amount of that certain Convertible
Term Note dated December 21, 2007 issued to Comvest Capital LLC, at a
current conversion rate of $1.4764 per share. The Company has been
informed that Comvest Capital Advisors, LLC is the managing entity of
ComVest Capital, LLC, and that Gary Jaggard, managing director of Comvest
Capital, LLC, exercises voting and investment control over the shares
beneficially owned by ComVest Capital, LLC. See “Certain Relationships and
Related Transactions and Director Independence” for additional
detail.
|
|
(7)
|
Includes
780,000 vested shares of an award of an aggregate of 1,000,000 restricted
shares of Common Stock granted by the Company on May 13, 2008 for services
previously rendered.
|
|
(8)
|
Includes
585,000 vested shares of an award of an aggregate 750,000 restricted
shares of Common Stock granted by the Company on May 13, 2008 for services
previously rendered.
|
|
(9)
|
Includes
(i) 19,500 vested shares of restricted Common Stock of an award for an
aggregate 25,000 shares of restricted Common Stock granted on May 13, 2008
by the Company for services previously rendered; (ii) 73,336 vested shares
of restricted Common Stock out of an award of an aggregate of 110,000
shares of restricted Common Stock granted on October 6, 2008; and (iii)
68,181 vested shares of restricted Common Stock out of an award of an
aggregate of 204,545 shares of restricted Common Stock granted on July 1,
2009,
and (iv) 49,650 shares which will vest within 60 days of August 11,
2010.
|
|
(10)
|
Includes
(i) 19,500 vested shares of restricted Common Stock of an award for an
aggregate 25,000 shares of restricted Common Stock granted on May 13, 2008
by the Company for services previously rendered; and (ii) 51,137 vested
shares of restricted Common Stock (net of taxes) out of an award of an
aggregate of 104,000 shares of restricted Common Stock granted on October
6, 2008; and (iii) 58,106 vested shares of restricted Common Stock (net of
taxes) out of an award of an aggregate of 236,364 shares of restricted
Common Stock granted on July 1, 2009,
and (iv) 55,447 shares which will vest within 60 days of August 11,
2010.
|
|
(11)
|
Includes
(i) 19,500 vested shares of restricted Common Stock of an award for an
aggregate 25,000 shares of restricted Common Stock granted on May 13, 2008
by the Company for services previously rendered; (ii) 69,336 vested shares
of restricted Common Stock out of an award of an aggregate of 104,000
shares of restricted Common Stock granted on October 6, 2008; and (iii)
62,936 vested shares of restricted Common Stock (net of taxes) out of an
award of an aggregate of 190,909 shares of restricted Common Stock granted
on July 1, 2009,
and (iv) 46,451 shares which will vest within 60 days of August 11,
2010.
|
|
(12)
|
Includes
(i) 13,333 vested shares of restricted Common Stock (net of taxes) out of
an award for an aggregate 25,000 shares of restricted Common Stock granted
by the Company for joining the Board of Directors on October 6, 2008; (ii)
79,892 vested shares of restricted Common Stock (net of taxes) out of an
award of an aggregate of 140,000 shares of restricted Common Stock granted
on October 6, 2008; and (iii) 68,940 vested shares of restricted Common
Stock (net of taxes) out of an award of an aggregate of 318,182 shares of
restricted Common Stock granted on July 1, 2009,
and (iv) 76,030 shares which will vest within 60 days of August 11,
2010.
|
|
(13)
|
W.
Austin Lewis IV is the portfolio manager and general partner of Lewis
Asset Management Corp., the investment manager of Lewis Opportunity Fund,
LP and LAM Opportunity Fund, LTD. Accordingly, Mr. Lewis is deemed to
be the beneficial owner of the shares owned by Lewis Opportunity Fund, LP
and LAM Opportunity Fund, LTD. and beneficially owned by Lewis Asset
Management Corp.
|
|
(14)
|
Represents
(i) 3,614,353 shares owned directly by W. Austin Lewis IV, (ii) 5,322,646
shares of common stock owned by Lewis Opportunity Fund, LP; (iii)
1,348,719 shares of common stock owned by LAM Opportunity Fund, LTD.; (iv)
14,000 vested shares of restricted Common Stock out of an award of an
aggregate of 25,000 shares of restricted Common Stock granted on February
20, 2009; (v) 36,935 vested shares of restricted Common Stock out of an
award of an aggregate 80,000 shares of restricted Common Stock granted on
February 20, 2009; and (vi) 60,607 vested shares of restricted Common
Stock out of an award of an aggregate of 181,818 shares of restricted
Common Stock granted on July 1, 2009,
and (vii) 49,319 shares which will vest within 60 days of August 11,
2010. Note
that Mr. Lewis’ shareholdings have been reduced by an aggregate of
6,402,999 shares to reflect the surrender of the Exchange Warrants by
Lewis Opportunity Fund, LP and LAM Opportunity Fund Ltd. to the Company as
part of the Company’s proposed Exchange
Offer.
|
Report
of Independent Registered Public Accounting Firm
|
F–1
|
|
Consolidated
Balance Sheets as of June 30, 2010 and 2009
|
F–2
|
|
Consolidated
Statements of Operations and Comprehensive Loss for the years
ended June 30, 2010 and 2009
|
F–3
|
|
Consolidated
Statements of Stockholders’ Equity for the years ended June 30, 2010 and
2009
|
F–4
|
|
Consolidated
Statements of Cash Flows for the years ended June 30, 2010 and
2009
|
F–5
|
|
Notes
to Consolidated Financial Statements
|
|
F–7
|
June
30,
|
||||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash and cash
equivalents
|
$
|
1,196
|
$
|
1,663
|
||||
Accounts receivable, net of
allowance of $192 and $87
|
2,520
|
2,154
|
||||||
Inventories
|
366
|
318
|
||||||
Prepaid expenses and other current
assets
|
371
|
507
|
||||||
Total Current
Assets
|
4,453
|
4,642
|
||||||
Property and Equipment,
Net
|
856
|
1,028
|
||||||
Other
Assets
|
||||||||
Goodwill
|
8,924
|
9,548
|
||||||
Amortizable intangible assets,
net
|
2,757
|
3,566
|
||||||
Software development costs,
net
|
1,520
|
1,691
|
||||||
Other long-term
assets
|
49
|
179
|
||||||
TOTAL
ASSETS
|
$
|
18,559
|
$
|
20,654
|
||||
