SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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þ
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the quarterly period ended June 30, 2009 or
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o
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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: 0-27166
XATA Corporation
(Exact Name of Registrant as Specified in its Charter)
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Minnesota
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41-1641815
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(State or Other Jurisdiction of Incorporation or Organization)
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(I.R.S. Employer Identification Number)
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965 Prairie Center Drive, Eden Prairie, Minnesota 55344
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (952) 707-5600
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes
þ
No
o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes
o
No
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes
o
No
þ
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 definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting
company)
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Smaller reporting company
þ
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APPLICABLE ONLY TO CORPORATE ISSUERS
As of July 24, 2009, the following securities of the Registrant were outstanding: 8,790,214 shares
of Common Stock, $.01 par value per share, 2,003,611 shares of Series B Preferred Stock, 1,269,036
shares of Series C Preferred Stock, 1,566,580 shares of Series D Preferred Stock and 1,355,857
shares of Series E Preferred Stock.
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
XATA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
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For the Three Months Ended
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For the Nine Months Ended
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June 30,
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June 30,
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2009
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2008
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2009
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2008
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Revenue
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$
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17,589
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$
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16,167
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$
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49,127
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$
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35,983
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Costs and expenses
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Cost of goods sold
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10,085
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9,016
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26,943
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19,930
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Selling, general and administrative
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5,712
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6,064
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17,364
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15,057
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Research and development
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1,407
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1,279
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4,218
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3,393
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Total costs and expenses
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17,204
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16,359
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48,525
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38,380
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Operating income (loss)
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385
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(192
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)
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602
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(2,397
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)
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Interest income
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24
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86
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96
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327
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Interest expense
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(375
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)
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(531
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)
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(1,244
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)
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(918
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)
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Income (loss) before income taxes
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34
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(637
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)
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(546
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)
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(2,988
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)
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Income tax expense
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Net income (loss)
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34
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(637
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)
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(546
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)
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(2,988
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)
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Preferred stock dividends
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(50
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)
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(49
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)
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(149
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)
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(143
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)
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Preferred stock deemed dividends
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(46
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)
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(26
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)
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(525
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)
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(69
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)
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Net loss to common shareholders
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$
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(62
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)
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$
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(712
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)
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$
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(1,220
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)
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$
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(3,200
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)
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Net loss per common share basic and diluted
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$
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(0.01
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)
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$
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(0.08
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)
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$
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(0.14
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)
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$
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(0.39
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)
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Weighted average common and
common share equivalents
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Basic and diluted
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8,588
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8,411
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8,530
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8,293
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
3
XATA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
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June 30,
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September 30,
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2009
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2008
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(Unaudited)
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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3,641
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$
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8,904
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Accounts receivable, less allowances
of $469 and $333
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9,075
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11,365
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Inventories
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4,226
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2,735
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Deferred product costs
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2,033
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1,474
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Current portion of investment in sales-type leases
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423
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768
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Prepaid expenses and other current assets
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599
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691
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Total current assets
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19,997
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25,937
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Equipment and leasehold improvements, net
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3,837
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3,925
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Intangible assets, net
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11,149
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12,420
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Goodwill
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3,011
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3,011
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Deferred product costs, net of current portion
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2,665
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2,685
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Investment in sales-type leases, net of current portion
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57
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310
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Debt financing costs, net
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520
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708
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Total assets
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$
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41,236
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$
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48,996
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current liabilities
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Current portion of long-term obligations
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$
|
95
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$
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1,845
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Accounts payable
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5,227
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4,394
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Accrued expenses
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4,639
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6,574
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Deferred revenue
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5,283
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4,996
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Total current liabilities
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15,244
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17,809
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Long-term obligations, net of current portion
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8,546
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16,342
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Deferred revenue, net of current portion
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6,830
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7,848
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Other long-term liabilities
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862
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805
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Total liabilities
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31,482
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42,804
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Shareholders equity
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Preferred stock, no par, 10,000 shares authorized:
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Series B, 4% convertible, 2,250 shares designated;
shares issued and outstanding: 2,004 at June 30, 2009
and 1,926 at September 30, 2008
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4,790
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5,181
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|
Series C, convertible, 1,400 shares designated;
1,269 shares issued and outstanding at June 30, 2009
and September 30, 2008
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4,426
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4,845
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Series D, convertible, 1,600 shares designated;
1,567 shares issued and outstanding at June 30, 2009
and September 30, 2008
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5,279
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|
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5,937
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Series F, convertible, 1,400 shares designated;
1,356 shares issued and outstanding at June 30, 2009
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2,365
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Common stock, par value $0.01 per share; 25,000 shares
authorized; shares issued and outstanding: 8,790 at June 30, 2009
and 8,745 at September 30, 2008
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88
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|
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87
|
|
Additional paid-in capital
|
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32,118
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28,234
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Accumulated deficit
|
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|
(39,312
|
)
|
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|
(38,092
|
)
|
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Total shareholders equity
|
|
|
9,754
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|
|
|
6,192
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Total liabilities and shareholders equity
|
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$
|
41,236
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$
|
48,996
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|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
4
XATA CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(in thousands)
(Unaudited)
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|
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Series B
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Series C
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Series D
|
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|
Series F
|
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Additional
|
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|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
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|
Common Stock
|
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|
Paid-In
|
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Accumulated
|
|
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|
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Shares
|
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Amount
|
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Shares
|
|
|
Amount
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|
|
Shares
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|
|
Amount
|
|
|
Shares
|
|
|
Amount
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|
|
Shares
|
|
|
Amount
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Capital
|
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|
Deficit
|
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|
Total
|
|
Balance at September 30, 2007
|
|
|
1,851
|
|
|
$
|
4,921
|
|
|
|
1,269
|
|
|
$
|
4,845
|
|
|
|
1,567
|
|
|
$
|
5,937
|
|
|
|
|
|
|
$
|
|
|
|
|
8,516
|
|
|
$
|
85
|
|
|
$
|
25,760
|
|
|
$
|
(34,470
|
)
|
|
$
|
7,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued on exercise of options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
44
|
|
Issuance of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,588
|
|
|
|
|
|
|
|
1,588
|
|
Forfeiture of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91
|
|
|
|
1
|
|
|
|
843
|
|
|
|
|
|
|
|
844
|
|
Preferred stock dividends
|
|
|
75
|
|
|
|
191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(192
|
)
|
|
|
(1
|
)
|
Preferred stock deemed dividends
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(69
|
)
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,361
|
)
|
|
|
(3,361
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2008
|
|
|
1,926
|
|
|
|
5,181
|
|
|
|
1,269
|
|
|
|
4,845
|
|
|
|
1,567
|
|
|
|
5,937
|
|
|
|
|
|
|
|
|
|
|
|
8,745
|
|
|
|
87
|
|
|
|
28,234
|
|
|
|
(38,092
|
)
|
|
|
6,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,195
|
|
|
|
|
|
|
|
1,195
|
|
Forfeiture of restricted shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of preferred stock and warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,356
|
|
|
|
2,365
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
2,865
|
|
Record the beneficial conversion feature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(484
|
)
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
78
|
|
|
|
197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(149
|
)
|
|
|
48
|
|
Preferred stock deemed dividends
|
|
|
|
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(525
|
)
|
|
|
|
|
Adjustment to reflect value of beneficial conversion feature
|
|
|
|
|
|
|
(629
|
)
|
|
|
|
|
|
|
(419
|
)
|
|
|
|
|
|
|
(658
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,706
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(546
|
)
|
|
|
(546
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2009
|
|
|
2,004
|
|
|
$
|
4,790
|
|
|
|
1,269
|
|
|
$
|
4,426
|
|
|
|
1,567
|
|
|
$
|
5,279
|
|
|
|
1,356
|
|
|
$
|
2,365
|
|
|
|
8,790
|
|
|
$
|
88
|
|
|
$
|
32,118
|
|
|
$
|
(39,312
|
)
|
|
$
|
9,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
5
XATA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended
|
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(546
|
)
|
|
$
|
(2,988
|
)
|
Adjustments
to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
2,250
|
|
|
|
1,701
|
|
Amortization of debt financing costs
|
|
|
188
|
|
|
|
104
|
|
Stock based compensation
|
|
|
1,195
|
|
|
|
1,238
|
|
Changes in assets and liabilities, net of impact of acquisition:
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
2,290
|
|
|
|
(2,711
|
)
|
Inventories
|
|
|
(1,491
|
)
|
|
|
2,101
|
|
Deferred product costs
|
|
|
(539
|
)
|
|
|
(1,044
|
)
|
Prepaid expenses and other assets
|
|
|
92
|
|
|
|
(618
|
)
|
Lease equipment receivable
|
|
|
598
|
|
|
|
429
|
|
Accounts payable
|
|
|
833
|
|
|
|
(1,205
|
)
|
Accrued expenses
|
|
|
(1,830
|
)
|
|
|
(913
|
)
|
Deferred revenue
|
|
|
(731
|
)
|
|
|
1,741
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
2,309
|
|
|
|
(2,165
|
)
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
Purchase of equipment and leasehold improvements
|
|
|
(892
|
)
|
|
|
(2,757
|
)
|
Purchase of GeoLogic Solutions, Inc., net of cash acquired
|
|
|
|
|
|
|
(16,277
|
)
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(892
|
)
|
|
|
(19,034
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
Borrowings on long-term obligations
|
|
|
18,077
|
|
|
|
16,224
|
|
Payments on long-term obligations
|
|
|
(27,622
|
)
|
|
|
(128
|
)
|
Payments on financing costs
|
|
|
|
|
|
|
(339
|
)
|
Proceeds from issuance of preferred stock and warrants
|
|
|
2,865
|
|
|
|
|
|
Proceeds from options and warrants exercised
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities
|
|
|
(6,680
|
)
|
|
|
15,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents
|
|
|
(5,263
|
)
|
|
|
(5,391
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Beginning
|
|
|
8,904
|
|
|
|
13,675
|
|
|
|
|
|
|
|
|
Ending
|
|
$
|
3,641
|
|
|
$
|
8,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information
|
|
|
|
|
|
|
|
|
Cash payments for interest
|
|
$
|
883
|
|
|
$
|
627
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of noncash investing and financing activities
|
|
|
|
|
|
|
|
|
Preferred stock deemed dividends
|
|
$
|
525
|
|
|
$
|
69
|
|
Preferred stock dividends payable
|
|
$
|
17
|
|
|
$
|
16
|
|
Preferred stock dividends paid
|
|
$
|
197
|
|
|
$
|
191
|
|
Issuance of warrants in consideration for financing fees
|
|
|
|
|
|
$
|
535
|
|
Issuance of sellers note
|
|
|
|
|
|
$
|
2,000
|
|
Issuance of common stock related to purchase of GeoLogic Solutions, Inc.
|
|
|
|
|
|
$
|
300
|
|
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Significant Accounting Policies
Presentation
The accompanying unaudited consolidated financial statements were prepared by XATA Corporation (the
Company) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for
interim financial statements. Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant to such rules and
regulations, although the Company believes the disclosures made herein are adequate to make the
information presented not misleading.
