þ
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
||
SECURITIES
EXCHANGE ACT OF 1934
|
|||
FOR
THE FISCAL YEAR ENDED JUNE 30, 2010
|
|||
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
||
SECURITIES
EXCHANGE ACT OF 1934
|
Delaware
|
84-1108035
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
Title
of each class:
|
Name
of each exchange on which registered:
|
|
None
|
None
|
Large accelerated filer
¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company þ
|
Page
|
||
PART
I
|
1
|
|
Item
1.
|
Business
|
1
|
Item 1A.
|
Risk
Factors
|
16
|
Item 1B.
|
Unresolved
Staff Comments
|
26
|
Item
2.
|
Properties
|
26
|
Item
3.
|
Legal
Proceedings
|
27
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
29
|
PART
II
|
30
|
|
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
30
|
Item
6.
|
Selected
Financial Data
|
32
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
32
|
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market Risk.
|
56
|
Item
8.
|
Financial
Statements and Supplementary Data
|
56
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
56
|
Item 9A(T).
|
Controls
and Procedures
|
56
|
Item 9B.
|
Other
Information
|
57
|
PART
III
|
58
|
|
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
58
|
Item
11.
|
Executive
Compensation
|
62
|
Item
12.
|
Security
Ownership Of Certain Beneficial Owners And Management and Related
Stockholder Matters
|
79
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
83
|
Item
14.
|
Principal
Accounting Fees and Services
|
90
|
PART
IV
|
91
|
|
Item
15.
|
Exhibits,
Financial Statement Schedules
|
91
|
SIGNATURES
|
||
INDEX
TO EXHIBITS
|
|
Item
1.
|
Business
|
|
·
|
The
sale of business management systems comprised of proprietary software
applications, implementation and training;
and
|
|
·
|
Providing
subscription-based services, including software support and maintenance,
information (content) products and online services for a
fee.
|
|
·
|
gradual
growth in the aggregate number of vehicles in
use;
|
|
·
|
an
increase in the average age of vehicles in
operation;
|
|
·
|
fewer
new vehicles being purchased due to uncertainty in the economy, especially
available credit;
|
|
·
|
the
total number of miles driven per vehicle per year;
and
|
|
·
|
increased
vehicle complexity.
|
|
1.
|
Business
Management Systems comprised of the Company’s proprietary software
applications, implementation and training and third-party hardware and
peripherals;
|
|
2.
|
Information
Products such as an accessible catalog database related to parts,
tires, labor estimates, scheduled maintenance, repair information,
technical service bulletins, pricing and product features and benefits
that are used by the different participants in the automotive
aftermarket;
|
|
3.
|
Online
Services and products that provide online connectivity between
manufacturers, warehouse distributors, retailers and automotive service
providers. These products enable electronic data interchange throughout
the automotive aftermarket supply chain between the different trading
partners. They also enable procurement and business services to be
projected over the internet to an expanded business audience;
and
|
|
4.
|
Customer
Support, Consulting and Training that provide phone and online
support, implementation and
training.
|
|
·
|
Phone
and online support. Customers can call dedicated support lines to speak
with knowledgeable personnel who provide support and perform on-line
problem solving as required.
|
|
·
|
Implementation,
education and training consulting. Our consulting and training teams work
together to minimize the disruption to a customer’s business during the
implementation process of a new system and to maximize the customer’s
benefit from the use of the system through
training.
|
|
·
|
Traditional Wholesale
Channel . The wholesale channel is the predominant distribution
channel in the automotive aftermarket. It is characterized by the
distribution of parts from the manufacturer to a warehouse distributor, to
parts stores and then to automotive service providers. Warehouse
distributors sell to automotive service providers through parts stores,
which are positioned geographically near the automotive service providers
they serve. This distribution method provides for the rapid distribution
of parts. The Company has products and services that meet the needs of the
warehouse distributors, parts stores and the automotive service
providers.
|
|
·
|
Retail Channel
. The retail channel is comprised of large specialty retailers,
small independent parts stores and regional chains that sell to
“do-it-yourself” customers. Larger specialty retailers, such as Advance
Discount Auto Parts, AutoZone, Inc., O’Reilly Automotive, Inc. and CSK
Auto Corporation carry a greater number of parts and accessories at more
attractive prices than smaller retail outlets and are gaining market
share. The business management systems used in this channel are either
custom developed by the large specialty retailers or purchased from
business systems providers by small to medium-sized businesses. The
Company has products and services that support the retail
channel.
|
|
·
|
Integrating
all of the Company’s products so that its software solutions work together
seamlessly, thereby eliminating the need to switch between
applications;
|
|
·
|
Enhancing
the Company’s current products and services to support its changing
customers needs; and
|
|
·
|
Providing
a migration path to the Company’s business management systems, reducing a
fear that many customers have that changing systems will disrupt
business.
|
Item
1A.
|
Risk
Factors
|
|
·
|
implement
and successfully execute our business and marketing
strategy;
|
|
·
|
continue
to develop new products and upgrade our existing
products;
|
|
·
|
respond
to industry and competitive
developments;
|
|
·
|
attract,
retain, and motivate qualified personnel;
and
|
|
·
|
obtain
equity and debt financing on satisfactory terms and in timely fashion in
amounts adequate to implement our business plan and meet our
obligations.
|
|
•
|
difficulty
in establishing or managing distribution
relationships;
|
|
•
|
different
standards for the development, use, packaging and marketing of our
products and technologies;
|
|
•
|
our
ability to locate qualified local employees, partners, distributors and
suppliers;
|
|
•
|
the
potential burden of complying with a variety of foreign laws and trade
standards; and
|
|
•
|
general
geopolitical risks, such as political and economic instability, changes in
diplomatic and trade relations, and foreign currency risks and
fluctuations.
|
Item
1B.
|
Unresolved
Staff Comments.
|
Item
2.
|
Properties.
|
Item
3.
|
Legal
Proceedings
|
Item
4.
|
Submission
of Matters to a Vote of Security
Holders
|
1.
|
The
election of six (6) members of the Company’s Board of Directors, each to
serve until the next annual meeting of stockholders and until their
successors are elected and qualified or until their earlier resignation or
removal;
|
2.
|
The
ratification of the Board’s selection of KMJ Corbin & Company LLP as
the Company’s independent auditors for the fiscal year ending June 30,
2010.
|
3.
|
Name
Change
|
Votes For
|
Votes Against
|
Abstain
|
||||||||||
Election
of Michael Jamieson
|
24,457,173 | 150,689 | 0 | |||||||||
Election
of Dwight Mamanteo
|
22,499,062 | 2,108,800 | 0 | |||||||||
Election
of Marcus Wohlrab
|
24,273,401 | 334,461 | 0 | |||||||||
Election
of Frederick Wasserman
|
24,450,415 | 157,447 | 0 | |||||||||
Election
of Gerry Czarnecki
|
24,275,525 | 334,337 | 0 | |||||||||
Election
of Austin Lewis IV
|
22,315,414 | 2,292,448 | 0 | |||||||||
Name
Change
|
45,156,491 | 5,364,051 | 38,456 | |||||||||
Ratification
of KMJ Corbin & Company LLP
|
45,171,225 | 5,382,459 | 5,314 |
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
2009
|
||||||||
High
|
Low
|
|||||||
1st
Quarter ended September 30
|
$ | 0.51 | $ | 0.10 | ||||
2nd
Quarter ended December 31
|
$ | 0.34 | $ | 0.07 | ||||
3rd
Quarter ended March 31
|
$ | 0.10 | $ | 0.03 | ||||
4th
Quarter ended June 30
|
$ | 0.11 | $ | 0.03 |
2010
|
||||||||
High
|
Low
|
|||||||
1st
Quarter ended September 30
|
$ | 0.14 | $ | 0.05 | ||||
2nd
Quarter ended December 31
|
$ | 0.11 | $ | 0.06 | ||||
3rd
Quarter ended March 31
|
$ | 0.09 | $ | 0.06 | ||||
4th
Quarter ended June 30
|
$ | 0.08 | $ | 0.06 |
Plan Category
|
Number of
Securities to Be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
|
Number of
Securities
Remaining
Available for
Future Issuance
under the Plan
(2)
|
|||||||||
(a)
|
(b)
|
(c)
|
||||||||||
Equity
compensation plans approved by security holders (1)
|
- | N/A | 12,729,432 | |||||||||
Equity
compensation plans not approved by security holders
|
- | - | - | |||||||||
Total
|
- | - | 12,729,432 |
(1)
|
Represents
the shares authorized for issuance under the Aftersoft Group, Inc. 2007
Long-Term Incentive Plan, which was approved by the Company’s shareholders
at the Annual Meeting held on June 12, 2008. The maximum aggregate number
of shares of Common Stock that may be issued under the Plan, including
Stock Options, Stock Awards, and Stock Appreciation Rights is limited to
15% of the shares of Common Stock outstanding on the first trading day of
any fiscal year, or 12,729,432 for fiscal
2011.