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$
|
1,551
|
$
|
1,386
|
||||
Accrued expenses and
other
|
2,368
|
3,162
|
||||||
Payroll and other
taxes
|
364
|
278
|
||||||
Current portion of settlement
liability
|
326
|
-
|
||||||
Derivative
liabilities
|
291
|
-
|
||||||
Current portion of long-term
debt
|
5,000
|
1,598
|
||||||
Current portion of deferred
revenue
|
641
|
482
|
||||||
Taxes
payable
|
647
|
708
|
||||||
Total Current
Liabilities
|
11,188
|
7,614
|
||||||
Long-Term
Liabilities
|
||||||||
Deferred revenue, net of current
portion
|
345
|
748
|
||||||
Deferred income
taxes
|
642
|
880
|
||||||
Settlement liability, net of
current portion
|
525
|
-
|
||||||
Long-term debt, net of current
portion
|
168
|
4,713
|
||||||
Other
|
359
|
199
|
||||||
Total
Liabilities
|
13,227
|
14,154
|
||||||
Commitments and
contingencies
|
||||||||
Stockholders'
Equity
|
||||||||
Preferred stock: Par value $0.0001
per share; 10,000,000 shares authorized, none issued and
outstanding
|
–
|
–
|
||||||
Common stock: Par value $0.0001
per share; 150,000,000 shares authorized, 84,862,880
and 83,462,337 shares issued and outstanding,
respectively
|
8
|
8
|
||||||
Additional paid-in
capital
|
29,503
|
30,219
|
||||||
Accumulated other comprehensive
loss
|
(768
|
)
|
(482
|
)
|
||||
Accumulated
deficit
|
(23,411
|
)
|
(23,245
|
)
|
||||
Total Stockholders'
Equity
|
5,332
|
6,500
|
||||||
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
|
18,559
|
$
|
20,654
|
For the Year
Ended
June
30,
|
||||||||
2010
|
2009
|
|||||||
Revenues
|
$
|
24,156
|
$
|
21,119
|
||||
Cost of
revenues
|
10,274
|
9,496
|
||||||
Gross
Profit
|
13,882
|
11,623
|
||||||
Operating
Expenses
|
||||||||
Research and
development
|
3,012
|
2,860
|
||||||
Sales and
marketing
|
2,181
|
2,211
|
||||||
General and
administrative
|
6,462
|
5,651
|
||||||
Depreciation and
amortization
|
1,116
|
1,082
|
||||||
Impairment of
goodwill
|
-
|
850
|
||||||
Total Operating
Expenses
|
12,771
|
12,654
|
||||||
Operating Income (Loss)
|
1,111
|
(1,031
|
)
|
|||||
Other Income
(Expense)
|
||||||||
Interest
expense
|
(1,361
|
)
|
(1,602
|
)
|
||||
Interest
income
|
-
|
21
|
||||||
Change in fair value of derivative
liabilities
|
267
|
–
|
||||||
Write down of investments in
available-for-sale
securities
|
-
|
(4,723
|
)
|
|||||
Other, net
|
50
|
98
|
||||||
Total other expense,
net
|
(1,044
|
)
|
(6,206
|
)
|
||||
Income (loss) before provision for income
taxes
|
67
|
(7,237
|
)
|
|||||
Provision for income
taxes
|
694
|
386
|
||||||
Net Loss
|
(627
|
)
|
(7,623
|
)
|
||||
Unrealized gain on reversal of unrealized loss on investments in
available–for–sale securities
|
-
|
184
|
||||||
Foreign currency translation
loss
|
(286
|
)
|
(2,283
|
)
|
||||
Total Comprehensive
Loss
|
$
|
(913
|
)
|
$
|
(9,722
|
)
|
||
Loss per share attributed to
common stockholders - basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.09
|
)
|
||
Weighted average common
shares outstanding basic
and diluted
|
83,970,278
|
86,272,712
|
Common Stock
|
Additional
Paid-in-
|
Due
From
|
Other Accumulated
Comprehensive
|
Accumulated
|
||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Parent
|
Income (Loss)
|
Deficit
|
Total
|
||||||||||||||||||||||
Balance June 30,
2008
|
92,733,220
|
$
|
9
|
$
|
31,732
|
$
|
(2,850
|
)
|
$
|
1,617
|
$
|
(15,453
|
)
|
$
|
15,055
|
|||||||||||||
Sale of parent company common
stock
|
–
|
–
|
337
|
505
|
–
|
–
|
842
|
|||||||||||||||||||||
Parent company common stock issued
for parent company liabilities
|
–
|
–
|
(53
|
)
|
193
|
–
|
(140)
|
–
|
||||||||||||||||||||
Common
stock retired
|
(13,722,112
|
)
|
(1)
|
(2,122)
|
2,152
|
–
|
(29)
|
–
|
||||||||||||||||||||
Common stock issued as
compensation
|
4,451,229
|
–
|
310
|
–
|
–
|
–
|
310
|
|||||||||||||||||||||
Fair value of warrants issued to
lender
|
–
|
–
|
15
|
–
|
–
|
–
|
15
|
|||||||||||||||||||||
Foreign currency
translation
|
–
|
–
|
–
|
–
|
(2,283
|
)
|
–
|
(2,283
|
)
|
|||||||||||||||||||
Reversal of unrealized loss on
investment in available-for-sale securities
|
–
|
–
|
–
|
–
|
184
|
184
|
||||||||||||||||||||||
Net loss
|
–
|
–
|
–
|
–
|
–
|
(7,623
|
)
|
(7,623
|
)
|
|||||||||||||||||||
Balance June 30,
2009
|
83,462,337
|
8
|
30,219
|
–
|
(482
|
)
|
(23,245
|
)
|
6,500
|
|||||||||||||||||||
Adoption of new accounting
guidance related to derivative instruments
|
-
|
-
|
(868
|
)
|
-
|
-
|
461
|
(407
|
)
|
|||||||||||||||||||
Common stock issued as
compensation
|
1,400,543
|
-
|
116
|
-
|
-
|
-
|
116
|
|||||||||||||||||||||
Fair value of warrants issued
for services
|
-
|
-
|
36
|
-
|
--
|
-
|
36
|
|||||||||||||||||||||
Foreign currency
translation
|
-
|
-
|
-
|
-
|
(286
|
)
|
-
|
(286
|
)
|
|||||||||||||||||||
Net loss
|
(627
|
)
|
(627
|
)
|
||||||||||||||||||||||||
Balance June 30,
2010
|
84,862,880
|
$
|
8
|
$
|
29,503
|
$
|
-
|
$
|
(768
|
)
|
$
|
(23,411)
|
$
|
5,332
|
(In thousands)
|
For the Years Ended
June 30,
|
|||||||
2010
|
2009
|
|||||||
CASH FLOWS FROM OPERATING
ACTIVITIES :
|
||||||||
Net loss
|
$
|
(627
|
)
|
$
|
(7,623
|
)
|
||
Adjustments to reconcile net loss
to net cash provided by operating
activities:
|
||||||||
Bad Debt
Expense
|
177
|
-
|
||||||
Depreciation and
amortization
|
1,116
|
1,082
|
||||||
Debt discount and debt issuance
cost amortization
|
513
|
699
|
||||||
Gain on write off of
liabilities
|
(50
|
)
|
(134
|
)
|
||||
Change in fair value of derivative
liabilities
|
(267
|
)
|
-
|
|||||
Write down of investment in
available - for- sale securities
|
-
|
4,723
|
||||||
Deferred income
tax
|
(238
|
)
|
-
|
|||||
Fair value of stock issued for
services and compensation
|
116
|
310
|
||||||
Warrants issued in settlement of a
service agreement
|
36
|
-
|
||||||
Impairment of
goodwill
|
-
|
850
|
||||||
Changes in assets and
liabilities:
|
||||||||
Accounts
receivable
|
(707
|
)
|
1,079
|
|||||
Inventories
|
(79
|
)
|
297
|
|||||
Prepaid expenses and other
assets
|
105
|
183
|
||||||
Accounts
payable
|
257
|
(852
|
)
|
|||||
Taxes
payable
|
(6
|
)
|
329
|
|||||
Deferred
revenue
|
(196
