| Condensed Balance Sheet |
Condensed Consolidated Balance Sheet
as of June 30, 2017 (Unaudited)
(in thousands, except par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
Guarantor Subsidiaries |
|
Non-Guarantor Subsidiaries |
|
Consolidated Total |
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
254 |
|
|
$ |
5,962 |
|
|
$ |
86 |
|
|
$ |
6,302 |
|
Restricted cash |
|
156 |
|
|
175 |
|
|
— |
|
|
331 |
|
Accounts receivable, net of allowance of $671 |
|
— |
|
|
19,121 |
|
|
1,015 |
|
|
20,136 |
|
Deposits |
|
— |
|
|
121 |
|
|
— |
|
|
121 |
|
Prepaid expenses and other current assets |
|
333 |
|
|
245 |
|
|
4 |
|
|
582 |
|
Total current assets |
|
743 |
|
|
25,624 |
|
|
1,105 |
|
|
27,472 |
|
Property and equipment, net |
|
58 |
|
|
2,378 |
|
|
17 |
|
|
2,453 |
|
Deferred tax assets |
|
352 |
|
|
— |
|
|
— |
|
|
352 |
|
Intangible assets, net |
|
— |
|
|
2,270 |
|
|
1,705 |
|
|
3,975 |
|
Goodwill |
|
— |
|
|
70,377 |
|
|
6,244 |
|
|
76,621 |
|
TOTAL ASSETS |
|
$ |
1,153 |
|
|
$ |
100,649 |
|
|
$ |
9,071 |
|
|
$ |
110,873 |
|
INTERCOMPANY |
|
|
|
|
|
|
|
|
Intercompany payable/receivable, net |
|
124,468 |
|
|
(108,411 |
) |
|
(16,057 |
) |
|
— |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,259 |
|
|
$ |
18,770 |
|
|
$ |
234 |
|
|
$ |
20,263 |
|
Accrued license fees and revenue share |
|
— |
|
|
9,761 |
|
|
191 |
|
|
9,952 |
|
Accrued compensation |
|
34 |
|
|
1,233 |
|
|
— |
|
|
1,267 |
|
Short-term debt, net of debt issuance costs and discounts of $307 |
|
1,943 |
|
|
— |
|
|
— |
|
|
1,943 |
|
Other current liabilities |
|
1,248 |
|
|
525 |
|
|
— |
|
|
1,773 |
|
Total current liabilities |
|
4,484 |
|
|
30,289 |
|
|
425 |
|
|
35,198 |
|
Convertible notes, net of debt issuance costs and discounts of $5,975 |
|
10,025 |
|
|
— |
|
|
— |
|
|
10,025 |
|
Convertible note embedded derivative liability |
|
4,526 |
|
|
— |
|
|
— |
|
|
4,526 |
|
Warrant liability |
|
1,540 |
|
|
— |
|
|
— |
|
|
1,540 |
|
Other non-current liabilities |
|
770 |
|
|
79 |
|
|
— |
|
|
849 |
|
Total liabilities |
|
21,345 |
|
|
30,368 |
|
|
425 |
|
|
52,138 |
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
|
|
|
|
|
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1,000) |
|
100 |
|
|
— |
|
|
— |
|
|
100 |
|
Common stock |
|
|
|
|
|
|
|
|
$0.0001 par value: 200,000,000 shares authorized; 67,342,084 issued and 66,607,628 outstanding at June 30, 2017. |
|
(28 |
) |
|
— |
|
|
36 |
|
|
8 |
|
Additional paid-in capital |
|
300,453 |
|
|
— |
|
|
— |
|
|
300,453 |
|
Treasury stock (754,599 shares at June 30, 2017) |
|
(71 |
) |
|
— |
|
|
— |
|
|
(71 |
) |
Accumulated other comprehensive loss |
|
— |
|
|
(1,709 |
) |
|
1,380 |
|
|
(329 |
) |
Accumulated deficit |
|
(196,099 |
) |
|
(37,347 |
) |
|
(7,980 |
) |
|
(241,426 |
) |
Total stockholders' equity |
|
104,355 |
|
|
(39,056 |
) |
|
(6,564 |
) |
|
58,735 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
125,700 |
|
|
$ |
(8,688 |
) |
|
$ |
(6,139 |
) |
|
$ |
110,873 |
|
Condensed Consolidated Balance Sheet
as of March 31, 2017 (Unaudited)
(in thousands, except par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
