UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K/A
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Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended December 31, 2009.
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the Transition period from _____________ to ____________.
Commission File Number: 0-29020
ViewCast.com, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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75-2528700
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(State or other jurisdiction of incorporation or
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(I.R.S. Employer Identification No.)
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organization)
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3701 W. Plano Parkway, Suite 300, Plano, TX
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75075
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(Address of principal executive offices)
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(Zip Code)
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972-488-7200
Registrant’s telephone number, including area code
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common
Stock, $.0001 par value
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes
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No
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
Yes
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No
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such period that the registrant was required to submit and post such files). Yes
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes
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No
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The aggregate market value of the common stock held by non-affiliates of the registrant as of June
30, 2009 was $7,277,238.
As of March 15, 2010, there were 36,011,868 shares of the registrant’s common stock (par value
$0.0001) outstanding.
Documents incorporated by reference: None.
PART I
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this Annual Report on Form 10-K included under “Business”,
“Management’s Discussion and Analysis of Financial Condition and Result of Operation”, and
elsewhere in the Report constitute forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include statements regarding ViewCast’s expectations, beliefs,
hopes, intentions or strategies regarding the future. These statements involve known and unknown
risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels
of activity, performance, or achievements expressed or implied by such forward-looking statements
to differ from expected results. Such factors include, but are not limited to, product demand and
market acceptance risks, the impact of competitive products and pricing, product development,
commercialization and technological difficulties, capacity and supply constraints or difficulties,
general business and economic conditions, the availability of sufficient working capital, the
ability to service our debt, the effect of our accounting polices and other risks detailed in this
Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission.
In some cases, you can identify forward-looking statements by terminology such as “may”,
“will”, “expects”, “should”, “anticipates”, “believes”, “estimates”, “predicts”, “plans”,
“potential”, “intends” or “continue” or the negative of such terms or other comparable terminology.
Although we believe the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.
We are under no duty to update any of the forward-looking statements after the date of this report
to conform such statements to actual results.
References in this Report to “ViewCast,” “the Company,” “we,” “us,” and “our” refer to
ViewCast.com, Inc. and its subsidiaries.
Item 1. Business
Overview
ViewCast.com, Inc., doing business as ViewCast Corporation (“ViewCast”), develops
industry-leading hardware and software for the capture, management, transformation and delivery of
digital media over IP and mobile networks. ViewCast’s solutions simplify the complex workflows
required for these tasks, allowing broadcasters, businesses, and governments to reach and expand
their use and distribution of their digital media easily and effectively. ViewCast’s Niagara
®
streaming appliances, Osprey
®
video capture cards, and ViewCast Media Platform (VMp™) software
suite provide the highly reliable technology required to deliver the multi-platform experiences
driving today’s digital media market. ViewCast markets and sells its products and professional
services worldwide directly to end-users or through indirect channels including original equipment
manufacturers (“OEMs”), value-added resellers (“VARs”), resellers, distributors and computer system
integrators. ViewCast is focused on growth by leveraging the digital media market expansion and
our product solutions to capitalize on sales opportunities. We believe that emphasis on revenue
and market share growth will enable us to realize long-term profitability and stockholder value.
On March 13, 2009, ViewCast completed the purchase of certain assets from Ancept Media Server,
LLC (the “Ancept Assets”) related to the development and licensing of software products that
provide the management of the life cycle phases of digital media pursuant to the terms of the Asset
Purchase Agreement dated March 5, 2009, as amended, by and between ViewCast and Ancept Media
Server, LLC. ViewCast’s wholly-owned subsidiary, ViewCast Online Solutions, Inc., was renamed
Ancept Corporation and operates this business. The lead software product, rebranded as VMp
Production and the core of VMp, has been an established digital asset management (“DAM”) solution
capable of supporting the needs of large enterprises, while remaining flexible and affordable to
serve the needs of small to medium businesses. Fortune 1000 companies, educators, small
businesses and public sector organizations have chosen Ancept to help meet their media production,
management and distribution needs. The combined company has an expanded global business presence
and offers a complete set of solutions for the transformation, management and delivery of live and
on-demand video content to broadband and mobile networks.
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ViewCast was incorporated in Delaware in February 1994 as MultiMedia Access Corporation. We
changed our name to ViewCast.com, Inc. on April 8, 1999. ViewCast has four wholly-owned
subsidiaries: VideoWare, Inc., Osprey Technologies, Inc., Ancept Corporation previously known as
ViewCast Online Solutions, Inc. and ViewCast Technology Services Corporation, all Delaware
corporations. Our principal executive offices are located at 3701 W. Plano Parkway, Suite 300,
Plano, Texas 75075. Our Internet address is www.viewcast.com.
Our common stock trades on the Over-the-Counter Bulletin Board (“OTC BB”) under the symbol
VCST-OB.
Market Background and Market Drivers
“The sum of all forms of video (TV, video on demand, Internet, and P2P) will account for over
91 percent of global consumer traffic by 2013.” (Cisco
®
Visual Networking Index -2009)
ViewCast has seen digital media move to the mainstream as a strategic business tool for
enterprises—including education and corporate enterprise, and consumer segments—while
advertising, media and entertainment look to capitalize on increased viewership over a variety of
devices. Customers are looking for solutions that will drive business value either directly or
indirectly. From a technology standpoint, the quality continues to improve due to increased
available bandwidth and more efficient encoding technologies. More importantly, customers have
learned how to increase profits by using the Internet as alternative distribution medium for their
content.
ViewCast believes its market opportunity is now expanded to approximately $1.4 billion based
on 2010 Frost & Sullivan reports regarding DAM and a portion of the encoding market, along with
management’s estimates. The DAM market alone will reach $853.7 million in revenues in 2010,
reflecting an anticipated compound average growth rate of 26 percent (2007-2013) as the market
continues to mature (also according to 2010 Frost & Sullivan reports). The rapid expansion of
these markets, especially toward high definition, more powerful and reliable performance, and
greater ease of use, has underscored the need for structured, secure and scalable digital asset and
media management solutions delivered comprehensively, from one trusted provider. We believe that
ViewCast can capably fill that role.
Market Drivers
We believe the following factors are driving the market for our digital media equipment and
management systems:
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Transition to digitized Internet Protocol (IP) distribution platform for information,
content and communication;
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Increase adoption of webcasting, streaming and video applications for business
efficiency;
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Increase in adoption of high-definition content demand drives the need for advanced
solutions;
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Proliferation of digital assets within media and entertainment, business, educational,
and government entities;
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Evolution of digital asset management with web content management creates increased
value for managing online presence;
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Increase in DAM technology within new markets such as advertising, publishing,
telecommunications and life sciences as new standards are adopted;
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Increase in advertising spend (TV vs. Web);
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The value proposition in terms of investment, efficiency, flexibility and speed
continues to increase demand on the enterprise side; and
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Rising adoption of mobile video worldwide is expected to drive the demand for efficient
video compression solutions and delivery solutions.
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How ViewCast Addresses the Market
ViewCast believes it is well positioned to address the expanding digital media market for the
following reasons:
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ViewCast develops industry-leading solutions for the
transformation, management and
delivery
of professional quality video over IP and mobile networks
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We
simplify the complex workflows
required for the Web-based streaming of news,
sports, music and other video content to computers and mobile devices
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We
empower
broadcasters, businesses and governments to repurpose their content,
reach new markets, and expand their audiences
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We provide the
highly reliable technology
required to deliver the
multi-platform experiences
driving today’s digital media market
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ViewCast has an expanded global business presence with a complete portfolio of solutions that
encompass live and on-demand video encoding, digital asset management and delivery solutions.
ViewCast Advantage
We believe we provide the following advantages:
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Proprietary designs and proven performance,
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Patent-pending technologies,
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Third-party integration capabilities,
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Established relationships with other industry leaders,
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Broad portfolio of solutions:
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Capture Cards, Appliances, Software,
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Strong brand and product awareness:
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Osprey Cards, Niagara Encoders, ViewCast Media Platform software,
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Solutions for multiple markets, and multiple applications,
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Reputation for reliable, advanced technology and design:
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Controlled engineering & manufacturing process.
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Corporate Growth and Value
ViewCast has become widely regarded as a leading global provider of high-quality digital media
communication products. As the global economy recovers and the market for our digital media
products continues to grow, we believe ViewCast’s goals of driving revenue growth, enhancing
stockholder value and providing a path to long-term profitability will regain momentum in 2010. We
intend to achieve our goals by leveraging the market’s expansion with our current and future
products internally developed or acquired to capitalize on sales opportunities. Specifically, our
ability to achieve our goals depends on the following:
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Rapidly Growing Market
. Media, enterprise, government, and network communication
sectors are adopting and allocating funds for digital media technologies;
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Profitability and Increasing Revenue.
ViewCast believes that a focus on revenue and
market share growth, both organically and through acquisition, will enable us to realize
long-term profitability and enhanced stockholder value;
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Strong Products and Brand Equity
. ViewCast is positioned for the market with well known
solutions that appeal to a broad range of industries and to continue investment in research
and development projects;
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Two-Pronged Sales Focus
. Well established worldwide indirect channels and large account
& OEM business development;
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Maintain Efficient Operations
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We have adjusted our expense levels and will continue to
monitor expenses during 2010 while investing in growth areas of sales, marketing, and
research and development; and
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Continue to Increase and Enhance Our Industry and Technology Relationships
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We have
established significant industry partnerships with leaders in the technology and video
industry. We intend to strengthen these partnerships and continue to establish new
partnerships to enhance endorsements, referrals, technology, product development, channel
distribution, and sales. We seek companies who can add valuable services, technology or
bundling opportunities to our product offerings with the potential of future
co-development, merger or acquisition by ViewCast.
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ViewCast Products and Services
The ViewCast solutions family includes:
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Osprey Video
®
line of capture cards,
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Niagara
®
line of video encoding systems and related SimulStream
®
and Niagara SCX
®
software,
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ViewCast Media Platform (VMp) DAM software suite including ViewCast Media Production,
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Professional services and support, and
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Other complementary products and technologies from leading providers.
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ViewCast solutions provide a bridge between digital assets and delivery networks. Our
customers seek to have their digital assets, including MS Office documents, PDF files and still
image files, in addition to audio and video media, processed in one or more of the following ways:
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Deliver (Live or on-demand) to users and devices on delivery networks, such as
enterprise, web, IPTV, digital signage, and mobile
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Osprey Video Products.
Since the inception of Internet streaming media, starting with
Progressive Networks (now RealNetworks
®
) in 1997, ViewCast Osprey Video has been a major player in
pioneering efforts of the streaming media industry. Throughout the streaming media market’s
emergence and high-rate growth, Osprey Video has maintained its position as an industry-leading
developer and manufacturer of digital media capture technology. Moreover, Osprey Video products
have enabled many companies to deliver on key applications like Internet TV, mobile streaming,
webcasting, and more recently, video signage.
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Designed for video acquisition/capture/streaming
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Award-winning capture cards for streaming from the first card for Web streaming to
professional-quality cards for Internet TV:
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Analog /Digital Audio & Video
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Standard & High Definition
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Composite, Component & SDI Video, Y/C, S-Video
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Balanced & Unbalanced Audio
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Niagara Streaming Systems and Software.
The ViewCast Niagara family of streaming media
encoders have been designed from the ground up to provide reliable, pre-configured, plug-and-play
solutions enabling the user to quickly encode and stream premium quality audio and video over the
Internet or corporate network. The Niagara systems are built upon the well known ViewCast Osprey
Video streaming capture boards. These systems include a mix of Osprey analog and digital capture
boards along with our remote encoder management software (Niagara SCX
®
) and streaming productivity
software (SimulStream
®
) resulting in a powerful, reliable, and cost-effective streaming media
platform.
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Complete systems designed for live video streaming:
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Acquire, transform, and deliver video content to IP and mobile networks
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Dedicated, embedded operating systems, optimized for video encoding
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Features Niagara SCX
®
and SimulStream
®
software technology:
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Stream a single video source in multiple formats, bitrates and resolutions —
simultaneously
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Configure & control encoding into multiple formats over the network through an
easy-to-use Web interface allowing scalability and remote access
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We believe our Niagara products offer unique advantages to application developers, integrators
and OEMs including extensive Software Developments Kits (“SDKs”). These streaming appliances
comply with the most popular industry video standards, and we provide expert support and
development staff to enable custom development of required applications.
ViewCast Media Platform (VMp) Software.
Since the asset acquisition from Ancept in March
2009, ViewCast has expanded its software solutions into DAM and workflow software solutions known
as VMp. ViewCast develops software solutions to manage and automate media, from production to
scheduling, editing, processing and content distribution. These solutions enable ViewCast’s
customers to save operating costs while scaling their media management applications and automating
complex workflows.
The available modules — VMp Live, VMp Portal and VMp Production — include comprehensive
support for live video sources and events as well as archived or on-demand content. The VMp
modules, as well as third-party applications, can access this functionality through a robust Web
services application programming interface (API).
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Comprehensive File Management
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Unlike other digital management solutions — the VMp software manages dozens of
audio and video formats, hundreds of image formats, Microsoft
®
Office docs and
Adobe
®
PDF files.
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Full-featured solution supports the needs of large enterprises, while remaining
flexible and affordable to serve the needs of small to medium businesses.
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Complete Life Cycle Management
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From ingest to delivery — the VMp software enables and automates content
production; manages distribution and publishing; controls access and usage of
content; significantly reduce costs.
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Includes live event management, which allows scheduling, recording and delivery
of live video from encoder and video sources on the network.
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VMp Production is the core module and has been an established DAM solution capable of
supporting the needs of large enterprises, while remaining flexible and affordable to serve the
needs of small to medium businesses. With
the VMp Live and VMp Portal modules and additional new features available in 2010, ViewCast’s
current and future customers will continue to benefit from their investment in the ViewCast Media
Platform. By adding ViewCast’s industry-leading Osprey and Niagara IP video encoding solutions, we
have created a wide-ranging framework available for building audiences, organizing workflows and
creating new revenue streams in today’s IP-centric digital media marketplace. We believe our
digital media management suite of software will be an increasingly significant factor in our 2010
sales growth and beyond.
Marketing and Sales
ViewCast serves a variety of markets including:
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Broadcasters and Narrowcasters,
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Federal, State, and Local Government,
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Small, Medium, and Large Enterprises,
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Mobile and Wireline Carriers,
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Education and Training,
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Retail and Consumer Package Goods,
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Content Delivery Networks,
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Digital Signage Integrators,
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Other industry verticals such as advertising, medical and insurance.
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ViewCast brings market synergies and customer advantages by providing comprehensive, robust
and proven digital media solutions built on leading-edge technologies. ViewCast has expanded its
scope and capabilities while broadening its market and bringing a comprehensive, integrated
solution to our customer base, ss highlighted below,
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Osprey and Niagara — best-in-class live encoding solutions for:
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Industry leading brands, proven solutions, Microsoft & Adobe partners and
significant customers
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ViewCast Media Platform (VMp) — best-in-class media management solutions for:
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Strong industry brand, robust and proven solutions, IBM partner and significant
customers
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VMp customers have access to a high-quality content ingest solution using Niagara
encoders:
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Integrated control via the VMp software modules
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Our solutions are globally marketed to media and entertainment, Internet, corporate,
financial, educational, security, healthcare, governmental and network enterprises. We also market
our products and services directly or via third-party distribution channels including, but not
limited to, OEMs, VARs, distributors, and system integrators. These relationships are
non-exclusive and typically require that these resellers participate in the marketing, installation
and technical support of our products.
Our product revenue has been well diversified among various end-users who purchase from our
direct and indirect channels. During 2009, two distributors generated more than 10% of our sales,
Jeff Burgess and Associates, Inc. (12.7%) and Graphics Distribution, Inc. (14.0%) due to general
increased sales volume and the movement of lower volume reseller sales to our distributors. In
addition, one of our OEM customers, Cisco Systems, Inc. generated 12.1% of our 2009 sales. We plan
to build upon our established customer base by expanding our distribution and sales force and
expanding our product market awareness and reach.
Our sales and marketing program utilizes direct business development and indirect reseller,
OEM and VAR channels that enhances our ability to cover domestic and international geographical
territories and market segments in an efficient and cost-effective manner. Under the terms of the
indirect channel program, an authorized reseller of ViewCast products must meet certain
qualifications regarding its business, personnel, product and market knowledge, and support and
service capabilities. Through this authorized reseller program, we support and enhance our
channels of distribution to encourage placement of ViewCast video products into the marketplace.
8
Production and Supply
We build our Osprey video products using contract manufacturers in the United States and Asia.
Our operations personnel in the Carrollton, Texas area are responsible for parts planning,
procurement, Niagara system assembly, software loading, final testing and inspection to quality
standards. We plan for most high-volume production to be handled through large OEMs or contract
manufacturers.
We have been and will continue to be dependent on third parties for the supply and
manufacturing of our subassemblies, components and electronic parts, including standard and
custom-designed components. We generally do not maintain supply agreements with such third parties
but instead purchase components and electronic parts pursuant to purchase orders in the ordinary
course of business. We are dependent on the ability of our third-party manufacturers and suppliers
to meet our design, performance and quality specifications.
Installation, Service and Maintenance
Most of our Osprey video card products and Niagara system products are customer installable.
For those customers who need assistance with Niagara products, we utilize our channels to install
and provide service. Further, we maintain an in-house technical support group to assist our
channels and customers as required which has been expanded in March 2009 with the addition of a
professional services group. The VMp software solution is typically installed and customized with
assistance from the ViewCast professional services group or authorized third party.
We offer limited warranties covering workmanship and materials, during which period our
resellers or ViewCast will replace parts or make repairs. We maintain an in-house staff of
engineering personnel and offer telephone support to assist resellers and end-users during normal
business hours. In addition, we enter into annual contracts with end-users to provide software
maintenance and support on our products.
Research and Development
We continue to focus our research and development activities on digital media applications,
process management and new features for expanded market opportunities. We will continue to make
investments in core video technology and processing techniques, focusing on how to best apply the
latest advancements in the industry into commercially viable products. In some cases, strategic
partnerships will be utilized to enhance our research and development, and potentially reduce
costs. During the 2008 and 2009 fiscal years we expended approximately $2.9 million and $3.0
million, respectively, in research and development activities; plus capitalized software
development costs of $0.2 million and $0.5 million, respectively. No significant portion of such
expenses was borne directly by our customers.
New products or feature enhancements are scheduled for launch in 2010 in the Osprey, Niagara
and VMp product families that will provide new capabilities and features for digital media
applications. We believe these products and services will be competitive and feature unique
capabilities. We will maintain integration efforts with third party application software and
hardware for our products and services.
Competition
The market for digital media software, systems and services is highly competitive and
characterized by the frequent introduction of new products and features based upon innovative
technologies. We compete with numerous well-established manufacturers and suppliers of video
streaming technologies, videoconferencing, networking, telecommunications, DAM and multimedia
products, certain of which dominate the existing network or video communications market for such
products. In addition, we are aware of others that are developing, and in some cases have
introduced, new products and services for digital media communications and management.
We are not aware of any direct competitors that compete in all of our digital media product
families and applications. However, among our direct competitors competing with one or more of our
products or applications are: VBrick and Digital Rapids. Electronics manufacturers may be sales
channels for our products but also actively
compete for business in this market.
9
Patents, Copyrights, Trademarks and Proprietary Information
We hold a U.S. patent covering certain aspects of compressed video and have two patents
pending covering certain aspects of a confidence monitor and system and a media encoder system.
Although we do not believe these patents or any other patent is essential to our business
operations, we may apply for additional patents relating to other aspects of our products. We also
rely on copyright laws to protect our software applications, which we consider proprietary.
We believe that product recognition is an important competitive factor and, accordingly, we
promote the ViewCast
®
, Osprey
®
, Niagara
®
, SimulStream
®
, Niagara GoStream
®
, Niagara SCX
®
, VMp™ and
Ancept™ names, among others, in connection with our marketing activities, and have applied for or
received trademark or service mark registration for such names. Our use of these marks and our
trade names may be subject to challenge by others, which, if successful, could have a material
adverse effect on our operations.
We also rely on confidentiality agreements with our directors, employees, consultants and
manufacturers and employ various methods to protect the source codes, concepts, ideas, proprietary
know-how and documentation of our proprietary technology. However, such methods may not afford us
complete protection, and there can be no assurance that others will not independently develop
similar know-how or obtain access to our know-how or software codes, concepts, ideas and
documentation. Furthermore, although we have and expect to continue to have confidentiality
agreements with our directors, employees, consultants, manufacturers, and appropriate vendors,
there can be no assurance that such arrangements will adequately protect our trade secrets.