|
)
|
78
|
|||||
Accrued expenses and other
liabilities
|
515
|
(804
|
)
|
|||||
NET CASH PROVIDED
BY OPERATING ACTIVITIES
|
665
|
217
|
||||||
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
||||||||
Purchase of property and
equipment
|
(85
|
)
|
(213
|
)
|
||||
Capitalized software development
costs
|
(66
|
)
|
(276
|
)
|
||||
NET CASH USED IN INVESTING
ACTIVITIES
|
(151
|
)
|
(489
|
)
|
||||
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
||||||||
Proceeds from sale of parent
company stock, net of cash issuance costs
|
-
|
842
|
||||||
Proceeds from long-term
debt
|
-
|
500
|
||||||
Payments on long-term
debt
|
(1,346
|
)
|
(410
|
)
|
||||
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES
|
(1,346
|
)
|
932
|
|||||
Effect of exchange rate
changes
|
365
|
(961
|
)
|
|||||
Net change in cash and cash
equivalents
|
(467
|
)
|
(301
|
)
|
||||
Cash and cash equivalents at
beginning of year
|
1,663
|
1,964
|
||||||
Cash and cash equivalents at end
of year
|
$
|
1,196
|
$
|
1,663
|
(In thousands)
|
For the Years Ended
June 30,
|
|||||||
2010
|
2009
|
|||||||
Supplemental disclosures of cash
flow information
|
||||||||
Cash paid during the year for
:
|
||||||||
Interest
|
$
|
849
|
$
|
841
|
||||
Income
taxes
|
$
|
463
|
$
|
873
|
||||
Non-cash investing and financing
transactions during the year for :
|
||||||||
Value of distributed
shares
|
$
|
-
|
$
|
29
|
||||
Value of retired
shares
|
$
|
-
|
$
|
2,123
|
||||
Cumulative effect to retained
earnings due to adoption of accounting standard
|
$
|
461
|
$
|
-
|
||||
Cumulative effect to additional
paid – in – capital to adoption of accounting
standard
|
$
|
868
|
$
|
-
|
||||
Cumulative effect to debt discount
due to adoption of accounting standard
|
$
|
310
|
$
|
-
|
||||
Gain on sale of Parent company
common stock
|
$
|
-
|
$
|
337
|
||||
Value of warrants issued for
amended debt covenants
|
$
|
-
|
$
|
15
|
||||
Issuance of debt for property,
plant and equipment
|
$
|
-
|
$
|
403
|
||||
Shares exchanged for parent
company common stock:
|
||||||||
Shares of Parent company common
stock remitted in exchange for Parent company
obligations
|
$
|
-
|
$
|
193
|
||||
Parent company obligations assumed
by Company
|
$
|
-
|
$
|
(140
|
)
|
|||
Loss on settlement of Parent
company obligations
|
$
|
-
|
$
|
53
|
·
|
Level 1 – Fair value based on
quoted prices in active markets for identical assets or
liabilities.
|
|
·
|
Level 2 – Fair value based on
significant directly observable data (other than Level 1 quoted prices) or
significant indirectly observable data through corroboration with
observable market data. Inputs would normally be (i) quoted prices in
active markets for similar assets or liabilities, (ii) quoted prices in
inactive markets for identical or similar assets or liabilities or (iii)
information derived from or corroborated by observable market
data.
|
·
|
Level 3 – Fair value based on
prices or valuation techniques that require significant unobservable data
inputs. Inputs would normally be a reporting entity’s own data and
judgments about assumptions that market participants would use in pricing
the asset or liability.
|
$
|
11,878,000
|
|||
Effect of exchange rate
changes
|
(1,480,000
|
)
|
||
Impairment
charges
|
(850,000
|
)
|
||
Balance June 30,
2009
|
$
|
9,548,000
|
||
Effect of exchange rate
changes
|
(624,000
|
)
|
||
Balance June 30,
2010
|
$
|
8,924,000
|
1)
|
When customer acceptance can be
estimated, expenditures are capitalized as work in process and deferred
until completion of the contract at which time the costs and revenues are
recognized.
|
|
2)
|
When customer acceptance cannot be
estimated based on historical evidence, costs are expensed as incurred and
revenue is recognized at the completion of the contract when customer
acceptance is obtained.
|
2010
|
2009
|
|||||||
Numerator for basic and diluted
loss per share:
|
||||||||
Net loss
|
$
|
(627,000
|
)
|
$
|
(7,623,000
|
)
|
||
Deemed distribution to parent
company
|
-
|
(169,000
|
)
|
|||||
Net loss available to common
shareholders
|
$
|
(627,000
|
)
|
$
|
(7,792,000
|
)
|
||
Denominator for basic and diluted
loss per common
share:
|
||||||||
Weighted average number of shares
of common stock outstanding
|
83,970,278
|
86,272,712
|
||||||
Net loss per common share
available to common stockholders - basic and
diluted
|
$
|
(0.01
|
)
|
$
|
(0.09
|
)
|
June 30,
|
July 1,
|
|||||||
2010
|
2009
|
|||||||
Annual dividend
yield
|
0.0
|
%
|
0.0
|
%
|
||||
Expected life
(years)
|
0.42 - 3.50
|
4.50
|
||||||
Risk-free interest
rate
|
0.39%-2.65
|
%
|
0.54%-2.51
|
%
|
||||
Expected
volatility
|
82% - 137
|
%
|
175
|
%
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Fair value of
warrants
|
$
|
-
|
$
|
-
|
$
|
291,000
|
$
|
291,000
|
||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
291,000
|
$
|
291,000
|
Balance as of June 30,
2009
|
$
|
-
|
||
Cumulative effect of
adoption
|
558,000
|
|||
Change in fair
value
|
(267,000
|
)
|
||
Balance as of June 30, 2010
|
$
|
291,000
|
Investment in available-for-sale
securities under Level 3 classification as of March 31,
2009
|
$
|
-
|
||
Transfers into Level
3
|
1,238,000
|
|||
Write down of available – for-
sale securities
|
(1,238,000
|
)
|
||
Balance as of June 30,
2009
|
-
|
June 30, 2010
|
June 30, 2009
|
|||||||
Leasehold
improvements
|
$
|
745,000
|
$
|
774,000
|
||||
Computer and office
equipment
|
370,000
|
336,000
|
||||||
Equipment under capital
leases
|
10,000
|
10,000
|
||||||
Furniture and
equipment
|
258,000
|
275,000
|
||||||
1,383,000
|
1,395,000
|
|||||||
Less: Accumulated depreciation and
amortization
|
(527,000
|
)
|
(367,000
|
)
|
||||
$
|
856,000
|
$
|
1,028,000
|
June 30,
2010
|
June 30,
2009
|
|||||||
Assets not subject to
amortization:
|
||||||||
Goodwill
|
$
|
8,924,000
|
$
|
9,548,000
|
||||
Assets subject to
amortization:
|
||||||||
Completed software technology
(9-10 years useful life)
|
$
|
2,991,000
|
$
|
3,109,000
|
||||
Customer contracts / relationships
(10 years useful life)
|
3,711,000
|
3,770,000
|