Guarantor Subsidiaries |
|
Non-Guarantor Subsidiaries |
|
Consolidated Total |
ASSETS |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
258 |
|
|
$ |
5,333 |
|
|
$ |
558 |
|
|
$ |
6,149 |
|
Restricted cash |
|
156 |
|
|
175 |
|
|
— |
|
|
331 |
|
Accounts receivable, net of allowance of $597 |
|
— |
|
|
15,740 |
|
|
814 |
|
|
16,554 |
|
Deposits |
|
— |
|
|
121 |
|
|
— |
|
|
121 |
|
Prepaid expenses and other current assets |
|
282 |
|
|
226 |
|
|
2 |
|
|
510 |
|
Total current assets |
|
696 |
|
|
21,595 |
|
|
1,374 |
|
|
23,665 |
|
Property and equipment, net |
|
64 |
|
|
2,296 |
|
|
17 |
|
|
2,377 |
|
Deferred tax assets |
|
352 |
|
|
— |
|
|
— |
|
|
352 |
|
Intangible assets, net |
|
— |
|
|
2,647 |
|
|
1,918 |
|
|
4,565 |
|
Goodwill |
|
— |
|
|
70,377 |
|
|
6,244 |
|
|
76,621 |
|
TOTAL ASSETS |
|
$ |
1,112 |
|
|
$ |
96,915 |
|
|
$ |
9,553 |
|
|
$ |
107,580 |
|
INTERCOMPANY |
|
|
|
|
|
|
|
|
Intercompany payable/receivable, net |
|
123,800 |
|
|
(107,348 |
) |
|
(16,452 |
) |
|
— |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,023 |
|
|
$ |
18,697 |
|
|
$ |
148 |
|
|
$ |
19,868 |
|
Accrued license fees and revenue share |
|
— |
|
|
8,312 |
|
|
217 |
|
|
8,529 |
|
Accrued compensation |
|
32 |
|
|
1,041 |
|
|
— |
|
|
1,073 |
|
Other current liabilities |
|
794 |
|
|
510 |
|
|
— |
|
|
1,304 |
|
Total current liabilities |
|
1,849 |
|
|
28,560 |
|
|
365 |
|
|
30,774 |
|
Convertible notes, net of debt issuance costs and discounts of $6,315 |
|
9,685 |
|
|
— |
|
|
— |
|
|
9,685 |
|
Convertible note embedded derivative liability |
|
3,218 |
|
|
— |
|
|
— |
|
|
3,218 |
|
Warrant liability |
|
1,076 |
|
|
— |
|
|
— |
|
|
1,076 |
|
Other non-current liabilities |
|
695 |
|
|
87 |
|
|
— |
|
|
782 |
|
Total liabilities |
|
16,523 |
|
|
28,647 |
|
|
365 |
|
|
45,535 |
|
Stockholders' equity |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
|
|
|
|
|
Series A convertible preferred stock at $0.0001 par value; 2,000,000 shares authorized, 100,000 issued and outstanding (liquidation preference of $1,000) |
|
100 |
|
|
— |
|
|
— |
|
|
100 |
|
Common stock |
|
|
|
|
|
|
|
|
$0.0001 par value: 200,000,000 shares authorized; 67,329,262 issued and 66,594,806 outstanding at March 31, 2017 |
|
8 |
|
|
— |
|
|
— |
|
|
8 |
|
Additional paid-in capital |
|
299,580 |
|
|
— |
|
|
— |
|
|
299,580 |
|
Treasury stock (754,599 shares at March 31, 2017) |
|
(71 |
) |
|
— |
|
|
— |
|
|
(71 |
) |
Accumulated other comprehensive loss |
|
— |
|
|
(1,704 |
) |
|
1,383 |
|
|
(321 |
) |
Accumulated deficit |
|
(191,228 |
) |
|
(37,376 |
) |
|
(8,647 |
) |
|
(237,251 |
) |
Total stockholders' equity |
|
108,389 |
|
|
(39,080 |
) |
|
(7,264 |
) |
|
62,045 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
124,912 |
|
|
$ |
(10,433 |
) |
|
$ |
(6,899 |
) |
|
$ |
107,580 |
|
|
| Condensed Income Statement |
Consolidated Statement of Operations and Comprehensive Loss
for the three months ended June 30, 2017 (Unaudited)
(in thousands, except par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
Guarantor Subsidiaries |
|
Non-Guarantor Subsidiaries |
|
Elimination |
|