We purchase certain components that are incorporated into our products from third-party
suppliers and rely on their assurances that such components do not infringe on the patents of
others. A successful claim against any components used in our products could affect our ability to
manufacture, supply and support our products. We use commercially reasonable efforts to ensure
third-party supplied components are non-infringing, but there can be no assurances against future
claims.
Government Regulation
We are subject to Federal Communications Commission regulations relating to electromagnetic
radiation from our products, which impose compliance burdens on us. In the event we redesign or
otherwise modify our products or complete the development of new products, we will be required to
comply with Federal Communications Commission regulations with respect to such products. Our
foreign markets require us to comply with additional regulatory requirements. Compliance with
environment laws, both domestic and foreign, may also precipitate changes in materials or processes
related to our products and packing materials and may cause us to be subject to additional
requirements for testing, certifications or disposal.
Employees
As of March 15, 2010, we had seventy-three (73) employees, three (3) of whom are in executive
positions, twenty (20) of whom are engaged in engineering, research and development, nineteen (19)
of whom are engaged in marketing and sales activities, fourteen (14) of whom are engaged in
operations, ten (10) of whom are providing support and professional services and seven (7) of whom
are in finance and administration. None of our employees are represented by a labor union. We
consider our employee relations to be satisfactory.
Item 1A. Risk Factors
Not required.
Item 1B. Unresolved Staff Comments
None.
10
Item 2. Properties
Our principal executive offices are located in approximately 18,676 square feet of leased
space in Plano, Texas. We use this space for administration, marketing, research and development
and some of our sales activities. The primary lease term expires in April 2011 and provides for a
base annual rent expense of $204,547. In 2010 ViewCast entered into an amendment to the lease
wherein, effective May 1, 2011, the term of lease shall be extended with the termination date being
July 31, 2021 and the base annual rent expense increases to $244,003. Our manufacturing and
distribution operations are located in approximately 16,575 square feet of leased space in
Carrollton, Texas. The lease expires in February 2012 and provides for a base annual rent expense
of $71,257.
Our Ancept subsidiary will continue to operate its engineering, support and services
operations at its current location in Bloomington, Minnesota and Grand Forks, North Dakota and
other sites. Our finance, administration, sales and marketing functions are based at ViewCast
headquarters in Plano, Texas
We believe that our facilities are adequate for our current and reasonable foreseeable future
needs and our current facilities can accommodate expansion, as required.
Item 3. Legal Proceedings
There are no material legal proceedings pending to which we are a party, or of which any of
our property is the subject, other than ordinary, routine litigation incidental to the business.
Item 4. Submission of Matters to a Vote of Security Holders
ViewCast held its annual meeting on October 1, 2009. The proposals submitted to shareholders
and the tabulations of votes for each proposal were as follows:
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1.
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Election of directors for one-year terms.
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Number of
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Number of
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Number of
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Votes Against
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Votes
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Broker
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Nominees
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Votes For
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or Withheld
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Abstaining
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Non-Votes
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George C. Platt
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40,794,760
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1,144,332
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4,473,798
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David T. Stoner
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40,794,960
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1,144,132
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4,473,798
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Joseph Autem
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40,822,246
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1,116,846
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4,473,798
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Sherel Horsley
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40,822,346
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1,116,746
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4,473,798
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David W. Brandenburg
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40,822,246
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1,116,846
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4,473,798
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John Slocum, Jr.
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40,822,246
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1,116,846
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4,473,798
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2.
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Approval of an amendment to ViewCast’s 2005 Incentive Stock Plan increasing the
number of shares of common stock available for award from 3,000,000 to 6,000,000.
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Number of Votes
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Number of Votes
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Number of Votes
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Broker
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For
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Against
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Abstaining
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Non-Votes
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25,015,197
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2,412,666
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2,479
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18,982,548
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3.
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Ratification of BKD, LLP as ViewCast’s independent registered public accounting firm
for the fiscal year 2009.
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Number of Votes
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Number of Votes
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Number of Votes
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For
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Against
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Abstaining
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Broker Non-Votes
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41,031,706
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895,183
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12,203
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4,473,798
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11
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
Common Stock Price Range
As of March 15, 2010, there were 35,864,809 shares of our common stock were outstanding. The
following table sets forth, for the periods indicated, the high and low sales prices for the common
stock on the OTC-BB. Our common stock is traded on the OTC-BB under the symbol “VCST.OB”. These
over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions. The trading market in our securities may at
times be relatively illiquid due to low trading volume.
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Common Stock
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Fiscal 2008
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High
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Low
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1st Quarter
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$
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0.42
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$
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0.26
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2nd Quarter
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$
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0.44
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$
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0.26
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3rd Quarter
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$
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0.45
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$
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0.25
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4th Quarter
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$
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0.42
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$
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0.27
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Common Stock
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Fiscal 2009
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High
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Low
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1st Quarter
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$
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0.41
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$
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0.30
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2nd Quarter
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$
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0.40
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$
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0.28
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3rd Quarter
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$
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0.34
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$
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0.15
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4th Quarter
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$
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0.26
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$
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0.15
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On March 15, 2010, the last reported sales price for our common stock as reported on the
OTC-BB was $0.15. As of March 15, 2010, there were approximately 298 holders of record of the
common stock.
Dividend Policy
We have never paid cash dividends on our common stock. The Board of Directors does not
anticipate declaring cash dividends in the foreseeable future as it intends to retain future
earnings to finance the expansion of our business and for general corporate purposes. The payment
of future cash dividends will depend on such factors as our earnings levels, anticipated capital
requirements, operating and financial condition, consent from our lenders and other factors deemed
relevant by our Board of Directors.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None.
Purchases of Equity Securities by the Issuer and the Affiliated Purchasers
None.
Item 6. Selected Financial Data
Not required.
12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
The following information should be read in conjunction with our consolidated financial
statements and related notes thereto included elsewhere in this Report. The following discussion
may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual
results could differ materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to these differences include, but are not limited to, those
discussed above under “Special Note Regarding Forward-Looking Statements.”
Overview
ViewCast.com, Inc., doing business as ViewCast Corporation (“ViewCast”), develops
industry-leading hardware and software for the capture, management, transformation and delivery of
digital media over IP and mobile networks. ViewCast’s solutions simplify the complex workflows
required for these tasks, allowing broadcasters, businesses, and governments to reach and expand
their use and distribution of their digital media easily and effectively. ViewCast’s Niagara
®
streaming appliances, Osprey
®
video capture cards, and ViewCast Media Platform (VMp™) software
suite provide the highly reliable technology required to deliver the multi-platform experiences
driving today’s digital media market. ViewCast markets and sells its products and professional
services worldwide directly to end-users or through indirect channels including original equipment
manufacturers (“OEMs”), value-added resellers (“VARs”), resellers, distributors and computer system
integrators. ViewCast is focused on growth by leveraging the digital media market expansion and
our product solutions to capitalize on sales opportunities. We believe that emphasis on revenue
and market share growth will enable us to realize long-term profitability and stockholder value.
On March 13, 2009, ViewCast completed the purchase of the Ancept Assets from Ancept Media
Server, LLC (the “Seller”) related to the development and licensing of software products that
provide the management of the life cycle phases of digital media pursuant to the terms of the Asset
Purchase Agreement dated March 5, 2009, as amended, by and between ViewCast and the Seller.
ViewCast’s wholly owned subsidiary, ViewCast Online Solutions, Inc., was renamed Ancept Corporation
and operates this business. The lead software product, rebranded as VMp Production and the core of
VMp, has been an established digital asset management (“DAM”) solution capable of supporting the
needs of large enterprises, while remaining flexible and affordable to serve the needs of small to
medium businesses. Fortune 1000 companies, educators, small businesses and public sector
organizations have chosen Ancept to help meet their media production, management and distribution
needs. The combined company has an expanded global business presence and offers a complete set of
solutions for the transformation, management and delivery of live and on-demand video content to
broadband and mobile networks.
ViewCast utilizes significant capital to design, develop and commercialize its products and
intends to fund its 2010 operating activities and sales growth by utilizing existing cash, cash
provided from operations and working capital lines of credit to the extent possible. ViewCast
believes that these items will provide sufficient cash to fund operations for the next 12 months,
however, ViewCast may require additional working capital during the next year to support operations
and the expansion of sales channels and market distribution, to develop and introduce new products
and services, to enhance existing product offerings, to address unanticipated competitive threats
or technical problems, to transition adverse economic conditions and for potential acquisition
transactions. There can be no assurance that additional financing will be available to ViewCast on
acceptable terms, or at all. Additional equity financing may involve substantial dilution to our
then existing stockholders. In the event ViewCast is unable to raise additional capital or execute
other alternatives, it may be required to sell segments of the business, or substantially reduce or
curtail our activities. Such actions could result in charges that could be material to ViewCast’s
results of operations or financial position.
13
Financial Highlights of 2009
Total revenues for the year ended December 31, 2009 were $13,905,860, a 20% decrease from
revenues of $17,362,212 reported in 2008. Gross margin for 2009 decreased 26% to $8,782,674, or
63.2% of sales, from $11,927,923, or 68.7% of sales, in the year ended December 31, 2008. Total
operating expenses of $11,446,605 for the fiscal year of 2009 were up 2% when compared to the
$11,234,726 for the fiscal year of 2008. Net loss for the fiscal year of 2009 was $2,800,347
compared to the net income of $531,105 for the fiscal year of 2008.
The $3,331,451 difference in net income was mainly due to lower revenues and gross margin,
which resulted from a year over year decline of 5.5% in gross margin percentage and a decrease of
sales of $3,456,352. In addition, increases in development, depreciation and amortization
operating expenses of $406,133 were partially offset by a decline in sales, general and
administrative operating expenses of $194,254.
Critical Accounting Policies
Management’s discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the U.S (“GAAP”). We review the accounting policies we
use in reporting our financial results on a regular basis. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On
an on-going basis we evaluate our estimates, including those related to accounts receivable,
inventories, warranty obligations, income taxes, restructuring and contingencies and litigation.
Our estimates are based on historical experience and other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from other sources. In
addition to the items listed above which are affected by estimates, we believe that the following
are critical accounting policies used in the preparation of our consolidated financial statements:
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•
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Revenue Recognition
— We apply provisions of Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements as revised
by SAB 104, Revenue Recognition, FASB ASC 605, “Revenue Recognition” and FASB ASC 985,
“Software”. Under these guidelines, we recognize revenue on transactions where persuasive
evidence of an arrangement exists, title has transferred, product payment is not contingent
upon performance of installation or service obligations, the price is fixed or determinable
and payment is reasonably assured. We accrue warranty costs and sales allowances for
promotional activities at time of shipment based on historical experience. In addition, we
defer revenue associated with maintenance and support contracts and recognize revenue
ratably over the contract term.
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•
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Allowance for Doubtful Accounts —
We maintain allowances for doubtful accounts for
estimated losses resulting from the inability of our customers to make required payments.
If the financial condition of our customers or distribution partners were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be
required.
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•
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Excess and Obsolete Inventories —
We write down our inventories for estimated
obsolescence and unmarketable inventory equal to the difference between the cost of the
inventory and the estimated market value based upon assumptions about future demand and
market conditions. If actual market conditions are less than those projected by
management, additional write-downs may be required.
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•
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Deferred Taxes —
We record a valuation allowance to reduce our deferred tax assets to
an amount that we believe is more likely than not to be realized. In our opinion,
realization of our net operating loss carryforward is not reasonably assured, and a
valuation allowance has been provided against deferred tax assets in excess of deferred tax
liabilities in the accompanying consolidated financial statements. However, should we
determine in the future that realization of deferred tax assets in excess of recorded
amounts is likely, an adjustment to the deferred tax assets would increase income in the
period such determination was made.
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14
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•
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Purchase Accounting, Goodwill and Intangible Assets —
We use the purchase method of
accounting for our business acquisitions, accordingly, the statement of operation include
the results of acquired businesses since the date of acquisition. The assets acquired and
liabilities assumed are recorded at their estimated fair value as determined by management
and supported by an independent third-party valuation.
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•
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Goodwill Arising from the Acquisitions of Business
— We record goodwill arising from
the acquisition of a business as the excess of the purchase price over the estimated fair
value of the net assets of the business acquired. In accordance with FASB ASC 350,
“Intangibles — Goodwill and Other,” we are required to test goodwill for impairment
annually or more frequently if circumstances indicate potential impairment. Consistent
with this standard, we will review goodwill, as well as other intangible assets and
long-term assets, for impairment annually or more frequently as warranted, and if
circumstances indicate that the recorded value of any such other asset is impaired, such
asset is written down to its new, lower fair value. If any item of goodwill or such other
asset is determined to be impaired, an impairment loss would be recognized equal to the
amount by which the recorded value exceeds the estimated fair market value.
|
Results of Operations
Year Ended December 31, 2009 compared to Year Ended December 31, 2008.
Net Sales
.
During the year ended December 31, 2009, net sales decreased $3,456,352 to
$13,905,860 from $17,362,212 in 2008, representing a 20% decrease from 2008. This decrease was
mainly due to the global economic recession which adversely affected the bulk of our Osprey and
Niagara product lines across all of our global regions as customers cancelled or delayed plans for
business expansion or new media initiatives. The decrease during 2009 was primarily due to
decreases in Osprey
®
capture card and Niagara
®
system revenue which was partially offset by an
increase in Ancept-related revenues of $1,105,368, as noted below. Excluding Ancept, net sales
decreased during 2009 compared to the same period in 2008 by 24% in the North America sales region,
41% in the Europe, Middle East and Africa (“EMEA”) and 7% in the Pacific Rim/South America sales
regions.
We believe that our sales volume began recovery during the fourth quarter of 2009 and expect
that trend to continue for the 2010 year. We can now see evidence of increases in sales of all
product lines taking hold where we have seen a greater than 30% increase in booked orders received
in the first quarter of 2010 compared to the fourth quarter of 2009.
Osprey Product Sales
.
During the year ended December 31, 2009, Osprey sales decreased
$3,128,055 to $7,870,571 from $10,998,626 in 2008, representing a 28% decrease from 2008 and 56.6%
of total 2009 net sales, compared to 63.3% in 2008. The decrease in sales for 2009 was due to
sales declines in all sales regions. Due to the global economic recession and, consequently, the
reduction in larger integration projects, sales of these products for 2009 were negatively
affected. We expect the recovery in Osprey sales, which began during the last half of 2009, to
continue during 2010 as customer transition to the PCI Express-based Osprey 240e and Osprey 450e
increases. As consumer demand for high definition (“HD”) Internet content continues to accelerate,
we believe the market opportunity for ViewCast’s Osprey 700e HD will expand. We anticipate further
growth as broadband networking providers deploy new, higher bandwidth services and technologies,
such as Cisco and Google.
ViewCast Niagara
®
Streaming/Encoding Systems.
During the year ended December 31, 2009,
combined systems sales decreased $1,381,912 to $4,707,290 from $6,089,202 in 2008, representing a
23% decrease from 2008 and 33.9% of total 2009 net sales, compared to 35.1% in 2008. The decrease
in sales for 2009 was due to sales declines in all sales regions. Due to the global economic
recession and, consequently, the reduction in customer budgets and solution integration projects
for 2009, sales of these products for 2009 were negatively affected. During 2010 we anticipate the
availability of the Niagara 7500 for shipment and the new version of SCX released for our Niagara
systems will have a positive impact on sales activity within this product line. In addition our
largest OEM customer has resumed orders in the first quarter of 2010, following six months of being
dormant. Based on its outlook for 2010, we expect robust sales from this customer throughout the
year.
15
Software Licenses and Other Revenues
.
During the year ended December 31, 2009, other revenues
from software licenses, support and maintenance, professional services and net third-party product
revenue increased
$1,053,615 to $1,327,999 from $274,384 in 2008, representing a 384% increase from the 2008
levels and 9.5% of total 2009 revenue, compared to 1.6% in 2008. This increase was primarily due
to ViewCast’s newly-acquired Ancept business late in the first quarter, which contributed in
software license, maintenance and support, and professional service revenue of $1,105,368,
representing 7.9% of total revenue in 2009. We anticipate that Other Revenue will vary quarter to
quarter depending on the mix of software license and professional service revenues in addition to
support and maintenance revenues that are amortized over the contract period.
Cost of Sales/Gross Profit
.
During the year ended December 31, 2009, cost of sales decreased
$311,103 to $5,123,186 from $5,434,289 in 2008, representing a 5.7% decrease from 2008. Gross
profit margin decreased $3,145,249 to $8,782,674 from $11,927,923 in 2008, representing a 26%
decrease from 2008 and 63.2% of total 2009 net sales, compared to 68.7% in 2008. The decrease in
gross profit was primarily due to decreased net sales in 2009. The decrease in gross profit margin
percentage was primarily due to lower Osprey sales and a higher percentage of sales derived from
the lower margin OEM system products. In addition, the increased revenues from professional
services, support and maintenance experience a lower margin than the hardware and software
products.
We expect 2010 gross profit margins to remain comparable to historical margins in the 55%-68%
range. Margins will be affected quarter to quarter by promotional activities, price adjustments,
cost of materials, inventory obsolescence, new products and the sales mix between capture cards,
systems and services in any one reporting period.
Selling, General and Administrative Expense
.
During 2009, selling, general and administrative
expenses decreased $194,254 to $7,624,962 from $7,819,216 in 2008, representing a 2.5% decrease
from 2008 and 55% of total 2009 net sales, compared to 45% in 2008. The decrease is attributable
to a reduction in sales and customer support expenses offset partially by increases in marketing
reflecting increased headcount, advertising, public relations and related expenses. Additionally,
there were non-recurring expenses of $167,000 during 2009 related to the acquisition of the Ancept
Assets.
Research and Development Expense.
During 2009, research and development expense increased
$96,161 to $3,032,215 from $2,936,054 in 2008, representing a 3% increase over 2008 and 21.8% of
total 2009 net sales, compared to 16.9% in 2008. The increase reflects additional personnel plus
higher new product prototype and related development expenses compared to 2008. Research and
development expenses fluctuate depending on the number of product introductions planned and as new
product prototypes, testing and certifications are completed.
Depreciation and Amortization Expense.
During 2009, depreciation and amortization expense
increased $309,972 to $789,428 from $479,456 in 2008, representing a 65% increase from 2008. The
increase was primarily due to the amortization of acquired intangible assets and capitalized
software development plus capital expenditures in 2009 for IT infrastructure, test equipment and
demo gear.
Other Income and Expense
. During 2009, total other expense increased by $3,498 to $154,190
from $150,692 in 2008, representing a 2% increase from the 2008 levels. Interest expense for 2009
decreased $20,666 to $162,831 from $183,497 in 2008, representing an 11% decrease from the 2008
levels. The decrease in interest expense is principally due to the decrease of interest rates from
our debt under the credit facility we have in place with Ardinger Family Partnership, Ltd. (See
Note 8). Interest income for 2009 decreased $28,139 to $4,666 from $32,805 in 2008. The decrease
in interest income is primarily due to lower interest rates and average cash balance during the
period.
Net Income
.
During the year ended December 31, 2009, net income decreased $3,331,452 to a net
loss of $2,800,347 from net income of $531,105 in 2008. The decrease in net income was mainly due
to decreased revenue and the related gross margins. After adjusting 2009 net income for preferred
dividends of $820,000, the net loss per share to the common stockholders for the year ended
December 31, 2009 was ($0.10) per share, compared to a net loss of ($0.01) per share, for the year
ended December 31, 2008.
16
Liquidity and Capital Resources
ViewCast’s primary sources of funds for conducting its business activities are derived from
sales of its products and services, from its credit facilities and from the placement of its equity
securities with investors. ViewCast requires working capital primarily to increase inventories and
accounts receivable during sales growth, develop products, service debt, purchase capital assets,
fund operating losses and strategic acquisitions.
Net cash used by operating activities for the year ended December 31, 2009 totaled $480,682, a
decrease from the cash provided of $1,033,974 in 2008. The net cash used in operating activities
for the year ended December 31, 2009 was due to the net loss of $2,800,347 offset by non-cash
operating expenses of $1,030,314 and by changes in operating assets and liabilities of $1,289,351.
The cash provided by operating assets and liabilities was principally from decreases in accounts
receivable, inventories, and prepaid expenses, partially offset by cash used from decreases in
accounts payable, and accrued expenses.
Net cash used for investing activities during the year ended December 31, 2009 totaled
$1,747,686, of which $1,031,422 was used for the acquisition of the Ancept Assets. The remaining
$716,264 of cash utilized for investing activities was for $195,458 of property and equipment
purchased and $520,806 of software development costs capitalized.