In the opinion of management, the consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to fairly present the financial
condition, results of operations, and cash flows for the periods presented. Results of operations
for the periods presented are not necessarily indicative of results to be expected for any other
interim period or for the full year. These consolidated financial statements should be read in
conjunction with the Companys financial statements and notes thereto in its Form 10-K for the year
ended September 30, 2008 and Annual Report to Shareholders filed with the SEC.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiary GeoLogic Solutions, Inc. All significant intercompany accounts and transactions have
been eliminated in consolidation.
Revenue Recognition
The Company derives its revenue from sales of systems, software and related services. The Company
recognizes revenue in accordance with Statement of Position (SOP) 97-2,
Software Revenue
Recognition
, as amended by SOP 98-9, Modification of SOP 97-2,
Software Revenue Recognition with
Respect to Certain Transactions
, and Securities and Exchange Commission Staff Accounting Bulletin
(SAB) 104,
Revenue Recognition in Financial Statements
.
The Company recognizes revenue under SOP 97-2 and SAB 104 when (i) persuasive evidence of an
arrangement exists (for example a signed agreement or purchase order), (ii) delivery has occurred,
as evidenced by shipping documents or customer acceptance, (iii) the fee is fixed or determinable
and payable within twelve months, and (iv) collectability is probable and supported by credit
checks or past payment history.
With regard to arrangements involving multiple elements, the Company allocates revenue to the
software and services elements based on the fair value of each element with the residual amount
allocated to the systems revenue which is recognized upon delivery. The Companys determination of
fair value relating to the software and services elements in multiple-element arrangements is based
on vendor-specific objective evidence (VSOE). The Companys assessment of VSOE for each element is
either the price charged when the same element is sold separately or the price established by
management if that item is not yet sold separately. The Company has analyzed all of the elements
included in its multiple-element
arrangements and has determined that it has sufficient VSOE to allocate revenue to the services and
7
software components of its arrangements. Accordingly, assuming all other revenue recognition
criteria are met, revenue from the software component is recognized ratably over the applicable
term.
Agreements that do not meet the requirements described in Emerging Issues Task Force (EITF) 00-03,
Application of AICPA Statement of Position 97-2 to Arrangements That Include the Right to Use
Software Stored on Another Entitys Hardware
, to allow treatment under SOP 97-2, result in the
recognition of all revenue ratably over the term of the agreement.
Allowance for Doubtful Accounts
The Company grants credit to customers in the normal course of business. The majority of the
Companys accounts receivable and investment in sales-type leases receivable are due from companies
with fleet trucking operations in a variety of industries. Credit is extended based on an
evaluation of a customers financial condition and, generally, collateral is not required, although
sales-type leases receivable are secured by a retained security interest in the leased equipment.
Accounts receivable are typically due from customers within 30 days and are stated at amounts net
of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual
payment terms are considered past due. The Company determines the allowance for doubtful accounts
by considering a number of factors, including the length of time accounts receivables are past due,
our previous loss history, the customers current ability to pay its obligation, and the condition
of the general economy and the industry as a whole. The Company reserves for these accounts
receivable by increasing bad debt expense when they are determined to be uncollectible. Payments
subsequently received, or otherwise determined to be collectible, are treated as recoveries that
reduce bad debt expense. The balance of the allowance accounts at June 30, 2009 and September 30,
2008 was approximately $0.5 million and $0.3 million, respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Basis of Presentation
Certain amounts from the prior years financial statements have been reclassified to conform to the
current year presentation. These reclassifications resulted from a detailed review by management of
the operating expenses of the Company and involved moving certain internal salaries and IT related
costs from selling, general and administrative expenses and research and development expenses to
cost of sales and between operating expense categories. These reclassifications had no effect on
net loss to common shareholders or shareholders equity. The reclassifications are shown below (in
thousands):
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As Previously
|
|
|
|
|
|
As Currently
|
|
|
Reported
|
|
Reclassification
|
|
Reported
|
For the three months ended June 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
8,542
|
|
|
$
|
474
|
|
|
$
|
9,016
|
|
Selling, general and administrative expenses
|
|
|
6,218
|
|
|
|
(154
|
)
|
|
|
6,064
|
|
Research and development expenses
|
|
|
1,599
|
|
|
|
(320
|
)
|
|
|
1,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended June 30, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
18,609
|
|
|
$
|
1,321
|
|
|
$
|
19,930
|
|
Selling, general and administrative expenses
|
|
|
15,693
|
|
|
|
(636
|
)
|
|
|
15,057
|
|
Research and development expenses
|
|
|
4,078
|
|
|
|
(685
|
)
|
|
|
3,393
|
|
Additionally, during fiscal year 2009, the Company determined that the previous accounting provided
on the initial issuance of the Series B, C and D preferred stock did not reflect the value of the
beneficial conversion feature as additional paid-in capital. The Company has made an adjustment
within the equity section to properly reflect the carrying value of the respective issues of the
preferred stock. These reclassifications had no effect on net loss to common shareholders.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments in overnight sweep and money market
accounts. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation
insurance limits.
Fair Value of Financial Instruments
Fair Value Hierarchy
SFAS No. 157,
Fair Value Measurement,
establishes a fair value hierarchy that requires an
entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. Observable inputs are obtained from independent sources and can be validated
by a third party, whereas unobservable inputs reflect assumptions regarding what a third party
would use in pricing an asset or liability. A financial instruments categorization within the fair
value hierarchy is based upon the lowest level of input that is significant to the fair value
measurement. SFAS No. 157 establishes three levels of inputs that may be used to measure fair
value:
Level 1
Observable inputs that reflect quoted prices (unadjusted) for identical assets or
liabilities in active markets.
Level 2
Include other inputs that are directly or indirectly observable in the marketplace.
Level 3
Unobservable inputs which are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value.
The carrying amounts of the Companys financial instruments, which include cash and cash
equivalents, accounts receivable, sales-type lease receivables, accounts payable and debt
obligations, approximate fair value.
9
Inventories
Inventories consist of finished goods which are stated at the lower of cost or market. Cost is
determined on the average cost method, which approximates the first-in, first-out method.
Investment in Sales-Type Leases
As the result of the acquisition of GeoLogic Solutions, Inc. on January 31, 2008, the Company
acquired GeoLogic Solutions, Inc.s investment in sales-type leases. The Company records the
investment in sales-type leases at the present value of the future minimum lease payments. There
is no guaranteed residual value associated with the leased devices. The receivables generally have
terms of five years and are collateralized by a security interest in the related equipment. The
Company records subscriber revenue on these leased devices as the ongoing service is provided over
the term of the related lease agreement and recognizes interest income as the lease payments are
billed to the customers. Future minimum lease payments to the Company under non-cancelable
sales-type leases as of June 30, 2009 are as follows (in thousands):
|
|
|
|
|
Years ending September 30,
|
|
|
|
|
2009
|
|
$
|
179
|
|
2010
|
|
|
296
|
|
2011
|
|
|
42
|
|
|
|
|
|
Total minimum lease payments
|
|
|
517
|
|
Less: amount representing interest (at 11.71%)
|
|
|
(37
|
)
|
|
|
|
|
Present value of net minimum sales-type lease payments
|
|
|
480
|
|
Less: current portion of investment in sales-type leases
|
|
|
(423
|
)
|
|
|
|
|
Investment in sales-type leases, excluding current portion
|
|
$
|
57
|
|
|
|
|
|
Interest income from sales-type leases was approximately $18,000 and $46,000 for the three months
ended June 30, 2009 and 2008, respectively, and $71,000 and $83,000 for the nine months ended June
30, 2009 and 2008, respectively.
Debt Financing Costs
Debt financing costs are amortized to interest expense over the term of the related financing
agreement on a straight-line basis, which approximates the effective interest method. The net
carrying value of the debt financing costs is approximately $0.5 million and $0.7 million as of
June 30, 2009 and September 30, 2008, respectively.
Equipment and Leasehold Improvements
Purchased equipment and leased equipment under capital leases are stated at cost and depreciated
using the straight-line method over estimated useful lives of approximately two to seven years.
Leasehold improvements are amortized over the shorter of the remaining lease term at the time of
purchase or their estimated useful lives (one to seven years). Depreciation for income tax
reporting purposes is computed using accelerated methods.
Equipment and leasehold improvements consist of (in thousands):
10
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
Office furniture and equipment
|
|
$
|
4,809
|
|
|
$
|
4,003
|
|
Engineering and manufacturing equipment
|
|
|
900
|
|
|
|
831
|
|
Leasehold improvements
|
|
|
2,462
|
|
|
|
2,473
|
|
|
|
|
|
|
|
|
|
|
|
8,171
|
|
|
|
7,307
|
|
Less: accumulated depreciation
|
|
|
(4,334
|
)
|
|
|
(3,382
|
)
|
|
|
|
|
|
|
|
Equipment and leasehold improvements, net
|
|
$
|
3,837
|
|
|
$
|
3,925
|
|
|
|
|
|
|
|
|
Depreciation expense was approximately $0.3 million for each of the three months ended June 30,
2009 and 2008, and $1.0 million and $0.9 million for the nine months ended June 30, 2009 and 2008,
respectively.
Capitalized Software Development Costs
Software development costs incurred after establishing technological feasibility are capitalized in
accordance with Statement of Financial Accounting Standards No. 86, (SFAS No. 86),
Accounting for
the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed
. Capitalized costs are
amortized to cost of goods sold beginning when the product is first released for sale to the
general public. Amortization is at the greater of the amount computed using the ratio of current
gross revenues for the product to the total of current and anticipated future gross revenues or the
straight-line method over the estimated economic life of the product (two to five years). As of
June 30, 2009 and September 30, 2008 there were no capitalized software development costs.
Software development costs that do not meet the capitalization criteria of SFAS No. 86 are charged
to research and development expense as incurred.