Consolidated Total |
Net revenues |
|
$ |
— |
|
|
$ |
37,937 |
|
|
$ |
347 |
|
|
$ |
(12,164 |
) |
|
$ |
26,120 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
License fees and revenue share |
|
— |
|
|
30,869 |
|
|
176 |
|
|
(12,164 |
) |
|
18,881 |
|
Other direct cost of revenues |
|
— |
|
|
409 |
|
|
214 |
|
|
— |
|
|
623 |
|
Total cost of revenues |
|
— |
|
|
31,278 |
|
|
390 |
|
|
(12,164 |
) |
|
19,504 |
|
Gross profit |
|
— |
|
|
6,659 |
|
|
(43 |
) |
|
— |
|
|
6,616 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Product development |
|
5 |
|
|
2,741 |
|
|
12 |
|
|
— |
|
|
2,758 |
|
Sales and marketing |
|
102 |
|
|
1,403 |
|
|
53 |
|
|
— |
|
|
1,558 |
|
General and administrative |
|
2,325 |
|
|
1,425 |
|
|
74 |
|
|
— |
|
|
3,824 |
|
Total operating expenses |
|
2,432 |
|
|
5,569 |
|
|
139 |
|
|
— |
|
|
8,140 |
|
Income / (loss) from operations |
|
(2,432 |
) |
|
1,090 |
|
|
(182 |
) |
|
— |
|
|
(1,524 |
) |
Interest and other income / (expense), net |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
(710 |
) |
|
3 |
|
|
— |
|
|
— |
|
|
(707 |
) |
Foreign exchange transaction loss |
|
— |
|
|
(144 |
) |
|
— |
|
|
— |
|
|
(144 |
) |
Change in fair value of convertible note embedded derivative liability |
|
(1,308 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(1,308 |
) |
Change in fair value of warrant liability |
|
(464 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(464 |
) |
Other income |
|
3 |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
Total interest and other income / (expense), net |
|
(2,479 |
) |
|
(141 |
) |
|
— |
|
|
— |
|
|
(2,620 |
) |
Income / (loss) from operations before income taxes |
|
(4,911 |
) |
|
949 |
|
|
(182 |
) |
|
— |
|
|
(4,144 |
) |
Income tax provision |
|
31 |
|
|
— |
|
|
— |
|
|
— |
|
|
31 |
|
Net income / (loss) |
|
$ |
(4,942 |
) |
|
$ |
949 |
|
|
$ |
(182 |
) |
|
$ |
— |
|
|
$ |
(4,175 |
) |
Other comprehensive income / (loss) |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
— |
|
|
(224 |
) |
|
216 |
|
|
— |
|
|
(8 |
) |
Comprehensive income / (loss) |
|
$ |
(4,942 |
) |
|
$ |
725 |
|
|
$ |
34 |
|
|
$ |
— |
|
|
$ |
(4,183 |
) |
Consolidated Statement of Operations and Comprehensive Loss
for the three months ended June 30, 2016 (Unaudited)
(in thousands, except par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
Guarantor Subsidiaries |
|
Non-Guarantor Subsidiaries |
|
Elimination |
|
Consolidated Total |
Net revenues |
|
$ |
— |
|
|
$ |
29,604 |
|
|
$ |
118 |
|
|
$ |
(5,683 |
) |
|
$ |
24,039 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
License fees and revenue share |
|
— |
|
|
24,877 |
|
|
30 |
|
|
(5,683 |
) |
|
19,224 |
|
Other direct cost of revenues |
|
— |
|
|
1,805 |
|
|
75 |
|
|
— |
|
|
1,880 |
|
Total cost of revenues |
|
— |
|
|
26,682 |
|
|
105 |
|
|
(5,683 |
) |
|
21,104 |
|
Gross profit |
|
— |
|
|
2,922 |
|
|
13 |
|
|
— |
|
|
2,935 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Product development |
|
— |
|
|
2,809 |
|
|
26 |
|
|
— |
|
|
2,835 |
|
Sales and marketing |
|
41 |
|
|
1,429 |
|
|
(26 |
) |
|
— |
|
|
1,444 |
|
General and administrative |