||||||
Automotive data services (20 years
useful life)
|
295,000
|
323,000
|
||||||
6,997,000
|
7,202,000
|
|||||||
Less : Accumulated
amortization
|
(4,240,000
|
)
|
(3,636,000
|
)
|
||||
Amortizable intangible assets,
net
|
$
|
2,757,000
|
$
|
3,566,000
|
||||
Software development
costs
|
$
|
2,953,000
|
$
|
3,083,000
|
||||
Less : Accumulated
amortization
|
(1,433,000
|
)
|
(1,392,000
|
)
|
||||
Software development costs,
net
|
$
|
1,520,000
|
$
|
1,691,000
|
Years Ending June
30,
|
||||
$
|
865,000
|
|||
2012
|
865,000
|
|||
2013
|
690,000
|
|||
2014
|
588,000
|
|||
2015
|
472,000
|
|||
Thereafter
|
797,000
|
|||
Total
|
$
|
4,277,000
|
2010
|
2009
|
|||||||
ComVest term loan, net of debt
discount of $71,000 and $303,000
|
$
|
3,912,000
|
$
|
4,697,000
|
||||
ComVest
revolver
|
1,000,000
|
1,000,000
|
||||||
Secured
notes
|
243,000
|
388,000
|
||||||
McKenna
note
|
-
|
150,000
|
||||||
Homann note
|
-
|
63,000
|
||||||
Other notes
|
13,000
|
13,000
|
||||||
5,168,000
|
6,311,000
|
|||||||
Less current
portion
|
(5,000,000
|
)
|
(1,598,000
|
)
|
||||
Long term
portion
|
$
|
168,000
|
$
|
4,713,000
|
Years Years Ending June
30,
|
||||
$
|
5,071,000
|
|||
2012
|
75,000
|
|||
2013
|
75,000
|
|||
2014
|
18,000
|
|||
Total
|
$
|
5,239,000
|
US
Federal
|
US
State
|
UK
Corporate
|
Total
|
|||||||||||||
2010
|
||||||||||||||||
Current
|
$
|
-
|
$
|
-
|
$
|
694,000
|
694,000
|
|||||||||
Deferred
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
694,000
|
694,000
|
|||||||||
2009
|
||||||||||||||||
Current
|
$
|
-
|
$
|
-
|
$
|
386,000
|
386,000
|
|||||||||
Deferred
|
-
|
-
|
-
|
-
|
||||||||||||
Total
|
$
|
-
|
$
|
-
|
$
|
386,000
|
386,000
|
June 30,
2010
|
June 30,
2009
|
|||||||
Deferred tax
assets:
|
||||||||
Net operating loss
carry-forwards
|
$
|
8,378,000
|
$
|
3,729,000
|
||||
Unrealized loss on
available-for-sale securities
|
1,889,000
|
1,889,000
|
||||||
Deferred
revenue
|
151,000
|
145,000
|
||||||
Reserves and
accruals
|
128,000
|
124,000
|
||||||
Deferred rent
|
44,000
|
-
|
||||||
Derivative
liabilities
|
116,000
|
-
|
||||||
Total deferred tax
assets
|
10,706,000
|
5,887,000
|
||||||
Deferred tax
liabilities:
|
||||||||
Other acquired amortizable
intangibles
|
(1,103,000
|
)
|
(1,426,000
|
)
|
||||
Software development
costs
|
(461,000
|
)
|
(482,000
|
)
|
||||
Depreciation and
amortization
|
(86,000
|
)
|
(116,000
|
)
|
||||
State taxes
|
-
|
-
|
)
|
|||||
Total deferred tax
liabilities
|
(1,650,000
|
)
|
(2,024,000
|
)
|
||||
|
||||||||
Valuation
allowance
|
(9,698,000
|
)
|
(4,743,000
|
)
|
||||
Net deferred tax
liabilities
|
$
|
(642,000
|
)
|
$
|
(880,000
|
)
|
June 30,
|
||||||||
2010
|
2009
|
|||||||
Taxes at statutory rates applied
to loss from continuing operations before taxes
|
$
|
23,000
|
$
|
(2,460,000
|
)
|
|||
State taxes, net of federal
effect
|
1,000
|
(462,000
|
)
|
|||||
Non-deductible goodwill
impairment
|
-
|
340,000
|
||||||
Other net
|
(20,000
|
)
|
82,000
|
|||||
Increase in acquired net operating
losses
|
(4,057,000
|
)
|
-
|
|||||
Differential in UK corporate tax
rate
|
(208,000
|
)
|
(103,000
|
)
|
||||
Change in valuation
allowance
|
4,955,000
|
2,989,000
|
||||||
Total
adjustments
|
671,000
|
2,846,000
|
||||||
Provision for income
taxes
|
$
|
694,000
|
386,000
|
(1)
|
On August 1, 2007, the Company and
Mr. McKenna entered into an agreement that settled all outstanding actions
by Mr. McKenna against the Company and its subsidiaries related to the
initial action against CarParts Technologies, Inc., which is now known as
ASNA. Pursuant to the settlement, the Company paid Mr. McKenna $2,000,000
in cash, issued him an 8% promissory note in the principal amount of
$825,000, which is payable over 24 months, and issued Mr. McKenna
1,718,750 shares of the Company’s Common Stock, which represented $825,000
at a value of $0.48 per share (the closing price of the Company’s Common
Stock on the date of settlement). Mr. McKenna was also entitled to
warrants to purchase an equivalent number of shares of Common Stock at the
same price. Upon entering this agreement all parties agreed to withdraw
all existing litigation and claims. The Company finalized its agreement
with McKenna on December 6, 2007 and revised its litigation accrual to
$3,650,000 to reflect the settlement. The shares were issued in August
2007. In November 2007, the Company amended the settlement agreement and
issued 1,718,750 warrants to purchase Common Stock for $0.48 per share.
The warrants were issued to replace the Common Stock included in the
settlement agreement. In February 2009, the Company orally advised Mr.
McKenna that it would reduce the monthly payment on the note to $18,650
per month from
$37,313 per month. Such amendment was not memorialized in writing, Since
February 2009, Mr. McKenna accepted the reduced monthly
payments, and has not notified the Company of any violations of
the terms and conditions of the payment agreement. The Company
repaid the note in full during the three month period ended March 31,
2010 (see Note 9).
|
(2)
|
Additionally, the Company entered
into a settlement agreement with Mr. Arthur Blumenthal, a former
shareholder of Anderson BDG, Inc. Mr. Blumenthal’s lawsuit against the
Company’s parent ADNW emanated from an agreement Mr. Blumenthal had with a
subsidiary of the Company, ASNA (f/k/a CarParts Technologies, Inc.) for
the purchase of Anderson BDG, that had not been settled although it was
past due. The Company assumed the liability as part of a plan of spinning
off certain businesses into the Company and renegotiated the agreement
with Mr. Blumenthal, the terms of which required the Company to make a
payment of $50,000 cash and the issuance to Mr. Blumenthal and
registration of 300,000 shares of the Company’s common stock, which were
issued in fiscal 2007 and valued at $0.48 per share, (the closing price of
the Company’s common stock on the date of settlement) or $144,000. The
Company subsequently completely settled the lawsuit with Mr. Blumenthal
and repaid his notes in fiscal 2008.