Long-Lived Assets
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be
recognized when the sum of the undiscounted future net cash flows expected to result from the use
of the asset and its eventual disposition is less than its carrying amount.
Goodwill and Intangible Assets
As of June 30, 2009, the Company had a goodwill balance of $3.0 million that resulted from the
Companys acquisition of GeoLogic Solutions, Inc. on January 31, 2008. The Company records
goodwill when the purchase price of net tangible and intangible assets acquired exceeds their fair
value. In accordance with SFAS No. 142,
Goodwill and Other Intangible Assets,
the Company will
review goodwill for impairment at least annually, on the first day of the fourth quarter, or more
frequently if an event occurs indicating the potential for impairment. Goodwill is not amortized,
but instead tested for impairment at the reporting unit level. The Company has one reporting unit.
The annual goodwill impairment test is a two-step process. First, the Company determines if the
carrying value of its related reporting unit exceeds fair value, which would indicate that goodwill
may be impaired. If the Company then determines that goodwill may be impaired, implied fair value
of the goodwill is compared to its carrying amount to determine if there is an impairment loss. The
Company completed this review in the fourth quarter of fiscal 2008 and concluded that no impairment
existed.
11
Intangible assets are carried at cost less accumulated amortization. The Company amortizes the
cost of identified intangible assets on a straight-line basis over their expected economic lives.
In accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets
,
the Company reviews intangible assets that have finite useful lives when an event occurs indicating
the potential for earlier impairment. The Company measures impairment losses related to long-lived
assets based on the amount by which the carrying amounts of these assets exceed their fair values.
The Company measures fair value
under SFAS No. 144, which is generally based on the present value of estimated future cash flows.
The Companys analysis is based on available information and on assumptions and projections it
considers to be reasonable and supportable. The cash flow analysis considers the likelihood of
possible outcomes and is based on the Companys best estimate of projected future cash flows. If
necessary, the Company performs subsequent calculations to measure the amount of the impairment
loss based on the excess of the carrying value over the fair value of the impaired assets.
Based on the allocation of the purchase price for GeoLogic Solutions, Inc., intangible assets
subject to amortization were as follows as of June 30, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Life (years)
|
|
|
Cost
|
|
|
Amortization
|
|
|
Net
|
|
Acquired customer contracts
|
|
|
8
|
|
|
$
|
13,500
|
|
|
$
|
(2,390
|
)
|
|
$
|
11,110
|
|
Other intangibles
|
|
|
7
|
|
|
|
49
|
|
|
|
(10
|
)
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8
|
|
|
$
|
13,549
|
|
|
$
|
(2,400
|
)
|
|
$
|
11,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense was $0.4 million for each of the three months ended June 30, 2009 and 2008 and
$1.3 million and $0.7 million for the nine months ended June 30, 2009 and 2008, respectively.
Future amortization expense, as of June 30, 2009, is expected to be as follows (in thousands):
|
|
|
|
|
Years Ending September 30,
|
|
|
|
|
2009
|
|
$
|
424
|
|
2010
|
|
|
1,695
|
|
2011
|
|
|
1,695
|
|
2012
|
|
|
1,695
|
|
2013
|
|
|
1,695
|
|
Thereafter
|
|
|
3,945
|
|
|
|
|
|
Total expected amortization expense
|
|
$
|
11,149
|
|
|
|
|
|
Product Warranties
The Company sells its systems with a limited warranty, with an option to purchase extended
warranties. The Company provides for estimated warranty costs in relation to the recognition of
the associated revenue. Factors affecting the Companys product warranty liability include the
number of units sold, historical and anticipated rates of claims and cost per claim. The Company
periodically assesses the adequacy of its product warranty liability based on changes in these
factors.
At June 30, 2009 and September 30, 2008, the Company had accruals for product warranties of
approximately $1.4 million and $1.6 million, respectively. These amounts are included in accrued
expenses on the Companys balance sheet.
12
Shipping Costs
Shipping costs, which are classified as a component of cost of goods sold, were approximately $0.1
million for each of the three months ended June 30, 2009 and 2008 and $0.3 million for each of the
nine
months ended June 30, 2009 and 2008. Customer billings related to shipping and handling fees are
reported as systems revenue.
Advertising Costs
Advertising costs consist primarily of ad campaigns, catalog brochures, promotional items and trade
show expenses and are expensed as incurred. Advertising costs, which are included in selling,
general and administrative expenses, were approximately $0.2 million and $0.4 million for the three
months ended June 30, 2009 and 2008, respectively, and $0.7 million for each of the nine months
ended June 30, 2009 and 2008.
Income taxes
The Company accounts for income taxes following the provisions of SFAS No. 109,
Accounting for
Income Taxes
. SFAS No. 109 requires that deferred income taxes be recognized for the future tax
consequences associated with differences between the tax basis of assets and liabilities and their
financial reporting amounts at each year end, based on enacted tax laws and statutory rates
applicable to the periods in which the differences are expected to affect taxable earnings.
Valuation allowances are established by the Company when necessary to reduce deferred tax assets to
the amount more likely than not to be realized. The effect of changes in tax rates is recognized in
the period in which the rate change occurs.
Recently Issued Accounting Standards
Fair Value Measurements (SFAS 157)
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
. SFAS 157 defines fair
value, establishes a framework for measuring fair value and expands disclosures about fair value
measurements but does not require any new fair value measurements. In February 2008, the Financial
Accounting Standards Board issued FASB Staff Position (FSP) No. 157-2,
Effective Date of FASB
No. 157,
which delays the effective date for non-financial assets and non-financial liabilities to
fiscal years beginning after November 15, 2008, except for items that are measured at fair value in
the financial statements on a recurring basis (at least annually). The adoption of this accounting
pronouncement is not expected to have a material effect on the financial statements.
Business Combinations Revised (SFAS 141R)
In December 2007, the FASB issued SFAS No. 141(R) (revised 2007),
Business Combinations
. SFAS
141(R) replaces SFAS 141 and establishes principles and requirements for how an acquirer recognizes
and measures in its financial statements the identifiable assets acquired, including goodwill, the
liabilities assumed and any non-controlling interest in the acquiree. SFAS 141(R) also establishes
disclosure requirements to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. This statement is effective for fiscal years
beginning after December 15, 2008. The impact of the adoption of SFAS 141(R) will depend on future
acquisitions as there will be no impact on our existing financial position and results of
operations.
13
The Hierarchy of Generally Accepted Accounting Principles (SFAS 162)
In May 2008, the FASB issued SFAS No. 162,
The Hierarchy of Generally Accepted Accounting
Principles
. SFAS No. 162 identifies the sources of accounting principles and the framework for
selecting
the principles used in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP hierarchy). SFAS
No. 162 became effective November 15, 2008. The adoption of SFAS No. 162 has not had a material
effect on the Companys financial position, operating results or cash flows.
The FASB Accounting Standards Codification
TM
and the Hierarchy of Generally Accepted
Accounting Principlesa replacement of FASB Statement No. 162 (SFAS 168)
In June 2009, the FASB issued SFAS No. 168,
The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principlesa replacement of FASB Statement No. 162
. The
Codification will become the source of authoritative GAAP recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date
of SFAS 168, the Codification will supersede all then-existing non-SEC accounting and reporting
standards. All other nongrandfathered non-SEC accounting literature not included in the
Codification will become nonauthoritative. SFAS 168 is effective for financial statements issued
for interim and annual periods ending after September 15, 2009. SFAS 168 is not expected to have a
material impact on our financial statements.
Subsequent Events (SFAS 165)
In May 2009, the Financial Accounting
Standards Board issued Statement 165, Subsequent Events, to incorporate the accounting and
disclosure requirements for subsequent events into U.S. generally accepted accounting principles.
Statement 165 introduces new terminology, defines a date through which management must evaluate
subsequent events, and lists the circumstances under which an entity must recognize and disclose events
or transactions occurring after the balance-sheet date. The Company adopted Statement 165 as of
June 30, 2009, which was the required effective date. The Company evaluated its June 30, 2009 financial
statements for subsequent events through July 15, 2009, the date the financial statements were available
to be issued. The Company is not aware of any subsequent events which would require recognition or disclosure
in the financial statements.
Note 2. Revenue and Cost of Goods Sold Information
The Company operates and manages the business as one reportable segment. Factors used to identify
the single operating segment include the financial information available for evaluation by the
chief operating decision maker in making decisions about how to allocate resources and assess
performance. For the three and nine months ended June 30, 2009 and 2008, the Company reported the
following revenues and related cost of goods sold by type.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$
|
8,976
|
|
|
$
|
7,328
|
|
|
$
|
25,441
|
|
|
$
|
16,089
|
|
Systems
|
|
|
6,804
|
|
|
|
7,637
|
|
|
|
19,215
|
|
|
|
16,985
|
|
Services
|
|
|
1,809
|
|
|
|
1,202
|
|
|
|
4,471
|
|
|
|
2,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
$
|
17,589
|
|
|
$
|
16,167
|
|
|
$
|
49,127
|
|
|
$
|
35,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Cost of goods sold:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$
|
2,495
|
|
|
$
|
2,272
|
|
|
$
|
7,258
|
|
|
$
|
4,982
|
|
Systems
|
|
|
6,470
|
|
|
|
5,925
|
|
|
|
16,725
|
|
|
|
12,757
|
|
Services
|
|
|
1,120
|
|
|
|
819
|
|
|
|
2,960
|
|
|
|
2,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of goods sold
|
|
$
|
10,085
|
|
|
$
|
9,016
|
|
|
$
|
26,943
|
|
|
$
|
19,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
Note 3. GeoLogic Solutions, Inc. Acquisition
On January 31, 2008, the Company acquired all of the outstanding stock of GeoLogic Solutions, Inc.
The results of operations of GeoLogic Solutions, Inc. have been included in the Companys
consolidated results of operations since the date of acquisition. GeoLogic Solutions, Inc. provides
mobile
communications and tracking systems for the transportation industry. The acquisition enhanced the
Companys product portfolio and broadened its addressable market.
The total purchase price included $15.3 million in cash, 90,689 shares of common stock (valued at
$0.3 million) of the Company and $1.8 million in debt obligations to the seller of GeoLogic
Solutions, Inc. The Company also incurred $1.6 million of transaction costs in connection with the
acquisition. The Company incurred additional debt of $16.2 million in connection with the
acquisition.