|
(2)
|
As
of July 1, 2010.
|
Item
6.
|
Selected
Financial Data.
|
Item
7.
|
Management
Discussion and Analysis of Financial Condition and Results of
Operations.
|
|
·
|
Level 1 – Fair value based on
quoted prices in active markets for identical assets or
liabilities.
|
|
·
|
Level 2 – Fair value based on
significant directly observable data (other than Level 1 quoted prices) or
significant indirectly observable data through corroboration with
observable market data. Inputs would normally be (i) quoted prices in
active markets for similar assets or liabilities, (ii) quoted prices in
inactive markets for identical or similar assets or liabilities or (iii)
information derived from or corroborated by observable market
data.
|
|
·
|
Level 3 – Fair value based on
prices or valuation techniques that require significant unobservable data
inputs. Inputs would normally be a reporting entity’s own data and
judgments about assumptions that market participants would use in pricing
the asset or
liability.
|
|
1.
|
When
customer acceptance can be estimated, expenditures are capitalized as work
in process and deferred until completion of the contract at which time the
costs and revenues are recognized.
|
|
2.
|
When
customer acceptance cannot be estimated based on historical evidence,
costs are expensed as incurred and revenue is recognized at the completion
of the contract when customer acceptance is
obtained.
|
For the Twelve Months Ended
June 30,
|
||||||||||||||||
2010
|
2009
|
$ Variance
|
% Variance
|
|||||||||||||
Research
and development
|
$
|
3,012,000
|
$
|
2,860,000
|
$
|
152,000
|
5.3
|
%
|
||||||||
Sales
and marketing
|
2,181,000
|
2,211,000
|
(30,000
|
)
|
(1.4
|
)%
|
||||||||||
General
and administrative
|
6,462,000
|
5,651,000
|
811,000
|
14.4
|
%
|
|||||||||||
Depreciation
and amortization
|
1,116,000
|
1,082,000
|
34,000
|
3.1
|
%
|
|||||||||||
Impairment
of goodwill
|
-
|
850,000
|
(850,000
|
)
|
(100.0
|
)%
|
||||||||||
Total
Operating Expenses
|
$
|
12,771,000
|
$
|
12,654,000
|
$
|
117,000
|
0.9
|
%
|
(a)
|
Maximum
limits for capital expenditures of $600,000 per fiscal
year;
|
(b)
|
Limitation
on future borrowings, other than in certain circumstances, including to
finance capital expenditures;
|
(c)
|
Limitation
on guaranteeing any obligation, except for obligations in the ordinary
course of business and obligations of our wholly owned subsidiaries
incurred in the ordinary course of
business;
|
(d)
|
Limitation
on entering Sales-Leaseback Transactions with respect to the sale or
transfer of property used or useful in our business
operations;
|
(e)
|
Limitation
on acquiring securities or making
loans;
|
(f)
|
Limitation
on acquiring real property;
|
(g)
|
Limitation
on selling assets of the Company or permitting any reduction in our
ultimate ownership position of any
subsidiary;
|
(h)
|
Limitation
on paying dividends;
|
(i)
|
Limitation
on selling any accounts receivable;
and
|
(j)
|
Requiring
that, at the end of any quarter of any fiscal year, the ratio of (a)
Earnings Before Interest, Depreciation, and Amortization (“EBIDA”) minus
capital expenditures incurred to maintain or replace capital assets, to
(b) debt service (all interest and principle payments), for the four (4)
consecutive quarters then ended, to be not less than 1.25 to 1.00 (the
“EBIDA Ratio Covenant”).
|
Years Ending
June 30,
|
||||
2011
|
$
|
459,000
|
||
2012
|
375,000
|
|||
2013
|
349,000
|
|||
2014
|
344,000
|
|||
2015
|
326,000
|
|||
Thereafter
|
2,535,000
|
|||
$
|
4,388,000
|
·
|
Business
management systems comprised of our proprietary software applications,
implementation and training and third-party hardware and
peripherals;
|
·
|
Information
products such as an accessible catalog database related to parts, tires,
labor estimates, scheduled maintenance, repair information, technical
service bulletins, pricing and product features and benefits, which are
used by the different participants in the automotive
aftermarket;
|
·
|
Online
services and products that connect manufacturers, warehouse distributors,
retailers and automotive service providers via the internet. These
products enable electronic data interchange throughout the automotive
aftermarket supply chain among the different trading partners. They also
enable procurement and business services to be projected over the internet
to an expanded business audience. Some UK clients use our information
products on their own websites and intranets; some clients in North
America and the UK use our systems and branded software to obtain relevant
and up-to-date information via the internet;
and
|
·
|
Customer
support and consulting services that provide phone and online support,
implementation and training.
|
·
|
gradual
growth in the aggregate number of vehicles in
use;
|
·
|
an
increase in the average age of vehicles in
operation;
|
·
|
fewer
new vehicles being purchased due to a slow down in the
economy;
|
·
|
growth
in the total number of miles driven per vehicle per year;
and
|
·
|
increased
vehicle complexity.
|
Item
7A.
|
Quantitative
and Qualitative Disclosures about Market
Risk.
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.
|
Item
9A.
|
Controls
and Procedures
|
(a)
|
Evaluation
of disclosure controls and
procedures
|
(b)
|
Management’s
report on internal control over financial
reporting
|
(c)
|
Changes
in internal control over financial
reporting
|
Item
9B.
|
Other
Information
|
Name
|
Age
|
Position
|
||
Michael
Jamieson
|
43
|
Chief
Executive Officer and Director
|
||
Charles
F. Trapp
|
60
|
Chief
Financial Officer of the Company
|
||
Dwight
B. Mamanteo
|
41
|
Director
|
||
Marcus
Wohlrab
|
47
|
Director
|
||
Frederick
Wasserman
|
56
|
Director
|
||
Gerald
M. Czarnecki
|
69
|
Chairman
of the Board of Directors of the Company
|
||
W.
Austin Lewis IV
|
34
|
Director
|
Compensation Committee:
|
Audit Committee
|
Governance and
Nomination Committee
|
||
Dwight
B. Mamanteo – Chair
|
Dwight
B. Mamanteo
|
Dwight
B. Mamanteo
|
||
Marcus
Wohlrab
|
Frederick
Wasserman** – Chair
|
Marcus
Wohlrab – Chair
|
||
Gerald
M. Czarnecki -ex officio member
|
Gerald
M. Czarnecki -ex officio member
|
Frederick
Wasserman
|
||
W.
Austin Lewis IV
|
W.
Austin Lewis IV
|
Gerald
M. Czarnecki -ex officio
member
|
**
|
The
Board of Directors has determined that Frederick Wasserman is a financial
expert as defined in Regulation S-K promulgated under the Securities
Act.
|
Name and
Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compensation
($)
|
Non-
qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||
Michael
G. Jamieson, (1)
Chief
Executive Officer,
President
and Director
|
2010
|
80,428
|
—
|
17,600
|
(5)
|
—
|
—
|
—
|
—
|
98,028
|
|||||||||||||||||||||
Ian
Warwick (2)
|
2010
|
475,000
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||
Former
Chief Executive
Officer, President |
2009
|
292,828
|
—
|
—
|
—
|
—
|
—
|
—
|
292,828
|
||||||||||||||||||||||
and
Director
|
2008
|
349,195
|
—
|
—
|
—
|
—
|
—
|
—
|
349,195
|
||||||||||||||||||||||
Simon
Chadwick (3)
|
2010
|
356,250
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||
Former
Chief Operating
|
2009
|
218,780
|
—
|
—
|
—
|
—
|
—
|
—
|
218,780
|
||||||||||||||||||||||
Officer and
Director
|
2008
|
259,402
|
—
|
—
|
—
|
—
|
—
|
—
|
259,402
|
||||||||||||||||||||||
Charles
F. Trapp (4)
|
2010
|
220,000
|
—
|
13,200
|
(6)
|
—
|
—
|
—
|
—
|
233,200
|
|||||||||||||||||||||
Executive
Vice President,
|
2009
|
224,166
|
—
|
5,775
|
(6)
|
—
|
—
|
—
|
—
|
229,941
|
|||||||||||||||||||||
and
Chief Financial Officer
|
2008
|
214,583
|
—
|
25,500
|
(6)
|
—
|
—
|
—
|
—
|
240,083
|
(1)
|
Reflects
salary paid to Mr. Jamieson for services rendered to us and our
subsidiaries during fiscal 2010 as MAM’s Chief Executive Officer and
President. Salary was paid by a subsidiary of the Company in
British pounds at an annual salary of 122,000 GPB per year. Mr.