|
4,012 |
|
|
1,395 |
|
|
(302 |
) |
|
— |
|
|
5,105 |
|
Total operating expenses |
|
4,053 |
|
|
5,633 |
|
|
(302 |
) |
|
— |
|
|
9,384 |
|
Loss from operations |
|
(4,053 |
) |
|
(2,711 |
) |
|
315 |
|
|
— |
|
|
(6,449 |
) |
Interest and other income / (expense), net |
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
— |
|
|
(682 |
) |
|
— |
|
|
— |
|
|
(682 |
) |
Foreign exchange transaction loss |
|
— |
|
|
(2 |
) |
|
(1 |
) |
|
— |
|
|
(3 |
) |
Other income |
|
18 |
|
|
— |
|
|
— |
|
|
— |
|
|
18 |
|
Total interest and other income / (expense), net |
|
18 |
|
|
(684 |
) |
|
(1 |
) |
|
— |
|
|
(667 |
) |
Income / (loss) from operations before income taxes |
|
(4,035 |
) |
|
(3,395 |
) |
|
314 |
|
|
— |
|
|
(7,116 |
) |
Income tax provision |
|
296 |
|
|
— |
|
|
— |
|
|
— |
|
|
296 |
|
Net income / (loss) |
|
$ |
(4,331 |
) |
|
$ |
(3,395 |
) |
|
$ |
314 |
|
|
$ |
— |
|
|
$ |
(7,412 |
) |
Other comprehensive income / (loss) |
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
— |
|
|
27 |
|
|
— |
|
|
— |
|
|
27 |
|
Comprehensive income / (loss) |
|
$ |
(4,331 |
) |
|
$ |
(3,368 |
) |
|
$ |
314 |
|
|
$ |
— |
|
|
$ |
(7,385 |
) |
|
| Condensed Cash Flow Statement |
Condensed Consolidated Statement of Cash Flows
for the three months ended June 30, 2017 (Unaudited)
(in thousands, except par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
Guarantor Subsidiaries |
|
Non-Guarantor Subsidiaries |
|
Consolidated Total |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,942 |
) |
|
$ |
949 |
|
|
$ |
(182 |
) |
|
$ |
(4,175 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
34 |
|
|
667 |
|
|
187 |
|
|
888 |
|
Change in allowance for doubtful accounts |
|
— |
|
|
75 |
|
|
— |
|
|
75 |
|
Amortization of debt discount and debt issuance costs |
|
353 |
|
|
— |
|
|
— |
|
|
353 |
|
Accrued interest |
|
344 |
|
|
— |
|
|
— |
|
|
344 |
|
Stock-based compensation |
|
788 |
|
|
— |
|
|
— |
|
|
788 |
|
Restricted shares and warrants compensation for services rendered
|
|
76 |
|
|
— |
|
|
— |
|
|
76 |
|
Change in fair value of convertible note embedded derivative liability |
|
1,308 |
|
|
— |
|
|
— |
|
|
1,308 |
|
Change in fair value of warrant liability |
|
464 |
|
|
— |
|
|
— |
|
|
464 |
|
(Increase) / decrease in assets: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
— |
|
|
(3,456 |
) |
|
(200 |
) |
|
(3,656 |
) |
Prepaid expenses and other current assets |
|
(52 |
) |
|
(18 |
) |
|
(2 |
) |
|
(72 |
) |
Increase / (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
236 |
|
|
73 |
|
|
86 |
|
|
395 |
|
Accrued license fees and revenue share |
|
— |
|
|
1,449 |
|
|
(26 |
) |
|
1,423 |
|
Accrued compensation |
|
— |
|
|
194 |
|
|
— |
|
|
194 |
|
Other current liabilities |
|
110 |
|
|
17 |
|
|
(3 |
) |
|
124 |
|
Other non-current liabilities |
|
67 |
|
|
— |
|
|
— |
|
|
67 |
|
Intercompany movement of cash |
|
(729 |
) |
|
1,061 |
|
|
(332 |
) |
|
— |
|
Net cash used in operating activities |
|
(1,943 |
) |
|
1,011 |
|
|
(472 |
) |
|
(1,404 |
) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
— |
|
|
(374 |
) |
|
— |
|
|
(374 |