The components of the purchase price and the allocation to the assets and liabilities based on
their estimated fair values at the date of acquisition are as follows (in thousands):
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
$
|
15,277
|
|
Debt obligations
|
|
|
|
|
|
|
1,750
|
|
Common stock
|
|
|
|
|
|
|
300
|
|
Transaction costs
|
|
|
|
|
|
|
1,560
|
|
|
|
|
|
|
|
|
|
Total purchase price
|
|
|
|
|
|
$
|
18,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
557
|
|
|
|
|
|
Other current assets
|
|
|
6,208
|
|
|
|
|
|
Property and equipment
|
|
|
554
|
|
|
|
|
|
Intangible and other assets
|
|
|
1,049
|
|
|
|
|
|
Current liabilities
|
|
|
(5,992
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
|
|
|
|
2,376
|
|
Acquired customer contracts
|
|
|
|
|
|
|
13,500
|
|
Goodwill
|
|
|
|
|
|
|
3,011
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
18,887
|
|
|
|
|
|
|
|
|
|
Unaudited pro forma results of operations for the nine months ended June 30, 2008, as if the
purchase had occurred at the beginning of the periods indicated are as follows (in thousands,
except per share amounts):
15
|
|
|
|
|
|
|
For the Nine Months
|
|
|
Ended June 30, 2008
|
Net sales
|
|
$
|
42,936
|
|
|
|
|
|
|
Net loss to common shareholders
|
|
$
|
(6,977
|
)
|
|
|
|
|
|
Net loss per common share basic and diluted
|
|
$
|
(0.84
|
)
|
|
|
|
|
|
Weighted
average common and common share equivalents basic and diluted
|
|
|
8,293
|
|
Pro forma adjustments relate to amortization of intangible assets, interest expense resulting from
acquisition financing and certain other adjustments. The above unaudited pro forma consolidated
results of operations are for comparative purposes only and are not necessarily indicative of
results that would have occurred had the acquisition been consummated as of the beginning of the
periods presented, nor are they necessarily indicative of future results.
Note 4. Stock-Based Compensation
In February 2007 the Company adopted the 2007 Long Term Incentive and Stock Option Plan (the 2007
Plan). The 2007 Plan permits the granting of incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended, and nonqualified options that do not
meet the requirements of Section 422. Stock appreciation rights, restricted stock awards, and
restricted stock units may also be granted under the 2007 Plan. A total of 500,000 shares of the
Companys common stock were originally reserved for issuance pursuant to equity awards under the
2007 Plan. Subsequently, 1,000,000 shares were approved for addition to the 2007 Plan at the 2009
Annual Shareholders Meeting. The 2007 Plan has an evergreen provision in which the maximum number
of shares that may be issued under the 2007 Plan shall be cumulatively increased on January 1, 2008
and on each January 1 thereafter for nine years by the lesser of (i) 500,000 Common Shares, (ii) 3%
of the Companys outstanding Common Shares, on an as-converted basis, as of the preceding December
31 and (iii) a number of Common Shares determined by the Board or Committee. The Company has
591,820 shares authorized and available for future equity awards as of June 30, 2009. Generally,
the options that are granted under the 2007 Plan are exercisable for a period of ten years from the
date of grant and vest over a period of up to three years from the date of grant.
Stock Options
The Company accounts for share-based employee compensation plans under the provisions of Statement
of Financial Accounting Standards No. 123(R) (SFAS 123(R)),
Share-Based Payment,
which requires
the measurement and recognition of compensation expense for all share-based payment awards to
employees and directors based on estimated fair values.
The fair value of each option is estimated at the grant date using the Black-Scholes option-pricing
model. The weighted average fair value at the date of grant and the assumptions used to determine
such values are indicated in the following table (number of shares in thousands):
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
Number of shares granted
|
|
|
|
|
|
|
27
|
|
|
|
725
|
|
|
|
323
|
|
Fair value
|
|
|
|
|
|
$
|
0.87
|
|
|
$
|
0.86
|
|
|
$
|
0.81
|
|
Risk-free interest rate
|
|
|
|
|
|
|
2.47
|
%
|
|
|
2.28
|
%
|
|
|
2.24
|
%
|
Expected volatility
|
|
|
|
|
|
|
29.88
|
%
|
|
|
40.26
|
%
|
|
|
30.88
|
%
|
Expected life (in years)
|
|
|
|
|
|
|
3.50
|
|
|
|
5.73
|
|
|
|
3.70
|
|
Dividend yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company estimates the volatility of the common stock at the date of grant based on a historical
volatility rate, consistent with SFAS 123(R) and Securities and Exchange Commission Staff
Accounting Bulletin No. 107 (SAB 107). The decision to use historical volatility was based upon
the lack of traded common stock options. The expected term is estimated consistent with the
simplified method identified in SAB 107, whose use was extended by Securities and Exchange
Commission Staff Accounting Bulletin No. 110 (SAB 110). The simplified method calculates the
expected term as the average of the vesting and contractual terms of the award. The risk-free
interest rate assumption is based on observed interest rates appropriate for the term of the
options. The Company uses historical data to estimate pre-vesting option forfeitures and records
share-based compensation expense only for those awards that are expected to vest. The fair value
of stock options are amortized over the vesting period of the awards utilizing a straight-line
method.
The following table summarizes information relating to stock option activity for fiscal 2008 and
for the nine month period ended June 30, 2009 (number of shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
Shares
|
|
Exercise Price
|
Options outstanding at September 30, 2007
|
|
|
1,232
|
|
|
$
|
5.01
|
|
Granted
|
|
|
323
|
|
|
|
3.05
|
|
Exercised
|
|
|
(15
|
)
|
|
|
2.98
|
|
Cancelled
|
|
|
(301
|
)
|
|
|
4.43
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at September 30, 2008
|
|
|
1,239
|
|
|
|
4.66
|
|
Granted
|
|
|
725
|
|
|
|
2.17
|
|
Cancelled
|
|
|
(58
|
)
|
|
|
4.17
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at June 30, 2009
|
|
|
1,906
|
|
|
|
3.73
|
|
|
|
|
|
|
|
|
|
|
There were no options exercised during the three and nine months ended June 30, 2009. Total
intrinsic value of stock options exercised during the three and nine months ended June 30, 2008 was
$2,000. The intrinsic value of stock options outstanding and stock options outstanding and
exercisable as of June 30, 2009 was $1.3 million and $0.1 million, respectively.
On December 19, 2008, pursuant to and in accordance with the recommendation of the Compensation
Committee (the Committee) of the Board of Directors of the Company, the Company extended the
expiration date of all employee stock options previously issued under the 2007 Long-Term Incentive
and Stock Option Plan and the 2002 Long-Term Incentive and Stock Option Plan from five years to ten
years. No changes were made to any other terms of the stock options and the exercise prices
remained the same.
17
The total impact of this modification is that an additional $80,000 of
compensation cost is being recognized ratably over the remaining vesting periods of the modified
options.
Information regarding options outstanding and exercisable at June 30, 2009 is as follows (number of
shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
Weighted
|
|
|
|
|
|
Average
|
|
Weighted
|
|
|
|
|
|
|
Remaining
|
|
Average
|
|
|
|
|
|
Remaining
|
|
Average
|
Range of
|
|
Number
|
|
Contractual
|
|
Exercise
|
|
Number
|
|
Contractual
|
|
Exercise
|
exercise price
|
|
of Shares
|
|
Life (Years)
|
|
Price
|
|
of Shares
|
|
Life (Years)
|
|
Price
|
$2.00 $2.99
|
|
|
887
|
|
|
|
9.3
|
|
|
$
|
2.25
|
|
|
|
123
|
|
|
|
8.9
|
|
|
$
|
2.75
|
|
$3.15 $3.99
|
|
|
124
|
|
|
|
8.9
|
|
|
|
3.63
|
|
|
|
23
|
|
|
|
8.6
|
|
|
|
3.47
|
|
$4.33 $4.98
|
|
|
38
|
|
|
|
7.2
|
|
|
|
4.62
|
|
|
|
33
|
|
|
|
7.1
|
|
|
|
4.66
|
|
$5.03 $5.40
|
|
|
857
|
|
|
|
7.2
|
|
|
|
5.23
|
|
|
|
684
|
|
|
|
7.2
|
|
|
|
5.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,906
|
|
|
|
8.3
|
|
|
|
3.73
|
|
|
|
863
|
|
|
|
7.4
|
|
|
|
4.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2009, there was approximately $0.9 million of total unrecognized compensation costs
related to stock option awards. The Company will recognize this cost over the remaining vesting
periods of these options. The weighted average period over which the costs will be recognized is
1.7 years.
Restricted Stock Awards
The Company grants restricted shares of common stock in addition to stock options and restricted
stock units as part of its long-term incentive compensation to employees and members of the Board
of Directors. The fair value of restricted stock awards is determined based on the closing market
price of the Companys stock on the date of grant. Restricted stock awards vests over a period of
one to six years for employees and vests immediately for directors. Shares granted may be sold
once vested.
The following table summarizes information relating to restricted stock activity for fiscal 2008
and for the nine month period ended June 30, 2009 (number of shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Number of
|
|
Average Grant
|
|
|
Shares
|
|
Date Fair Value
|
Restricted stock outstanding at September 30, 2007
|
|
|
361
|
|
|
$
|
5.22
|
|
Granted
|
|
|
151
|
|
|
|
3.04
|
|
Vested
|
|
|
(198
|
)
|
|
|
4.94
|
|
Cancelled
|
|
|
(29
|
)
|
|
|
4.08
|
|
|
|
|
|
|
|
|
|
|
Restricted stock outstanding at September 30, 2008
|
|
|
285
|
|
|
|
4.37
|
|
Granted
|
|
|
48
|
|
|
|
3.24
|
|
Vested
|
|
|
(148
|
)
|
|
|
4.33
|
|
Cancelled
|
|
|
(3
|
)
|
|
|
2.99
|
|
|
|
|
|
|
|
|
|
|
Restricted stock outstanding at June 30, 2009
|
|
|
182
|
|
|
|
4.12
|
|
|
|
|
|
|
|
|
|
|
The total fair value of shares vested during the three months ended June 30, 2009 and 2008 was $0.1
million for each of these periods. The total fair value of shares vested during the nine months
ended June
18
30, 2009 and 2008 was $0.4 million and $0.7 million, respectively. There were no
restricted stock awards granted during the three months ended June 30, 2009. The weighted average
grant date fair value of restricted stock awards granted during the three months ended June 30,
2008 was $3.40. The weighted average grant date fair value of restricted stock awards granted
during the nine months ended June 30, 2009 and 2008, respectively, was $3.24 and $3.04.