Jamieson became Interim Chief Executive Officer and Interim President on
February 1, 2010 and was paid 50,830 GBP for the period from February 1,
2010 to June 30, 2010 pursuant to the terms of Mr. Jamieson’s employment
agreement with our subsidiary. The amount shown for 2010 was
translated to US dollars based on a June 30, 2010 currency conversion rate
of 1 GBP = $1.5823 (or $80,428). Mr. Jamieson did not receive any
additional compensation for his services as a director on our Board of
Directors.
|
(2)
|
Mr.
Warwick resigned his position as Chief Executive Officer, President and
Director effective as of January 31, 2010. Reflects salary paid
to Mr. Warwick for services rendered to us and our subsidiaries during
fiscal 2010, 2009 and 2008 as MAM’s Chief Executive Officer and
President. The salary for the period from July 1, 2009 to
January 31, 2010 was paid in US dollars at an annual base rate of $300,000
(or $175,000 for the period), pursuant to the terms of Mr. Warwick’s
employment agreement. Pursuant to the terms of Mr. Warwick’s
Separation Agreement he was paid $300,000 in six equal monthly
installments of $50,000 per month. Mr. Warwick was paid in
British pounds at an annual salary of 175,000 GPB for each of the 2008
fiscal year, and for the period from July 1, 2008 to November 30, 2008 (or
72,916 GBP). Salary for the period from December 1, 2008
through June 30, 2009 was paid in US dollars at an annual base rate of
$300,000 (or $175,000 for the period), pursuant to the terms of Mr.
Warwick’s employment agreement. The amount shown for 2008 was
translated to US dollars based on a June 30, 2008 currency conversion rate
of 1 GBP = $1.9954. The portion of Mr. Warwick’s salary for
fiscal 2009 which was paid in British pounds (for the period from July 1,
2008 through November 30, 2008) was translated to US dollars based on the
June 30, 2009 currency conversion rate of 1 GBP= $1.61593 (or $117,828).
Mr. Warwick did not receive any additional compensation for his services
as a director on our Board of
Directors.
|
(3)
|
Mr.
Chadwick resigned his position as Chief Operating Officer and Director
effective as of January 31, 2010. Reflects salary paid to Mr.
Chadwick for services rendered to us and our subsidiaries during fiscal
2010, 2009 and 2008 as MAM’s Chief Operating Officer. The
Salary for the period from July 1, 2009 to January 31, 2010 was paid in US
dollars at an annual base rate of $225,000 (or $131,250 for the period),
pursuant to the terms of Mr. Chadwick’s employment
agreement. Pursuant to the terms of Mr. Chadwick’s Separation
Agreement he was paid $225,000 in six equal monthly installments of
$37,500 per month. Salary was paid in British pounds at an annual salary
of 130,000 GPB for each of the 2008 fiscal year, and for the period from
July 1, 2008 to November 30, 2008 (or 54,167 GBP). Salary for
the period from December 1, 2008 through June 30, 2009 was paid in US
dollars at an annual base rate of $225,000 (or $131,250 for the period),
pursuant to the terms of Mr. Chadwick’s employment agreement.
The amount shown for 2008 was translated to US dollars based on a June 30,
2008 currency conversion rate of 1 GBP = $1.9954. The portion
of Mr. Chadwick’s salary for fiscal 2009 which was paid in British pounds
(for the period from July 1, 2008 through November 30, 2008) was
translated to US dollars based on the June 30, 2009 currency conversion
rate of 1 GBP= $1.61593 (or $87,530). Mr. Chadwick did not receive any
additional compensation for his services as a director on our Board of
Directors.
|
(4)
|
Mr.
Trapp was appointed Vice President Finance and Chief Financial Officer
effective as of December 1, 2007. For the year ended June 30, 2010, the
amount shown in the table reflects salary in the amount of $91,667 earned
for services in these capacities between July 1, 2009 and November 30,
2009, pursuant to the terms of Mr. Trapp’s employment agreement, as well
as salary in the amount of $128,333 earned for services between December
1, 2009 and June 30, 2010 pursuant to a month to month verbal agreement.
The salary for fiscal 2010 also includes $22,000 that was deferred and
contributed by Mr. Trapp to the Company’s plan established under section
401(k) of the Internal Revenue Code of 1986, as amended. For
the year ended June 30, 2009, the amount shown in the table reflects
salary in the amount of $95,833 earned for services in these capacities
between July 1, 2008 and November 30, 2008, as well as salary in the
amount of $128,333 earned for services between December 1, 2008 and June
30, 2009 pursuant to the terms of Mr. Trapp’s employment agreement. The
salary for fiscal 2009 also includes $20,500 that was deferred and
contributed by Mr. Trapp to the Company’s plan established under section
401(k) of the Internal Revenue Code of 1986, as amended. For
the year ended June 30, 2008, the amount shown in the table reflects
salary in the amount of $134,167 earned for services between December 1,
2007 and June 30, 2008, as well as salary in the amount of $80,416 earned
for services as an accountant prior to his appointment as an officer. The
salary for fiscal 2008 also includes $20,500 that was deferred and
contributed by Mr. Trapp to the Company’s plan established under section
401(k) of the Internal Revenue Code of 1986, as
amended.
|
(5)
|
The
amount shown in the “Stock Awards” column reflects the dollar amount
recognized for fiscal 2010 financial statement reporting purposes of the
outstanding stock awards held by Mr. Jamieson in accordance with FAS 123R.
Stock award represent an award on May 13, 2008 of 1,000,000 shares of
Common Stock with a grant date closing price of $0.10 per share, of which
34% or 340,000 shares vested immediately on the date of grant. The
remaining 66% of the shares or 660,000 shares will vest in three equal
installments of 220,000 shares on each of the first, second and third
anniversaries of the grant date. The shares were not issued pursuant to
any existing compensation plan. Refer to the Company’s Consolidated
Financial Statements for the Fiscal Years Ended June 30, 2010 and 2009,
Note 1 “Stock Based Compensation” and Note 9 “Stockholders Equity”
included in this Annual Report on Form 10-K, with respect to valuation
assumptions for this stock grant. Mr. Jamieson held no other stock or
option awards at June 30, 2010 and 2009,
respectively.
|
(6)
|
The
amount shown in the “Stock Awards” column reflects the dollar amount
recognized for fiscal 2010, 2009 and 2008 financial statement reporting
purposes of the outstanding stock awards held by Mr. Trapp in accordance
with FAS 123R. Stock award represent an award on May 13, 2008 of 750,000
shares of Common Stock with a grant date closing price of $0.10 per share,
of which 34% or 255,000 shares vested immediately on the date of grant.
The remaining 66% of the shares or 495,000 shares will vest in three equal
installments of 165,000 shares on each of the first, second and third
anniversaries of the grant date. The shares were not issued pursuant
to any existing compensation plan. Refer to the Company’s Consolidated
Financial Statements for the Fiscal Years Ended June 30, 2010 and 20097,
Note 1 “Stock Based Compensation” and Note 9 “Stockholders Equity”
included in this Annual Report on Form 10-K, with respect to valuation
assumptions for this stock grant. Mr. Trapp held no other stock or option
awards at June 30, 2010 and 20098,
respectively.