During the year ended December 31, 2009, ViewCast’s financing activities, provided cash of
$1,016,836 of which $940,000 was provided from the exercise of warrants by H.T. Ardinger and the
Ardinger Family Partnership, Ltd. for the purchase of 2,500,000 shares of the Company’s
unregistered common stock at an amended exercise price of $0.376 per share, which proceeds were
used to fund a significant portion of the cash paid to the Seller for the purchase of the Ancept
Assets. The remaining $76,836 of cash provided included $92,321 provided from an increase in line
of credit, $14,441 from the sale of stock under the Employee Stock Purchase Plan, and $2,850 from
the exercise of employee stock options, offset by $32,776 cash used for repayment of long-term
debt.
On March 13, 2009, ViewCast acquired the Ancept Assets for $1,431,422. ViewCast (i) paid to
the Seller’s lender $1,000,000 in cash, (ii) paid to the Seller $31,422 in cash which is the
difference between $170,000 in cash less a holdback amount of $138,578 based on the difference in
accounts receivables and deferred revenue as of March 13, 2009, which may be adjusted in the future
based on actual collected accounts receivable, (iii) issued to the Seller Company common stock of
$400,000 which resulted in the issuance of 1,141,314 shares based on the weighted average closing
price of our common stock for the ten trading days immediately prior to the closing of the
transaction, which was $0.35047, and (iv) assumed deferred revenue liabilities related to the
Ancept Assets. The primary purpose of the acquisition was to enable ViewCast to expand its global
business presence with a complete portfolio of solutions that encompasses live and on-demand video
encoding, management and delivery.
Since October 1998, ViewCast has maintained a credit facility with an entity controlled by its
largest stockholder, Mr. H.T. Ardinger. Most recently, ViewCast.com, Inc., Osprey Technologies,
Inc. and VideoWare, Inc. (jointly and severally, the “Borrower”) amended the terms and conditions
of the loan and security agreement with the Ardinger Family Partnership, Ltd. on March 10, 2010,
effective January 31, 2010. Under the amended terms, the $1,250,000 of the primary principal amount
and $3,891,361 of the secondary principal amount mature December 31, 2012, subject to certain
earlier payment conditions. The interest on the primary principal amount will accrue based on an
interest rate per annum which is the greater of 5.00% or the effective prime rate plus 0.75% (4.00%
as of December 31, 2008 and 2009). Interest on the secondary principal shall accrue based on an
interest rate per annum which is the lesser of 9.50% or the effective Applicable Federal Rate, as
defined in the agreement (2.85% and 2.64% as of December 31, 2008 and December 31, 2009,
respectively). The amended terms call for interest to be paid monthly; and previously accrued
interest ($169,846 at December 31, 2008) to be paid in approximately equal monthly payments from
October 31, 2008, through June 30, 2009. Beginning July 31, 2010, minimum monthly principal
payments of $21,422 will be made, in addition to the monthly interest payments. Any amounts
remaining outstanding on December 31, 2012, will become due on that date. The amended note
agreement is secured by all the assets of the Borrower.
17
In June 2007, ViewCast entered into a Purchase and Sale Agreement/Security Agreement with
Amegy Bank National Association, a national banking association. This agreement provides ViewCast
with an account up to
$1,000,000 receivable loan facility to provide a source of working capital. As of December
31, 2009, we have an outstanding balance of $92,321 under this facility.
There were no preferred stock dividends declared or paid during 2009. The Series B and Series
C preferred stock issues carry cumulative dividends of 8% and 9% per year, respectively, and are
generally payable semi-annually in arrears in cash or in ViewCast common stock, at ViewCast’s
option. Cumulative dividends in arrears on preferred shares are approximately: Series
B-$5,120,000, Series C-$1,437,500. Holders of Series B and Series C preferred stock have no voting
rights except as required by law.
At December 31, 2009, ViewCast had working capital of $2,056,216 and cash and cash equivalents
of $368,151. ViewCast expects to obtain additional working capital by increasing sales,
maintaining reduced operating expenses, borrowing under its loan facilities and through other
initiatives that may include raising additional equity. We believe that our sales volume has begun
recovery during the fourth quarter of 2009 and expect that trend to continue for the rest of 2010
year. We can now see evidence of increases in sales of all product lines taking hold where we have
seen a greater than 30% increase in booked orders received in the first quarter of 2010 vs. the
fourth quarter of 2009. ViewCast utilizes significant capital to design, develop and commercialize
its products and intends to fund its operating activities and sales growth during the next twelve
months by utilizing existing cash, cash contributed from operations and its available working
capital lines of credit. ViewCast anticipates it may require additional working capital during
2010 to support the expansion of sales channels and market distribution, to develop and introduce
new products and services, to enhance existing product offerings, to address unanticipated
competitive threats or technical problems, to transition adverse economic conditions, to service
its debt and for potential acquisition transactions.
Although ViewCast has no firm arrangements with respect to additional capital financing, on an
ongoing basis, it considers proposals received from potential investors relating to the issuance of
equity securities in exchange for a cash investment in ViewCast. There can be no assurance that
additional financing will be available to ViewCast on acceptable terms, or at all. Additional
equity financing may involve substantial dilution to our then existing stockholders. ViewCast
intends to actively pursue other strategic merger and acquisition opportunities to the extent
possible. In the event we are unable to raise additional capital or execute other alternatives, we
may be required to sell segments of the business, or substantially reduce or curtail our
activities. Such actions could result in charges that could be material to ViewCast’s results of
operations or financial position.
At December 31, 2009, ViewCast had no material commitments for capital expenditures.
18
Operating Leases
The following table summarizes ViewCast’s operating leases with definitive payment terms that
will require cash outlays in the future. These future cash payment amounts are as of December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual Obligations
|
|
(In thousands)
|
|
|
and Commitments:
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
Thereafter
|
|
|
Total
|
|
|
Operating leases
|
|
$
|
370
|
|
|
$
|
274
|
|
|
$
|
239
|
|
|
$
|
243
|
|
|
$
|
1,934
|
|
|
$
|
3,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
370
|
|
|
$
|
274
|
|
|
$
|
239
|
|
|
$
|
243
|
|
|
$
|
1,934
|
|
|
$
|
3,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ViewCast is obligated under various operating lease agreements, primarily for office
facilities that expire at various dates through 2012. The scheduled monthly base rental payments
for facilities range from $6,160 to $17,898 and differ from the monthly rental expense due to free
or varied monthly rental payments during the term of the lease agreements.
Off Balance Sheet Arrangements
ViewCast does not have any off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on ViewCast’s financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to investors.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not required.
19
Item 8. Financial Statements
ViewCast.com, Inc. and Subsidiaries
Index to Consolidated Financial Statements
20
Report of Independent Registered Public Accounting Firm
To the Board of Directors
ViewCast.com, Inc.
We have audited the accompanying consolidated balance sheet of ViewCast.com, Inc. and subsidiaries
(the “Company”) as of December 31, 2009 and the related consolidated statements of operations,
stockholders’ equity (deficit) and cash flows for the year then ended. The Company’s management is
responsible for these consolidated financial statements. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of ViewCast.com, Inc. and subsidiaries as of December 31,
2009 and the consolidated results of their operations and their cash flows for the year then ended
in conformity with accounting principles generally accepted in the United States of America.
/s/ BKD, LLP
Dallas, Texas
March 31, 2010
21
Report of Independent Registered Public Accounting Firm
The Board of Directors
ViewCast.com, Inc.
We have audited the accompanying consolidated balance sheet of ViewCast.com, Inc. and subsidiaries
as of December 31, 2008, and the related consolidated statements of operations, stockholders’
equity and cash flows for the year then ended. These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform an audit of its internal control
over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimate made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in all material
respects, the consolidated financial position of ViewCast.com, Inc. and subsidiaries as of December
31, 2008, and the consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ KBA Group LLP
Dallas, Texas
March 31, 2009
22
VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,579,683
|
|
|
$
|
368,151
|
|
|
Accounts receivable, less allowance for doubtful accounts of
$82,317 and $69,767 at December 31, 2008 and 2009, respectively
|
|
|
2,654,217
|
|
|
|
1,208,929
|
|
|
Inventories, net
|
|
|
2,824,236
|
|
|
|
2,283,348
|
|
|
Prepaid expenses
|
|
|
352,089
|
|
|
|
208,804
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
7,410,225
|
|
|
|
4,069,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
772,290
|
|
|
|
575,032
|
|
|
Goodwill
|
|
|
—
|
|
|
|
620,002
|
|
|
Intangible assets, net
|
|
|
423,028
|
|
|
|
1,535,135
|
|
|
Deposits
|
|
|
48,177
|
|
|
|
48,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
8,653,720
|
|
|
$
|
6,847,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,106,892
|
|
|
$
|
730,395
|
|
|
Accrued expenses and other current liabilities
|
|
|
1,143,882
|
|
|
|
1,033,167
|
|
|
Stockholder accrued interest
|
|
|
169,846
|
|
|
|
—
|
|
|
Line of credit
|
|
|
—
|
|
|
|
92,321
|
|
|
Current maturities of long-term debt and stockholder notes payable
|
|
|
159,032
|
|
|
|
157,133
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
2,579,652
|
|
|
|
2,013,016
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, less current maturities
|
|
|
38,172
|
|
|
|
46,698
|
|
|
Stockholder notes payable, less current maturities
|
|
|
5,012,827
|
|
|
|
5,012,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
7,630,651
|
|
|
|
7,072,541
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, authorized 5,000,000 shares:
|
|
|
|
|
|
|
|
|
|
Series B convertible — issued and outstanding shares — 800,000
— liquidation value of $16 per share as of December 31, 2008
and 2009
|
|
|
80
|
|
|
|
80
|
|
|
Series C convertible — issued and outstanding shares — 200,000
— liquidation value of $31 and $32 per share as of December
31, 2008 and 2009, respectively
|
|
|
20
|
|
|
|
20
|
|
|
Series E convertible — issued and outstanding shares — 80,000
— liquidation value of $104 and $105 per share as of December
31, 2008 and 2009 respectively
|
|
|
8
|
|
|
|
8
|
|
|
Common stock, $.0001 par value, authorized 100,000,000 shares;
issued shares — 32,419,886 and 36,126,306 at December 31, 2008 and
2009, respectively
|
|
|
3,242
|
|
|
|
3,613
|
|
|
Additional paid-in capital
|
|
|
70,153,562
|
|
|
|
71,705,762
|
|
|
Accumulated deficit
|
|
|
(69,121,937
|
)
|
|
|
(71,922,284
|
)
|
|
Treasury stock, 261,497 shares at cost
|
|
|
(11,906
|
)
|
|
|
(11,906
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity (deficit)
|
|
|
1,023,069
|
|
|
|
(224,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit)
|
|
$
|
8,653,720
|
|
|
$
|
6,847,834
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated statements.
23
VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
17,362,212
|
|
|
$
|
13,905,860
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
5,434,289
|
|
|
|
5,123,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
11,927,923
|
|
|
|
8,782,674
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
7,819,216
|
|
|
|
7,624,962
|
|
|
Research and development
|
|
|
2,936,054
|
|
|
|
3,032,215
|
|
|
Depreciation and amortization
|
|
|
479,456
|
|
|
|
789,428
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
11,234,726
|
|
|
|
11,446,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
693,197
|
|
|
|
(2,663,931
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense (including $172,526
and $154,426 of expense to related
parties)
|
|
|
(183,497
|
)
|
|
|
(162,831
|
)
|
|
Interest income
|
|
|
32,805
|
|
|
|
4,666
|
|
|
Other
|
|
|
—
|
|
|
|
3,975
|
|
|
|
|
|
|
|
|
|
|
Total other expense, net
|
|
|
(150,692
|
)
|
|
|
(154,190
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) before income taxes
|
|
|
542,505
|
|
|
|
(2,818,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax income benefit (expense)
|
|
|
(11,400
|
)
|
|
|
17,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$
|
531,105
|
|
|
$
|
(2,800,347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
(820,029
|
)
|
|
|
(820,000
|
)
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stockholders
|
|
$
|
(288,924
|
)
|
|
$
|
(3,620,347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
32,110,458
|
|
|
|
35,171,107
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
32,110,458
|
|
|
|
35,171,107
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated statements.
24
VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 2008 AND 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B
|
|
|
Series C
|
|
|
Series E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
|
|
|
Convertible
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated
|
|
|
Treasury
|
|
|
Stockholders’
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Capital
|
|
|
Deficit
|
|
|
Stock
|
|
|
Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2007
|
|
|
800,000
|
|
|
$
|
80
|
|
|
|
200,000
|
|
|
$
|
20
|
|
|
|
80,000
|
|
|
$
|
8
|
|
|
|
32,341,753
|
|
|
$
|
3,234
|
|
|
$
|
69,990,960
|
|
|
$
|
(69,653,042
|
)
|
|
$
|
(11,906
|
)
|
|
$
|
329,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
138,491
|
|
|
|
—
|
|
|
|
—
|
|
|
|
138,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock purchase plan
issuance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
50,397
|
|
|
|
5
|
|
|
|
17,231
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19,165
|
|
|
|
2
|
|
|
|
3,881
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock issuance for services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,571.00
|
|
|
|
1
|
|
|
|
2,999
|
|
|
|
0
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
531,105
|
|
|
|
—
|
|
|
|
531,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2008
|
|
|
800,000
|
|
|
|
80
|
|
|
|
200,000
|
|
|
|
20
|
|
|
|
80,000
|
|
|
|
8
|
|
|
|
32,419,886
|
|
|
|
3,242
|
|
|
|
70,153,562
|
|
|
|
(69,121,937
|
)
|
|
|
(11,906
|
)
|
|
|
1,023,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
195,280
|
|
|
|
—
|
|
|
|
—
|
|
|
|
195,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock purchase plan
issuance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
55,106
|
|
|
|
6
|
|
|
|
14,435
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
1
|
|
|
|
2,849
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise of warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,500,000
|
|
|
|
250
|
|
|
|
939,750
|
|
|
|
—
|
|
|
|
—
|
|
|
|
940,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issuance for acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,141,314
|
|
|
|
114
|
|
|
|
399,886
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,800,347
|
)
|
|
|
—
|
|
|
|
(2,800,347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2009
|
|
|
800,000
|
|
|
$
|
80
|
|
|
|
200,000
|
|
|
$
|
20
|
|
|
|
80,000
|
|
|
$
|
8
|
|
|
|
36,126,306
|
|
|
$
|
3,613
|
|
|
$
|
71,705,762
|
|
|
$
|
(71,922,284
|
)
|
|
$
|
(11,906
|
)
|
|
$
|
(224,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated statements.
25
VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
531,105
|
|
|
$
|
(2,800,347
|
)
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
Bad debt expense (gain)
|
|
|
57,912
|
|
|
|
(175
|
)
|
|
Depreciation of property and equipment
|
|
|
350,795
|
|
|
|
446,729
|
|
|
Amortization of intangible assets
|
|
|
128,661
|
|
|
|
342,699
|
|
|
Warranty reserve
|
|
|
137,126
|
|
|
|
44,808
|
|
|
Stock based compensation expense
|
|
|
138,491
|
|
|
|
195,280
|
|
|
Common stock issued to employee for services
|
|
|
3,000
|
|
|
|
—
|
|
|
Loss on disposition of property and equipment
|
|
|
—
|
|
|
|
973
|
|
|
Changes in operating assets and liabilities: (net of effect of acquisition)
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(450,996
|
)
|
|
|
1,606,223
|
|
|
Inventories
|
|
|
(457,036
|
)
|
|
|
540,888
|
|
|
Prepaid expenses
|
|
|
(108,475
|
)
|
|
|
143,700
|
|
|
Deposits
|
|
|
(2,611
|
)
|
|
|
(256
|
)
|
|
Accounts payable
|
|
|
650,251
|
|
|
|
(376,497
|
)
|
|
Accrued expenses and other current liabilities
|
|
|
78,899
|
|
|
|
(454,861
|
)
|
|
Stockholder accrued interest
|
|
|
(23,148
|
)
|
|
|
(169,846
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
1,033,974
|
|
|
|
(480,682
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
Capitalized software development costs
|
|
|
(228,322
|
)
|
|
|
(520,806
|
)
|
|
Purchase of property and equipment
|
|
|
(353,310
|
)
|
|
|
(195,458
|
)
|
|
Cash paid for acquisition
|
|
|
—
|
|
|
|
(1,031,422
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(581,632
|
)
|
|
|
(1,747,686
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
17,236
|
|
|
|
14,441
|
|
|
Proceeds from exercise of employee stock options
|
|
|
3,883
|
|
|
|
2,850
|
|
|
Net proceeds from exercise of warrants
|
|
|
—
|
|
|
|
940,000
|
|
|
Proceeds from line of credit
|
|
|
—
|
|
|
|
92,321
|
|
|
Repayments of long-term debt
|
|
|
(29,194
|
)
|
|
|
(32,776
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(8,075
|
)
|
|
|
1,016,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
444,267
|
|
|
|
(1,211,532
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
1,135,416
|
|
|
|
1,579,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
1,579,683
|
|
|
$
|
368,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
206,645
|
|
|
$
|
332,677
|
|
|
Cash paid for income taxes
|
|
$
|
34,115
|
|
|
$
|
1,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash items:
|
|
|
|
|
|
|
|
|
|
Stock issued for acquisition
|
|
$
|
—
|
|
|
$
|
400,000
|
|
|
Liabilities assumed in acquisition
|
|
$
|
—
|
|
|
$
|
299,338
|
|
|
Acquisition of property and equipment under capital leases
|
|
$
|
48,362
|
|
|
$
|
39,403
|
|
The accompanying notes are an integral part of these consolidated statements.
26
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements
1. The Company and Description of Business and Future Liquidity Needs
The accompanying consolidated financial statements include the accounts of ViewCast.com, Inc.
dba ViewCast Corporation and its wholly-owned subsidiaries, VideoWare, Inc., Osprey Technologies,
Inc., Ancept Corporation, previously known as ViewCast Online Solutions, Inc., and ViewCast
Technology Services Corporation (collectively, ViewCast or the Company). The Company develops
industry-leading hardware and software for the capture, management, transformation and delivery of
digital media over IP and mobile networks. ViewCast’s solutions simplify the complex workflows
required for these tasks, allowing broadcasters, businesses, and governments to reach and expand
their use and distribution of their digital media easily and effectively. ViewCast’s Niagara
®
streaming appliances, Osprey
®
video capture cards, and ViewCast Media Platform (VMp™) software
suite provide the highly reliable technology required to deliver the multi-platform experiences
driving today’s digital media market. ViewCast markets and sells its products and professional
services worldwide directly to end-users or through indirect channels including original equipment
manufacturers (“OEMs”), value-added resellers (“VARs”), resellers, distributors and computer system
integrators.
In March 2009, ViewCast purchased certain assets from Ancept Media Server, LLC (the “Ancept
Assets”) pursuant to the terms of the Asset Purchase Agreement dated March 5, 2009, as amended, by
and between ViewCast and Ancept Media Server, LLC. (“Seller”). ViewCast’s wholly owned subsidiary,
ViewCast Online Solutions, Inc., was renamed Ancept Corporation (“Ancept”) and operates this
business. The lead software product, rebranded as VMp Production, has been an established digital
asset management (“DAM”) solution capable of supporting the needs of large enterprises, while
remaining flexible and affordable to serve the needs of small to medium businesses. Fortune 1000
companies, educators, small businesses and public sector organizations have chosen Ancept to help
meet their media production, management and distribution needs. The Company has an expanded global
business presence and offers a complete set of solutions for the transformation, management and
delivery of live and on-demand video content to broadband and mobile networks.
During the year ended December 31, 2009, the Company incurred a net loss of $2,800,347 and
used cash in operations of $480,682. At December 31, 2009, the Company has working capital of
$2,056,216 and cash and cash equivalents of $368,151. The Company expects to obtain additional
working capital by increasing revenue, maintaining reduced operating expenses which were reduced
during late 2009, borrowing on its line of credit and through other initiatives that may include
raising additional capital. The Company believes that these items will provide sufficient cash to
fund operations for the next 12 months, however, the Company may require additional working capital
during 2010 to support operations and the expansion of sales channels and market distribution, to
develop and introduce new products and services, to enhance existing product offerings, to address
unanticipated competitive threats or technical problems, to transition adverse economic conditions
and for potential acquisition transactions. There can be no assurance that additional financing
will be available to the Company on acceptable terms, or at all. Additional equity financing may
involve substantial dilution to our then existing stockholders. In the event the Company is unable
to raise additional capital or execute other alternatives, it may be required to sell segments of
the business, or substantially reduce or curtail our activities. Such actions could result in
charges that could be material to ViewCast’s results of operations or financial position.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and all of its
subsidiaries, all of which are wholly-owned. All inter-company accounts and transactions have been
eliminated in consolidation.