At June 30, 2009, there was approximately $0.6 million of total unrecognized compensation costs
related to restricted stock awards. The Company will recognize this cost over the remaining
vesting periods of these awards. The weighted average period over which the costs will be
recognized is 1.5 years.
Restricted Stock Units
The Company currently grants restricted units of common stock as part of its long-term incentive
compensation to employees. The fair value of restricted stock units is determined based on the
closing market price of the Companys stock on the date of grant. Restricted stock units vest over
a period of three years for employees.
The following table summarizes information relating to restricted stock unit activity for the nine
month period ended June 30, 2009 (number of units in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Number of
|
|
Average Grant
|
|
|
Shares
|
|
Date Fair Value
|
Restricted stock outstanding at September 30, 2008
|
|
|
|
|
|
|
|
|
Granted
|
|
|
241
|
|
|
$
|
2.00
|
|
|
|
|
|
|
|
|
|
|
Restricted stock outstanding at June 30, 2009
|
|
|
241
|
|
|
|
2.00
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2009, there was approximately $0.5 million of total unrecognized compensation costs
related to restricted stock units. The Company will recognize this cost over the remaining vesting
periods of these units. The weighted average period over which the costs will be recognized is 1.9
years.
Note 5. Commitments
Leases
The Company leases its offices, warehouse, and certain office equipment under noncancelable
operating leases. The facility leases require that the Company pay a portion of the real estate
taxes, maintenance, utilities and insurance.
Approximate future minimum rental commitments, excluding common area costs under these
non-cancelable operating leases, as of June 30, 2009 are (in thousands):
19
|
|
|
|
|
Years ending September 30,
|
|
|
|
|
2009
|
|
$
|
270
|
|
2010
|
|
|
1,084
|
|
2011
|
|
|
748
|
|
2012
|
|
|
527
|
|
2013
|
|
|
540
|
|
Thereafter
|
|
|
698
|
|
|
|
|
|
Total
|
|
$
|
3,867
|
|
|
|
|
|
Rental expense, including common area costs, was approximately $0.4 million and $0.3 million for
the three months ended June 30, 2009 and 2008, respectively, and $1.2 million and $0.8 million for
the nine months ended June 30, 2009 and 2008, respectively.
401(k) Plan
The Company has a 401(k) plan covering substantially all employees and the plan is operated on a
calendar year basis. The Company provides an employer matching contribution equal to 50% of an
employees contribution for employee deferrals of up to 6% of their compensation. Matching
contributions were $0.1 million for each of the three months ended June 30, 2009 and 2008, and $0.3
million and $0.2 million for the nine months ended June 30, 2009 and 2008, respectively.
Note 6. Financing Arrangements
In connection with the financing of the acquisition of GeoLogic Solutions, Inc., the Company
entered into a three-year secured credit facility with Silicon Valley Bank (SVB) consisting of a
$10.0 million revolving line of credit bearing interest at a floating rate equal to 0.5% over SVBs
Prime Rate. The credit facility is secured by substantially all the assets of the Company.
Interest is paid monthly in arrears, and the entire amount of any outstanding principal is due at
maturity on January 30, 2011. The credit agreement contains certain financial covenants which
impose a minimum level of net worth and fixed charge coverage ratio.
Also in connection with the acquisition of GeoLogic Solutions, Inc., the Company entered into a
four year secured credit facility consisting of an $8.0 million term loan with Partners for Growth
II, L.P. (PFG) bearing interest at a fixed rate of 14.5%, subject to adjustment under various
circumstances. Under the
terms of the loan agreement, the Company must comply with financial covenants specifying minimum
levels of net worth and fixed charge coverage ratio. The loan is secured by substantially all the
assets of the Company and is subordinate to the security interest of SVB. Interest is payable
monthly, and the Company is required to make quarterly principal payments of $1.0 million beginning
March 31, 2011 with the remainder of the unpaid principal due at maturity on January 31, 2012.
As of June 30, 2009, the Company is in compliance with all financial covenants related to the debt
obligations.
In addition to the preceding sources of financing, the Company also issued $1.8 million of debt
obligations to the seller (the Seller Notes) in conjunction with the acquisition of GeoLogic
Solutions, Inc. The Seller Notes and related accrued interest were paid in full in February 2009.
Long- term obligations and notes payable consist of the following (in thousands):
20
|
|
|
|
|
|
|
|
|
|
|
June 30, 2009
|
|
|
September 30, 2008
|
|
Subordinated notes
|
|
$
|
|
|
|
$
|
1,225
|
|
Subordinated convertible notes
|
|
|
|
|
|
|
525
|
|
|
|
|
|
|
|
|
Total notes payable
|
|
|
|
|
|
|
1,750
|
|
Senior secured revolving credit facility
|
|
|
500
|
|
|
|
8,223
|
|
Secured term loan
|
|
|
8,000
|
|
|
|
8,000
|
|
Capitalized leases
|
|
|
141
|
|
|
|
214
|
|
|
|
|
|
|
|
|
Total long-term obligations
|
|
|
8,641
|
|
|
|
18,187
|
|
Less current portion of long-term obligations
|
|
|
95
|
|
|
|
1,845
|
|
|
|
|
|
|
|
|
Total long-term obligations, net of current portion
|
|
$
|
8,546
|
|
|
$
|
16,342
|
|
|
|
|
|
|
|
|
Note 7. Shareholders Equity
Common Stock
The Company is authorized to issue up to 25,000,000 shares of common stock.
Preferred Stock
The Company has authorized an undesignated class of preferred stock of 10,000,000 shares. The Board
of Directors can issue preferred stock in one or more series and fix the terms of such stock
without shareholder approval. Preferred stock may include the right to vote as a series on
particular matters, preferences as to dividends and liquidation, conversion and redemption rights
and sinking fund provisions.
Series B
In December 2003, the Company sold 1,613,000 shares of Series B Preferred Stock for $4.1 million,
or $2.54 per share. Each share of the Series B Preferred Stock is convertible into one share of
the Companys common stock. The price per share of the Series B Preferred Stock and the conversion
price for the common stock were equal to the market value of the common stock (as defined in the
rules of the Nasdaq Stock Market) on the date of execution of the definitive agreements. The
Series B Preferred Stock pays a cumulative dividend of 4% of the original issue price per annum
(payable semi-annually) on each outstanding share of Series B Preferred Stock. The dividend is
payable in additional shares of
Series B Preferred Stock rather than cash, at the option of the holders, and has a
non-participating preferred liquidation right equal to the original issue price plus accrued unpaid
dividends.
For the nine months ended June 30, 2009 and 2008, the Company issued 78,000 and 75,000 shares,
respectively, of Series B Preferred Stock for payment of accrued dividends. Based on the market
value of the Companys common stock on the date of the dividend payment, the payment of the
dividend in additional shares of Series B Preferred Stock resulted in a non-cash dividend of $0.2
million and $0.3 million for the nine months ended June 30, 2009 and 2008, respectively.
The Series B Preferred Stock is redeemable at the option of the holder at 100% of the original
purchase price plus accrued and unpaid dividends at any time after five years from the date of
issuance, or at any time if there is a significant adverse judgment against the Company, the
Company defaults on its debts or files for bankruptcy, or in the event of a change of control. The
Company may decline to redeem any or all of the Series B Preferred Stock at its sole option and
discretion, and in such case the annual dividend
21
on the Series B Preferred Stock will increase from
4% to 10%. The Company may redeem the Series B Preferred Stock at its option after five years from
the date of issuance at the original issue price, plus accrued unpaid dividends, if the market
value of the common stock is at least three times the then effective conversion price for a
specified period.
Series C
In September 2005, the Company sold 1,269,000 shares of Series C Preferred Stock for $5.0 million,
or $3.94 per share. Each share of the Series C Preferred Stock is convertible into one share of
the Companys common stock. The price per share of Series C Preferred Stock and the conversion
price for the common stock is equal to the market value of the common stock (as defined in the
rules of the Nasdaq Stock Market) on the date of execution of the definitive agreements. The
Series C Preferred Stock does not pay a dividend, unless the Company declines to redeem the stock
upon demand of the holders after an Acceleration Event (as defined in the Certificate of
Designation of the Series C Preferred Stock). In that case, the Series C Preferred Stock pays a
cumulative dividend of 4% of the original issue price per annum on each outstanding share of Series
C Preferred Stock (payable in cash). The Series C Preferred Stock has a non-participating
liquidation right equal to the original issue price, plus accrued unpaid dividends which are senior
to the Companys common stock and junior to the Series B Preferred Stock. The Company may redeem
the Series C Preferred Stock at its option after five years from the date of issuance at the
original issue price, plus accrued unpaid dividends, if the market value of the common stock is at
least three times the then effective conversion price for a specified period.
Series D
In June 2007, the Company sold 1,567,000 shares of Series D Preferred Stock for $6.0 million, or
$3.83 per share. Each share of the Series D Preferred Stock is convertible into one share of the
Companys common stock. The price per share of Series D Preferred Stock and the conversion price
for the common stock is equal to the market value of the common stock (as defined in the rules of
the Nasdaq Stock Market) on the date of execution of the definitive agreements. The Series D
Preferred Stock does not pay a dividend, unless the Company declines to redeem the stock upon
demand of the holders after an Acceleration Event (as defined in the Certificate of Designation of
the Series D Preferred Stock). In that case, the Series D Preferred Stock pays a cumulative
dividend of 4% of the original issue price per annum on each outstanding share of Series D
Preferred Stock (payable in cash). The Series D Preferred Stock has a non-participating
liquidation right equal to the original issue price, plus accrued unpaid dividends which are senior
to the Companys common stock and junior to the Series B and Series C Preferred Stock. The Company
may redeem the Series D Preferred Stock at its option after five years from the date
of issuance at the original issue price, plus accrued unpaid dividends, if the market value of the
common stock is at least three times the then effective conversion price for a specified period.