On February 17, 2010, Mr.
Blumenthal commenced a civil action against the Company, certain
subsidiaries, and current and former officers and directors of the
Company. The Company has previously
recorded a liability for $817,000 and recorded an additional expense of
$513,000 in the quarter ending March 31, 2010. On April 16, 2010, the Company
settled the litigation with Mr. Blumenthal for $1,250,000. On April 19,
2010, the Company paid Mr. Blumenthal $350,000 as partial payment of the
settlement amount. The balance of the
settlement amount is payable through November 2012 in equal monthly
payments of $31,250, which includes interest at 7%. In the event the
Company defaults in payment, Mr. Blumenthal may elect to reinstitute the
original litigation. Of the remaining balance due
Blumenthal of $851,000, $326,000 is included in the “Current portion of
settlement liability” and $525,000 is included “Settlement liability, net
of current portion”.
|
Years Ending
June 30,
|
||||
2011
|
$
|
459,000
|
||
2012
|
375,000
|
|||
2013
|
349,000
|
|||
2014
|
344,000
|
|||
2015
|
326,000
|
|||
Thereafter
|
2,535,000
|
|||
$
|
4,388,000
|
Issuance of warrants in connection
with the ComVest Loan Agreement (see Note 6):
|
||||
ComVest
|
5,083,333
|
|||
Other
|
250,000
|
|||
5,333,333
|
||||
Issuance of warrants to a service
provider (valued at $27,000)
|
155,549
|
|||
Issuance of warrants in
McKenna settlement
|
3,437,500
|
|||
Issuance of warrants to
investors in private placement
|
5,208,337
|
|||
Issuance of warrants
Commonwealth in
settlement for services offered (see above)
|
700,000
|
|||
Issuance of warrants Commonwealth
in private placement (see above)
|
1,000,000
|
|||
Issuance of warrants to placement
agent in private placement
|
260,417
|
|||
Issuance of warrants to Lewis
Global Funds
|
6,402,999
|
|||
Total
issued
|
22,498,135
|
Securities
and Exchange Commission registration fee
|
$
|
239
|
||
Printing costs
(1)
|
2,000
|
|||
Accounting fees and
expenses (1)
|
12,000
|
|||
Legal fees and expenses
(1)
|
35,000
|
|||
Miscellaneous
(1)
|
761
|
|||
Total (1)
|
$ | 50,000 |
On
July 5, 2007, the Company issued a total of 5,208,333 shares of Common
Stock at $0.48 per share and 5,208,333 warrants to purchase Common Stock
at $1.00 per share to the following entities, who were recognized as
accredited investors, as that term is defined in Rule 501(a) of Regulation
D: 625,000 shares of Common Stock and warrants to Hummingbird Microcap
Value Fund LP; 625,000 shares of Common Stock and warrants to Hummingbird
Value Fund LP; 357,292 shares of Common Stock and warrants to Little Wing
LP; 59,375 shares of Common Stock and warrants to Trade Winds Fund LTD;
208,334 shares of Common Stock and warrants to Alexandra & Christopher
Vulliez; 208,334 shares of Common Stock and warrants to Mary Kanary;
625,000 shares of Common Stock and warrants to Channel Partnership II;
833,334 shares of Common Stock and warrants to Wynnefield SmallCap
Offshore Fund, Ltd.; 833,334 shares of Common Stock and warrants to
Wynnefield Partners SmallCap Value, LP; 833,334 shares of Common Stock and
warrants to Wynnefield Partners SmallCap Value, LP
I.
|
(2)
|
On
December 21, 2007, in connection with a Revolving Credit and Term Loan
Agreement with ComVest Capital LLC (“ComVest”), the Company issued a
Credit Note, Term Note and Warrants to
ComVest.
|
(3)
|
On
July 5, 2007, the Company issued warrants to Quillen Securities to
purchase 260,417 shares of the Company’s Common Stock as compensation in
connection with the Company’s private placement of 2,500,000 shares of
Common Stock and warrants on the same date. The warrants were immediately
exercisable at $1.00 per share and expire July 2,
2013.
|
(4)
|
On
February 7, 2008, the Company issued warrants to Quillen Securities to
purchase 250,000 shares of the Company’s Common Stock, which were
immediately exercisable at $1.00 per share and expire July 2, 2013, as
compensation in connection with the ComVest
financing
|
(5)
|
On
February 7, 2008, the Company issued warrants to Quillen Securities to
purchase 155,549 shares of the Company’s Common Stock as compensation,
which were immediately exercisable at $1.00 per share and expire July 2,
2013, for services rendered.
|
(6)
|
On
each of August 1, 2007 and November 1, 2007, the Company issued warrants
to Mr. McKenna to purchase 1,718,750 shares of Common Stock, which were
immediately exercisable at $0.48 per share, and expire on January 31,
2012.
|
(7)
|
On
May 13, 2008, the Compensation Committee of the Board of Directors of the
Company approved restricted stock awards of an aggregate of 2,985,000
shares of its Common Stock to certain employees, a corporate officer and
three outside directors in respect of services previously rendered. The
shares vest as follows: 34% of the shares vest immediately on the date of
grant. The remaining 66% of the shares will vest in three equal
installments on each of the first, second and third anniversaries of the
grant date. An aggregate of 994,500 shares were fully vested on the date
of grant. The Company did not receive any consideration for these
grants.
|
(8)
|
On
April 24, 2008, the holder of 2,124,098 shares of ADNW Preferred stock
(which is convertible into 7,231,622 shares of the Company’s common
shares), or 6.97% of the fully diluted shares of ADNW, completed an
exchange of the Preferred shares for 6,402,999 units of the Company, which
consisted of 6,402,999 shares of Common Stock and a six-year warrant to
purchase 6,402,999 shares of the Company’s Common Stock for $1.00 per
share.
|
(9)
|
On
July 3, 2008, the Company issued 1,000,000 warrants exercisable at $0.30,
and expiring July 3, 2013 as placement fees for the sale of the 5,231,622
shares of ADNW common stock.
|
(10)
|
On
November 24, 2008 (the “Dividend Distribution Date”), ADNW distributed the
dividend of the 71,250,000 shares of the Company’s common stock that ADNW
owned at such time in order to complete the spin-off of the Company’s
businesses. The dividend shares were distributed in the form of a pro rata
dividend to the holders of record as of November 17, 2008 (the “Record
Date”) of ADNW’s common and convertible preferred stock. Each holder of
record of shares of ADNW common and preferred stock as of the close of
business on the Record Date was entitled to receive 0.6864782 shares of
the Company’s common stock for each share of common stock of ADNW held at
such time, and/or for each share of ADNW common stock that such holder
would own, assuming the convertible preferred stock owned on the Record
Date was converted in full. Prior to the spin-off, ADNW owned
approximately 77% of the Company’s issued and outstanding common stock.