27
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an initial maturity of
three months or less to be cash equivalents.
The financial institution holding the Company’s cash accounts is participating in the FDIC’s
Transaction Account Guarantee Program. Under that program, through June 30, 2010, all
noninterest-bearing accounts are fully guaranteed by the FDIC for the entire amount in the account.
Accounts Receivable
The Company’s accounts receivable are primarily due from resellers and distributors of its
video products. Credit is extended based on evaluation of each customer’s financial condition and,
generally collateral is not required except for certain international customers. Accounts
receivable are generally due within 30 days and are stated net of an allowance for doubtful
accounts. Accounts are considered past due if outstanding longer than contractual payment terms.
The Company records an allowance on a specific basis by considering a number of factors, including
the length of time trade accounts are past due, the Company’s previous loss history, the
credit-worthiness of individual customers, economic conditions affecting specific customer
industries and economic conditions in general. The Company writes-off accounts receivable when
they become uncollectible and payments subsequently received on such receivables are credited
against write-offs in the period the payment is received.
Changes in the Company’s allowance for doubtful accounts for the years ended December 31, 2008
and 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
30,390
|
|
|
$
|
82,317
|
|
|
Bad debt expense
|
|
|
57,912
|
|
|
|
(175
|
)
|
|
Uncollectible accounts written off
|
|
|
(5,985
|
)
|
|
|
(12,375
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
82,317
|
|
|
$
|
69,767
|
|
|
|
|
|
|
|
|
|
Inventories
Inventories consist primarily of purchased electronic components and computer system products,
along with the related documentation manuals and packaging materials. Inventories are carried at
the lower of cost or market, cost being determined at average cost. In order to assess the ultimate
realization of inventories, the Company is required to make judgments as to the future demand
requirements compared to current or committed inventory levels. Write downs are made to the lower
of cost or market when projected demand requirements decrease due to market conditions,
technological obsolescence and product life cycle changes.
Property and Equipment
Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is
determined using the straight-line method over the estimated useful lives, generally two to seven
years, of the related assets. Leasehold improvements are amortized over the shorter of the useful
life or the remaining term of the related leases. Expenditures for repairs and maintenance are
charged to operations as incurred; renewals and betterments are capitalized. Gains and losses on
the disposition of property and equipment are recorded in the period incurred.
Intangible Assets and Amortization
Costs of developing new software products and substantial enhancements to existing software
products are expensed as incurred until technological feasibility has been established, after which
time additional costs incurred are capitalized. Amortization of capitalized software development
costs begins when products are available for general release to customers, and is computed using
the greater of the revenue method or the straight-line method over a period not to exceed three
years.
28
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
Legal fees and similar capitalizable costs relating to patents, copyrights, and trademarks are
capitalized as appropriate. Patent costs are generally amortized on a straight-line basis over 17
years.
Intangible assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
December 31, 2009
|
|
|
|
|
Gross carrying
|
|
|
Accumulated
|
|
|
Gross carrying
|
|
|
Accumulated
|
|
|
|
|
amount
|
|
|
amortization
|
|
|
amount
|
|
|
amortization
|
|
|
Customer Lists
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
60,000
|
|
|
$
|
9,581
|
|
|
Non-Compete agreements
|
|
|
—
|
|
|
|
—
|
|
|
|
24,000
|
|
|
|
6,387
|
|
|
Capitalized Software
Costs
|
|
|
1,385,215
|
|
|
|
1,049,412
|
|
|
|
2,733,950
|
|
|
|
1,369,532
|
|
|
Patents
|
|
|
102,594
|
|
|
|
15,369
|
|
|
|
124,665
|
|
|
|
21,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,487,809
|
|
|
$
|
1,064,781
|
|
|
$
|
2,942,615
|
|
|
$
|
1,407,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated aggregate amortization expense for the succeeding years are as follows:
|
|
|
|
|
|
|
2010
|
|
$
|
434,337
|
|
|
2011
|
|
|
369,969
|
|
|
2012
|
|
|
246,957
|
|
|
2013
|
|
|
140,762
|
|
|
2014
|
|
|
131,180
|
|
|
Thereafter
|
|
|
211,929
|
|
|
|
|
|
|
|
|
|
$
|
1,535,135
|
|
|
|
|
|
|
The weighted average remaining amortization period for intangible assets at December 31, 2009
is 5.5 years.
Impairment of Long-Lived Assets
Assets that are held and used are analyzed for impairment whenever events or changes in
circumstances indicate that the carrying amounts may not be recoverable. Impairment is recognized
when the estimated undiscounted cash flow generated by those assets is less than the carrying
amounts of such assets. The amount of impairment is the excess of the carrying amount over the
fair value of such assets. Assets held for sale are carried at the lower of carrying amount or
fair value less selling costs. No impairment charges were recognized for 2008 and 2009.
Goodwill
Goodwill is tested annually for impairment. If the implied fair value of goodwill is lower
than its carrying amount, goodwill impairment is indicated and goodwill is written down to its
implied fair value. Subsequent increases in goodwill value are not recognized in the financial
statements.
Revenue Recognition
The Company recognizes revenue in accordance with Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in financial Statement as revised by SAB
104, Revenue Recognition, FASB ASC 605, “Revenue Recognition” and FASB ASC 985, “Software”. Under
these guidelines, the Company recognizes revenue on transactions where persuasive evidence of an
arrangement exists, title has transferred, product payment is not contingent upon performance of
installation or service obligations, the price is fixed or determinable and payment is reasonably
assured. The Company accrues warranty costs and sales allowances for promotional activities at
time of shipment based on historical experience.
29
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
Product sales are recognized upon shipment, provided title and risk of loss has passed to the
customer, there is evidence of an arrangement, fees are fixed or determinable, and collectability
is reasonably assured. Transactions that do not meet all these requirements are deferred until the
point at which these requirements are satisfied. Maintenance and support revenues are recognized
monthly over the contract term.
Net Earnings Per Share
Basic earnings per share (“EPS”) is calculated by dividing net income or loss applicable to
common stockholders by the weighted-average number of common shares outstanding during the period.
Diluted earnings per share is calculated by using the weighted-average number of common shares
outstanding during the period increased to include the number of additional shares of common stock
that would have been outstanding if the dilutive potential shares of common stock had been issued.
Dilutive potential shares of common stock include convertible preferred stock, options and warrants
which are exercisable based on the average market price during the year. For 2008 and 2009, the
computation of diluted loss per share excludes the portion of convertible preferred stock, options
and warrants as they are anti-dilutive. The following table sets forth the computation of basic
and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stockholders —
numerator for basic and diluted earnings per
share
|
|
$
|
(288,924
|
)
|
|
$
|
(3,620,347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted — average common shares outstanding
— denominator for basic earnings per share
|
|
|
32,110,458
|
|
|
|
35,171,107
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
The following table sets forth the anti-dilutive securities excluded from diluted earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive securities excluded from diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
3,776,368
|
|
|
|
4,554,881
|
|
|
Public and private warrants
|
|
|
2,500,000
|
|
|
|
2,500,000
|
|
|
Convertible preferred stock — Series B
|
|
|
2,206,896
|
|
|
|
2,206,896
|
|
|
Convertible preferred stock — Series C
|
|
|
3,333,333
|
|
|
|
3,333,333
|
|
|
Convertible preferred stock — Series E
|
|
|
15,215,686
|
|
|
|
13,333,333
|
|
Warranty Reserves
Reserves are provided for the estimated warranty costs when revenue is recognized. The costs
of warranty obligations are estimated based on the Company’s warranty policy or applicable
contractual warranty obligations, historical experience of known product failure rates and use of
materials and service delivery charges incurred in correcting product failures. Specific warranty
accruals may be made if unforeseen technical problems arise. If actual experience, relative to
these factors, adversely differs from these estimates, additional warranty expense may be required.
30
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
The following table below shows the roll forward of the warranty reserve for the years ended
December 31, 2008 and 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
133,940
|
|
|
$
|
199,446
|
|
|
Charged to expense
|
|
|
137,126
|
|
|
|
44,808
|
|
|
Usage
|
|
|
(71,620
|
)
|
|
|
(88,404
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
199,446
|
|
|
$
|
155,850
|
|
|
|
|
|
|
|
|
|
Risk and Uncertainties
Financial instruments that potentially subject the Company to credit risk consist principally
of cash, cash equivalents and trade accounts receivable. The Company invests its cash and cash
equivalents with commercial banks in Texas. The Company sells its products and services primarily
to end users, distributors and resellers without requiring collateral; however, the Company
routinely assesses the financial condition of its customers and maintains allowances for
anticipated losses. The following table discloses the number of customers that accounted for more
than 10% of annual sales and receivable balances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer Exceeding 10%
|
|
|
Customer Exceeding 10% of Year-End
|
|
|
|
|
of Net Sales
|
|
|
Accounts Receivable Balance
|
|
|
|
|
Number of
|
|
|
Combined
|
|
|
Number of
|
|
|
Combined
|
|
|
Year
|
|
Customers
|
|
|
Percent
|
|
|
Customers
|
|
|
Percent
|
|
|
2008
|
|
|
3
|
|
|
|
42
|
%
|
|
|
1
|
|
|
|
31
|
%
|
|
2009
|
|
|
3
|
|
|
|
39
|
%
|
|
|
2
|
|
|
|
42
|
%
|
The Company believes it has no significant credit risk in excess of provided reserves.
The Company is substantially dependent on its third-party suppliers and manufacturers to
supply its components and electronic parts, including standard and custom-designed components.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes. Significant
estimates used in preparing these financial statements are related primarily to accounts receivable
allowances, inventory valuation, warranty reserves, deferred tax asset valuation allowances and
stock options. Management believes the estimates used in preparing the financial statements are
reasonable; however, actual results could differ from those estimates.
Income Taxes
The Company utilizes the liability method of accounting for income taxes wherein deferred tax
assets and liabilities are determined based upon the differences between the financial statement
and tax bases of assets and liabilities, as measured by enacted tax rates expected to be in effect
when these differences reverse. Deferred tax assets are recognized when it becomes more likely
than not that the assets will be realized. The Company files tax returns with the U.S. Federal and
various state jurisdictions and is no longer subject to income tax examinations for years before
2004.
Advertising Costs
Advertising costs are expensed as incurred. Advertising expense for the years ended December
31, 2008 and 2009 was $752,010 and $866,612, respectively.
31
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
Fair Value of Financial Instruments
The Company believes that the carrying amount of certain of its financial instruments, which
include cash equivalents, accounts receivable, accounts payable, short-term debt and accrued
expenses, approximate fair value due to the short-term maturities of these instruments. The
Company also has long-term debt with its primary shareholder.
Stock-Based Compensation
The Company accounts for all share-based payment awards made to employees and directors
including stock options and employee stock purchases related to the Employee Stock Purchase Plan
(“ESPP”) based on estimated fair values. The Company estimates the fair value of share-based
payment awards on the date of grant using an option-pricing model and the value of the portion of
the award that is ultimately expected to vest is recognized as expense over the requisite service
period, net of forfeitures.
The Company uses the Black-Scholes option-pricing model (“Black-Scholes”) as its method of
valuation. The fair value is then amortized on a straight-line basis over the requisite service
periods of the awards, which is generally the vesting period. The fair value of share-based
payment awards on the date of grant as determined by the Black-Scholes model is affected by the
Company’s stock price as well as other assumptions. These assumptions include, but are not limited
to the expected stock price volatility over the term of the awards and the actual and projected
employee stock option exercise behaviors. The weighted-average estimated value of employee stock
options granted during the year ended December 31, 2008 and 2009 was estimated using the
Black-Scholes model with the following weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected volatility
|
|
|
126
|
%
|
|
|
132
|
%
|
|
Risk-free interest rate
|
|
|
3.17
|
%
|
|
|
2.81
|
%
|
|
Expected dividends
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
|
Expected term in years
|
|
|
4.60
|
|
|
|
4.48
|
|
3. Acquisition
On March 13, 2009, the Company acquired certain assets (the “Ancept Assets”) of Ancept Media
Server, LLC (“Seller”) for $1,431,422. The Company (i) paid to the Seller’s lender $1,000,000 in
cash, (ii) paid to the Seller $31,422 in cash, which is the difference between $170,000 in cash
less a holdback amount of $138,578 based on the difference in accounts receivables and deferred
revenue as of March 13, 2009, (iii) issued to the Seller Company common stock of $400,000 which
resulted in the issuance of 1,141,314 shares based on the weighted average closing price of the
Company’s common stock for the ten trading days immediately prior to the closing of the
transaction, which was $0.35, and (iv) assumed deferred revenue liabilities related to the Ancept
Assets. The primary purpose of the acquisition was to enable the Company to expand its global
business presence with a complete portfolio of solutions that encompasses live and on-demand video
encoding, management and delivery. ViewCast’s wholly-owned subsidiary ViewCast Online Solutions,
Inc. was renamed Ancept Corporation (“Ancept”) and this subsidiary operates the Ancept business.
32
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
The following table summarizes the assets acquired and liabilities assumed as of the closing
date:
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
160,760
|
|
|
Prepaid expenses
|
|
|
415
|
|
|
Software
|
|
|
850,000
|
|
|
Customer related intangible assets
|
|
|
60,000
|
|
|
Non-compete agreements
|
|
|
24,000
|
|
|
Goodwill
|
|
|
620,002
|
|
|
Property and equipment
|
|
|
15,583
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
1,730,760
|
|
|
Liabilities assumed
|
|
|
(299,338
|
)
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
1,431,422
|
|
|
|
|
|
|
The acquisition was accounted for using the purchase method of accounting. Intangible assets
will be amortized over their estimated useful life of three to seven years. The purchase price
allocated to the intangible assets was determined by management’s estimate with the assistance of a
professional valuation group. Goodwill represents the excess of purchase consideration over the
fair value of assets acquired. In the event that the Company enters into certain key contracts
with either one of two specified entities to redistribute or resell in volume certain of Seller’s
products by the second anniversary of the closing of the acquisition (the “Closing”), the Company
shall issue $100,000 of additional shares of the Company’s common stock to the Seller, with a value
per share based on the weighted average closing price of the Company’s common stock for the ten
trading days immediately prior to finalizing such agreement. Further, the Seller is eligible to
receive an earn-out amount equal to 5% of the Company’s net revenue relating solely to certain
business related to the Ancept Assets that is in excess of $2,000,000 for each of the two years
following the Closing. The goodwill acquired may be amortized for federal income tax purposes.
The amount of Ancept revenue and earnings included in the Company’s consolidated statement of
operations for the year ended December 31, 2009 was $1,116,665 and $(643,308), respectively.
The following unaudited pro forma summary approximates the consolidated results of operations
as if the acquisition disclosed above had occurred as of January 1, 2008, after giving effect to
certain adjustments, including allocation of specifically identifiable expenses. The pro forma
financial information does not purport to be indicative of the results of operations that would
have occurred had the transactions taken place at the beginning of the period presented or
indicative of future results of operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
18,951,729
|
|
|
$
|
14,066,487
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common stockholders
|
|
|
371,395
|
|
|
|
(2,807,661
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per common
share applicable to common stockholders
|
|
$
|
0.01
|
|
|
$
|
(0.08
|
)
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
basic
|
|
|
33,251,772
|
|
|
|
35,396,243
|
|
|
diluted
|
|
|
33,371,262
|
|
|
|
35,396,243
|
|
33
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
4. Inventories
Inventories consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased materials
|
|
$
|
1,670,260
|
|
|
$
|
1,077,135
|
|
|
Finished goods
|
|
|
1,207,518
|
|
|
|
1,330,783
|
|
|
Inventory obsolescence reserve
|
|
|
(53,542
|
)
|
|
|
(124,570
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,824,236
|
|
|
$
|
2,283,348
|
|
|
|
|
|
|
|
|
|
5. Property and Equipment
Property and equipment, consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
Useful Life
|
|
December 31,
|
|
|
|
|
(Years)
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service equipment
|
|
3
|
|
$
|
242,362
|
|
|
$
|
242,362
|
|
|
Computer equipment
|
|
2 to 7
|
|
|
420,398
|
|
|
|
497,139
|
|
|
Software
|
|
3 to 5
|
|
|
184,038
|
|
|
|
207,531
|
|
|
Leasehold improvements
|
|
1 to 5
|
|
|
172,697
|
|
|
|
172,697
|
|
|
Office furniture and equipment
|
|
5 to 7
|
|
|
1,136,470
|
|
|
|
1,284,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,155,965
|
|
|
|
2,404,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated depreciation
and
amortization
|
|
|
|
|
(1,383,675
|
)
|
|
|
(1,829,581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
772,290
|
|
|
$
|
575,032
|
|
|
|
|
|
|
|
|
|
|
|
6. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation
|
|
$
|
302,310
|
|
|
$
|
123,882
|
|
|
Accrued warranty
|
|
|
199,446
|
|
|
|
155,850
|
|
|
Accrued inventory purchases
|
|
|
39,595
|
|
|
|
50,450
|
|
|
Customer deposits
|
|
|
122,321
|
|
|
|
28,919
|
|
|
Deferred rent
|
|
|
73,484
|
|
|
|
46,258
|
|
|
Deferred revenue
|
|
|
156,611
|
|
|
|
353,458
|
|
|
Accrued taxes and other
|
|
|
250,115
|
|
|
|
274,350
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,143,882
|
|
|
$
|
1,033,167
|
|
|
|
|
|
|
|
|
|
34
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
7. Line of Credit
On June 29, 2007, the Company entered into a Purchase and Sale Agreement/Security Agreement
with Amegy Bank National Association (“Amegy”), a national banking association. This agreement
provides the Company with an accounts receivable loan facility to provide a source of working
capital with advances generally limited to 85% of submitted accounts receivable. Upon collection
of an account receivable, the remaining fifteen percent is rebated to the Company less the Amegy
fixed and variable discounts. The Amegy fixed discount equals 0.2% of the account receivable for
the first 15 days the account receivable is outstanding plus an additional 0.2% for each additional
15 day period, up to 1.2% for receivables 76 to 90 days outstanding. The variable discount is
calculated for each day that the amount advanced by Amegy is outstanding until repaid by collection
of the account receivable and equals the prime rate plus 1.5% divided by 360 multiplied by the
advance amount for each account receivable. The borrowing line under this facility is $1,000,000,
reviewed as growth of business dictates. To secure the amounts due under the agreement, the
Company granted Amegy a security interest in all of its assets owned as of the date of the
agreement or thereafter acquired. The Company had no outstanding balance as of December 31, 2008
and $92,321 outstanding as of December 31, 2009 under this facility.
8. Long-term Debt
Stockholder Term Notes
Since October 1998, the Company has maintained a credit facility with an entity controlled by
one of its principal stockholders, Mr. H.T. Ardinger. Most recently, ViewCast.com, Inc., Osprey
Technologies, Inc. and VideoWare, Inc. (jointly and severally, “the Borrower”) amended the terms
and conditions of the loan and security agreement with the Ardinger Family Partnership, Ltd. on
March 10, 2010, effective January 31, 2010. Under the amended terms the $1,250,000 of the primary
principal amount and $3,891,361 of the secondary principal amount mature December 31, 2012, subject
to certain earlier payment conditions. The interest on the primary principal amount will accrue
and be paid monthly based on an interest rate per annum which is the greater of 5.0% or the
effective prime rate plus 0.75% (4.00% as of December 31, 2008 and 2009). Interest on the
secondary principal shall accrue based on the effective Applicable Federal Rate, as defined in the
agreement, (2.85% and 2.64% as of December 31, 2008 and 2009, respectively). The amended terms
call for interest to be paid monthly; and previously accrued interest ($169,846 at December 31,
2008) to be paid in approximately equal monthly payments from October 31, 2008, through June 30,
2009. Beginning July 31, 2010, minimum monthly principal payments of $21,422 will be made, in
additional to the monthly interest payments. Any amounts remaining outstanding on December 31,
2012, will become due on that date. The amended note agreement is secured by all the assets of the
Borrower.