Series E and Series F
In February 2009, the Company sold 1,355,857 shares of Series E Preferred Stock for $3.0 million,
or $2.22 per share. Each share of the Series E Preferred Stock was converted into one share of the
Series F Preferred Stock in April 2009 and the Certificate of Designation for the Series E
Preferred Stock was cancelled. Each share of Series F Preferred Stock is convertible into one share
of the Companys common stock. The price per share of Series F Preferred Stock and the conversion
price for the common stock is equal to the market value of the common stock (as defined in the
rules of the Nasdaq Stock Market) on the date of execution of the definitive agreements. The
Series F Preferred Stock does not pay a dividend, unless the Company declines to redeem the stock
upon demand of the holders after an Acceleration Event (as defined in the Certificate of
Designation of the Series F Preferred Stock). In that case, the Series F Preferred Stock pays a
cumulative dividend of 4% of the original issue price per annum on each
22
outstanding share of Series
F Preferred Stock (payable in cash). The Series F Preferred Stock has a non-participating
liquidation right equal to the original issue price, plus accrued unpaid dividends, which is senior
to the Companys common stock and the Series B, Series C, and Series D Preferred Stock. The
Company may redeem the Series F Preferred Stock at its option after five years from the date of
issuance at the original issue price, plus accrued unpaid dividends, if the market value of the
common stock is at least three times the then effective conversion price for a specified period.
Additionally, the Company issued 7-year warrants to purchase 406,759 shares of its common stock at
an exercise price of $2.22 per share. Also in connection with this transaction, the Company
extended by two years the term of each common stock warrant issued on September 15, 2005 (in
connection with the purchase of the Companys Series C Preferred Stock) and June 19, 2007 (in
connection with the purchase of the Companys Series D Preferred Stock), so that such warrants are
now exercisable until the seventh anniversary (instead of the fifth anniversary) of the original
date of issuance. The aggregate fair value of the warrants was $535,000, of which $129,000 related
to the modification of the Series C and Series D warrants. The warrants permit cashless exercise.
In connection with this transaction, the Company recognized a one-time, non-cash deemed dividend of
$484,000 relating to the beneficial conversion portion of the preferred stock. The beneficial
conversion portion was determined by allocating the proceeds on a fair value basis between the
preferred stock and the warrants. The amount of the deemed dividend was the difference between the
deemed fair value of the Series E Preferred Stock and the purchase price on the date of the
transaction. The deemed dividend was recorded as an addition to preferred stock with a
corresponding increase to accumulated deficit. The addition was recognized at the date of issuance
of the Series E Preferred Stock, the same date at which such shares were eligible for conversion.
No broker or placement agent was involved in the placement of the preferred stock and warrants in
this transaction and no commissions or other compensation was paid.
Common Stock Warrants
The Company has issued warrants for the purchase of common stock to directors, executives,
consultants and placement agents. Compensation expense associated with the warrants has not been
material. The Company has also issued warrants as a component of preferred stock offerings and
debt financing.
The following tables summarize information relating to stock warrants for fiscal 2008 and for the
nine month period ended June 30, 2009 (number of warrants in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
Average
|
|
|
Number of
|
|
Average
|
|
Remaining
|
|
|
Warrants
|
|
Exercise Price
|
|
Life (years)
|
Warrants outstanding at September 30, 2007
|
|
|
1,538
|
|
|
$
|
5.22
|
|
|
|
2.9
|
|
Granted
|
|
|
457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding at September 30, 2008
|
|
|
1,995
|
|
|
|
3.54
|
|
|
|
2.6
|
|
Granted
|
|
|
407
|
|
|
|
|
|
|
|
|
|
Cancelled
|
|
|
(451
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants outstanding at June 30, 2009
|
|
|
1,951
|
|
|
|
3.35
|
|
|
|
4.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
Note 8. Net Loss Per Common Share
Basic loss per common share is computed based on the weighted average number of common shares
outstanding by dividing net loss applicable to common shareholders by the weighted average number
of common shares outstanding for the period. Generally, diluted net income per common share
reflects the potential dilution that could occur if securities or other obligations to issue common
stock such as options, restricted stock units, warrants or convertible preferred stock, were
exercised or converted into common stock that then shared in the earnings of the Company. However,
diluted net loss per common share is equal to basic net loss per common share for all periods
presented because the effect of including such securities or obligations would have been
antidilutive.
Potentially dilutive securities representing approximately 4.3 million shares of common stock
outstanding at June 30, 2009 and 3.6 million shares of common stock outstanding as June 30, 2008
were excluded from the computation of diluted earnings per share because their effect would have
been antidilutive.
24
Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
Forward-looking Statements
Except for the historical information contained herein, the matters discussed in this Report on
Form 10-Q are forward-looking statements involving risks and uncertainties that could cause actual
results to differ materially from those in such forward-looking statements. Numerous factors,
risks and uncertainties affect the Companys operating results and could cause the Companys actual
results to differ materially from forecasts and estimates or from any other forward-looking
statements made by, or on behalf of, the Company, and there can be no assurance that future results
will meet expectations, estimates or projections. Risks and uncertainties about us include, but
are not limited to, the following:
|
|
|
although we have generated operating income and net income recently,
operating losses may occur in the future and may be in excess of
amounts that could be funded from operations and thus we may be
dependent upon external investment to support our operations during
these periods;
|
|
|
|
|
we will continue to be dependent upon positioning systems and
communication networks owned and controlled by others, and
accordingly, their problems may adversely impact us;
|
|
|
|
|
for the foreseeable future, we are dependent upon the continued
receipt and fulfillment of new orders for our current products;
|
|
|
|
|
our growth and profitability depend on our timely introduction and
market acceptance of new products, our ability to continue to fund
research and development activities, and our ability to establish and
maintain strategic partner relationships.
|
Further information regarding these and other risks is included in Risk Factors in Part 1, Item
1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2008, in this Form
10-Q and in our other filings we make with the SEC.
Overview
XATA is one of the leading providers of fleet management solutions to the truck transportation
industry. Our innovative technologies and value-added services are intended to enable customers to
optimize the utilization of their assets and enhance the productivity of fleet operations across
the entire supply chain, resulting in decreased costs, improved compliance with U.S. Department of
Transportation (DOT) regulations, and enhanced customer service.
Over the past two decades, XATA has developed relationships with several of the nations largest
fleets including CVS Pharmacy, Sysco, US Foodservice, Dean Foods, and Southeastern Freight Lines to
find and develop technologies that provide information about their fleets and transform that data
into actionable intelligence.
On January 31, 2008, XATA completed its acquisition of GeoLogic Solutions, Inc., which provides the
commercial trucking industry with wireless asset management solutions in the for-hire segment of
the over-the-road transportation sector. As the result of this acquisition, XATA now serves both
the private fleet and for-hire segments.
25
XATA pioneered innovations, such as learned standards and paperless driver logs. We engineer
software that improves overall transportation operations and integrates fleet data with back-office
billing, payroll and routing systems.
Technology, People, Processes
XATA takes a three-prong approach to meeting its customers fleet management needs:
|
|
|
Technology.
XATA provides a total fleet management solution, including systems,
software and services. XATANET, our web-based, on-demand scalable software, includes a
variety of web-based enterprise applications. As our flagship product, XATANET provides
critical real-time information about our customers fleets, allows for paperless driver
logs and provides summary and granular reports on driver and vehicle performance. XATANET
can also integrate with back-office applications, for a seamless flow of information, and
our software works with a variety of in-cab communications devices.
|
|
|
|
|
MobileMax helps for-hire trucking companies track and manage nearly every aspect of their
fleets activities to help control costs and increase return on investment. The MobileMax
solution features Multi-Mode communication capabilities that automatically switch between
land-based and satellite communications to take advantage of the cost-savings and
reliability of both terrestrial and satellite communication. MobileMax integrates with
dispatching and routing applications for a seamless flow of information.
|
|
|
|
|
People.
Several XATA employees have been with our company for many years, providing a
thorough understanding of the trucking industry. With employee expertise in safety, fleet
management and technology, XATA is able to provide consultation services to help
organizations implement best practices for fleet productivity and develop specific customer
hardware and reporting requirements.
|
|
|
|
|
Processes.
All XATA processes are designed to make managing fleets easier. Drawing on
hundreds of successful implementations with a wide variety of fleets including
multibillion-dollar organizations, XATA carefully plans each phase of the implementation
and follows well established methodologies. The process begins with assessing our
customers objectives. Then, we develop a detailed implementation schedule that includes
all aspects of the project, from implementation to conversion, integration, training and
problem solving.
|
Critical Accounting Policies
Accounting policies, methods and estimates are an integral part of our financial statements and are
based upon managements current judgments. Certain accounting policies, methods and estimates are
particularly important because of their significance to the financial statements. Note 1 of the
Notes to Financial Statements includes a summary of the significant accounting policies and methods
we use. The following is a discussion of what we believe to be the most critical of these policies
and methods.
Revenue Recognition.
The Company derives its revenue from sales of systems, software and related
services. The Company recognizes revenue in accordance with Statement of Position (SOP) 97-2,
Software Revenue Recognition
, as amended by SOP 98-9, Modification of SOP 97-2,
Software Revenue
Recognition with Respect to Certain Transactions
, and Securities and Exchange Commission Staff
Accounting Bulletin (SAB) 104,
Revenue Recognition in Financial Statements
.
26
The Company recognizes revenue under SOP 97-2 and SAB 104 when (i) persuasive evidence of an
arrangement exists (for example a signed agreement or purchase order), (ii) delivery has occurred,
as evidenced by shipping documents or customer acceptance, (iii) the fee is fixed or determinable
and payable within twelve months, and (iv) collectability is probable and supported by credit
checks or past payment history.
With regard to arrangements involving multiple elements, the Company allocates revenue to the
software and services elements based on the fair value of each element with the residual amount
allocated to the systems revenue which is recognized upon delivery. The Companys determination of
fair value relating to the software and services elements in multiple-element arrangements is based
on vendor-specific objective evidence (VSOE). The Companys assessment of VSOE for each element is
either the price charged when the same element is sold separately or the price established by
management if that item is not yet sold separately. The Company has analyzed all of the elements
included in its multiple-element arrangements and has determined that it has sufficient VSOE to
allocate revenue to the services and software components of its arrangements. Accordingly, assuming
all other revenue recognition criteria are met, revenue from the software component is recognized
ratably over the applicable term.
Agreements that do not meet the requirements described in Emerging Issues Task Force (EITF) 00-03,
Application of AICPA Statement of Position 97-2 to Arrangements That Include the Right to Use
Software Stored on Another Entitys Hardware
, to allow treatment under SOP 97-2, result in the
recognition of all revenue ratably over the term of the agreement.
Allowance for doubtful accounts.
We grant credit to customers in the normal course of business.