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
(# Exercisable)
|
Number of
Securities
Underlying
Unexercised
Option
(# Unexercisable)
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other Rights
That Have
Not
Vested
(#)
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
Or Other
Rights
That Have
Not
Vested
($)
|
|||||||||||||||||||||||||
Michael
G. Jamieson
|
—
|
—
|
—
|
—
|
—
|
220,000
|
(1)
|
$
|
17,600
|
(3)
|
—
|
—
|
||||||||||||||||||||||
Charles
F. Trapp
|
—
|
—
|
—
|
—
|
—
|
165,000
|
(2)
|
$
|
13,200
|
(3)
|
—
|
—
|
||||||||||||||||||||||
Ian
Warwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
Simon
Chadwick
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
Stock
awards represent an award on May 13, 2008 to Mr. Jamieson of 1,000,000
shares of Common Stock with a grant date fair value of $0.10 per share, of
which 34%, or 340,000 shares, vested immediately on the date of grant,
220,000 shares valued at $.035 per share vested on May 13, 2009 and
220,000 shares valued at $.08 per share vested on May 13, 2010 The
remaining 220,000 shares reflected in the table, will vest on May 13,
2011. The shares were not issued pursuant to any existing compensation
plan.
|
(2)
|
Stock
awards represent an award on May 13, 2008 to Mr. Trapp of 750,000 shares
of Common Stock with a grant date fair value of $0.10 per share, of which
34%, or 255,000 shares, vested immediately on the date of grant and
165,000 shares valued at $.035 per share vested on May 13, 2009 and
165,000 shares valued at $.08 per share vested on May 13, 2010. The
remaining 165,000 shares reflected in the table, will vest on May 13,
2011. The shares were not issued pursuant to any existing compensation
plan.
|
(3)
|
Based
on the closing price of $0.08 of the Company’s Common Stock on June 30,
2010.
|
Fees
Earned or
Paid in
Cash
($)
|
Stock
Awards
($)(1)
|
Options
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compen-
sation
($) |
Total
($)
|
||||||||||||||||||||||
Michael
G. Jamieson
|
— | — | — | — | — | — | — | |||||||||||||||||||||
Ian
Warwick
|
— | — | — | — | — | — | — | |||||||||||||||||||||
Simon
Chadwick
|
— | — | — | — | — | — | — | |||||||||||||||||||||
Dwight
B. Mamanteo
|
26,000 | (2) | 6,785 | (3) | — | — | — | — | 32,785 | |||||||||||||||||||
Marcus
Wohlrab
|
21,000 | 7,987 | (4) | — | — | — | — | 28,987 | ||||||||||||||||||||
Frederick
Wasserman
|
22,500 | 8,518 | (5) | — | — | — | — | 31,018 | ||||||||||||||||||||
Gerald
M. Czarnecki
|
35,000 | (6) | 8,359 | (7) | — | — | — | — | 43,359 | |||||||||||||||||||
W.
Austin Lewis IV
|
20,000 | (8) | 8,353 | (9) | — | — | — | — | 28,353 |
(1)
|
The
amount shown in the table reflects the dollar amount recognized for fiscal
2010 financial statement reporting purposes of the outstanding stock
awards held by the directors in accordance with FAS 123R. Refer to the
Company’s Consolidated Financial Statements for the Fiscal Years Ended
June 30, 2010 and 2009, Note 1 “Stock Based Compensation” and Note 9
“Stockholders Equity” included in the Company’s Annual Report on Form 10-K
for the fiscal year ended June 30, 2010, with respect to valuation
assumptions for this stock grant. The directors held no other stock or
option awards at June 30, 2010.
|
(2)
|
Includes
176,312 shares of Common Stock valued at market price on the date of
issuance, net of income taxes of $4,550, and received in lieu of $19,500
of cash compensation.
|
(3)
|
Includes
83,674 shares valued at market price on the date of issuance, net of
income taxes of $2,433.
|
(4)
|
Includes
98,304 shares valued at market price on the date of
issuance.
|
(5)
|
Includes
104,850 shares valued at market price on the date of
issuance.
|
(6)
|
Includes
280,313 shares of Common Stock valued at market price on the date of
issuance, net of income taxes of $12,250, and received in lieu of $22,750
of cash compensation.
|
(7)
|
Includes
102,885 shares valued at market price on the date of issuance, net of
income taxes of $4,502.
|
(8)
|
Includes
246,429 shares of Common Stock valued at market price on date of issuance,
and received in lieu of $20,000 of cash
compensation.
|
(9)
|
Includes
101,276 shares valued at market price on the date of
issuance.
|
Security
Ownership Of Certain Beneficial Owners And Management and Related
Stockholder Matters
|
Name and address of beneficial owner
|
Amount and Nature of
Beneficial Ownership |
Percent of class of
Common Stock (1) |
||||||
Wynnefield
Persons (2)
c/o
Wynnefield Capital Inc.
450
Seventh Ave., Suite 509
New
York, NY 10123
|
10,829,479 | (3) | 12.61 | % | ||||
Quillen
Persons (4)
145
East 57th Street, 10th Floor
New
York, NY 10022
|
6,543,445 | (5) | 7.62 | % | ||||
ComVest
Capital LLC
105
S. Narcissus Ave.
West
Palm Beach, FL 33401
|
8,469,949 | (6) | 8.98 | % | ||||
Directors
and Officers:
|
||||||||
Michael
Jamieson
Chief
Executive Officer
|
1,460,000 | (7) | 1.71 | % | ||||
Charles
F. Trapp
Chief
Financial Officer
|
1,869,340 | (8) | 2.18 | % | ||||
Frederick
Wasserman,
Director
|
250,666 | (9) | 0.29 | % | ||||
Dwight
B. Mamanteo,
Director
|
781,866 | (10) | 0.91 | % | ||||
Marcus
Wohlrab,
Director
|
198,923 | (11) | 0.23 | % | ||||
Gerald
M. Czarnecki,
Chairman
|
1,211,983 | (12) | 1.41 | % | ||||
W.
Austin Lewis IV (13)
c/o
Lewis Asset Management Corp.
45
Rockefeller Plaza
New
York, NY 10111
|
10,335,037 | (14) | 12.03 | % | ||||
Directors
and Officers as a group (7 persons)
|
16,107,815 | 18.75 | % | |||||
Former
Officers and Directors:
|
||||||||
Ian
Warwick
Chief
Executive Officer
and
Chairman
|
4,561,452 | 5.31 | % | |||||
Simon
Chadwick
Chief
Operating Officer
|
1,961,084 | 2.28 | % |
(1)
|
Based
on a total of 85,860,185 shares of Common Stock outstanding as of July 26,
2010. In accordance with Securities and Exchange Commission rules, each
person’s percentage interest is calculated by dividing the number of
shares that person owns by the sum of (a) the total number of shares
outstanding as of July 26, 2010 plus (b) the number of shares such person
has the right to acquire within sixty (60) days of July 26,
2010.
|
(2)
|
Comprised
of Wynnefield Partners Small Cap Value, LP (“Wynnefield Partners”) and
Wynnefield Partners Small Cap Value LP I (“Wynnefield Partners I”), and
the general partner of each of these entities, Wynnefield Capital
Management, LLC (“Wynnefield LLC”); Wynnefield Small Cap Value Offshore
Fund Ltd. (“Wynnefield Offshore”) and its investment manager, Wynnefield
Capital, Inc. (“Wynnefield Capital”); Wynnefield Capital, Inc. Profit
Sharing & Money Purchase Plan (the “Plan”); Channel Partnership II, LP
(“Channel”); Nelson Obus, who serves as principal and co-managing member
of Wynnefield Capital Management, LLC, principal executive officer of
Wynnefield Capital, Inc. and general partner of Channel Partnership II,
LP; and Joshua H. Landes, who serves as principal and co-managing member
of Wynnefield Capital Management, LLC and executive officer of Wynnefield
Capital, Inc. (collectively, the “Wynnefield Persons”). Dwight Mamanteo,
one of the Company’s directors, is an investment analyst with Wynnefield
Capital. Mr. Mamanteo exercises neither voting nor dispositive control
over the shares beneficially owned by Wynnefield Capital. The Company has
been informed that Nelson Obus and Joshua H. Landes share voting and
investment control over the shares beneficially owned by Wynnefield
Partners, Wynnefield Partners I, Wynnefield Offshore, Wynnefield LLC,
Wynnefield Capital and the Plan, and that Nelson Obus exercises sole
voting and investment control over the shares beneficially owned by
Channel. Based upon information provided in a Schedule 13D/A
filed with the SEC on April 3, 2009 and a Form 4 filed on May 22,
2009. Note that the Wynnefield Persons’ shareholdings have been
reduced by an aggregate of 3,125,002 shares to reflect the surrender of
the Exchange Warrants by the Wynnefield Partners Small Cap Value, LP,
Wynnefield Partners Small Cap Value, LP I, Wynnefield SmallCap Offshore
Fund, Ltd and Channel Partnership II, LP to the Company as part of the
Company’s proposed Exchange Offer.
|
(3)
|
Represents
an aggregate of 10,829,479 shares of common stock, which are beneficially
owned as follows: (i) 3,102,885 shares of common stock are beneficially
owned by Wynnefield Partners; (ii) 2,525,615 shares of common stock are
beneficially owned by Wynnefield Partners I; (iii) 4,559,115 shares of
common stock; (iv) 16,864 shares of common stock are beneficially owned by
the Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan; and
(v) 625,000 shares of common stock are beneficially owned by
Channel. Based upon information provided in a Form 4 filed with
the SEC on May 22, 2009.