) |
Net cash used in investing activities |
|
— |
|
|
(374 |
) |
|
— |
|
|
(374 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from short-term borrowings |
|
2,250 |
|
|
— |
|
|
— |
|
|
2,250 |
|
Payment of debt issuance costs |
|
(320 |
) |
|
— |
|
|
— |
|
|
(320 |
) |
Options exercised |
|
9 |
|
|
— |
|
|
— |
|
|
9 |
|
Net cash provided by (used in) financing activities |
|
1,939 |
|
|
— |
|
|
— |
|
|
1,939 |
|
Effect of exchange rate changes on cash |
|
— |
|
|
(8 |
) |
|
— |
|
|
(8 |
) |
Net change in cash |
|
(4 |
) |
|
629 |
|
|
(472 |
) |
|
153 |
|
Cash, beginning of period |
|
258 |
|
|
5,333 |
|
|
558 |
|
|
6,149 |
|
Cash, end of period |
|
$ |
254 |
|
|
$ |
5,962 |
|
|
$ |
86 |
|
|
$ |
6,302 |
|
Condensed Consolidated Statement of Cash Flows
for the three months ended June 30, 2016 (Unaudited)
(in thousands, except par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent |
|
Guarantor Subsidiaries |
|
Non-Guarantor Subsidiaries |
|
Consolidated Total |
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(4,331 |
) |
|
$ |
(3,395 |
) |
|
$ |
314 |
|
|
$ |
(7,412 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
2 |
|
|
1,802 |
|
|
290 |
|
|
2,094 |
|
Change in allowance for doubtful accounts |
|
— |
|
|
(82 |
) |
|
(27 |
) |
|
(109 |
) |
Amortization of debt discount and debt issuance costs |
|
— |
|
|
342 |
|
|
— |
|
|
342 |
|
Accrued interest |
|
— |
|
|
1 |
|
|
— |
|
|
1 |
|
Stock-based compensation |
|
1,223 |
|
|
— |
|
|
— |
|
|
1,223 |
|
Restricted shares and warrants compensation for services rendered
|
|
80 |
|
|
— |
|
|
— |
|
|
80 |
|
(Increase) / decrease in assets: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
22 |
|
|
1,952 |
|
|
6 |
|
|
1,980 |
|
Deposits |
|
— |
|
|
69 |
|
|
(3 |
) |
|
66 |
|
Prepaid expenses and other current assets |
|
16 |
|
|
68 |
|
|
5 |
|
|
89 |
|
Increase / (decrease) in liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
(190 |
) |
|
37 |
|
|
(16 |
) |
|
(169 |
) |
Accrued license fees and revenue share |
|
— |
|
|
401 |
|
|
18 |
|
|
419 |
|
Accrued compensation |
|
699 |
|
|
(674 |
) |
|
(97 |
) |
|
(72 |
) |
Other current liabilities |
|
109 |
|
|
718 |
|
|
(455 |
) |
|
372 |
|
Intercompany movement of cash |
|
1,286 |
|
|
(1,351 |
) |
|
65 |
|
|
— |
|
Net cash used in operating activities |
|
(1,084 |
) |
|
(112 |
) |
|
100 |
|
|
(1,096 |
) |
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
— |
|
|
(472 |
) |
|
— |
|
|
(472 |
) |
Net cash used in investing activities |
|
— |
|
|
(472 |
) |
|
— |
|
|
(472 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Payment of debt issuance costs |
|
— |
|
|
(280 |
) |
|
— |
|
|
(280 |
) |
Options exercised |
|
2 |
|
|
— |
|
|
— |
|
|
2 |
|
Net cash provided by (used in) financing activities |
|
2 |
|
|
(280 |
) |
|
— |
|
|
(278 |
) |
Effect of exchange rate changes on cash |
|
— |
|
|
27 |
|
|
— |
|
|
27 |
|
Net change in cash |
|
(1,082 |
) |
|
(837 |
) |
|
100 |
|
|
(1,819 |
) |
Cash, beginning of period |
|
6,712 |
|
|
4,470 |
|
|
49 |
|
|
11,231 |
|
Cash, end of period |
|
$ |
5,630 |
|
|
$ |
3,633 |
|
|
$ |
149 |
|
|
$ |
9,412 |
|
|