The majority of the Companys accounts receivable and investment in sales-type leases receivable
are due from companies with fleet trucking operations in a variety of industries. Credit is
extended based on an evaluation of a customers financial condition and, generally, collateral is
not required, although sales-type leases receivable are secured by a retained security interest in
the leased equipment. Accounts receivable are typically due from customers within 30 days and are
stated at amounts net of an allowance for doubtful accounts. Accounts receivable outstanding
longer than the contractual payment terms are considered past due. We determine the allowance for
doubtful accounts by considering a number of factors, including the length of time accounts
receivables are past due, our previous loss history, the customers current ability to pay its
obligation, and the condition of the general economy and the industry as a whole. We reserve for
these accounts receivable by increasing bad debt expense when they are determined to be
uncollectible. Payments subsequently received, or otherwise determined to be collectible, are
treated as recoveries that reduce bad debt expense.
Goodwill.
As of June 30, 2009, the Company had a goodwill balance of $3.0 million that resulted
from the Companys acquisition of GeoLogic Solutions, Inc. on January 31, 2008. The Company
records goodwill when the purchase price of net tangible and intangible assets acquired exceeds
their fair value. In accordance with SFAS No. 142,
Goodwill and Other Intangible Assets,
the
Company will review goodwill for impairment at least annually, on the first day of the fourth
quarter, or more frequently if an event occurs indicating the potential for impairment. Goodwill is
not amortized, but instead tested for impairment at the reporting unit level. The Company has one
reporting unit. The annual goodwill impairment test is a two-step process. First, the Company
determines if the carrying value of its related reporting unit exceeds fair value, which would
indicate that goodwill may be impaired. If the Company then determines that goodwill may be
impaired, implied fair value of the goodwill is compared to its carrying amount to determine if
there is an impairment loss. The Company completed this review in the fourth quarter of fiscal 2008
and concluded that no impairment existed.
Intangible assets are carried at cost less accumulated amortization. The Company amortizes the
cost of identified intangible assets on a straight-line basis over their expected economic lives.
In accordance with
27
SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets
, the Company reviews
intangible assets that have finite useful lives when an event occurs indicating the potential for
earlier impairment. The Company reviews for impairment using facts or circumstances; either
internal or external, indicating that it may not recover the carrying value of the asset. The
Company measures impairment losses related to long-lived assets based on the amount by which the
carrying amounts of these assets exceed their fair values. The Company measures fair value under
SFAS No. 144, which is generally based on the present value of estimated future cash flows. The
Companys analysis is based on available information and on assumptions and projections it
considers to be reasonable and supportable. The cash flow analysis considers the likelihood of
possible outcomes and is based on the Companys best estimate of projected future cash flows. If
necessary, the Company performs subsequent calculations to measure the amount of the impairment
loss based on the excess of the carrying value over the fair value of the impaired assets.
Product Warranties.
The Company sells its systems with a limited warranty, with an option to
purchase extended warranties. The Company provides for estimated warranty costs in relation to the
recognition of the associated revenue. Factors affecting the Companys product warranty liability
include the number of units sold, historical and anticipated rates of claims and cost per claim.
The Company periodically assesses the adequacy of its product warranty liability based on changes
in these factors. At June 30, 2009 and September 30, 2008, the Company had accruals for product
warranties of approximately $1.4 million and $1.6 million, respectively. These amounts are included
in accrued expenses on the Companys balance sheet.
Capitalized software development costs
. Software development costs incurred after establishing
technological feasibility are capitalized in accordance with Statement of Financial Accounting
Standards No. 86, (SFAS No. 86),
Accounting for the Costs of Computer Software to Be Sold, Leased,
or Otherwise Marketed
. Capitalized costs are amortized to cost of goods sold beginning when the
product is first released for sale to the general public. Amortization is at the greater of the
amount computed using the ratio of current gross revenues for the product to the total of current
and anticipated future gross revenues or the straight-line method over the estimated economic life
of the product (two to five years). As of June 30, 2009 and September 30, 2008 there were no
capitalized development costs. Research and development expenses are charged to expense as
incurred. Such expenses include software development costs which have not met the capitalization
criteria of SFAS No. 86.
Income taxes
. Deferred income taxes are provided for using the liability method whereby deferred
tax assets and deferred tax liabilities are recognized for the effects of taxable temporary
differences. Temporary differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
On October 1, 2007, the Company adopted FIN 48,
Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement No. 109
(FIN 48). FIN 48 requires application of a
more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions.
Under FIN 48, once the-more-likely-than-not threshold is met, the amount of benefit to be
recognized is the largest amount of tax benefit that is greater than 50 percent likely of being
ultimately realized upon settlement. It further requires that a change in judgment related to the
expected ultimate resolution of uncertain tax positions be recognized in earnings in the period of
such a change. The impact of adopting FIN 48 on the Companys consolidated financial statements was
not material and no cumulative effect adjustment was recorded to the October 1, 2007 balance of
accumulated deficit. In 2008, the Company recognized no tax benefit or
liabilities for uncertainties related to prior and current year income tax positions, which were
determined to be immaterial.
28
Results of Operations for the three and nine months ended June 30, 2009 and 2008
The following table sets forth detail related to revenue, cost of goods sold, and gross margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Nine months ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
8,976
|
|
|
$
|
7,328
|
|
|
$
|
25,441
|
|
|
$
|
16,089
|
|
Cost of goods sold
|
|
|
2,495
|
|
|
|
2,272
|
|
|
|
7,258
|
|
|
|
4,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
$
|
6,481
|
|
|
$
|
5,056
|
|
|
$
|
18,183
|
|
|
$
|
11,107
|
|
Gross margin %
|
|
|
72.2
|
%
|
|
|
69.0
|
%
|
|
|
71.5
|
%
|
|
|
69.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Systems
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
6,804
|
|
|
$
|
7,637
|
|
|
$
|
19,215
|
|
|
$
|
16,985
|
|
Cost of goods sold
|
|
|
6,470
|
|
|
|
5,925
|
|
|
|
16,725
|
|
|
|
12,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
$
|
334
|
|
|
$
|
1,712
|
|
|
$
|
2,490
|
|
|
$
|
4,228
|
|
Gross margin %
|
|
|
4.9
|
%
|
|
|
22.4
|
%
|
|
|
13.0
|
%
|
|
|
24.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
1,809
|
|
|
$
|
1,202
|
|
|
$
|
4,471
|
|
|
$
|
2,909
|
|
Cost of goods sold
|
|
|
1,120
|
|
|
|
819
|
|
|
|
2,960
|
|
|
|
2,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
$
|
689
|
|
|
$
|
383
|
|
|
$
|
1,511
|
|
|
$
|
718
|
|
Gross margin %
|
|
|
38.1
|
%
|
|
|
31.9
|
%
|
|
|
33.8
|
%
|
|
|
24.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
17,589
|
|
|
$
|
16,167
|
|
|
$
|
49,127
|
|
|
$
|
35,983
|
|
Cost of goods sold
|
|
|
10,085
|
|
|
|
9,016
|
|
|
|
26,943
|
|
|
|
19,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
$
|
7,504
|
|
|
$
|
7,151
|
|
|
$
|
22,184
|
|
|
$
|
16,053
|
|
Gross margin %
|
|
|
42.7
|
%
|
|
|
44.2
|
%
|
|
|
45.2
|
%
|
|
|
44.6
|
%
|
Revenue
Overall revenue increased 8.8 percent to $17.6 million for the three months ended June 30, 2009
compared to $16.2 million for the same period in fiscal 2008. Overall revenue increased 36.5
percent to $49.1 million for the nine months ended June 30, 2009 compared to $36.0 million for the
same period in fiscal 2008. The organic revenue growth, which includes Geologic Solutions, Inc.
revenue for the five month period from the date of acquisition to June 30, 2008 and the comparable
period in fiscal 2009, was 19.5 percent for the nine months ended June 30, 2009.
Software revenue, including monthly subscriptions from XATANET and monthly fees from MobileMax and
OpCenter product lines, increased 22.4 percent to comprise 51.0 percent of total revenue for the
three months ended June 30, 2009 compared to 45.3 percent for the same period in fiscal 2008.
Software revenue increased 58.1 percent to comprise 51.8 percent of total revenue for the nine
months ended June 30, 2009 compared to 44.7 percent for the same period in fiscal 2008.
29
Systems revenue, which includes hardware, warranty, repair, and activation revenue, decreased 10.9
percent to comprise 38.7 percent of total revenue for the three months ended June 30, 2009 compared
to 47.2 percent for the same period in fiscal 2008. Systems revenue increased 13.1 percent to
comprise 39.1
percent of total revenue for the nine months ended June 30, 2009 compared to 47.2 percent for the
same period in fiscal 2008.
Services revenue, which includes training, implementation, installation, and professional service
revenue, increased 50.5 percent to comprise 10.3 percent of total revenue for the three months
ended June 30, 2009 compared to 7.4 percent for the same period in fiscal 2008. Services revenue
increased 53.7 percent to comprise 9.1 percent of total revenue for the nine months ended June 30,
2009 compared to 8.1 percent for the same period in fiscal 2008.
Cost of Goods Sold and Gross Margin
Cost of software
. Cost of software consists primarily of communication, hosting costs, and direct
personnel costs related to network and infrastructure support. Cost of software increased 9.8
percent to $2.5 million for the three months ended June 30, 2009 compared to $2.3 million for the
same period in fiscal 2008 and increased 45.7 percent to $7.3 million for the nine months ended
June 30, 2009 compared to $5.0 million for the same period in fiscal 2008. Software gross margin
improved 3.2 and 2.5 percentage points for the three and nine months ended June 30, 2009 the same
periods in fiscal 2008, respectively. This improvement was primarily driven by reductions to
communications costs and the ability to continue to leverage the existing cost structure.
Cost of systems
. Cost of systems consists primarily of the direct product costs, warranty costs,
product repair costs, and direct personnel costs related to customer support. Cost of systems
increased 9.2 percent to $6.5 million for the three months ended June 30, 2009 compared to $5.9
million for the same period in fiscal 2008 and increased 31.1 percent to $16.7 million for the nine
months ended June 30, 2009 compared to $12.8 million for the same period in fiscal 2008. Systems
gross margins decreased 17.5 and 11.9 percentage points for the three and nine months ended June
30, 2009 versus the same periods in fiscal 2008, respectively.
Declining systems sales prices due to competitive pressures
contributed to the decrease in gross margin.