|
(4)
|
Comprised
of Little Wing, L.P. (“Little Wing”); Quilcap Corp., the general partner
of Little Wing (“Quilcap Corp.”); Tradewinds Fund, Ltd. (“Tradewinds”);
Quilcap Management, LLC, the investment manager of Little Wing and
Tradewinds (“Quilcap Management”); and Parker Quillen, the President of
Quilcap Corp. and the Sole Managing Member of Quilcap Management
(collectively, the “Quillen Persons”). Based upon information
provided in a Schedule 13G/A filed with the SEC on February 13,
2009.
|
(5)
|
Represents
(i) 5,976,508 shares of common stock owned by Little Wing, with respect to
which Little Wing has the power to vote and dispose, which power may be
exercised by Mr. Quillen, as President of Quilcap Corp and as Sole
Managing Member of Quilcap Management; and (ii) 540,879 shares of common
stock owned by Tradewinds, with respect to which Tradewinds has the power
to vote and dispose, which power may be exercised by Mr. Quillen, as the
Sole Managing Member of Quilcap Management; and (iii) 26,058 shares
of common stock with respect to which Mr. Quillen has sole voting and
dispositive power. Based upon information provided in a
Schedule 13G/A filed with the SEC on February 13,
2009.
|
(6)
|
Includes
the following shares owned by ComVest Capital LLC: (i) 1,000,000 shares
issuable upon exercise of warrants to purchase shares of Common Stock,
which are currently exercisable at $0.1097 per share and expire December
31, 2013; (ii) 2,083,333 shares issuable upon exercise of warrants to
purchase shares of Common Stock, which are currently exercisable at
$0.3595 per share and expire December 31, 2013; (iii) 2,000,000 shares
issuable upon exercise of warrants to purchase shares of Common Stock,
which are currently exercisable at $0.1097 per share and expire December
31, 2013, and (iv) 3,386,616 shares of common stock issuable upon
conversion of the $5,000,000 principal amount of that certain Convertible
Term Note dated December 21, 2007 issued to Comvest Capital LLC, at a
current conversion rate of $1.4764 per share. The Company has been
informed that Comvest Capital Advisors, LLC is the managing entity of
ComVest Capital, LLC, and that Gary Jaggard, managing director of Comvest
Capital, LLC, exercises voting and investment control over the shares
beneficially owned by ComVest Capital, LLC. See “Certain Relationships and
Related Transactions and Director Independence” for additional
detail.
|
(7)
|
Includes
780,000 vested shares of an award of an aggregate of 1,000,000 restricted
shares of Common Stock granted by the Company on May 13, 2008 for services
previously rendered.
|
(8)
|
Includes
585,000 vested shares of an award of an aggregate 750,000 restricted
shares of Common Stock granted by the Company on May 13, 2008 for services
previously rendered.
|
(9)
|
Includes
(i) 19,500 vested shares of restricted Common Stock of an award for an
aggregate 25,000 shares of restricted Common Stock granted on May 13, 2008
by the Company for services previously rendered; (ii) 73,336 vested shares
of restricted Common Stock out of an award of an aggregate of 110,000
shares of restricted Common Stock granted on October 6, 2008; and (iii)
68,181 vested shares of restricted Common Stock out of an award of an
aggregate of 204,545 shares of restricted Common Stock granted on July 1,
2009, and (iv) 49,650 shares which will vest within 60 days of August 11,
2010.
|
(10)
|
Includes
(i) 19,500 vested shares of restricted Common Stock of an award for an
aggregate 25,000 shares of restricted Common Stock granted on May 13, 2008
by the Company for services previously rendered; and (ii) 51,137 vested
shares of restricted Common Stock (net of taxes) out of an award of an
aggregate of 104,000 shares of restricted Common Stock granted on October
6, 2008; and (iii) 58,106 vested shares of restricted Common Stock (net of
taxes) out of an award of an aggregate of 236,364 shares of restricted
Common Stock granted on July 1, 2009, and (iv) 55,447 shares which will
vest within 60 days of August 11,
2010.
|
(11)
|
Includes
(i) 19,500 vested shares of restricted Common Stock of an award for an
aggregate 25,000 shares of restricted Common Stock granted on May 13, 2008
by the Company for services previously rendered; (ii) 69,336 vested shares
of restricted Common Stock out of an award of an aggregate of 104,000
shares of restricted Common Stock granted on October 6, 2008; and (iii)
62,936 vested shares of restricted Common Stock (net of taxes) out of an
award of an aggregate of 190,909 shares of restricted Common Stock granted
on July 1, 2009, and (iv) 46,451 shares which will vest within 60 days of
August 11, 2010.
|
(12)
|
Includes
(i) 13,333 vested shares of restricted Common Stock (net of taxes) out of
an award for an aggregate 25,000 shares of restricted Common Stock granted
by the Company for joining the Board of Directors on October 6, 2008; (ii)
79,892 vested shares of restricted Common Stock (net of taxes) out of an
award of an aggregate of 140,000 shares of restricted Common Stock granted
on October 6, 2008; and (iii) 68,940 vested shares of restricted Common
Stock (net of taxes) out of an award of an aggregate of 318,182 shares of
restricted Common Stock granted on July 1, 2009, and (iv) 76,030 shares
which will vest within 60 days of August 11,
2010.
|
(13)
|
W.
Austin Lewis IV is the portfolio manager and general partner of Lewis
Asset Management Corp., the investment manager of Lewis Opportunity Fund,
LP and LAM Opportunity Fund, LTD. Accordingly, Mr. Lewis is deemed to
be the beneficial owner of the shares owned by Lewis Opportunity Fund, LP
and LAM Opportunity Fund, LTD. and beneficially owned by Lewis Asset
Management Corp.
|
(14)
|
Represents
(i) 3,614,353 shares owned directly by W. Austin Lewis IV, (ii) 5,322,646
shares of common stock owned by Lewis Opportunity Fund, LP; (iii)
1,348,719 shares of common stock owned by LAM Opportunity Fund, LTD.; (iv)
14,000 vested shares of restricted Common Stock out of an award of an
aggregate of 25,000 shares of restricted Common Stock granted on February
20, 2009; (v) 36,935 vested shares of restricted Common Stock out of an
award of an aggregate 80,000 shares of restricted Common Stock granted on
February 20, 2009; and (vi) 60,607 vested shares of restricted Common
Stock out of an award of an aggregate of 181,818 shares of restricted
Common Stock granted on July 1, 2009, and (vii) 49,319 shares which will
vest within 60 days of August 11, 2010. Note that Mr. Lewis’
shareholdings have been reduced by an aggregate of 6,402,999 shares to
reflect the surrender of the Exchange Warrants by Lewis Opportunity Fund,
LP and LAM Opportunity Fund Ltd. to the Company as part of the Company’s
proposed Exchange Offer.
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
Item
14.
|
Principal
Accounting Fees and Services.
|
For the Year Ended June 30,
|
||||||||
2010
|
2009
|
|||||||
Audit
fees (1)
|
$
|
123,200
|
$
|
175,000
|
||||
Audit-
related fees (2)
|
-
|
56,400
|
||||||
Tax
fees (3)
|
-
|
11,900
|
||||||
All
other fees
|
9,900
|
–
|
||||||
Total
fees
|
$
|
133,100
|
$
|
243,300
|
(1)
|
Audit
fees are comprised of annual audit fees and quarterly review
fees.
|
(2)
|
Audit-related
fees for fiscal years 2010 and 2009 are comprised of consent fees and work
on registration statements, consultation fees on accounting issues, and
fees related to the restatements of the fiscal 2008 quarterly reports that
were filed in fiscal 2009.
|
(3)
|
Tax
fees are comprised of tax compliance, preparation and consultation
fees.
|
Item
15.
|
Exhibits,
Financial Statement
Schedules.
|
Description of Exhibit
|
||
3(i)
|
Certificate
of Incorporation of MAM Software Group, Inc., as amended (incorporated by
reference to Exhibit 3(i) to the Company’s Registration Statement on Form
S-1/A filed on July 15, 2008).
|
|
3(ii)
|
By
laws (incorporated by reference to Exhibit 3(ii) to the Company’s
Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
4.1
|
Form
of Certificate of Common Stock (incorporated by reference to Exhibit 4.1
to the Company’s Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
10.1
|
Share
Sale Agreement relating to EXP Dealer Software Limited dated August 4,
2006 among Auto Data Network, Inc., MAM Software Group, Inc. and MAM
Software Dealer Software Limited (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on August 31,
2006).
|
10.2
|
Share
Sale Agreement relating to Dealer Software and Services Limited dated
February 1, 2007 between MAM Software Group, Inc. and Auto Data Network,
Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on February 7, 2007).