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
December 31, 2009
|
|
|
Aggregate of the Outstanding Principal (“Primary Principal
Amount”)
|
|
$
|
1,250,000
|
|
|
$
|
1,250,000
|
|
|
Accrued and Outstanding Interest (“Secondary Principal Amount”)
|
|
|
3,891,361
|
|
|
|
3,891,361
|
|
|
Other debt
|
|
|
68,670
|
|
|
|
75,297
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
5,210,031
|
|
|
|
5,216,658
|
|
|
Less current maturities
|
|
|
(159,032
|
)
|
|
|
(157,133
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term debt less current maturities
|
|
$
|
5,050,999
|
|
|
$
|
5,059,525
|
|
|
|
|
|
|
|
|
|
35
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
The following are the scheduled maturities of long-term debt at December 31, 2009:
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
|
2010
|
|
$
|
157,133
|
|
|
2011
|
|
|
279,760
|
|
|
2012
|
|
|
4,777,726
|
|
|
2013
|
|
|
2,039
|
|
|
|
|
|
|
|
|
|
$
|
5,216,658
|
|
|
|
|
|
|
9. Income Taxes
The Company records a valuation allowance when it is more likely than not that some portion or
all of the deferred tax assets will not be realized. In the opinion of management, realization of
the Company’s net operating loss carryforward is not reasonably assured, and a valuation allowance
of $26,242,000 and $27,138,000 has been provided against deferred tax assets in excess of deferred
tax liabilities in the accompanying consolidated financial statements at December 31, 2008 and
2009, respectively.
The components of the Company’s net deferred taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
Deferred tax assets (liability):
|
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
25,712,000
|
|
|
$
|
26,675,000
|
|
|
Deferred revenue
|
|
|
51,000
|
|
|
|
130,000
|
|
|
Goodwill and other intangibles
|
|
|
—
|
|
|
|
10,000
|
|
|
Accrued liabilities
|
|
|
365,000
|
|
|
|
338,000
|
|
|
Property and equipment
|
|
|
(24,000
|
)
|
|
|
36,000
|
|
|
Software development costs
|
|
|
138,000
|
|
|
|
67,000
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
26,242,000
|
|
|
|
27,256,000
|
|
|
Less: valuation allowance
|
|
|
(26,242,000
|
)
|
|
|
(27,256,000
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
The reconciliation between the income tax expense (benefit) calculated by applying statutory
rates to net income (loss) and the income tax expense (benefit) reported in the accompanying
consolidated financial statements is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. federal statutory rate applied to pretax
income
|
|
$
|
184,000
|
|
|
$
|
(1,032,000
|
)
|
|
Change in valuation allowance
|
|
|
(209,000
|
)
|
|
|
1,014,000
|
|
|
Other
|
|
|
36,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,000
|
|
|
$
|
(18,000
|
)
|
|
|
|
|
|
|
|
|
At December 31, 2009 the Company has federal income tax net operating loss carryforwards of
approximately $73,000,000, which expire at various dates beginning in 2010. The Company is subject
to limitations existing under Internal Revenue Code Section 382 (Change of Control) relating to the
availability of the operating loss carryforward.
36
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
10. Stockholders’ Equity
Preferred Stock
In December 1998 through February 1999, the Company received net proceeds of $8,834,346 from
the private placement of 945,000 shares of Series B Convertible Preferred Stock at a stated value
of $10 per share. Two principal stockholders of the Company purchased $4,000,000 and $2,000,000 of
the offering, respectively and other existing stockholders purchased the balance of $3.45 million.
The Series B Preferred Stock is convertible into common stock of the Company at a fixed price of
$3.625 per share, subject to certain requirements, and carries a dividend of 8% per year payable in
cash or common stock of the Company, at the Company’s option.
In November 2001, the Company received net proceeds of $2,000,000 from the private placement
of 200,000 shares of Series C Convertible Preferred Stock at a stated value of $10 per share with
H.T. Ardinger, Jr., a principal stockholder and former Chairman of the Board of the Company. The
Series C Preferred Stock is convertible into common stock of the Company at a fixed price of $0.60
per share, subject to certain requirements, and carries a dividend of 9% per year payable in cash
or common stock of the Company, at the Company’s option.
Holders of Series B and Series C Preferred Stock have no voting rights except on amendments to
the Company’s Articles of Incorporation to change the authorized shares, or par value, or to alter
or change the powers or preferences of their respective preferred stock issues.
In December 2006, the Company retired certain debt from the Ardinger Family Partnership, Ltd.
in exchange for certain Company securities, including 80,000 shares of ViewCast’s Series E
Convertible Preferred Stock with each share having a stated value of $100 with voting rights on an
“as converted’ basis with the common stock and accrues no dividends. The Series E preferred stock
provides for a conversion option to common stock at $0.60 per share of ViewCast common stock with
an early conversion discount of 15% during the first twenty-four months.
There were no preferred stock dividends declared or paid during 2008 and 2009. The Series B
and Series C Preferred Stock issues carry cumulative dividends of 8% and 9% per year, respectively,
and are generally payable semi-annually in arrears in cash or common stock of the Company, at the
Company’s option. Cumulative dividends on Series B and Series C preferred shares in arrears at
December 31, 2009 are $5,120,000 and $1,437,500.
Common Stock
During 2008 and 2009, the Company received $3,883 and $2,850 in proceeds from the exercise of
19,165 and 10,000 of its outstanding employee stock options, with a weighted-average exercise price
of approximately $0.20 and $0.29 per share, respectively. During 2008 and 2009, the Company
received $17,236 and $14,441 in proceeds from the purchase of 50,397 and 55,106 shares of the Common
Stock by employees through the 2005 Employee Stock Purchase Plan. On March 19, 2009, the Company
issued 1,141,314 shares based on the weighted average closing price of the Company’s common stock
for the ten trading days immediately prior to the closing of the transaction of Ancept acquisition,
which was $0.35.
Stock Option Plan
In October 2005, the Company adopted the ViewCast 2005 Stock Incentive Plan, which replaced
the Company’s expired stock option plans (the 1995 Employee Stock Option Plan and the 1995 Director
Stock Option Plan) and become the sole plan for providing equity-based incentive compensation to
the Company’s employees, non-employee directors and other service providers. Options granted under
the expired stock option plans will continue to be subject to the terms of those plans in effect
before the effective date of the 2005 Stock Incentive Plan. The plan allows for the grant of stock
options, restricted stock, restricted stock units, stock appreciation rights, performance awards
and other incentive awards to employees, non-employee directors and other service providers of the
Company and its affiliates who are in a position to make a significant contribution to the success
of the Company and its affiliates. The purposes of the plan are to attract and retain individuals,
further align employee and stockholder interests, and closely link compensation with Company
performance. The plan is administered by the Board of Directors.
37
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
The maximum number of shares available for grant under the plan is 6,000,000 shares of Common
Stock, plus any shares of Common Stock subject to outstanding awards under the Company’s prior
stock option plans as of the date the plan was approved by ViewCast’s stockholders that later cease
to be subject to such awards for any reason other than such awards having been exercised or
expired. The number of shares available for award under the plan is subject to adjustment for
certain corporate changes in accordance with the provisions of the plan.
Following is a summary of stock option activity from January 1, 2008 through December 31,
2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
Number
|
|
|
Price Per
|
|
Exercise Price
|
|
|
|
|
of Shares
|
|
|
Share
|
|
Per Share
|
|
|
Outstanding at January 1, 2008
|
|
|
2,660,850
|
|
|
$
|
0.20 – $7.14
|
|
$
|
1.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,812,500
|
|
|
|
0.30 – 0.48
|
|
|
0.37
|
|
|
Exercised
|
|
|
(19,165
|
)
|
|
|
0.20 – 0.22
|
|
|
0.20
|
|
|
Canceled/forfeited
|
|
|
(388,250
|
)
|
|
|
0.22 – 3.56
|
|
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2008
|
|
|
4,065,935
|
|
|
$
|
0.20 – $7.14
|
|
$
|
1.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,587,500
|
|
|
|
0.33 – 0.33
|
|
|
0.33
|
|
|
Exercised
|
|
|
(10,000
|
)
|
|
|
0.29 – 0.29
|
|
|
0.29
|
|
|
Canceled/forfeited
|
|
|
(1,480,972
|
)
|
|
|
0.29 – 7.14
|
|
|
2.78
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2009
|
|
|
4,162,463
|
|
|
$
|
0.20 – $3.52
|
|
$
|
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted-average grant-date fair value of options granted was $0.20 and $0.29 for the
years ended December 31, 2008 and 2009, respectively.
The following information applies to options outstanding at December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Weighted-
|
|
|
|
|
|
|
Weighted-
|
|
|
Range of
|
|
Outstanding at
|
|
|
Remaining
|
|
|
Average
|
|
|
Exercisable at
|
|
|
Average
|
|
|
Exercise
|
|
December 31,
|
|
|
Contractual
|
|
|
Exercise
|
|
|
December 31,
|
|
|
Exercise
|
|
|
Prices
|
|
2009
|
|
|
Life
|
|
|
Price
|
|
|
2009
|
|
|
Price
|
|
|
$0.01 – 1.00
|
|
|
3,547,913
|
|
|
|
5.1
|
|
|
$
|
0.38
|
|
|
|
2,161,153
|
|
|
$
|
0.40
|
|
|
1.01 – 2.00
|
|
|
532,050
|
|
|
|
1.2
|
|
|
|
1.12
|
|
|
|
532,050
|
|
|
|
1.12
|
|
|
2.01 – 3.00
|
|
|
80,000
|
|
|
|
0.6
|
|
|
|
2.50
|
|
|
|
80,000
|
|
|
|
2.50
|
|
|
3.01 – 4.00
|
|
|
2,500
|
|
|
|
0.5
|
|
|
|
3.52
|
|
|
|
2,500
|
|
|
|
3.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,162,463
|
|
|
|
4.5
|
|
|
$
|
0.52
|
|
|
|
2,775,703
|
|
|
$
|
0.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009, the balance of unearned stock-based compensation to be expensed in
future periods related to unvested share-based awards, as adjusted for expected forfeitures, is
approximately $249,000. The weighted-average period over which the unearned stock-based
compensation is expected to be recognized is approximately two years.
Employee Stock Purchase Plan
In October 2005, the Company established the ViewCast 2005 Employee Stock Purchase Plan (the
“ESPP”) to provide employees of the Company with an opportunity to purchase common stock through
payroll deductions. The plan replaced the Company’s expired employee stock purchase plan (the 1995
Employee Stock Purchase Plan) which expired in April 2005. Under the ESPP, 1,000,000 shares of
Common Stock have been reserved for issuance, subject to certain antidilution adjustments. The
ESPP is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of
the IRS Code.
38
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
Under the ESPP each offering is for a period of six months ending March 31 and September 30 of
each year. Eligible employees may participate in the ESPP by authorizing payroll deductions during
an offering period within a percentage range determined by the Board of Directors. Initially, the
amount of authorized payroll deductions is not more than ten percent of an employee’s cash
compensation during an offering period, and not more than $25,000 per year. Amounts withheld from
payroll are applied at the end of each offering period to purchase shares of Common Stock.
Participants may withdraw their contributions at any time before stock is purchased, and in the
event of withdrawal such contributions will be returned to participants. The purchase price of the
Common Stock is equal to ninety-five percent (95%) of the market price of Common Stock at the end
of each offering period (the “Exercise Date”). The Purchase Price may be changed by the Board or
its committee but in any case shall never be lower than 85% to the fair market value of a share of
Common Stock on the Exercise Date. ViewCast pays all expenses incurred in connection with the
implementation and administration of the ESPP.
During 2008 and 2009, 50,397 and 55,106 shares of common stock were issued under the ESPP.
Warrants
At December 31, 2008, the Company had outstanding 2,500,000 private warrants with exercise
prices of $0.48 per share and expiration dates in December 2013. On February 27, 2009, the Company
entered into an amendment to the warrant to purchase common stock, dated December 11, 2006, (the
“Amendment”) by and between the Company and the Ardinger Family Partnership, Ltd. The general
partner of the Ardinger Family Partnership, Ltd. is H.T. Ardinger, Jr., the Company’s largest
stockholder. Pursuant to the Amendment, the Company agreed to reduce the per share warrant
exercise price to the average closing price for the five consecutive trading days ending on
February 27, 2009 on the Over-The-Counter Bulletin Board in exchange for the Ardinger Family
Partnership agreeing to exercise the warrant on or prior to March 5, 2009 with the proceeds to be
used by the Company for the acquisition of Ancept Assets (see Note 3). On March 5, 2009, the
Ardinger Family Partnership, Ltd. exercised the outstanding warrant to purchase 2,500,000 shares of
the Company’s unregistered common stock at the amended exercise price of $0.376 per share and the
Company received proceeds of $940,000. At December 31, 2009, the Company had no outstanding
warrants.
11. Employee Benefit Plan
Effective March 1, 1997, the Company adopted a profit sharing plan pursuant to Section 401(k)
of the Internal Revenue Code whereby participants may elect to contribute up to sixty percent (60%)
of their compensation subject to statutory limitations. The plan provides for discretionary
matching and profit sharing contributions by the Company. All employees are eligible to
participate in the plan provided they meet minimum age requirement of eighteen. The Company
discontinued matching contributions under this plan in April 2009. The Company made $82,684 and
$21,453 matching contributions to this plan, for the year ended December 31, 2008 and 2009,
respectively.
39
ViewCast.com, Inc.
Notes to the Consolidated Financial Statements — Continued
12. Commitments and Contingencies
The Company leases offices and manufacturing space at various locations under non-cancelable
operating leases extending through 2021. The Company also leases certain office and computer
equipment under non-cancelable operating leases. Future minimum operating lease payments with
initial or remaining terms of one year or more are as follows:
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
|
Leases
|
|
|
Year ended December 31:
|
|
|
|
|
|
2010
|
|
$
|
369,843
|
|
|
2011
|
|
|
274,080
|
|
|
2012
|
|
|
238,731
|
|
|
2013
|
|
|
243,320
|
|
|
Thereafter
|
|
|
1,934,523
|
|
|
|
|
|
|
|
Total minimum lease payments
|
|
$
|
3,060,497
|
|
|
|
|
|
|
Rent expense was $330,204 and $422,969 for the years ended December 31, 2008 and 2009,
respectively.
13. Related Party Transactions
As discussed in Note 8, the Company has two outstanding notes payable to an entity controlled
by one of its principal stockholders, Mr. H.T. Ardinger.
In addition, the source of a significant portion of the cash paid to Seller for the purchase
of the Ancept Assets (more fully described in Note 3) was obtained by the Company pursuant to the
warrant exercise on March 5, 2009 by H.T. Ardinger and the Ardinger Family Partnership, Ltd. for
the purchase 2,500,000 shares of the Company’s unregistered common stock at an amended exercise
price of $0.376 per share, pursuant to which the Company received proceeds of $940,000. See Note
10 for related party warrant activity.
14. Current Economic Conditions
The current protracted economic decline continues to present companies with difficult
circumstances and challenges, which in some cases have resulted in large and unanticipated declines
in the fair value of certain assets, declines in the volume of business, constraints on liquidity
and difficulty obtaining financing. The financial statements have been prepared using values and
information currently available to the Company.
Current economic and financial market conditions could adversely affect the Company’s results
of operations in future periods. The current instability in the financial markets may make it
difficult for certain of the Company’s customers to obtain financing, which may significantly
impact the volume of future sales which could have an adverse impact on the Company’s future
operating results.
In addition, given the volatility of current economic conditions, the values of assets and
liabilities recorded in the financial statements could change rapidly, resulting in material future
adjustments in allowances for accounts receivable, inventory and valuation of intangibles and
goodwill.
15. Subsequent Event
Effective January 31, 2010, the terms and conditions of the loan and security agreement with
the Ardinger Family Partnership, Ltd. were amended to change the commencement date for the monthly
principal payments on the primary principal amount from January 31, 2010 to July 31, 2010.
40
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A(T). Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) are designed to provide reasonable assurance
that information required to be disclosed by us in the reports we file or submit under the Exchange
Act, is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the Securities and Exchange Commission and that such information is accumulated and
communicated to our management, including our principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required disclosure. As required by
Rule 13a-15(b) under the Exchange Act, our management carried out an evaluation, with the
participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
our disclosure controls and procedures as of December 31, 2009. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2009, our
disclosure controls and procedures were effective in providing such reasonable assurance.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the
Company. Internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting principles generally accepted in the
United States of America.
The Company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with GAAP, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness of internal control over financial reporting
based on the framework in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management
concluded that the Company’s internal control over financial reporting was effective as of December
31, 2009 under the criteria set forth in the Internal Control—Integrated Framework.
This annual report does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial reporting. Management’s report was not
subject to attestation by our registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit us to provide only management’s report in this
Annual Report on Form 10-K.
There have been no changes in the Company’s internal control over financial reporting
identified in connection with the evaluation that occurred during the Company’s last fiscal quarter
that has materially affected, or that is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
Item 9B. Other Information
None.
41
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The names of the Directors and certain other information about them as of March 31, 2010 are
set forth below. Each holds office until the 2010 Annual Meeting of Shareholders or until his
successor is duly elected and qualified.
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Name
|
|
Age
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|
|
Director Since
|
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Office Held with Company
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|
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|
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|
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|
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George C. Platt
|
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69
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|
|
1999
|
|
Chairman of the Board
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|
|
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|
|
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David T. Stoner
|
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53
|
|
|
2008
|
|
President and Chief Executive Officer
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Joseph Autem
|
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52
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1999
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Director
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Sherel D. Horsley
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67
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|
|
2006
|
|
Director
|
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John W. Slocum, Jr.
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69
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2006
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Director
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David W. Brandenburg
|
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65
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|
|
2008
|
|
Director
|
George C. Platt
has served as a director since September 1999 and currently serves as Chairman
of the Board. Mr. Platt joined ViewCast as Chief Executive Officer and President in September
1999. In October 2005, he relinquished the role of President, and he retired from the position of
Chief Executive Officer in July 2008. Mr. Platt is a former member of the Board of Directors of
Intervoice, a publicly held company acquired by Convergys in the fall of 2008. From 1991 through
1999, Mr. Platt was employed by Intecom, Inc., a Dallas-based provider of multimedia
telecommunications products and services, holding the positions of Chief Executive Officer and
President. Prior to his employment with Intecom, Inc., Mr. Platt was the President of SRX, an
entrepreneurial startup company. Before that, he was a Group Vice President (Business
Communications Group) at Rolm Corporation until its acquisition by International Business Machines
Corporation, or IBM, and prior to his employment at Rolm Corporation, Xerox employed him for
fifteen years, where he attained the position of Operations Manager, Southeast Region. Mr. Platt
holds an M.B.A. from the University of Chicago and a B.S. degree from Northwestern University.
David T. Stoner
has served as a director since May 2008 and moved to his current position as
President and Chief Executive Officer in August 2008. Mr. Stoner joined ViewCast as Vice President
of Operations in August 1996 and became President and Chief Operating Officer in October 2005.
From August 1994 to August 1996, Mr. Stoner was Vice President of Engineering for the Connectworks
Division of Connectware, Inc., a wholly owned subsidiary of AMP, Inc. From July 1986 to August
1994, Mr. Stoner was employed by Visual Information Technologies, Inc. (“VITec”), a manufacturer of
video, imaging, and graphics products, which was purchased by Connectware, Inc. At VITec, Mr.
Stoner was responsible for the development of hardware and software products, and served in various
positions including Vice President of Engineering. From January 1979 to July 1986, Mr. Stoner
served in various engineering positions at Texas Instruments, Inc. Mr. Stoner received his B.S.
degree in Electrical Engineering from the University of Kansas.
Joseph Autem
has served as a director since January 1999. He currently serves as a Managing
Director of CFO Partners since October 2009. Additionally, he is the general partner of Autem,
L.L.C., an investment company formed in May 1999. Previously Mr. Autem was a Director of
Broadcast.com, Inc. from September 1996 through August 1999 and has served in various consulting
capacities from July 1998 to the present, including a prior role as the President and a Director of
Paralegals Plus, Inc. which filed for bankruptcy in November 2008. Mr. Autem holds a B.S. in
Accounting from Pittsburg State University.
Sherel D. Horsley
has been a director since June 2006. He is retired from Texas Instruments,
Inc. where he performed 35 years of service covering a variety of marketing and business
development leadership roles, including field marketing assignments. His last position at TI was
Senior Vice President and product manager of Digital Imaging, where he was responsible for product
development, sales and marketing for all products based on TI’s
Digital Light Processing Technology. Mr. Horsley was vice chairman of the Electronic
Industries Alliance (EIA) and a member of the EIA Board of Governors and Executive Committee. He
was also a past board member of the Consumer Electronics Association. During his career, Mr.
Horsley received recognition for his work on numerous projects, and led a team that won the
prestigious Malcolm Baldrige National Quality Award in 1992.