Subsequent to and as a result of the spin-off, the Company is no longer a
subsidiary of ADNW.
|
(11)
|
On
May 13, 2008, the Compensation Committee of the Board of Directors of the
Company approved restricted stock awards of an aggregate of 2,985,000
shares of its common stock to certain employees, a corporate officer and
three outside directors in respect of services previously rendered. The
shares vest as follows: 34% of the shares vest immediately on the date of
grant. The remaining 66% of the shares will vest in three equal
installments on each of the first, second and third anniversaries of the
grant date. An aggregate of 994,500 shares were fully vested and issued on
the date of grant. The Company did not receive any
consideration for these grants and recorded an expense of $99,450 based on
the market price on the date of issuance. On May 13, 2009,
514,500 additional shares vested and were issued. The Company
did not receive any consideration for the issuance of these shares, and
recorded an expense of $18,008 based on the market price on the date of
issuance. During the year ended June 30, 2009, the Company
cancelled 396,000 previously approved restricted stock
awards.
|
(14)
|
During
the quarter ended September 30, 2008, the Company approved the issuance of
483,000 shares to the non-management members of the Board of Directors
under the Company’s 2007 Long-Term Incentive Plan. The shares
will be issued over a three year period. On October 6, 2008,
the Company issued 47,890 shares of these awards, which were valued at
$7,184. On January 6, 2009, the Company issued 31,955 shares of
these awards, which were valued at $2,876. On April 6, 2009, the
Company issued 34,639 shares of these awards, which were valued at
$1,386. On July 8, 2010, the Company issued 126,692 shares of
these awards (net of taxes), which were valued at $10,135. On July 8,
2010, the Company issued 126,692 shares of these awards (net of taxes),
which were valued at $10,135.
|
(15)
|
On
October 6, 2008, the Company issued 35,000 shares of common stock to a
director, which shares were valued at
$8,750.
|
(16)
|
On
May 13, 2009, the Company issued 1,615,370 shares of common stock to
certain directors and officers in lieu of deferred fees and salaries,
which were valued at $56,538.
|
(17)
|
On
June 30, 2009, the Company issued 171,875 shares of common stock to
certain directors in lieu of fees, which were valued
at $17,188.
|
(18)
|
On
June 30, 2009, the Company issued 2,000,000 shares of common stock to
certain employees in lieu of salaries, which were valued
at $200,000.
|
(19)
|
On
July 2, 2010, the Board unanimously approved a proposed exchange offer
(the “Exchange Offer”), whereby the Company would exchange outstanding
warrants to purchase shares of the Company’s common stock, which are
currently exercisable at $1.00 per share and expire either on July 2, 2013
or April 24, 2014 (the “Exchange Warrants”) for a to-be-designated series
of preferred stock, $.0001 par value (the “Series A Preferred
Stock”). Each holder of Series A Preferred Stock will have one
vote per share. Each share of Series A Preferred Stock will be
convertible into one share of common stock, subject to the approval by the
Company’s stockholders of an increase in the Company’s authorized shares
of common stock. In the event that the Company’s
stockholders do not approve an increase in its authorized shares, each
Series A Preferred stockholder will be entitled to a dividend, in an
amount to be determined. As of July 20, 2010, (the closing date
of the Exchange Offer) holders of 11,652,301 Exchange Warrants have
agreed to exchange their Exchange Warrants for 1,792,662 shares of Series
A Preferred Stock. The Series A Preferred Stock will be issued
in reliance upon the exemption from registration set forth in Section
3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”)
for any security exchanged by an issuer exclusively with its existing
security holders in a transaction where no commission or other
remuneration is paid or given directly or indirectly for soliciting such
exchange.
|
(20)
|
On
July 8, 2010, the Company issued 214,844 shares of common stock (net of
taxes) to certain directors in lieu of fees, which were valued at
$17,188.
|
Exhibit No.
|
Description of Exhibit
|
|
3(i)(a)
|
Certificate
of Incorporation of Aftersoft Group, Inc., as amended (incorporated by
reference to Exhibit 3(i) to the Company’s Registration Statement on Form
S-1/A filed on July 15, 2008).
|
|
3(i)(b)
|
Certificate
of Amendment of Certificate of Incorporation of Aftersoft Group, Inc.,
dated May 5, 2010 (incorporated by reference to Exhibit 3(i)(b) to the
Company’s Registration Statement on Form S-1/A filed on July 14,
2010).
|
|
3(ii)
|
By
laws (incorporated by reference to Exhibit 3(ii) to the Company’s
Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
4.1
|
Form
of Certificate of Common Stock (incorporated by reference to Exhibit 4.1
to the Company’s Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
4.2
|
Form of Subscription Rights Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-1/A, filed on September 2, 2010). | |
5.1
|
Opinion
of Gersten Savage LLP regarding the legality of the securities being
registered.
|
|
10.1
|
Share
Sale Agreement relating to EXP Dealer Software Limited dated August 4,
2006 among Auto Data Network, Inc., Aftersoft Group, Inc. and Aftersoft
Dealer Software Limited (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on August 31,
2006).
|
|
10.2
|
Share
Sale Agreement relating to Dealer Software and Services Limited dated
February 1, 2007 between Aftersoft Group, Inc. and Auto Data Network, Inc.
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on February 7, 2007).
|
|
10.3
|
Form
of Securities Purchase Agreement (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.4
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.5
|
Form
of Registration Rights Agreement (incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.6
|
Settlement
and Release Agreement between ASNA and Aidan J. McKenna (incorporated by
reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
filed August 6, 2007).
|
|
10.7
|
Share
Sale Agreement, dated November 12, 2007, between EU Web Services, Ltd., as
Purchaser, Aftersoft Group, Inc., as Vendor, and EXP Dealer Software Ltd.
(incorporated by reference to Exhibit 99.1 of the Company’s Current Report
on Form 8-K filed November 16,
2007)
|
10.8
|
Revolving
Credit and Term Loan Agreement dated as of December 21, 2007, by and
between ComVest Capital LLC, as Lender, and Aftersoft Group, Inc., as
Borrower (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed December 31, 2007).