|
|
10.4
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.5
|
Form
of Registration Rights Agreement (incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.6
|
Settlement
and Release Agreement between ASNA and Aidan J. McKenna (incorporated by
reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
filed August 6, 2007).
|
|
10.7
|
Share
Sale Agreement, dated November 12, 2007, between EU Web Services, Ltd., as
Purchaser, MAM Software Group, Inc., as Vendor, and EXP Dealer Software
Ltd. (incorporated by reference to Exhibit 99.1 of the Company’s Current
Report on Form 8-K filed November 16, 2007)
|
|
10.8
|
Revolving
Credit and Term Loan Agreement dated as of December 21, 2007, by and
between ComVest Capital LLC, as Lender, and MAM Software Group, Inc., as
Borrower (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed December 31, 2007).
|
|
10.9
|
Revolving
Credit Note dated December 21, 2007 in the principal amount of $1,000,000
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.10
|
Convertible
Term Note, dated December 21, 2007 in the principal amount of $5,000,000
(incorporated by reference to Exhibit 10.3 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.11
|
Collateral
Agreement dated as of December 21, 2007 by and among MAM Software Group,
Inc., Aftersoft Network, N.A. Inc., MAM Software Ltd., MAM Software Group
(UK) Ltd., AFS Warehouse Distribution Management, Inc., AFS Tire
Management, Inc. and AFS Autoservice Inc., and ComVest Capital LLC
(incorporated by reference to Exhibit 10.4 of the Company’s Current Report
on Form 8-K filed December 31,
2007).
|
Guaranty
Agreement dated December 21, 2007 by Aftersoft Network, N.A. Inc., MAM
Software Ltd., MAM Software Group (UK) Ltd., AFS Warehouse Distribution
Management, Inc., AFS Tire Management, Inc. and AFS Autoservice Inc., in
favor of ComVest Capital LLC (incorporated by reference to Exhibit 10.5 of
the Company’s Current Report on Form 8-K filed December 31,
2007).
|
||
10.13
|
Form
of Validity Guaranty (incorporated by reference to Exhibit 10.6 of the
Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.14
|
Warrant,
dated as of December 21, 2007, to Purchase 1,000,000 Shares of Common
Stock of MAM Software Group, Inc. (incorporated by reference to Exhibit
10.7 of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.15
|
Warrant,
dated as of December 21, 2007, to purchase 2,000,000 Shares of Common
Stock of MAM Software Group, Inc. (incorporated by reference to Exhibit
10.8 of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.16
|
Warrant,
dated as of December 21, 2007, to purchase 2,083,333 Shares of Common
Stock of MAM Software Group, Inc. (incorporated by reference to Exhibit
10.9 of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.17
|
Registration
Rights Agreement dated as of December 21, 2007 by MAM Software Group, Inc.
for the benefit of the holders (incorporated by reference to Exhibit 10.10
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.18
|
2007
Long-Term Stock Incentive Plan (incorporated by reference to Exhibit D of
the Company’s revised Definitive Proxy Statement filed on May 19,
2008).
|
|
10.19
|
Employment
Agreement dated as of December 1, 2008 between the Company and Ian Warwick
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K filed December 5,
2008).
|
10.20
|
Employment
Agreement dated as of December 1, 2008 between the Company and Charles F.
Trapp (incorporated by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K filed December 5, 2008).
|
|
10.21
|
Employment
Agreement dated as of December 1, 2008 between the Company and Simon
Chadwick (incorporated by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K filed December 5, 2008).
|
|
10.22
|
May
15, 2008 Waiver and Amendment (incorporated by reference to Exhibit 10.1
of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.23
|
September
23, 2008 Waiver and Amendment (incorporated herein by reference to Exhibit
10.2 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.24
|
February
10, 2009 Waiver and Amendment (incorporated herein by reference to Exhibit
10.3 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.25
|
April
22, 2009 Amendment (incorporated by reference to Exhibit 10.1 of the
Company’s current Report on Form 8-K filed April 23,
2009).
|
|
10.26
|
Consulting
Agreement with Commonwealth Associates LP dated June 3, 2008 (incorporated
herein by reference to Exhibit 10.25 to the Company's Registration
Statement on Form S-1/A filed on April 3, 2009).
|
|
14
|
Code
of Ethics (incorporated by reference to Exhibit 14 to the Company’s Annual
report on Form 10-K/A for the fiscal year ended June 30, 2007 filed
October 15, 2007.)
|
|
List
of subsidiaries (incorporated by reference to Exhibit 21 to the Company’s
Registration Statement on Form S-1/A filed on July 15,
2008).
|
||
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
32.2
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
MAM
Software Group, Inc.
|
||
Date:
September 16, 2010
|
By:
|
/s/Michael G. Jamieson
|
Michael
G. Jamieson
|
||
Chief
Executive Officer
(Principal
Executive Officer)
|
Date:
September 16, 2010
|
By:
|
/s/ Michael G. Jamieson
|
Michael
G. Jamieson
|
||
Chief
Executive Officer and Director
(Principal
Executive Officer)
|
||
Date:
September 16, 2010
|
By:
|
/s/ Charles F. Trapp
|
Charles
F. Trapp
|
||
Chief
Financial Officer
(Principal
Financial Officer and
Principal
Accounting Officer)
|
||
Date:
September 16, 2010
|
By:
|
/s/
Gerald M. Czarmecki
|
Gerald
M. Czarnecki
|
||
Chairman
of the Board, Lead Director,
ex officio member of
all committees
|
||
Date:
September 16, 2010
|
By:
|
/s/ Frederick Wasserman
|
Frederick
Wasserman
|
||
Audit
Committee Chair and Director
|
||
Date:
September 16, 2010
|
By:
|
/s/ Dwight Mamanteo
|
Dwight
Mamanteo
|
||
Compensation
Committee Chair and
Director
|
||
Date:
September 16, 2010
|
By:
|
/s/ Marcus Wohlrab
|
Marcus
Wohlrab
|
||
Governance
Committee Chair and
Director
|
||
Date:
September 16, 2010
|
By:
|
/s/ W. Austin Lewis IV
|
W.