42
John W. Slocum, Jr.
has served as director since June 2006. Professor Slocum holds the title
of Professor Emeritus in the Cox School of Business, Southern Methodist University in Dallas,
Texas. Professor Slocum has taught on the faculties of the University of Washington, Pennsylvania
State University, Ohio State University, the International University of Japan, and the Tuck School
at Dartmouth College. He is the author of 28 books and currently serves as the co-editor of the
Journal of World Business
,
Organizational Dynamics
, and
Journal of Leadership and Organizational
Studies
. Professor Slocum has also served as a management consultant to organizations such as
ARAMARK, Lockheed Martin, Celanese, Prudential Bache Indonesia, among others. He is on the
executive development staff of programs for the Governors of Oklahoma and Texas, SMU, and the
University of North Texas Health Sciences, among others. Professor Slocum is currently on the
board of advisors for Kisco Senior Living of Carlsbad, California.
David W. Brandenburg
has served as director since December 2008. Mr. Brandenburg is a former
Chairman and Vice Chairman of the Board of Directors, Chief Executive Officer and President of
Intervoice, a publicly held company acquired by Convergys in the fall of 2008. Intervoice
developed and delivered enhanced services platforms to cellular service providers that enabled them
to provide voice, text and video messaging and other enhanced services to their customers.
Intervoice also provided Interactive Voice Response systems to Fortune 1000 and other companies.
Mr. Brandenburg first joined Intervoice in 1990 as Chief Operating Officer after having served as a
director since 1989. He was promoted to President of Intervoice in 1991 where he served until
December 1994 when he relinquished his position of President and assumed the position of Vice
Chairman of the Board until May 1995. He re-joined Intervoice as Chief Executive Officer in June
2000 and also served as Chairman of the Board from December 2000 until his retirement in November
2004. In June of 2007, Mr. Brandenburg re-joined the Intervoice Board of Directors as Chairman.
He served in this position until the company was acquired by Convergys in September 2008. Mr.
Brandenburg also served as President and Chief Executive Officer of AnswerSoft, Inc. a global
provider of call center software automation solutions from November 1997 to May 1998, at which time
it completed a merger with Davox Corporation. Davox subsequently changed its name to Concerto
Software, Inc. and, following a merger with Aspect Communications Corp., is now part of Aspect
Software, Inc., a privately-held company. Mr. Brandenburg’s current principal occupation is
serving as a private, self-employed investor and philanthropist. He is Chairman and Chief
Executive Officer of the Brandenburg Life Foundation, a 501(c)(3) charitable foundation which he
founded with his wife in 1996. Mr. Brandenburg received a BSEE from the University of Michigan and
a MSEE from Southern Methodist University.
There are no family relationships among the directors, executive officers, or other
significant employees of ViewCast.
Executive Officers
The following table contains information as of March 31, 2010 as to the executive officers of
ViewCast. Each holds the offices to serve until the next regular meeting of the Board of Directors
to be held immediately following the 2010 Annual Meeting of Shareholders or until their successors
are chosen and qualified by the Board of Directors.
|
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|
|
|
|
|
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Name
|
|
Age
|
|
|
Office Held with Company
|
|
|
|
|
|
|
|
|
|
David T. Stoner
|
|
|
53
|
|
|
President and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
Laurie L. Latham
|
|
|
53
|
|
|
Chief Financial Officer and Senior Vice
President of Finance and Administration
|
43
David T. Stoner’s
information can be found with the information concerning Directors.
Laurie L. Latham
has served as Chief Financial Officer and Senior Vice President of Finance
and Administration of ViewCast since December 1999. From 1997 until she joined ViewCast, Ms.
Latham served as Senior Vice President and Chief Financial Officer of Perivox Corporation, an
interactive communications and direct marketing company. From 1994 through 1997, she was the Vice
President of Finance and Administration at Axis Media Corporation. Prior to joining Axis Media
Corporation, Ms. Latham had been in public practice with national and regional accounting firms,
including KPMG Peat Marwick, and was the Vice President of Finance and Administration for Medialink
International Corporation, a food industry technology company located in California. In addition,
Ms. Latham’s earlier career experience included roles within the oil and gas, real estate and
agricultural industries. Ms. Latham received her B.B.A. from the University of Texas and is a
Certified Public Accountant.
Meetings of the Board of Directors and Committees
Meetings.
The Board of Directors held a total of six meetings during ViewCast’s fiscal year
ended December 31, 2009. Each Director attended in person or telephonically at least 75% of the
meetings held by the Board of Directors and all committees thereof on which he served.
It is our policy that all directors and nominees should attend the annual meeting of
shareholders. All of our directors attended the 2009 Annual Meeting.
The Board of Directors has established two standing committees: the Audit and Compensation
Committees.
Compensation Committee.
The Compensation Committee reviews and approves salaries and bonuses
for all officers, administers options outstanding under ViewCast’s stock incentive plans, provides
advice and recommendations to the Board regarding directors’ compensation and carries out the
responsibilities required by the rules of the U.S. Securities and Exchange Commission (the “SEC”).
The Compensation Committee believes that its processes and oversight should be directed toward
attracting, retaining and motivating employees and non-employee directors to promote and advance
the interests and strategic goals of the Company. The Compensation Committee does not have any
employee members. As requested by the Compensation Committee, the Chief Executive Officer will
provide information and may participate in discussion regarding compensation for other executive
officers. The Compensation Committee does not utilize outside compensation consultants but
considers other general industry information and trends if available. The Board of Directors has
not adopted a written charter for the Compensation Committee.
Directors Brandenburg, Horsley and Slocum serve as the members of the Compensation Committee.
All members of the Compensation Committee are independent directors as defined under the NASDAQ
Stock Market listing standards. The Compensation Committee met one time in the 2009 fiscal year.
Audit Committee.
The Audit Committee oversees and monitors ViewCast’s financial reporting
process and internal control system, reviews and evaluates the audit performed by ViewCast’s
independent registered public accounting firm and reports any substantive issues found during the
audit to the Board and reviews and evaluates the internal audit program. The Audit Committee is
directly responsible for the appointment, compensation and oversight of the work of our independent
registered public accounting firm. The Audit Committee will also review and approve all
transactions with affiliated parties. The Board of Directors has adopted a written charter for the
Audit Committee, which can be located in the investor relations section of our website at
www.viewcast.com.
Directors Autem, Horsley and Slocum serve as the members of the Audit Committee. All members
of the committee are independent directors as defined under the NASDAQ Stock Market listing
standards. The Audit Committee met four times in the 2009 fiscal year.
The Board of Directors has determined that Mr. Autem qualifies as an “Audit Committee
Financial Expert” as that term is defined by applicable SEC rules, and the Board of Directors has
designated him as such.
Nomination of Directors
. The Board of Directors currently does not have a standing nominating
committee and consequently has no nominating committee charter. The Board of Directors believes
that it is appropriate under existing circumstances for the Company not to have a nominating
committee because the Board is comprised of only six members, four of whom are independent as
defined under the NASDAQ Stock Market listing standards. Currently, each member of the Board of
Directors participates in the consideration of director nominees.
44
The Board of Directors does not have a formal policy with regard to the consideration of any
director candidates recommended by shareholders because the Board believes it can adequately
evaluate any such recommendation on a case-by-case basis. However, the Board of Directors would
consider for possible nomination qualified nominees recommended by shareholders. Shareholders who
wish to propose a qualified candidate for consideration should submit complete information as to
the identity and qualifications of that person to the Secretary of the Company at 3701 W. Plano
Parkway, Suite 300, Plano, Texas 75075 sufficiently in advance of an annual meeting.
Absent special circumstances, the Board of Directors will continue to nominate qualified
incumbent directors whom the Board believes will continue to make important contributions to the
Board and the Company. The Board generally requires that nominees be persons of sound ethical
character, be able to represent all shareholders fairly, have demonstrated professional
achievement, have meaningful experience and have a general appreciation of the major business
issues facing ViewCast. The Board of Directors does not have a formal process for identifying and
evaluating nominees for director. However, the Board will evaluate all candidates, whether
recommended by shareholders or otherwise, in accordance with the above criteria.
Code of Ethics
The Company has adopted a Corporate Compliance Program Guidelines and Ethics Policy that
applies to all employees and officers of the Company and its subsidiaries, including the principal
executive officer and principal financial and accounting officer. This policy meets the
requirements of a “code of ethics” as defined by Item 406 of Regulation S-K and was filed as
Exhibit 14.1 to the Company’s report on Form 10-KSB for the fiscal year ended December 31, 2003,
filed with the SEC on March 30, 2004.
The Code of Conduct and Ethics is available on our website at www.viewcast.com under the
“Company Investor Relations.” You may obtain a copy of the Code of Conduct and Ethics, free of
charge, by sending a request in writing to Cordia Leung at the following address: Cordia Leung,
ViewCast.com, Inc., 3701 W. Plano Parkway, Suite 300, Plano, TX 75075.
Shareholder Communications with the Board of Directors.
Shareholders may send written
communications to our Board of Directors by delivering them to The Board of Directors,
Viewcast.com, Inc., at 3701 W Plano Parkway, Suite 300, Plano, TX 75075. All shareholder
communications will be forwarded to the Chairman of the Board of Directors or, if addressed to the
Audit or Compensation Committee, forwarded to the appropriate committee chairman.
Compliance with
Section 16(a)
of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires ViewCast’s officers, directors and persons who
beneficially own more than 10% of a registered class of ViewCast’s equity securities to file
reports of ownership and change in ownership with the U.S. Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required to furnish ViewCast with copies
of Section 16(a) forms which they file.
To ViewCast’s knowledge, based solely on review of the copies of such reports furnished to
ViewCast, and written representations that no other reports were required during the year ended
December 31, 2009, all Section 16(a) filing requirements applicable to ViewCast’s officers,
directors and greater than 10% beneficial owners were complied with.
Item 11. Executive Compensation
Director Compensation
In May 1995, ViewCast adopted a 1995 Director Option Plan (the “Director Plan”) under which
only outside directors were eligible to receive nonstatutory stock options. The Director Plan
terminated on April 21, 2005. As amended and approved by shareholder vote during 2002, a total of
500,000 shares of Common Stock were authorized for issuance under the Director Plan. As of March
31, 2010, options to purchase an aggregate of 50,000 shares at exercise prices ranging from $0.26
to $2.50 per share had been granted and were outstanding under the Director Plan.
45
The exercise price of each option granted under the Director Plan is equal to the fair market
value of the Common Stock on the date of grant. Each share grant vests at the rate of 25% of the
option shares upon the first anniversary of the date of grant and one forty-eighth of the options
shares per month thereafter, unless terminated sooner upon termination of the optionee’s status as
a director or otherwise pursuant to the Director Plan. On December 22, 2005, the Board of
Directors of ViewCast approved accelerating the vesting of “out-of-the-money” unvested options
previously awarded to employees, officers and directors under ViewCast’s stock option plans with an
exercise price greater than $0.30 per share. The numbers of “out-of-the-money” unvested options
under the Director Plan that were accelerated in 2005 and were held by directors as of March 31,
2010 are as follows: Joseph Autem — 14,376 options. In the event of a merger of ViewCast with or
into another corporation or a consolidation, acquisition of assets or other change in control
transaction involving ViewCast, each option becomes exercisable unless assumed or an equivalent
option substituted by the successor corporation.
Directors who are not independent directors currently receive no cash compensation for serving
on the Board of Directors other than reimbursement of reasonable expenses incurred in attending
meetings.
On June 20, 2006 and as subsequently modified on October 8, 2008, the Board of Directors of
ViewCast.com, Inc. approved the policy for the compensation of independent directors by
compensating such individuals with cash and equity designed to both reward such independent
directors for services rendered to the Corporation and to link a portion of their compensation to
the performance of the Corporation by means of equity grants as follows:
|
|
•
|
|
E
ach independent director of the Corporation shall be paid a cash retainer
equal to $500 per month with an additional cash payment for each meeting of the Board of
Directors of the Corporation equal to $1,000 if attended in person and $250 if attended by
telephone; and
|
|
|
•
|
|
E
ach independent director of the Corporation who has not previously served on
the Board of Directors of the Corporation be granted options under the 2005 Stock
Incentive Plan, as described below, to acquire 50,000 shares of the Corporation upon the
appointment to the Board of Directors with such option grant to vest one year from the
date of grant; and
|
|
|
•
|
|
E
ach independent director of the Corporation be granted options under the 2005
Stock Incentive Plan to acquire 25,000 shares of the Corporation each year immediately
following the date of the Corporation’s annual meeting, provided that such independent
director shall have served as a director of the Corporation at least twelve months prior
to the date of such grant, with such option grant to vest one year from the date of grant.
|
The exercise price of each option granted to an independent director under the 2005 Plan is
equal to the fair market value of the Common Stock on the date of grant. As of March 31, 2010,
options to purchase an aggregate of 308,335 shares at an exercise price ranging from $0.20 to
$0.475 per share had been granted to independent directors and were outstanding under the 2005 Plan
and 16,665 options previously granted have been exercised at an exercise price of $0.20 per share.
The following table sets forth information regarding compensation earned by the non-employee
directors of ViewCast.com, Inc. during the last fiscal year ending December 31, 2009.
Director Compensation Table
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Fees Earned or Paid
|
|
|
Option Awards
|
|
|
|
|
|
Name
|
|
in Cash ($) (1)
|
|
|
($) (2)
|
|
|
Total ($)
|
|
|
Joseph Autem
|
|
|
13,225
|
|
|
|
9,309
|
|
|
|
22,534
|
|
|
David Brandenburg
|
|
|
13,225
|
|
|
|
13,390
|
|
|
|
26,615
|
|
|
Sherel D Horsley
|
|
|
13,000
|
|
|
|
8,474
|
|
|
|
21,474
|
|
|
John W
Slocum, Jr.
|
|
|
13,900
|
|
|
|
8,474
|
|
|
|
22,374
|
|
|
|
|
|
|
(1)
|
|
Includes meeting fees earned during the fiscal year, whether such fees were paid
currently or deferred.
|
|
|
|
(2)
|
|
Represents the compensation cost recognized for the fiscal year for options to
purchase shares of ViewCast.com, Inc. Common Stock outstanding to the director,
regardless of the year in which granted and calculated in accordance with FAS 123R
for financial statement purposes. For more information concerning the assumptions
used for these calculations, please refer to the discussion under the section titled
“Stock-Based Compensation” in Note 2 to the audited financial statements contained
in our Form 10-K/A for the year ended December 31, 2009.
|
46
Summary Compensation Table
The table below set forth for 2008 and 2009 the compensation of each of our named executive
officers.
SUMMARY COMPENSATION TABLE
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All other
|
|
|
|
|
|
|
|
|
|
|
|
Salary (1)
|
|
|
Bonus (1)
|
|
|
Awards (2)
|
|
|
Compensation
|
|
|
Compensation (3)
|
|
|
Total
|
|
|
Name and Principal Positions
|
|
Year
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
George Platt, Chairman (4)
|
|
|
2009
|
|
|
|
60,667
|
|
|
|
—
|
|
|
|
57,347
|
|
|
|
—
|
|
|
|
—
|
|
|
|
118,014
|
|
|
|
|
|
2008
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
7,421
|
|
|
|
—
|
|
|
|
—
|
|
|
|
107,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Stoner, CEO and President (4)
|
|
|
2009
|
|
|
|
200,667
|
|
|
|
—
|
|
|
|
26,843
|
|
|
|
—
|
|
|
|
—
|
|
|
|
227,510
|
|
|
|
|
|
2008
|
|
|
|
193,667
|
|
|
|
—
|
|
|
|
21,867
|
|
|
|
72,823
|
(6)
|
|
|
—
|
|
|
|
288,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurie Latham, CFO and Sr. VP
Finance and Administration
|
|
|
2009
|
|
|
|
172,667
|
|
|
|
—
|
|
|
|
21,278
|
|
|
|
—
|
|
|
|
—
|
|
|
|
193,945
|
|
|
|
|
|
2008
|
|
|
|
174,500
|
|
|
|
—
|
|
|
|
21,269
|
|
|
|
67,058
|
(6)
|
|
|
—
|
|
|
|
262,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary Klembara, Sr. VP Sales (5)
|
|
|
2009
|
|
|
|
150,690
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,250
|
(7)
|
|
|
—
|
|
|
|
164,940
|
|
|
|
|
|
2008
|
|
|
|
167,500
|
|
|
|
10,000
|
|
|
|
11,665
|
|
|
|
18,750
|
(7)
|
|
|
—
|
|
|
|
207,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The figures shown for salary and bonus represent amounts earned for the fiscal year, whether
or not actually paid during such year, and include amounts deferred pursuant non-incentive
deferred compensation plans.
|
|
|
|
(2)
|
|
Represents the compensation cost recognized for the fiscal 2008 and 2009 for options to
purchase shares of ViewCast.com, Inc. common stock outstanding to the named executive officer,
regardless of the year in which granted and calculated in accordance with FAS 123R for
financial statement purposes. For more information concerning the assumptions used for these
calculations, please refer to the discussion under the caption Stock-Based Compensation in the
Management’s Discussion and Analysis and footnotes to the audited financial statements,
included in this 2009 Annual Report.
|
|
|
|
(3)
|
|
The named executive officers participate in certain group life, health, disability insurance
and medical reimbursement plans, not disclosed in the Summary Compensation Table, that are
generally available to salaries employees and do not discriminate in scope, terms and
operation.
|
|
|
|
(4)
|
|
Mr. Platt retired from the position of Chief Executive Officer on July 31, 2008. As a
result, Mr. Stoner was appointed Chief Executive Officer.
|
|
|
|
(5)
|
|
Mr. Klembara’s employment with the Company ended in November 2009.
|
|
|
|
(6)
|
|
Represents amounts earned for services rendered during the fiscal year under our CEO’s and
CFO’s Compensation Plan, whether or not actually paid during such fiscal year. Incentive was
earned quarterly and annually if achievement of 100% or greater of the profit target was
accomplished for such quarterly or annual reporting period.
|
|
|
|
(7)
|
|
Represents amounts earned for services rendered during the fiscal year under our Sr. VP of
Sales and Business Compensation Plan, whether or not actually paid during such fiscal year.
Incentive was earned (i) in 2009 based on achievement of 80% or better of the
cumulative quota for sales at the end of each quarter through December 2009 and (ii) in 2008
based on achievement of 90% or better of the cumulative quota for sales at the end of each
quarter through December 2008.
|
47
Stock Awards and Stock Option Grants Outstanding
The following tables set forth information regarding stock awards and similar equity
compensation outstanding at December 31, 2009, whether granted in 2009 or earlier, including awards
that have been transferred other than for value.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options (#)
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vesting Schedule
|
|
George Platt
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
2.5000
|
|
|
|
8/4/2010
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
1.0940
|
|
|
|
2/28/2011
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
0.4850
|
|
|
|
7/3/2012
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
70,000
|
|
|
|
|
|
|
|
|
|
|
|
0.2850
|
|
|
|
4/19/2015
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
0.4200
|
|
|
|
7/10/2014
|
|
|
Fully vested on July 10, 2008
|
|
|
|
|
30,556
|
|
|
|
19,444
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
2/8/2015
|
|
|
1/3 will vest on 2/8/09; with 1/36th each month thereafter
|
|
|
|
|
33,333
|
|
|
|
16,667
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
2/8/2015
|
|
|
15/36 will vest on 3/31/2009; with 1/36th each month thereafter
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
11/11/2015
|
|
|
Fully vested on 11/11/2009
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
0.3300
|
|
|
|
4/15/2016
|
|
|
Vests on 4/15/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Stoner
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
2.5000
|
|
|
|
8/4/2010
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
1.0940
|
|
|
|
2/28/2011
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
0.4850
|
|
|
|
7/3/2012
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
0.2850
|
|
|
|
4/19/2015
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
0.4200
|
|
|
|
7/10/2014
|
|
|
Fully vested on July 10, 2008
|
|
|
|
|
45,833
|
|
|
|
29,167
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
2/8/2015
|
|
|
1/3 will vest on 2/8/09; with 1/36th each month thereafter
|
|
|
|
|
125,000
|
|
|
|
62,500
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
2/8/2015
|
|
|
15/36 will vest on 3/31/2009; with 1/36th each month thereafter
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
0.3300
|
|
|
|
4/15/2016
|
|
|
12/36 will vest on 4/14/2010; with 1/36th each month thereafter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurie L. Latham
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
2.5000
|
|
|
|
8/4/2010
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
1.0940
|
|
|
|
2/28/2011
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
0.4850
|
|
|
|
7/3/2012
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
0.2850
|
|
|
|
4/19/2015
|
|
|
Fully vested on December 31, 2006
|
|
|
|
|
62,500
|
|
|
|
|
|
|
|
|
|
|
|
0.4200
|
|
|
|
7/10/2014
|
|
|
Fully vested on July 10, 2008
|
|
|
|
|
38,194
|
|
|
|
24,306
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
2/8/2015
|
|
|
1/3 will vest on 2/8/09; with 1/36th each month thereafter
|
|
|
|
|
125,000
|
|
|
|
62,500
|
|
|
|
|
|
|
|
0.4800
|
|
|
|
2/8/2015
|
|
|
15/36 will vest on 3/31/2009; with 1/36th each month thereafter
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
0.3300
|
|
|
|
4/15/2016
|
|
|
12/36 will vest on 4/14/2010; with 1/36th each month thereafter
|
2005 Stock Incentive Plan
In October 2005, the Company adopted the ViewCast 2005 Stock Incentive Plan (the “2005 Plan”),
which replaced its expired stock option plans (the 1995 Employee Stock Option Plan and the 1995
Director Stock Option Plan) and become the sole plan for providing equity-based incentive
compensation to ViewCast’s employees, non-employee directors and other service providers. Options
granted under the expired stock option plans will continue to be subject to the terms of those
plans in effect before the effective date of the 2005 Plan. The plan allows for the grant of stock
options, restricted stock, restricted stock units, stock appreciation rights, performance awards
and other incentive awards to employees, non-employee directors and other service providers of
ViewCast and its affiliates who are in a position to make a significant contribution to the success
of ViewCast and its affiliates. The purposes of the plan are to attract and retain individuals,
further align employee and shareholder interests, and closely link compensation with ViewCast’s
performance. The Compensation Committee of the Board of Directors currently administers options
outstanding under the 2005 Plan, the 1995 Plan and the Director Plan.