|
|
10.9
|
Revolving
Credit Note dated December 21, 2007 in the principal amount of $1,000,000
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.10
|
Convertible
Term Note, dated December 21, 2007 in the principal amount of $5,000,000
(incorporated by reference to Exhibit 10.3 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.11
|
Collateral
Agreement dated as of December 21, 2007 by and among Aftersoft Group,
Inc., Aftersoft Network, N.A. Inc., MAM Software Ltd., Aftersoft Group
(UK) Ltd., AFS Warehouse Distribution Management, Inc., AFS Tire
Management, Inc. and AFS Autoservice Inc., and ComVest Capital LLC
(incorporated by reference to Exhibit 10.4 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.12
|
Guaranty
Agreement dated December 21, 2007 by Aftersoft Network, N.A. Inc., MAM
Software Ltd., Aftersoft Group (UK) Ltd., AFS Warehouse Distribution
Management, Inc., AFS Tire Management, Inc. and AFS Autoservice Inc., in
favor of ComVest Capital LLC (incorporated by reference to Exhibit 10.5 of
the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.13
|
Form
of Validity Guaranty (incorporated by reference to Exhibit 10.6 of the
Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.14
|
Warrant,
dated as of December 21, 2007, to Purchase 1,000,000 Shares of Common
Stock of Aftersoft Group, Inc. (incorporated by reference to Exhibit 10.7
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.15
|
Warrant,
dated as of December 21, 2007, to purchase 2,000,000 Shares of Common
Stock of Aftersoft Group, Inc. (incorporated by reference to Exhibit 10.8
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.16
|
Warrant,
dated as of December 21, 2007, to purchase 2,083,333 Shares of Common
Stock of Aftersoft Group, Inc. (incorporated by reference to Exhibit 10.9
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.17
|
Registration
Rights Agreement dated as of December 21, 2007 by Aftersoft Group, Inc.
for the benefit of the holders (incorporated by reference to Exhibit 10.10
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.18
|
2007
Long-Term Stock Incentive Plan (incorporated by reference to Exhibit D of
the Company’s revised Definitive Proxy Statement filed on May 19,
2008).
|
|
10.19
|
Employment
Agreement dated as of December 1, 2008 between the Company and Ian Warwick
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K filed December 5, 2008).
|
|
10.20
|
Employment
Agreement dated as of December 1, 2008 between the Company and Charles F.
Trapp (incorporated by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K filed December 5,
2008).
|
10.21
|
Employment
Agreement dated as of December 1, 2008 between the Company and Simon
Chadwick (incorporated by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K filed December 5, 2008).
|
|
10.22
|
May
15, 2008 Waiver and Amendment (incorporated by reference to Exhibit 10.1
of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.23
|
September
23, 2008 Waiver and Amendment (incorporated herein by reference to Exhibit
10.2 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.24
|
February
10, 2009 Waiver and Amendment (incorporated herein by reference to Exhibit
10.3 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.25
|
Consulting
Agreement with Commonwealth Associates LP dated June 3,
2008.
|
10.26
|
Employment
Agreement effective as of July 1, 2010 between the Company and Michael
Jamieson (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed on July 21, 2010)
|
|
10.27
|
Fiscal
Year 2011 Formal Bonus Plan effective as of July 1, 2010 between the
Company and Michael Jamieson (incorporated by reference to Exhibit 10.2 of
the Company’s Current Report on Form 8-K filed on July 21,
2010)
|
|
10.28
|
Employment
Agreement effective as of July 1, 2010 between the Company and Charles F.
Trapp (incorporated by reference to Exhibit 10.3 of the Company’s Current
Report on Form 8-K filed on July 21, 2010)
|
|
10.29
|
Fiscal
Year 2011 Formal Bonus Plan effective as of July 1, 2010 between the
Company and Charles F. Trapp (incorporated by reference to Exhibit 10.4 of
the Company’s Current Report on Form 8-K filed on July 21,
2010)
|
21
|
List
of subsidiaries (incorporated by reference to Exhibit 21 to the Company’s
Registration Statement on Form S-1/A filed on July 15,
2008).
|
|
23.1
|
Consent
of KMJ Corbin & Company LLP.
|
|
23.2
|
Consent
of Gersten Savage LLP (See Exhibit
5.1).
|
99.1
|
Form
of Instruction for Use of Subscription Right Certificate (incorporated by
reference to Exhibit 99.1 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.2
|
Form
of Notice of Guaranteed Delivery (incorporated by reference to
Exhibit 99.2 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.3
|
Form
of Letter to Stockholders who are Record Holders (incorporated by
reference to Exhibit 99.3 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.4
|
Form
of Letter to Nominee Holders Whose Clients are Beneficial Holders
(incorporated by reference to Exhibit 99.4 to Amendment No. 2 to the
Company’s Registration Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.5
|
Form
of Letter to Clients of Nominee Holders (incorporated by reference to
Exhibit 99.5 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.6
|
Form
of Nominee Holder Certification (incorporated by reference to
Exhibit 99.6 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.7
|
Form
of Beneficial Owner Election (incorporated by
reference to Exhibit 99.7 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1/A, filed on September 2,
2010).
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
|
(ii)
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or any decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low end or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement;
|
(iii)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement.
|
(i)
|
If
the registrant is relying on Rule 430B (Section 230.430B of this
chapter):
|
(A)
|
Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement;
and
|
(B)
|
Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x)
for the purpose of providing information required by section 10(a) of the
Securities Act shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective
date.
|
(ii)
|
If
the registrant is subject to Rule 430C, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of
and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of
the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that
was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to
such date of first use.
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and
|
(iv)
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
MAM
SOFTWARE GROUP, INC.
|
||
A
Delaware corporation, Registrant
|
||
By:
|
/s/ MICHAEL JAMIESON
|
|
MICHAEL
JAMIESON
|
||
Chief
Executive Officer
|
||
(Principal
Executive Officer)
|
||
By:
|
/s/ CHARLES F. TRAPP
|
|
CHARLES
F. TRAPP
|
||
Chief
Financial Officer
|
||
(Principal
Accounting Officer)
|
Signature
|
Title
|
Date
|
||
/s/ Michael Jamieson
|
Chief Executive Officer and Director
|
September
14, 2010
|
||
Michael
Jamieson
|
(Principal
Executive Officer)
|
|||
/s/ Charles F. Trapp
|
Chief
Financial Officer
|
September
14, 2010
|
||
Charles
F. Trapp
|
(Principal
Accounting Officer)
|
|||
/s/ Dwight B. Mamanteo
|
Director
|
September
14, 2010
|
||
Dwight
B. Mamanteo
|
||||
/s/ Marcus Wohlrab
|
Director
|
September
14, 2010
|
||
Marcus
Wohlrab
|
||||
/s/ Frederick Wasserman
|
Director
|
September
14, 2010
|
||
Frederick
Wasserman
|
||||
/s/ Gerald M. Czarnecki
|
Chairman
|
September
14, 2010
|
||
Gerald
M. Czarnecki
|
||||
/s/ W. Austin Lewis IV
|
Director
|
September
14, 2010
|
||
W.