Austin Lewis IV
|
||
Compensation
Committee Member and
Director
|
Report
of Independent Registered Public Accounting Firm
|
F–1
|
|
Consolidated
Balance Sheets as of June 30, 2010 and 2009
|
F–2
|
|
Consolidated
Statements of Operations and Comprehensive Loss for the years
ended June 30, 2010 and 2009
|
F–3
|
|
Consolidated
Statements of Stockholders’ Equity for the years ended June 30, 2010 and
2009
|
F–4
|
|
Consolidated
Statements of Cash Flows for the years ended June 30, 2010 and
2009
|
F–5
|
|
Notes
to Consolidated Financial Statements
|
|
F–7
|
June 30,
|
||||||||
2010
|
2009
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$
|
1,196
|
$
|
1,663
|
||||
Accounts
receivable, net of allowance of $192 and $87
|
2,520
|
2,154
|
||||||
Inventories
|
366
|
318
|
||||||
Prepaid
expenses and other current assets
|
371
|
507
|
||||||
Total
Current Assets
|
4,453
|
4,642
|
||||||
Property
and Equipment, Net
|
856
|
1,028
|
||||||
Other
Assets
|
||||||||
Goodwill
|
8,924
|
9,548
|
||||||
Amortizable
intangible assets, net
|
2,757
|
3,566
|
||||||
Software
development costs, net
|
1,520
|
1,691
|
||||||
Other
long-term assets
|
49
|
179
|
||||||
TOTAL
ASSETS
|
$
|
18,559
|
$
|
20,654
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$
|
1,551
|
$
|
1,386
|
||||
Accrued
expenses and other
|
2,368
|
3,162
|
||||||
Payroll
and other taxes
|
364
|
278
|
||||||
Current
portion of settlement liability
|
326
|
-
|
||||||
Derivative
liabilities
|
291
|
-
|
||||||
Current
portion of long-term debt
|
5,000
|
1,598
|
||||||
Current
portion of deferred revenue
|
641
|
482
|
||||||
Taxes
payable
|
647
|
708
|
||||||
Total
Current Liabilities
|
11,188
|
7,614
|
||||||
Long-Term
Liabilities
|
||||||||
Deferred
revenue, net of current portion
|
345
|
748
|
||||||
Deferred
income taxes
|
642
|
880
|
||||||
Settlement
liability, net of current portion
|
525
|
-
|
||||||
Long-term
debt, net of current portion
|
168
|
4,713
|
||||||
Other
|
359
|
199
|
||||||
Total
Liabilities
|
13,227
|
14,154
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders'
Equity
|
||||||||
Preferred
stock: Par value $0.0001 per share; 10,000,000 shares authorized, none
issued and outstanding
|
–
|
–
|
||||||
Common
stock: Par value $0.0001 per share; 150,000,000 shares authorized,
84,862,880 and 83,462,337 shares issued and outstanding,
respectively
|
8
|
8
|
||||||
Additional
paid-in capital
|
29,503
|
30,219
|
||||||
Accumulated
other comprehensive loss
|
(768
|
)
|
(482
|
)
|
||||
Accumulated
deficit
|
(23,411
|
)
|
(23,245
|
)
|
||||
Total
Stockholders' Equity
|
5,332
|
6,500
|
||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
18,559
|
$
|
20,654
|
For the Year Ended
June 30,
|
||||||||
2010
|
2009
|
|||||||
Revenues
|
$
|
24,156
|
$
|
21,119
|
||||
Cost
of revenues
|
10,274
|
9,496
|
||||||
Gross
Profit
|
13,882
|
11,623
|
||||||
Operating
Expenses
|
||||||||
Research
and development
|
3,012
|
2,860
|
||||||
Sales
and marketing
|
2,181
|
2,211
|
||||||
General
and administrative
|
6,462
|
5,651
|
||||||
Depreciation
and amortization
|
1,116
|
1,082
|
||||||
Impairment
of goodwill
|
-
|
850
|
||||||
Total
Operating Expenses
|
12,771
|
12,654
|
||||||
Operating
Income (Loss)
|
1,111
|
(1,031
|
)
|
|||||
Other
Income (Expense)
|
||||||||
Interest
expense
|
(1,361
|
)
|
(1,602
|
)
|
||||
Interest
income
|
-
|
21
|
||||||
Change
in fair value of derivative liabilities
|
267
|
–
|
||||||
Write
down of investments in available-for-sale securities
|
-
|
(4,723
|
)
|
|||||
Other,
net
|
50
|
98
|
||||||
Total
other expense, net
|
(1,044
|
)
|
(6,206
|
)
|
||||
Income
(loss) before provision for income taxes
|
67
|
(7,237
|
)
|
|||||
Provision
for income taxes
|
694
|
386
|
||||||
Net
Loss
|
(627
|
)
|
(7,623
|
)
|
||||
Unrealized
gain on reversal of unrealized loss on investments in
available–for–sale securities
|
-
|
184
|
||||||
Foreign
currency translation loss
|
(286
|
)
|
(2,283
|
)
|
||||
Total
Comprehensive Loss
|
$
|
(913
|
)
|
$
|
(9,722
|
)
|
||
Loss
per share attributed to common stockholders - basic and
diluted
|
$
|
(0.01
|
)
|
$
|
(0.09
|
)
|
||
Weighted
average common shares outstanding basic
and diluted
|
83,970,278
|
86,272,712
|
Common Stock
|
Additional
Paid-in-
|
Due
From
|
Other
Accumulated
Comprehensive
|
Accumulated
|
||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Parent
|
Income (Loss)
|
Deficit
|
Total
|
||||||||||||||||||||||
Balance
June 30,
2008
|
92,733,220 | $ | 9 | $ | 31,732 | $ | (2,850 | ) | $ | 1,617 | $ | (15,453 | ) | $ | 15,055 | |||||||||||||
Sale
of parent company common stock
|
– | – | 337 | 505 | – | – | 842 | |||||||||||||||||||||
Parent
company common stock issued for parent company liabilities
|
– | – | (53 | ) | 193 | – | (140 | ) | – | |||||||||||||||||||
Common
stock retired
|
(13,722,112 | ) | (1 | ) | (2,122 | ) | 2,152 | – | (29 | ) | – | |||||||||||||||||
Common
stock issued as compensation
|
4,451,229 | – | 310 | – | – | – | 310 | |||||||||||||||||||||
Fair
value of warrants issued to lender
|
– | – | 15 | – | – | – | 15 | |||||||||||||||||||||
Foreign
currency translation
|
– | – | – | – | (2,283 | ) | – | (2,283 | ) | |||||||||||||||||||
Reversal
of unrealized loss on investment in available-for-sale
securities
|
– | – | – | – | 184 | 184 | ||||||||||||||||||||||
Net
loss
|
– | – | – | – | – | (7,623 | ) | (7,623 | ) | |||||||||||||||||||
Balance
June 30, 2009
|
83,462,337 | 8 | 30,219 | – | (482 | ) | (23,245 | ) | 6,500 | |||||||||||||||||||
Adoption
of new accounting guidance related to derivative
instruments
|
- | - | (868 | ) | - | - | 461 | (407 | ) | |||||||||||||||||||
Common
stock issued as compensation
|
1,400,543 | - | 116 | - | - | - | 116 | |||||||||||||||||||||
Fair
value of warrants issued for services
|
- | - | 36 | - | — | - | 36 | |||||||||||||||||||||
Foreign
currency translation
|
- | - | - | - | (286 | ) | - | (286 | ) | |||||||||||||||||||
Net
loss
|
(627 | ) | (627 | ) | ||||||||||||||||||||||||
Balance
June 30, 2010
|
84,862,880 | $ | 8 | $ | 29,503 | $ | - | $ | (768 | ) | $ | (23,411 | ) | $ | 5,332 |
(In thousands)
|
For the Years Ended
June 30,
|
|||||||
2010
|
2009
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES :
|
||||||||
Net
loss
|
$
|
(627
|
)
|
$
|
(7,623
|
)
|
||
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
||||||||
Bad
Debt Expense
|
177
|
-
|
||||||
Depreciation
and amortization
|
1,116
|
1,082
|
||||||
Debt
discount and debt issuance cost amortization
|
513
|
699
|
||||||
Gain
on write off of liabilities
|
(50
|
)
|
(134
|
)
|
||||
Change
in fair value of derivative liabilities
|
(267
|
)
|
-
|
|||||
Write
down of investment in available - for- sale securities
|
-
|
4,723
|
||||||
Deferred
income tax
|
(238
|
)
|
-
|
|||||
Fair
value of stock issued for services and compensation
|
116
|
310
|
||||||
Warrants
issued in settlement of a service agreement
|
36
|
-
|
||||||
Impairment
of goodwill
|
-
|
850
|
||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
(707
|
)
|
1,079
|
|||||
Inventories
|
(79
|
)
|
297
|
|||||
Prepaid
expenses and other assets
|
105
|
183
|
||||||
Accounts
payable
|
257
|
(852
|
)
|
|||||
Taxes
payable
|
(6
|
)
|
329
|
|||||
Deferred
revenue
|
(196
|
)
|
78
|
|||||
Accrued
expenses and other liabilities
|
515
|
(804
|
)
|
|||||
NET
CASH PROVIDED BY OPERATING
ACTIVITIES
|
665
|
217
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of property and equipment
|
(85
|
)
|
(213
|
)
|
||||
Capitalized
software development costs
|
(66
|
)
|
(276
|
)
|
||||
NET
CASH USED IN INVESTING ACTIVITIES
|
(151
|
)
|
(489
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds
from sale of parent company stock, net of cash issuance
costs
|
-
|
842
|
||||||
Proceeds
from long-term debt
|
-
|
500
|
||||||
Payments
on long-term debt
|
(1,346
|
)
|
(410
|
)
|
||||
NET
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
(1,346
|
)
|
932
|
|||||
Effect
of exchange rate changes
|
365
|
(961
|
)
|
|||||
Net
change in cash and cash equivalents
|
(467
|
)
|
(301
|
)
|
||||
Cash
and cash equivalents at beginning of year
|
1,663
|
1,964
|
||||||
Cash
and cash equivalents at end of year
|
$
|
1,196
|
$
|
1,663
|
(In thousands)
|
For the Years Ended
June 30,
|
|||||||
2010
|
2009
|
|||||||
Supplemental
disclosures of cash flow information
|
||||||||
Cash
paid during the year for :
|
||||||||
Interest
|
$ | 849 | $ | 841 | ||||
Income
taxes
|
$ | 463 | $ | 873 | ||||
Non-cash
investing and financing transactions during the year for :
|
||||||||
Value of
distributed shares
|
$ | - | $ | 29 | ||||
Value
of retired shares
|
$ | - | $ | 2,123 | ||||
Cumulative
effect to retained earnings due to adoption of accounting
standard
|
$ | 461 | $ | - | ||||
Cumulative
effect to additional paid – in – capital to adoption of accounting
standard
|
$ | 868 | $ | - | ||||
Cumulative
effect to debt discount due to adoption of accounting
standard
|
$ | 310 | $ | - | ||||
Gain
on sale of Parent company common stock
|
$ | - | $ | 337 | ||||
Value
of warrants issued for amended debt covenants
|
$ | - | $ | 15 | ||||
Issuance
of debt for property, plant and equipment
|
$ | - | $ | 403 | ||||
Shares
exchanged for parent company common stock:
|
||||||||
Shares
of Parent company common stock remitted in exchange for Parent company
obligations
|
$ | - | $ | 193 | ||||
Parent
company obligations assumed by Company
|
$ | - | $ | (140 | ) | |||
Loss
on settlement of Parent company obligations
|
$ | - | $ | 53 |
|
·
|
Level
1 – Fair value based on quoted prices in active markets for identical
assets or liabilities.