Cost of services
. Cost of services consists primarily of third party vendor costs and direct costs
related to service personnel. Cost of services increased 36.9 percent to $1.1 million for the three
months ended June 30, 2009 compared to $0.8 million for the same period in fiscal 2008 and
increased 35.1 percent to $3.0 million for the nine months ended June 30, 2009 compared to $2.2
million for the same period in fiscal 2008. Service gross margins improved 6.2 and 9.1 percentage
points for the three and nine months ended June 30, 2009 versus the same periods in fiscal 2008,
respectively. This improvement was primarily the result of higher utilization of services
personnel compared to the same periods of fiscal 2008.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of employee salaries in our sales,
client management and administration functions, sales commissions, marketing and promotional
expenses, executive and administrative costs, and accounting and professional fees. Selling,
general and administrative expenses were $5.7 million for the three months ended June 30, 2009
compared to $6.1 million for the same period in fiscal 2008.
Selling, general and administrative expenses were $17.4 million or 35.3 percent of revenue for the
nine months ended June 30, 2009 compared to $15.1 million or 41.8 percent of revenue for the same
period in
30
fiscal 2008. Selling, general and administrative expenses reflect an increase due to the
addition of the GeoLogic Solutions, Inc. cost structure, including incremental amortization expense
of $0.6 million related to intangible assets acquired with GeoLogic Solutions, Inc. As a
percentage of revenue these costs continue to decline as a result of leveraging this cost
structure.
Research & Development Expenses
Research and development expenses consist of employee salaries and expenses related to development
of software and systems. Research and development expenses were $1.4 million for the three months
ended June 30, 2009 compared to $1.3 million for the same period in fiscal 2008.
Research and development expenses were $4.2 million or 8.6 percent of revenue for the nine months
ended June 30, 2009 compared to $3.4 million or 9.4 percent of revenue for the same period in
fiscal 2008. The increase was primarily due to the addition of the GeoLogic Solutions, Inc. cost
structure.
Net Interest Expense
Net interest expense was $0.4 million for each of the three months ended June 30, 2009 and 2008.
Net interest expense was $1.1 million for the nine months ended June 30, 2009, compared to $0.6
million for the same period in fiscal 2008. The increase in interest expense was primarily due to
borrowings of long-term debt related to the acquisition of GeoLogic Solutions, Inc.
Income Taxes
No income tax benefit or expense was recorded for the nine month periods ended June 30, 2009 and
2008 as the result of continued operating losses and the Company does not have objectively
verifiable positive evidence of future taxable income as prescribed by SFAS No. 109 to support
recognizing a deferred tax asset without a valuation reserve. We concluded that a full valuation
allowance was appropriate. Realization of deferred tax assets is dependent on future taxable income
during the periods when deductible temporary differences and carryforwards are expected to be
available to reduce taxable income. The amount of the net deferred tax asset considered realizable
could be increased in the future if we return to profitability and actual future taxable income is
higher than currently estimated. At September 30, 2008, we had federal net operating loss
carryforwards of approximately $45.8 million.
The Company implemented the provisions of FIN 48,
Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement No. 109
, effective October 1, 2007. The impact of adopting FIN 48
on the Companys consolidated financial statements was not material and no cumulative effect
adjustment was recorded to the October 1, 2007 balance of accumulated deficit.
Net Loss to Common Shareholders
We incurred net losses to common shareholders of $0.1 million and $0.7 million for the three months
ended June 30, 2009 and 2008, respectively, and $1.2 million and $3.2 million for the nine months
ended June 30, 2009 and 2008, respectively. Net loss to common shareholders reflect preferred
stock dividends and preferred stock deemed dividends of $0.1 million for each of the three months
ended June 30, 2009 and 2008, and $0.7 million and $0.2 million for the nine months ended June 30,
2009 and 2008, respectively. For the nine month period ended June 30, 2009, preferred stock deemed
dividends reflect $0.5 million of cost associated with the issuance of the Series E Preferred
Stock.
31
Liquidity and Capital Resources
As of June 30, 2009, we held $3.6 million in cash and cash equivalents and had working capital,
which is total current assets less total current liabilities, of $4.8 million. This compared to
$8.9 million in cash and
cash equivalents, and working capital of $8.1 million, as of September 30, 2008. The reduction in
cash and working capital reflects a $9.5 million reduction in our long-term debt obligations offset
by $2.9 million of proceeds from the issuance of preferred stock.
Operating activities provided cash of $2.3 million during the nine months ended June 30, 2009
primarily the result of improved operations and the collections on accounts receivable offset by
reduced accrued expenses and increase in inventory, while operating activities used cash of $2.2
million during the same period in fiscal 2008.
Cash used in investing activities was $0.9 million for the nine months ended June 30, 2009 as the
result of purchases of equipment and leasehold improvements.
Cash used in financing activities of $6.7 million for the nine months ended June 30, 2009 included
net payments on long-term borrowings of $9.5 million offset by $2.9 million of proceeds from the
issuance of preferred stock.
In connection with the financing of the acquisition of GeoLogic Solutions, Inc., the Company
entered into a three-year secured credit facility with Silicon Valley Bank (SVB) consisting of a
$10.0 million revolving line of credit bearing interest at a floating rate equal to 0.5% over SVBs
Prime Rate. The credit facility is secured by substantially all the assets of the Company.
Interest is paid monthly in arrears, and the entire amount of any outstanding principal is due at
maturity on January 30, 2011. The credit agreement contains certain financial covenants which
impose a minimum level of net worth and fixed charge coverage ratio. The balance as of June 30,
2009 was $0.5 million.
Also in connection with the acquisition of GeoLogic Solutions, Inc., the Company entered into a
four year secured credit facility consisting of an $8.0 million term loan with Partners for Growth
II, L.P. (PFG) bearing interest at a fixed rate of 14.5%, subject to adjustment under various
circumstances. Under the terms of the loan agreement, the Company must comply with financial
covenants specifying minimum levels of net worth and fixed charge coverage ratio. The loan is
secured by substantially all the assets of the Company and is subordinate to the security interest
of SVB. Interest is payable monthly, and the Company is required to make quarterly principal
payments of $1.0 million beginning March 31, 2011 with the remainder of the unpaid principal due at
maturity on January 31, 2012.
As of June 30, 2009, the Company is in compliance with all financial covenants related to the debt
obligations.
In addition to the preceding sources of financing, the Company also issued $1.8 million of debt
obligations to the seller (the Seller Notes) in conjunction with the acquisition of GeoLogic
Solutions, Inc. The Seller Notes and related accrued interest were paid in full in February 2009.
We believe our existing funds, debt facilities and vendor terms will provide adequate cash to fund
operating needs for the foreseeable future. However, as debt facilities become due, it may be
necessary to obtain additional external funding.
Our Series B Preferred Stock prohibits payment of dividends to the holders of any other capital
stock unless and until we have paid dividends accrued on the Series B Preferred Stock, which pays a
cumulative dividend of 4% of the original issue price per annum (payable semi-annually) on each
outstanding share
32
of Series B Preferred Stock. At the option of the Series B Preferred Stock
holders, such dividends are payable in additional shares of Series B Preferred Stock or cash.
During the nine months ended June 30, 2009 and 2008, we issued 78,000 and 75,000 shares,
respectively, of Series B Preferred Stock for payment of accrued dividends. We are further
restricted from dividend payments by our primary lender.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting
On June 30, 2009, our Chief Executive Officer and Chief Financial Officer carried out an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures (as
defined in Exchange Rule 13a-15(e)). Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in reports that we file or submit under the
Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms and (ii) accumulated and communicated to the Chief Executive Officer and
Chief Financial Officer to allow timely decisions regarding required disclosure.
There were no changes in our internal controls over financial reporting that occurred during our
most recent fiscal quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
33
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
XATA has been named as one of many defendants in a lawsuit, filed in the United States District
Court, Eastern District of Texas, Tyler Division (6:09-cv-00157-LED). The plaintiff, Innovative
Global Solutions (IGS), has sued Turnpike Global Technologies, L.L.C., Cadec Global, Inc.,
General Electric, Trimble Navigation Ltd., Networkfleet, Inc. and XATA Corporation for infringement
of certain patents and has requested that the court assess compensatory damages against each
defendant and enjoin further infringing activities by the defendants. In addition, IGS has demanded
that the defendants pay pre- and post-judgment interest, plus attorney fees and costs. At this
time, XATA cannot estimate the amount of monetary damages, if any, or other consequences that might
result from this lawsuit. Substantial money damages or an injunction against the manufacture, sale
or use of XATAs allegedly infringing products could have a material adverse effect on XATA.
Item 1A. Risk Factors.
In addition to the other information set forth in this report and our other SEC filings, you should
carefully consider the factors discussed under Risk Factors in Part I, Item 1A of our Annual
Report on Form 10-K for the year ended September 30, 2008, as updated by our subsequent SEC
filings, which could have a material impact on our business, financial condition or results of
operations. The risks described in our Annual Report on Form 10-K are not the only risks we face.
Additional risks and uncertainties not presently known to us or that we currently believe to be
immaterial may also adversely affect our business, financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
A special meeting of shareholders of the Company was held on April 14, 2009. As of the record
date, March 31, 2009, there were 8,790,769 shares of Common Stock and 6,155,902 shares of Series B,
Series C, Series D, and Series E Preferred Stock of the Company (which votes as if converted to
Common Stock on 1 for 1 basis) entitled to vote at the meeting. There were in attendance at the
meeting in person or by proxy holders of approximately 10.5 million shares of voting stock, which
is equivalent to approximately 70% of the total number of eligible voting shares of the Company
issued and outstanding.
Matters voted upon and the results thereof are as follows:
|
1.
|
|
Approval of Articles of Amendment of Second Restated Articles of Incorporation.
|
For: 10,443,778 Against: 53,044 Withheld: 3,100
Item 5. Other Information.
None
34
Item 6. Exhibits.
|
3.1
|
|
Second Restated Articles of Incorporation, as amended through April 17, 2009
(incorporated by reference to Exhibit 3.1 of the Companys Report on Form 10-K filed
with the SEC on December 17, 2008, and Exhibits 3.1, 3.2 and 3.3 of the Companys
Report on Form 8-K filed with the SEC on April 21, 2009).
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3.2
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Restated Bylaws, as amended February 4, 2009 (incorporated by reference to
Exhibit 3.1 of the Companys Report on Form 8-K filed with the SEC on February 10,
2009).
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10.1
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Severance Agreement between XATA Corporation and David Gagne dated May 7, 2009
(incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K
filed with the SEC on May 11, 2009).
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31.1
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Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002
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35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Dated: August 5, 2009
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XATA Corporation
(Registrant)
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by:
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/s/ Mark E. Ties
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Mark E. Ties
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Chief Financial Officer
(Signing as Principal Financial and Accounting
Officer, and as Authorized Signatory of
Registrant)
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36
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