In October 2009, the Company adopted an amendment to the 2005 Plan to increase the number of
available shares under the 2005 Plan from 3,000,000 to 6,000,000 subject to any adjustments in
accordance with the previously approved 2005 Plan. As amended, the maximum number of shares
available for grant under the 2005 Plan is 6,000,000 shares of Common Stock, plus any shares of
Common Stock subject to outstanding awards under ViewCast’s prior stock option plans as of the date
the 2005 Plan was approved by ViewCast’s stockholders that later cease to be subject to such awards
for any reason other than such awards having been exercised or expired. Such shares shall, as of
the date such shares cease to be subject to such awards, cease to be available for grant under the
prior stock options plans, but shall be available for issuance under the 2005 Plan. The number of
shares available for award under the plan is subject to adjustment for certain corporate changes in
accordance with the provisions of the plan.
48
Employee Stock Purchase Plan
In October 2005, the Company established the ViewCast 2005 Employee Stock Purchase Plan (the
“ESPP”) to provide employees of the Company with an opportunity to purchase common stock through
payroll deductions. The plan replaced the Company’s 1995 employee stock purchase plan which
expired in April 2005. Under the ESPP, 1,000,000 shares of Common Stock have been reserved for
issuance, subject to certain antidilution adjustments. The ESPP is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended (the “Code”).
Under the ESPP, each ESPP offering is for a period of six months ending March 31 and September
30 of each year. Eligible employees may participate in the ESPP by authorizing payroll deductions
during an offering period
within a percentage range determined by the Board of Directors. Initially, the amount of
authorized payroll deductions is not more than ten percent of an employee’s cash compensation
during an offering period, and not more than $25,000 per year. Amounts withheld from payroll are
applied at the end of each offering period to purchase shares of Common Stock. Participants may
withdraw their contributions at any time before stock is purchased, and in the event of withdrawal
such contributions will be returned to participants. The purchase price of the Common Stock is
equal to ninety-five percent (95%) of the market price of Common Stock at the end of each offering
period (the “Exercise Date”). The Purchase Price may be changed by the Board of Directors or its
committee but in any case shall never be lower than 85% of the fair market value of a share of
Common Stock on the Exercise Date. ViewCast pays all expenses incurred in connection with the
implementation and administration of the ESPP. In 2009, Ms. Latham participated in the ESPP.
Employment Agreements
On May 20, 2008, Mr. Platt announced his intent to retire from the position of Chief Executive
Officer of ViewCast effective at the close of business on July 31, 2008. Following his retirement
from the position of Chief Executive Officer of the Company, George C. Platt has continued as
Chairman of the Board of the Company. For services rendered to ViewCast as Chairman of the Board,
Mr. Platt will receive an annual salary of $65,000. Mr. Platt will receive no additional cash
compensation for serving as Chairman other than reimbursement of reasonable expenses incurred in
attending meetings. Mr. Platt voluntarily reduced his cash compensation below $65,000 for part of
the 2009 calendar year.
Prior to July 31, 2008, we had entered into an employment agreement with Mr. Platt. His
employment agreement was initially in effect through March 2001 and had been renewed annually
through March 2008 with ongoing automatic one-year renewals unless ViewCast or Mr. Platt had
elected in advance not to renew the agreement. The employment agreement provided (i) for annual
base compensation of $240,000; (ii) that he was eligible to receive bonuses if our Board of
Directors so elected; (iii) for stock options to purchase 400,000 shares of our Common Stock
pursuant to the 1995 Option Plan which have all expired as of December 31, 2009; and (iv) for an
eighteen (18) month non-compete period if ViewCast terminated Mr. Platt. Mr. Platt voluntarily
reduced his cash compensation below $240,000 for the 2003 through 2007 calendar years.
We have entered into an employment agreement with Mr. Stoner. His employment agreement is
currently in effect through August 2010 and is renewed annually with ongoing automatic one-year
renewals unless ViewCast or Mr. Stoner elects in advance not to renew the agreement. The
employment agreement provides (i) for annual base compensation of $215,000; (ii) for incentive
compensation, at our Board of Directors’ discretion, in an amount up to 30% of base salary at 100%
achievement, increasing in a linear fashion for performance in excess of 100%, with no limit, based
50% on meeting profitability goals and 50% on meeting revenue growth targets and such other
criteria as determined by the Board of Directors, and (iii) for an eighteen month non-compete and
non-solicitation period upon termination of Mr. Stoner. Mr. Stoner voluntarily reduced his cash
compensation below $215,000 for part of the 2009 calendar year.
49
Under the employment agreement, Mr. Stoner will be entitled to (i) a lump sum amount equal to
six months of his annual salary in effect on the date of termination, (ii) beginning six months
after termination the continuation of his salary for six months and (iii) the reimbursement for six
months of COBRA premiums if employment is terminated by ViewCast without cause or by the employee
due to a significant change in the nature and scope of the authority, powers, functions, benefits
or duties attached to his position. In the event ViewCast terminates employment following a change
in control, Mr. Stoner will be entitled to (i) a lump sum amount equal to six months of his annual
salary in effect on the date of termination and (ii) beginning six months after termination the
continuation of his salary for six months.
In 2009, ViewCast had provided Mr. Stoner the incentive compensation opportunities promised
under his employment agreement by means of a 2009 Executive Incentive Compensation Plan. Revenue
goals under this plan were $4,762,437; $5,261,705; $5,694,043 and $ 6,031,815 for the first
through the fourth quarters of 2009, for a total annual goal of $21,750,000. Profit goals under
this plan were $100,000; $101,468; $234,896 and $517,180 for the first through the fourth quarters
of 2009, for a total annual goal of $891,133. In 2009, Mr. Stoner accrued no bonus under this plan
based on attainment of these goals.
We have entered into an employment agreement with Ms. Latham. Her employment agreement is
currently in effect through August 2010 and is renewed annually with ongoing automatic one-year
renewals unless ViewCast or Ms. Latham elects in advance not to renew the agreement. The
employment agreement provides (i) for annual base compensation of $185,000; (ii) for incentive
compensation, at our Board of Directors’ discretion, in an amount up to 30% of base salary at 100%
achievement, increasing in a linear fashion for performance in excess of 100%, with no limit, based
50% on meeting profitability goals and 50% on meeting revenue growth targets and such other
criteria as determined by the Board of Directors, and (iii) for an eighteen month non-compete and
non-solicitation period upon termination of Ms. Latham. Ms. Latham voluntarily reduced her cash
compensation below $185,000 for part of the 2009 calendar year.
Under the employment agreement, Ms. Latham will be entitled to (i) a lump sum amount equal to
six months of her annual salary in effect on the date of termination, (ii) beginning six months
after termination the continuation of her salary for six months and (iii) the reimbursement for six
months of COBRA premiums if employment is terminated by ViewCast without cause or by the employee
due to a significant change in the nature and scope of the authority, powers, functions, benefits
or duties attached to her position. In the event ViewCast terminates Ms. Latham’s employment
following a change in control, she will be entitled to (i) a lump sum amount equal to six months of
her annual salary in effect on the date of termination and (ii) beginning six months after
termination the continuation of her salary for six months.
In 2009, ViewCast had provided Ms. Latham the incentive compensation opportunities promised
under her employment agreement by means of a 2009 Executive Incentive Compensation Plan. Revenue
and profit goals under this plan for 2009 were the same as those for Mr. Stoner’s incentive
compensation plan, discussed above. In 2009, Ms. Latham accrued no bonus under this plan.
On November 12, 2009, Mr. Klembara’s employment with ViewCast ended. Prior to November 12,
2009, we had entered into an employment agreement with Mr. Klembara. The employment agreement
provided (i) for annual base compensation of $175,000; (ii) for incentive compensation deemed
appropriate for the position, at our Board of Directors’ discretion, which may be earned for each
calendar year, and (iii) for an eighteen month non-compete and non-solicitation period upon
termination of employment of Mr. Klembara. Mr. Klembara voluntarily reduced his cash compensation
below $175,000 for part of the 2009 calendar year.
In 2009, ViewCast has provided Mr. Klembara the incentive compensation opportunities promised
under his employment agreement by means of a Sr. Vice President, Sales Incentive Compensation Plan
2009. Under this plan, Mr. Klembara earns quarterly and cumulative commissions based on 2009
revenues, less certain expenses and charge backs. Mr. Klembara had additional incentive
compensation opportunities to earn quarterly and annual bonus based on profit. The quarterly and
annual goals are the same as the quarterly and annual profit and revenue goals for Mr. Stoner’s
compensation plan. The cumulative revenue goal for each quarter is the sum of the revenue goal for
that quarter and any prior quarters in 2009.
Mr. Klembara’s target cumulative commission for each quarter in 2009 is the sum of $18,750 for
that quarter plus $18,750 for each of the prior quarters which has already occurred or $75,000
cumulative total for 2009, and he would be entitled to 60% of his cumulative commissions on
reaching 80% of his cumulative revenue goal, and 100% of those commissions on reaching 100% of his
cumulative revenue goal. Under the plan for exceeding 100% of the cumulative goal, Mr. Klembara
would earn cumulative accelerators of 15% up to 110%, 25% over 110% to 120%, 50% over 120% to 125%,
and 75% over 125% to 130%. Accelerators for achievement between these percentage points will be
prorated, as will achievement beyond 130%. In 2009, Mr. Klembara accrued a commission of $14,250
under this plan.
50
The employment of all other ViewCast officers is “at will” and may be terminated by ViewCast
or the officer at any time, for any reason or no reason.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The following table sets forth information as of March 31, 2010, based on information obtained
from public records and our books and records regarding the persons named below, with respect to
the beneficial ownership of
shares of our Common Stock and Series E Preferred, respectively, by: (i) each person or a
group known by us to be the owner of more than five percent (5%) of each class of our outstanding
voting securities, (ii) each director, (iii) each executive officer and (iv) all officers and
directors as a group. Except as otherwise indicated, each person shown in the table has voting and
investment power with respect to the shares listed next to his or her name. Except as otherwise
indicated, the address for each person listed in the table below is c/o ViewCast.com, Inc., 3701 W.
Plano Parkway, Suite 300, Plano, TX 75075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
|
|
Percentage of
|
|
|
|
|
Shares of Common
|
|
|
Outstanding
|
|
|
Shares of Series E
|
|
|
Outstanding Series E
|
|
|
Name and Address of
|
|
Stock Beneficially
|
|
|
Common Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Beneficial Owner
|
|
Owned
|
|
|
Owned (1), (2)
|
|
|
Beneficially Owned
|
|
|
Owned
|
|
|
|
|
H.T. ARDINGER, JR.
1990 Lakepointe Dr.
Lewisville, TX 75057
|
|
|
27,296,659
|
(3)
|
|
|
50.75
|
%
|
|
|
80,000
|
(11)
|
|
|
100
|
%
|
|
|
|
DAVID W. BRANDENBURG
|
|
|
2,430,500
|
(4)
|
|
|
6.74
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
|
GEORGE C. PLATT
|
|
|
860,972
|
(5)
|
|
|
2.34
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
|
DAVID T. STONER
|
|
|
618,008
|
(6)
|
|
|
1.69
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
|
LAURIE L. LATHAM
|
|
|
573,151
|
(7)
|
|
|
1.57
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
|
SHEREL D. HORSLEY
|
|
|
91,667
|
(8)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
JOSEPH AUTEM
|
|
|
124,867
|
(9)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
JOHN W. SLOCUM, JR.
|
|
|
101,667
|
(10)
|
|
|
*
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
All executive officers and
directors as a group
(seven (7) persons)
|
|
|
4,800,832
|
|
|
|
12.59
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
*
|
|
Less than one percent (1%)
|
|
|
|
(1)
|
|
A person is deemed to be the beneficial owner of securities that can be acquired by such
person within 60 days from March 31, 2010 upon the exercise of warrants or options. Each
beneficial owner’s percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person) and which are
exercisable within 60 days from March 31, 2010 have been exercised. Unless otherwise
indicated, we believe that all persons named in the table have sole voting and investment
power with respect to all shares of Common Stock beneficially owned by them.
|
|
|
|
(2)
|
|
Based on a total of 36,011,868 shares issued and outstanding which excludes treasury stock,
plus, for each person listed, any Common Stock that person has the right to acquire within 60
days from March 31, 2010 pursuant to options, warrants, conversion privileges, etc.
|
|
|
|
(3)
|
|
Information is based on filings made with the Securities and Exchange Commission under
Sections 13 or 16 of the Securities Exchange Act and includes: (i) 181,501 shares owned by Mr.
Ardinger’s spouse, (ii) 5,562,687 shares owned by Ardinger Family Trust, (iii) 1,103,448
shares of Common Stock reserved for issuance upon the conversion of $4,000,000 of Series B
Convertible Preferred Stock to Common Stock at $3.625 per share, (iv) 3,333,333 shares of
Common Stock reserved for issuance upon the conversion of $2,000,000 of Series C Convertible
Preferred Stock to Common Stock at $0.60 per share, and (v) 13,333,333 shares of Common Stock
reserved for issuance upon the conversion of $8,000,000 of Series E Convertible Redeemable
Preferred Stock to Common Stock at $0.60 per share owned by Ardinger Family Partnership.
|
51
|
|
|
|
|
(4)
|
|
Information is based on filings made with the Securities and Exchange Commission under
Sections 13 or 16 of the Securities Exchange Act and includes: (i) 200,000 shares owned by Mr.
Brandenburg’s spouse and (ii) the following shares issuable under the 2005 Stock Incentive
Plan upon exercise of options: 50,000 shares issuable upon exercise at $0.315 per share,.
|
|
|
|
(5)
|
|
Includes the following shares issuable under the 1995 Option Plan and the 2005 Stock
Incentive Plan upon exercise of options: (i) 200,000 shares issuable upon exercise at $0.33
per share, (ii) 50,000 shares issuable upon exercise at $2.50 per share, (iii) 200,000 shares
issuable upon exercise at $1.094 per share, (iv) 70,000 shares issuable upon exercise at
$0.485 per share, (v) 70,000 shares issuable upon exercise at $0.285 per share, (vi) 12,500
shares issuable upon exercise at $0.42 per share, and (vii) 107,778 shares issuable upon
exercise at $0.48 per share.
|
|
|
|
(6)
|
|
Includes the following shares issuable under the 1995 Option Plan and the 2005 Stock
Incentive Plan upon exercise of
options: (i) 72,222 shares issuable upon exercise at $0.33 per share, (ii) 10,000 shares
issuable upon exercise at $2.50 per share, (iii) 100,000 shares issuable upon exercise at $1.094
per share, (iv) 60,000 shares issuable upon exercise at $0.485 per share, (v) 50,000 shares
issuable upon exercise at $0.285 per share, (vi) 62,500 shares issuable upon exercise at $0.42
per share, and (vii) 207,292 shares issuable upon exercise at $0.48 per share.
|
|
|
|
(7)
|
|
Includes the following shares issuable under the 1995 Option Plan and the 2005 Stock
Incentive Plan upon exercise of options: (i) 45,139 shares issuable upon exercise at $0.33 per
share, (ii) 10,000 shares issuable upon exercise at $2.50 per share, (iii) 100,000 shares
issuable upon exercise at $1.094 per share, (iv) 60,000 shares issuable upon exercise at
$0.485 per share, (v) 50,000 shares issuable upon exercise at $0.285 per share, (vi) 62,500
shares issuable upon exercise at $0.42 per share, and (vii) 197,917 shares issuable upon
exercise at $0.48 per share.
|
|
|
|
(8)
|
|
Includes the following shares issuable under the 2005 Stock Incentive Plan upon exercise of
options: (i) 50,000 shares issuable upon exercise at $0.20 per share, (ii) 25,000 shares
issuable upon exercise at $0.42 per share and (iii) 16,667 shares issuable upon exercise at
$0.475 per share.
|
|
|
|
(9)
|
|
Includes the following shares issuable under the 1995 Directors Option Plan upon exercise of
options: (i) 10,000 shares issuable upon exercise at $2.50 per share, (ii) 10,000 shares
issuable upon exercise at $0.755 per share, (iii) 10,000 shares issuable upon exercise at
$0.26 per share, (iv) 10,000 shares issuable upon exercise at $0.615 per share, (v) 10,000
shares issuable upon exercise at $0.37 per share; includes under the 2005 Stock Incentive Plan
(i) 25,000 shares issuable upon exercise at $0.39 per share, (ii) 25,000 shares issuable upon
exercise at $0.42 per share and (iii) 16,667 shares issuable upon exercise at $0.475 per
share.
|
|
|
|
(10)
|
|
Includes the following shares issuable under the 2005 Stock Incentive Plan upon exercise of
options: (i) 33.335 shares issuable upon exercise at $0.20 per share, (ii) 25,000 shares
issuable upon exercise at $0.42 per share and (ii) 16,667 shares issuable upon exercise at
$0.475 per share.
|
|
|
|
(11)
|
|
All of these shares are held through the Ardinger Family Partnership, Ltd.
|
Equity Compensation Plan Information
The following table sets forth certain information as of December 31, 2009 concerning
outstanding awards and securities available for future issuance pursuant to ViewCast’s equity
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities to be
|
|
|
|
|
|
|
Number of securities remaining
|
|
|
|
|
issued upon exercise of
|
|
|
Weighted-average exercise
|
|
|
available for future issuance under
|
|
|
|
|
outstanding options,
|
|
|
price of outstanding options,
|
|
|
equity compensation plans (excluding
|
|
|
Plan category
|
|
warrants and rights
|
|
|
warrants and rights
|
|
|
securities reflected in column (a))
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation
plans approved by
security holders
|
|
|
4,162,463
|
|
|
$
|
0.52
|
|
|
|
2,775,703
|
|
|
Equity compensation
plans not approved
by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,162,463
|
|
|
$
|
0.52
|
|
|
|
2,775,703
|
|
|
|
|
|
|
|
|
|
|
|
|
52
Item 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
Since October 1998, the Company has maintained a credit facility with an entity controlled by
one of its principal stockholders, Mr. H.T. Ardinger. Most recently, ViewCast.com, Inc., Osprey
Technologies, Inc. and VideoWare, Inc. (jointly and severally, “the Borrower”) amended the terms
and conditions of the loan and security agreement with the Ardinger Family Partnership, Ltd. on
March 10, 2010, effective January 31, 2010. Under the amended terms the $1,250,000 of the primary
principal amount and $3,891,361 of the secondary principal amount mature December 31, 2012, subject
to certain earlier payment conditions. The interest on the primary principal amount will accrue
and be paid monthly based on an interest rate per annum which is the greater of 5.0% or the
effective prime rate plus 0.75% (4.00% as of December 31, 2008 and 2009). Interest on the
secondary principal shall accrue based on the effective Applicable Federal Rate, as defined in the
agreement, (2.85% and 2.64% as of
December 31, 2008 and 2009, respectively). The amended terms call for interest to be paid
monthly; and previously accrued interest ($169,846 at December 31, 2008) to be paid in
approximately equal monthly payments from October 31, 2008, through June 30, 2009. Beginning July
31, 2010, minimum monthly principal payments of $21,422 will be made, in additional to the monthly
interest payments. Any amounts remaining outstanding on December 31, 2012, will become due on that
date. The amended note agreement is secured by all the assets of the Borrower.