Austin Lewis IV
|
Exhibit No.
|
Description of Exhibit
|
|
3(i)(a)
|
Certificate
of Incorporation of Aftersoft Group, Inc., as amended (incorporated by
reference to Exhibit 3(i) to the Company’s Registration Statement on Form
S-1/A filed on July 15, 2008).
|
|
3(i)(b)
|
Certificate
of Amendment of Certificate of Incorporation of Aftersoft Group, Inc.,
dated May 5, 2010 (incorporated by reference to Exhibit 3(i)(b) to the
Company’s Registration Statement on Form S-1/A filed on July 14,
2010).
|
|
3(ii)
|
By
laws (incorporated by reference to Exhibit 3(ii) to the Company’s
Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
4.1
|
Form
of Certificate of Common Stock (incorporated by reference to Exhibit 4.1
to the Company’s Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
4.2
|
Form of Subscription Rights Certificate (incorporated by reference to Exhibit 4.2 to Amendment No. 2 to the Company’s Registration Statement on Form S-1/A, filed on September 2, 2010). | |
5.1
|
Opinion
of Gersten Savage LLP regarding the legality of the securities being
registered.
|
|
10.1
|
Share
Sale Agreement relating to EXP Dealer Software Limited dated August 4,
2006 among Auto Data Network, Inc., Aftersoft Group, Inc. and Aftersoft
Dealer Software Limited (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on August 31,
2006).
|
|
10.2
|
Share
Sale Agreement relating to Dealer Software and Services Limited dated
February 1, 2007 between Aftersoft Group, Inc. and Auto Data Network, Inc.
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report
on Form 8-K filed on February 7, 2007).
|
|
10.3
|
Form
of Securities Purchase Agreement (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.4
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.5
|
Form
of Registration Rights Agreement (incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.6
|
Settlement
and Release Agreement between ASNA and Aidan J. McKenna (incorporated by
reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
filed August 6, 2007).
|
|
10.7
|
Share
Sale Agreement, dated November 12, 2007, between EU Web Services, Ltd., as
Purchaser, Aftersoft Group, Inc., as Vendor, and EXP Dealer Software Ltd.
(incorporated by reference to Exhibit 99.1 of the Company’s Current Report
on Form 8-K filed November 16,
2007)
|
10.8
|
Revolving
Credit and Term Loan Agreement dated as of December 21, 2007, by and
between ComVest Capital LLC, as Lender, and Aftersoft Group, Inc., as
Borrower (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed December 31, 2007).
|
|
10.9
|
Revolving
Credit Note dated December 21, 2007 in the principal amount of $1,000,000
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.10
|
Convertible
Term Note, dated December 21, 2007 in the principal amount of $5,000,000
(incorporated by reference to Exhibit 10.3 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.11
|
Collateral
Agreement dated as of December 21, 2007 by and among Aftersoft Group,
Inc., Aftersoft Network, N.A. Inc., MAM Software Ltd., Aftersoft Group
(UK) Ltd., AFS Warehouse Distribution Management, Inc., AFS Tire
Management, Inc. and AFS Autoservice Inc., and ComVest Capital LLC
(incorporated by reference to Exhibit 10.4 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.12
|
Guaranty
Agreement dated December 21, 2007 by Aftersoft Network, N.A. Inc., MAM
Software Ltd., Aftersoft Group (UK) Ltd., AFS Warehouse Distribution
Management, Inc., AFS Tire Management, Inc. and AFS Autoservice Inc., in
favor of ComVest Capital LLC (incorporated by reference to Exhibit 10.5 of
the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.13
|
Form
of Validity Guaranty (incorporated by reference to Exhibit 10.6 of the
Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.14
|
Warrant,
dated as of December 21, 2007, to Purchase 1,000,000 Shares of Common
Stock of Aftersoft Group, Inc. (incorporated by reference to Exhibit 10.7
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.15
|
Warrant,
dated as of December 21, 2007, to purchase 2,000,000 Shares of Common
Stock of Aftersoft Group, Inc. (incorporated by reference to Exhibit 10.8
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.16
|
Warrant,
dated as of December 21, 2007, to purchase 2,083,333 Shares of Common
Stock of Aftersoft Group, Inc. (incorporated by reference to Exhibit 10.9
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.17
|
Registration
Rights Agreement dated as of December 21, 2007 by Aftersoft Group, Inc.
for the benefit of the holders (incorporated by reference to Exhibit 10.10
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.18
|
2007
Long-Term Stock Incentive Plan (incorporated by reference to Exhibit D of
the Company’s revised Definitive Proxy Statement filed on May 19,
2008).
|
|
10.19
|
Employment
Agreement dated as of December 1, 2008 between the Company and Ian Warwick
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K filed December 5, 2008).
|
|
10.20
|
Employment
Agreement dated as of December 1, 2008 between the Company and Charles F.
Trapp (incorporated by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K filed December 5,
2008).
|
10.21
|
Employment
Agreement dated as of December 1, 2008 between the Company and Simon
Chadwick (incorporated by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K filed December 5, 2008).
|
|
10.22
|
May
15, 2008 Waiver and Amendment (incorporated by reference to Exhibit 10.1
of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.23
|
September
23, 2008 Waiver and Amendment (incorporated herein by reference to Exhibit
10.2 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.24
|
February
10, 2009 Waiver and Amendment (incorporated herein by reference to Exhibit
10.3 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.25
|
Consulting
Agreement with Commonwealth Associates LP dated June 3,
2008.
|
10.26
|
Employment
Agreement effective as of July 1, 2010 between the Company and Michael
Jamieson (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed on July 21, 2010)
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|
10.27
|
Fiscal
Year 2011 Formal Bonus Plan effective as of July 1, 2010 between the
Company and Michael Jamieson (incorporated by reference to Exhibit 10.2 of
the Company’s Current Report on Form 8-K filed on July 21,
2010)
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|
10.28
|
Employment
Agreement effective as of July 1, 2010 between the Company and Charles F.
Trapp (incorporated by reference to Exhibit 10.3 of the Company’s Current
Report on Form 8-K filed on July 21, 2010)
|
|
10.29
|
Fiscal
Year 2011 Formal Bonus Plan effective as of July 1, 2010 between the
Company and Charles F. Trapp (incorporated by reference to Exhibit 10.4 of
the Company’s Current Report on Form 8-K filed on July 21,
2010)
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21
|
List
of subsidiaries (incorporated by reference to Exhibit 21 to the Company’s
Registration Statement on Form S-1/A filed on July 15,
2008).
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|
23.1
|
Consent
of KMJ Corbin & Company LLP.
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|
23.2
|
Consent
of Gersten Savage LLP (See Exhibit
5.1).
|
99.1
|
Form
of Instruction for Use of Subscription Right Certificate (incorporated by
reference to Exhibit 99.1 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1/A, filed on September 2,
2010).
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|
99.2
|
Form
of Notice of Guaranteed Delivery (incorporated by reference to
Exhibit 99.2 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.3
|
Form
of Letter to Stockholders who are Record Holders (incorporated by
reference to Exhibit 99.3 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.4
|
Form
of Letter to Nominee Holders Whose Clients are Beneficial Holders
(incorporated by reference to Exhibit 99.4 to Amendment No. 2 to the
Company’s Registration Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.5
|
Form
of Letter to Clients of Nominee Holders (incorporated by reference to
Exhibit 99.5 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1/A, filed on September 2,
2010).
|
|
99.6
|
Form
of Nominee Holder Certification (incorporated by reference to
Exhibit 99.6 to Amendment No. 2 to the Company’s Registration
Statement on Form S-1/A, filed on September 2,
2010).
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99.7
|
Form
of Beneficial Owner Election (incorporated by
reference to Exhibit 99.7 to Amendment No. 2 to the Company’s
Registration Statement on Form S-1/A, filed on September 2,
2010).
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