On March 5, 2009, H.T. Ardinger and the Ardinger Family Partnership, Ltd exercised the
outstanding warrant to purchase 2,500,000 shares of the Company’s unregistered common stock at an
amended exercise price of $0.376 per share and the Company received proceeds of $940,000. On March
13, 2009, the Company completed the purchase of certain assets from Ancept Media Server, LLC
(“Seller”) related to the development and licensing of software products that provide the
management of the life cycle phases of digital media (the “Ancept Assets”) pursuant to the terms of
the Asset Purchase Agreement dated March 5, 2009, as amended, by and between the Company and Seller
(the “Purchase Agreement”). The source of a significant portion of the cash paid to Seller was
obtained by the Company pursuant to the warrant exercise by H.T. Ardinger and the Ardinger Family
Partnership, Ltd on March 5, 2009.
Board of Directors Independence
The Board of Directors is comprised of a majority of directors who qualify as independent
according to NASDAQ Stock Market listing standards. Based upon the term “independent” as defined
by NASDAQ Stock Market listing standards, the Board of Directors has determined that four of our
six directors (Joseph Autem, Sherel D. Horsley, John W. Slocum, Jr. and David W. Brandenburg) are
independent. All members of each of the Audit Committee and the Compensation Committee are
independent directors.
Annually, the Board of Directors reviews the relationships that each director has with us and
our affiliates as well as the criteria and standards for determining independence. Upon review,
the Board of Directors affirmatively determines which directors are considered independent.
None of the executive officers of ViewCast served as a member of the board of directors or as
a member of the compensation committee or similar board committee of another entity during 2009,
which entity had an executive officer serving on the Board of ViewCast or its Compensation
Committee. Consequently, there are no interlocking relationships that might affect the
determination of the compensation of executive officers of ViewCast.
53
Item 14. Principal Accountant Fees and Services
Subject to ratification by the stockholders, the Board of Directors has appointed BKD, LLP as
our independent registered public accounting firm for the 2010 fiscal year. During the fiscal
years ended December 31, 2008 and December 31, 2009, the Company had retained KBA Group LLP and
BKD, LLP, respectively, to provide audit and other services as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
Audit (1)
|
|
$
|
87,325
|
|
|
$
|
116,275
|
|
|
Audit Related Fees (2)
|
|
|
3,150
|
|
|
|
5,000
|
|
|
Tax Fees (3)
|
|
|
21,800
|
|
|
|
20,925
|
|
|
All Other Fees (4)
|
|
|
5,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
117,275
|
|
|
$
|
142,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Consists primarily of quarterly review and annual audit services
|
|
|
|
(2)
|
|
Consists primarily of review services for Form S-8
|
|
|
|
(3)
|
|
Consists primarily of Federal and State tax services
|
|
|
|
(4)
|
|
Consists primarily of Sarbanes-Oxley compliance services
|
The Audit Committee does not have a policy for the pre-approval of non-audit services to be
provided by the Company’s independent registered public accounting firm. Any such services would
be considered on a case-by-case basis. The Audit Committee approved the tax fees for services
provided by the independent auditors in fiscal years 2008 and 2009.
Previous Independent Registered Public Accounting Firm
ViewCast.com, Inc.’s independent registered public accounting firm, KBA Group LLP, announced
on June 1, 2009 that effective as of that date KBA Group, LLP had discontinued offering audit and
other professional services to clients and that the partners and substantially all staff thereof
had joined BKD, LLP. As a result, effective June 1, 2009, KBA Group LLP resigned as the Company’s
independent registered public accounting firm.
KBA Group LLP’s reports on the Company’s consolidated financial statements as of and for the
fiscal year ended December 31, 2008 and 2007 did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2008 and 2007, and through June 1, 2009, there were
(1) no disagreements with KBA Group LLP on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not resolved to KBA Group
LLP’s satisfaction, would have caused KBA Group LLP to make reference thereto in its reports on the
financial statements for such years, and (2) no “reportable events” as that term is used in Item
304 of Regulation S-K.
The Company requested KBA Group LLP to furnish it with a letter addressed to the SEC stating
whether it agrees with the above statements. Such letter, agreeing with the above statements, is
contained as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed June 25, 2009.
Current Independent Registered Public Accounting Firm
On June 22, 2009, the Company’s Audit Committee engaged BKD, LLP as the Company’s new independent
registered public accounting firm for the fiscal year ending December 31, 2009. During the
Company’s two most recent fiscal years ended December 31, 2008 and 2007, and through June 21, 2009,
the Company did not consult with BKD, LLP regarding any of the matters or events set forth in Item
304(a)(2) of Regulation S-K.
54
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of the Report:
|
|
1.
|
|
Financial Statements:
|
|
|
|
|
Consolidated Balance Sheets at December 31, 2008 and 2009
|
|
|
|
|
Consolidated Statements of Operations for the years ended December 31, 2008 and 2009
|
|
|
|
|
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2008
and 2009
|
|
|
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2008 and 2009
|
|
|
|
|
Notes to Consolidated Financial Statements.
|
|
|
2.
|
|
All other schedules are omitted because of they are not required or because the
required information is given in the consolidated financial statements or notes
thereto.
|
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
|
|
|
|
2.1
|
|
|
Agreement and Plan of Merger and Reorganization (1)
|
|
|
|
|
|
|
|
|
2.2
|
|
|
Asset Purchase Agreement between ViewCast.com, Inc. and Ancept Media Server, LLC,
dated March 5, 2009 (26)
|
|
|
|
|
|
|
|
|
2.3
|
|
|
First Amendment to Asset Purchase Agreement between ViewCast.com, Inc. and Ancept
Media Server, LLC, dated March 13, 2009 (26)
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Certificate of Incorporation (1)
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Amendment to Certificate of Incorporation (1)
|
|
|
|
|
|
|
|
|
3.3
|
|
|
Restated Bylaws (4)
|
|
|
|
|
|
|
|
|
3.4
|
|
|
Certificate of Designation of Series B Convertible Preferred Stock (2)
|
|
|
|
|
|
|
|
|
3.5
|
|
|
Certificate of Designation of Series C Convertible Preferred Stock (6)
|
|
|
|
|
|
|
|
|
3.6
|
|
|
Certificate of Designation of Series D Redeemable Convertible Preferred Stock (7)
|
|
|
|
|
|
|
|
|
3.7
|
|
|
Certificate of Designation of Series E Convertible Redeemable Preferred Stock (20)
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Form of Common Stock Certificate (1)
|
|
|
|
|
|
|
|
|
4.2
|
|
|
Form of Warrant Certificate (1)
|
|
|
|
|
|
|
|
|
4.3
|
|
|
Form of Warrant Agreement between ViewCast and Continental Stock Transfer & Trust
Company (1)
|
|
|
|
|
|
|
|
|
4.4
|
|
|
Form of Representative’s Warrant Agreement (1)
|
|
|
|
|
|
|
|
|
4.5
|
|
|
Notice of Extension of Warrant Expiration Date and Exercise Price Adjustment (5)
|
|
|
|
|
|
|
|
|
4.6
|
|
|
Warrant Issued to Ardinger Family Partnership, LTD (20)
|
|
|
|
|
|
|
|
|
10.1
|
|
|
Form of Indemnification Agreement between ViewCast and Executive Officers and
Directors (1)
|
|
|
|
|
|
|
|
|
10.2
|
|
|
Working Capital Line of Credit Loan Agreement between ViewCast and the Ardinger
Family Partnership, LTD (3)
|
|
|
|
|
|
|
|
|
10.3
|
|
|
Sublease Agreement between ViewCast and Host Communications, Inc. (6)
|
|
|
|
|
|
|
|
|
10.4
|
|
|
Reserved.
|
|
|
|
|
|
|
|
|
10.5
|
|
|
Revolving Loan Agreement between MMAC Communications Corp. and Keltic Financial
Partners, LP dated as of October 11, 2002 (7)
|
55
|
|
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
|
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|
10.6
|
|
|
Guarantee of Payment and Performance from ViewCast.com, Inc. to Keltic Financial
Partners, LP dated as of October 11, 2002 (7)
|
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10.7
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|
|
Subordination Agreement by and among Keltic Financial Partners, LP, MMAC
Communications Corp. and ViewCast.com, Inc. dated as of October 11, 2002 (7)
|
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10.8
|
|
|
General Security Agreement by and between MMAC Communications Corp. and Keltic
Financial Partners, LP dated as of October 11, 2002 (7)
|
|
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10.9
|
|
|
Revolving Note by MMAC Communications Corp. in favor of Keltic Financial Partners, LP
dated as of October 11, 2002 (7)
|
|
|
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10.10
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|
|
ViewCast.com, Inc. 2005 Stock Incentive Plan (14)
|
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10.11
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|
|
ViewCast.com, Inc. 2005 Employee Stock Purchase Plan (15)
|
|
|
|
|
|
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|
|
10.12
|
|
|
Reserved.
|
|
|
|
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|
10.13
|
|
|
Reserved.
|
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|
10.14
|
|
|
Reserved.
|
|
|
|
|
|
|
|
|
10.15
|
|
|
Form of Amended and Restated Security Agreement dated October 15, 2003 between
ViewCast.com, Inc. and the Ardinger Family Partnership, LTD (8)
|
|
|
|
|
|
|
|
|
10.16
|
|
|
Form of Amended and Restated Pledge Agreement dated October 15, 2003 between
ViewCast.com, Inc. and the Ardinger Family Partnership, LTD (8)
|
|
|
|
|
|
|
|
|
10.17
|
|
|
Form of First Amendment to the Revolving Loan Agreement dated October 11, 2003
between Delta Computec Inc. and Keltic Financial Partners, LP (8)
|
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|
|
|
|
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|
|
10.18
|
|
|
Reserved.
|
|
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|
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|
10.19
|
|
|
Reserved.
|
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|
|
|
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10.20
|
|
|
Third Amendment dated as of December 10, 2004 to Revolving Loan Agreement between
MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11,
2002 (9)
|
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|
|
|
|
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|
10.21
|
|
|
Fourth Amendment dated as of January 10, 2005 to Revolving Loan Agreement between
MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11,
2002 (9)
|
|
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|
|
|
|
|
|
10.22
|
|
|
Fifth Amendment dated as of February 15, 2005 to Revolving Loan Agreement between
MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11,
2002 (9)
|
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10.23
|
|
|
Notice of Lower Temporary Conversion Price dated March 21, 2005 (10)
|
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|
10.24
|
|
|
Letter Agreement Amending Revolving and Term Credit Facility dated March 22, 2005 (10)
|
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|
|
|
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|
|
10.25
|
|
|
Sixth Amendment, dated as if April 15, 2005, to Revolving Loan Agreement Between MMAC
Communications Corp. and Keltic Financial Partners, LP dated as of October 11, 2002
(11)
|
|
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|
|
|
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|
|
10.26
|
|
|
Seventh Amendment, dated as if July 15, 2005, to Revolving Loan Agreement Between
MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11,
2002 (12)
|
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|
|
|
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|
|
10.27
|
|
|
Letter Agreement Amending Revolving and Term Credit Facility dated July 22, 2005 (13)
|
|
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|
|
|
|
|
|
10.28
|
|
|
Eighth Amendment, dated as if October 11, 2005, to Revolving Loan Agreement Between
MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11,
2002 (16)
|
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|
|
|
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|
|
10.29
|
|
|
Reserved.
|
|
|
|
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|
10.30
|
|
|
Office Lease Agreement between ViewCast and TR Plano Parkway Partners, L.P. (17)
|
|
|
|
|
|
|
|
|
10.31
|
|
|
Letter Agreement Amending Revolving and Term Credit Facility dated March 20, 2006 (18)
|
56
|
|
|
|
|
|
|
Exhibit No.
|
|
Description of Exhibit
|
|
|
|
|
|
|
|
|
10.32
|
|
|
Office Lease Agreement between ViewCast and Valwood Centreport, LP (19)
|
|
|
|
|
|
|
|
|
10.33
|
|
|
Registration Rights Agreement by and among ViewCast and Ardinger Family Partnership,
Ltd. Dated as of December 11, 2006 (20)
|
|
|
|
|
|
|
|
|
10.34
|
|
|
Second Amended Loan and Security Agreement dated as of December 11, 2006 (20)
|
|
|
|
|
|
|
|
|
10.35
|
|
|
Exchange Agreement dated as of December 11, 2006 by and among ViewCast, Osprey
Technologies, Inc. and Videoware, Inc. and Ardinger Family Partnership, Ltd. (20)
|
|
|
|
|
|
|
|
|
10.36
|
|
|
Employment Agreement by and between ViewCast Corporation and David T. Stoner
effective as of March 1, 2007 (21)
|
|
|
|
|
|
|
|
|
10.37
|
|
|
2007 Executive Incentive Compensation Plan for David T. Stoner (21)
|
|
|
|
|
|
|
|
|
10.38
|
|
|
Employment Agreement by and between ViewCast Corporation and Laurie L. Latham
effective as of March 1, 2007 (21)
|
|
|
|
|
|
|
|
|
10.39
|
|
|
2007 Executive Incentive Compensation Plan for Laurie L. Latham (21)
|
|
|
|
|
|
|
|
|
10.40
|
|
|
Purchase and Sale Agreement/Security Agreement by and among ViewCast.com, Inc.,
Osprey Technologies, Inc., Videoware, Inc. and Amegy Bank National Association, dated
June 29, 2007 (22)
|
|
|
|
|
|
|
|
|
10.41
|
|
|
Amendment to Purchase and Sale Agreement/Security Agreement by and among
ViewCast.com, Inc., Osprey Technologies, Inc., Videoware, Inc. and Amegy Bank
National Association, dated June 29, 2007 (22)
|
|
|
|
|
|
|
|
|
10.42
|
|
|
Employment Agreement by and between ViewCast.com, Inc. and Gary Klembara effective
September 1, 2007 (23)
|
|
|
|
|
|
|
|
|
10.43
|
|
|
First Amendment to Amended and Restated Security Agreement by and among Ardinger
Family Partnership, Ltd., ViewCast.com, Inc., Osprey Technologies, Inc. and
Videoware, Inc. (24)
|
|
|
|
|
|
|
|
|
10.44
|
|
|
First Amendment to Warrant to Purchase Common Stock by and between ViewCast.com, Inc.
and Ardinger Family Partnership, Ltd., dated February 27, 2009. (25)
|
|
|
|
|
|
|
|
|
10.45
|
|
|
Second Amendment to Amended and Restated Security Agreement by and among Ardinger
Family Partnership, Ltd., ViewCast.com, Inc., Osprey Technologies, Inc. and
Videoware, Inc. (28)
|
|
|
|
|
|
|
|
|
10.46
|
|
|
Third Amendment to Amended and Restated Security Agreement by and among Ardinger
Family Partnership, Ltd., ViewCast.com, Inc., Osprey Technologies, Inc. and
Videoware, Inc. (29)
|
|
|
|
|
|
|
|
|
14.1
|
|
|
Code of Ethics (27)
|
|
|
|
|
|
|
|
|
21.1
|
|
|
Subsidiaries of ViewCast.com, Inc. (1)
|
|
|
|
|
|
|
|
|
23.1
|
|
|
Consent of BKD, LLP*
|
|
|
|
|
|
|
|
|
23.2
|
|
|
Consent of KBA Group LLP *
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certifications *
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Statement 1350 Certifications *
|
|
|
|
|
|
*
|
|
Filed herewith.
|
|
|
|
(1)
|
|
Incorporated by reference to the Registration Statement on Form SB-2 and all amendments
thereto as declared effective on February 4, 1997.
|
|
|
|
(2)
|
|
Incorporated by reference to Form 8-K filed March 15, 1999.
|
|
|
|
(3)
|
|
Incorporated by reference to Form 10-KSB filed March 26, 1999.
|
|
|
|
(4)
|
|
Incorporated by reference to Form S-3 filed June 30, 2000.
|
57
|
|
|
|
|
(5)
|
|
Incorporated by reference to Form 8-K filed January 23, 2002.
|
|
|
|
(6)
|
|
Incorporated by reference to Form 10-K filed April 16, 2002.
|
|
|
|
(7)
|
|
Incorporated by reference to Form 8-K filed October 25, 2002.
|
|
|
|
(8)
|
|
Incorporated by reference to Form 10-QSB filed November 14, 2003.
|
|
|
|
(9)
|
|
Incorporated by reference to Form 8-K filed March 25, 2005.
|
|
|
|
(10)
|
|
Incorporated by reference to Form 8-K filed March 25, 2005.
|
|
|
|
(11)
|
|
Incorporated by reference to Form 8-K filed April 21, 2005.
|
|
|
|
(12)
|
|
Incorporated by reference to Form 8-K filed July 18, 2005.
|
|
|
|
(13)
|
|
Incorporated by reference to Form 8-K filed July 27, 2005.
|
|
|
|
(14)
|
|
Incorporated by reference to Appendix A to Proxy Statement filed September 9, 2005.
|
|
|
|
(15)
|
|
Incorporated by reference to Appendix B to Proxy Statement filed September 9, 2005.
|
|
|
|
(16)
|
|
Incorporated by reference to Form 8-K filed October 17, 2005.
|
|
|
|
(17)
|
|
Incorporated by reference to Form 8-K filed January 17, 2006.
|
|
|
|
(18)
|
|
Incorporated by reference to Form 8-K filed March 23, 2006.
|
|
|
|
(19)
|
|
Incorporated by reference to Form 8-K filed November 2, 2006.
|
|
|
|
(20)
|
|
Incorporated by reference to Form 8-K filed December 15, 2006.
|
|
|
|
(21)
|
|
Incorporated by reference to Form 10-KSB/A filed April 30, 2007.
|
|
|
|
(22)
|
|
Incorporated by reference to Form 8-K filed July 6, 2007.
|
|
|
|
(23)
|
|
Incorporated by reference to Form 8-K filed September 5, 2007.
|
|
|
|
(24)
|
|
Incorporated by reference to Form 8-K filed November 4, 2008.
|
|
|
|
(25)
|
|
Incorporated by reference to Form 8-K filed March 5, 2009.
|
|
|
|
(26)
|
|
Incorporated by reference to Form 8-K filed March 23, 2009.
|
|
|
|
(27)
|
|
Incorporated by reference to Form 10-KSB filed March 30, 2004.
|
|
|
|
(28)
|
|
Incorporated by reference to Form 8-K filed August 5, 2009.
|
|
|
|
(29)
|
|
Incorporated by reference to Form 8-K filed March 15, 2010.
|
58
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
|
|
|
|
|
|
|
Date
|
|
ViewCast.com, Inc.
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
/s/ Laurie L. Latham
|
|
|
|
|
|
Laurie L. Latham
|
|
|
|
|
|
Chief Financial Officer and Senior Vice President of Finance and
Administration
|
|
POWER OF ATTORNEY
Know all people by these presents, that each person whose signature appears below constitutes
and appoints David T. Stoner and Laurie L. Latham, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her
and in his or her name, place and stead, in any and all capacities, to sign any amendments to this
annual report on Form 10-K, and to file the same, with all exhibits thereto, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully and to all intents and purposes as he or she might or
could do in person, hereby confirming all that said attorneys-in-fact and agents or either of them,
or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ David T. Stoner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Stoner
Director and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ Laurie L. Latham
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Laurie L. Latham
Chief Financial Officer and
Senior Vice President
of Finance and Administration
(Principal Accounting and Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ George C. Platt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George C. Platt
Director
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ Joseph W. Autem
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph W. Autem
Director
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ Sherel D. Horsley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sherel D. Horsley
Director
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ John W. Slocum, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Slocum, Jr.
Director
|
|
|
|
|
|
|
|
|
|
|
|
April 30, 2010
|
|
By:
|
|
/s/ David W. Brandenburg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David W. Brandenburg
Director
|
|
|
59
EXHIBIT INDEX FOR DOCUMENTS FILED WITH THIS REPORT
|
|
|
|
|
|
|
Exhibit
|
|
|
|
No.
|
|
Description of Exhibit
|
|
|
|
|
23.1
|
|
|
Consent of BKD, LLP
|
|
|
23.2
|
|
|
Consent of KBA Group LLP
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) Certifications
|
|
|
32.1
|
|
|
Section 1350 Certifications
|
60
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