|
|
·
|
Level
2 – Fair value based on significant directly observable data (other than
Level 1 quoted prices) or significant indirectly observable data through
corroboration with observable market data. Inputs would normally be (i)
quoted prices in active markets for similar assets or liabilities, (ii)
quoted prices in inactive markets for identical or similar assets or
liabilities or (iii) information derived from or corroborated by
observable market data.
|
|
·
|
Level
3 – Fair value based on prices or valuation techniques that require
significant unobservable data inputs. Inputs would normally be a reporting
entity’s own data and judgments about assumptions that market participants
would use in pricing the asset or
liability.
|
Balance
July 1, 2008
|
$ | 11,878,000 | ||
Effect
of exchange rate changes
|
(1,480,000 | ) | ||
Impairment
charges
|
(850,000 | ) | ||
Balance
June 30, 2009
|
$ | 9,548,000 | ||
Effect
of exchange rate changes
|
(624,000 | ) | ||
Balance
June 30, 2010
|
$ | 8,924,000 |
|
1)
|
When
customer acceptance can be estimated, expenditures are capitalized as work
in process and deferred until completion of the contract at which time the
costs and revenues are recognized.
|
|
2)
|
When
customer acceptance cannot be estimated based on historical evidence,
costs are expensed as incurred and revenue is recognized at the completion
of the contract when customer acceptance is
obtained.
|
2010
|
2009
|
|||||||
Numerator
for basic and diluted loss per share:
|
||||||||
Net
loss
|
$ | (627,000 | ) | $ | (7,623,000 | ) | ||
Deemed
distribution to parent company
|
- | (169,000 | ) | |||||
Net
loss available to common shareholders
|
$ | (627,000 | ) | $ | (7,792,000 | ) | ||
Denominator
for basic and diluted loss per common share:
|
||||||||
Weighted
average number of shares of common stock outstanding
|
83,970,278 | 86,272,712 | ||||||
Net
loss per common share available to common stockholders - basic and
diluted
|
$ | (0.01 | ) | $ | (0.09 | ) |
June 30,
|
July 1,
|
|||||||
2010
|
2009
|
|||||||
Annual
dividend yield
|
0.0 | % | 0.0 | % | ||||
Expected
life (years)
|
0.42 - 3.50 | 4.50 | ||||||
Risk-free
interest rate
|
0.39%-2.65 | % | 0.54%-2.51 | % | ||||
Expected
volatility
|
82% - 137 | % | 175 | % |
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Fair
value of warrants
|
$ | - | $ | - | $ | 291,000 | $ | 291,000 | ||||||||
Total
|
$ | - | $ | - | $ | 291,000 | $ | 291,000 |
Balance
as of June 30, 2009
|
$
|
-
|
||
Cumulative
effect of adoption
|
558,000
|
|||
Change
in fair value
|
(267,000
|
)
|
||
Balance
as of June 30, 2010
|
$
|
291,000
|
Investment
in available-for-sale securities under Level 3 classification as
of March 31, 2009
|
$
|
-
|
||
Transfers
into Level 3
|
1,238,000
|
|||
Write
down of available – for- sale securities
|
(1,238,000
|
)
|
||
Balance
as of June 30, 2009
|
-
|
June 30, 2010
|
June 30, 2009
|
|||||||
Leasehold
improvements
|
$ | 745,000 | $ | 774,000 | ||||
Computer
and office equipment
|
370,000 | 336,000 | ||||||
Equipment
under capital leases
|
10,000 | 10,000 | ||||||
Furniture
and equipment
|
258,000 | 275,000 | ||||||
1,383,000 | 1,395,000 | |||||||
Less:
Accumulated depreciation and amortization
|
(527,000 | ) | (367,000 | ) | ||||
$ | 856,000 | $ | 1,028,000 |
June 30,
2010
|
June 30,
2009
|
|||||||
Assets
not subject to amortization:
|
||||||||
Goodwill
|
$ | 8,924,000 | $ | 9,548,000 | ||||
Assets
subject to amortization:
|
||||||||
Completed
software technology (9-10 years useful life)
|
$ | 2,991,000 | $ | 3,109,000 | ||||
Customer
contracts / relationships (10 years useful life)
|
3,711,000 | 3,770,000 | ||||||
Automotive
data services (20 years useful life)
|
295,000 | 323,000 | ||||||
6,997,000 | 7,202,000 | |||||||
Less
: Accumulated amortization
|
(4,240,000 | ) | (3,636,000 | ) | ||||
Amortizable
intangible assets, net
|
$ | 2,757,000 | $ | 3,566,000 | ||||
Software
development costs
|
$ | 2,953,000 | $ | 3,083,000 | ||||
Less
: Accumulated amortization
|
(1,433,000 | ) | (1,392,000 | ) | ||||
Software
development costs, net
|
$ | 1,520,000 | $ | 1,691,000 |
Years
Ending June 30,
|
||||
2011
|
$
|
865,000
|
||
2012
|
865,000
|
|||
2013
|
690,000
|
|||
2014
|
588,000
|
|||
2015
|
472,000
|
|||
Thereafter
|
797,000
|
|||
Total
|
$
|
4,277,000
|
2010
|
2009
|
|||||||
ComVest
term loan, net of debt discount of $71,000 and
$303,000
|
$ | 3,912,000 | $ | 4,697,000 | ||||
ComVest
revolver
|
1,000,000 | 1,000,000 | ||||||
Secured
notes
|
243,000 | 388,000 | ||||||
McKenna
note
|
- | 150,000 | ||||||
Homann
note
|
- | 63,000 | ||||||
Other
notes
|
13,000 | 13,000 | ||||||
5,168,000 | 6,311,000 | |||||||
Less
current portion
|
(5,000,000 | ) | (1,598,000 | ) | ||||
Long
term portion
|
$ | 168,000 | $ | 4,713,000 |
Years
Ending June 30,
|
||||
2011
|
$
|
5,071,000
|
||
2012
|
75,000
|
|||
2013
|
75,000
|
|||
2014
|
18,000
|
|||
Total
|
$
|
5,239,000
|
US
Federal
|
US
State
|
UK
Corporate
|
Total
|
|||||||||||||
2010
|
||||||||||||||||
Current
|
$ | - | $ | - | $ | 694,000 | 694,000 | |||||||||
Deferred
|
- | - | - | - | ||||||||||||
Total
|
$ | - | $ | - | $ | 694,000 | 694,000 | |||||||||
2009
|
||||||||||||||||
Current
|
$ | - | $ | - | $ | 386,000 | 386,000 | |||||||||
Deferred
|
- | - | - | - | ||||||||||||
Total
|
$ | - | $ | - | $ | 386,000 | 386,000 |
June 30,
2010
|
June 30,
2009
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating loss carry-forwards
|
$ | 8,378,000 | $ | 3,729,000 | ||||
Unrealized
loss on available-for-sale securities
|
1,889,000 | 1,889,000 | ||||||
Deferred
revenue
|
151,000 | 145,000 | ||||||
Reserves
and accruals
|
128,000 | 124,000 | ||||||
Deferred
rent
|
44,000 | - | ||||||
Derivative
liabilities
|
116,000 | - | ||||||
Total
deferred tax assets
|
10,706,000 | 5,887,000 | ||||||
Deferred
tax liabilities:
|
||||||||
Other
acquired amortizable intangibles
|
(1,103,000 | ) | (1,426,000 | ) | ||||
Software
development costs
|
(461,000 | ) | (482,000 | ) | ||||
Depreciation
and amortization
|
(86,000 | ) | (116,000 | ) | ||||
State
taxes
|
- | - | ) | |||||
Total
deferred tax liabilities
|
(1,650,000 | ) | (2,024,000 | ) | ||||
Valuation
allowance
|
(9,698,000 | ) | (4,743,000 | ) | ||||
Net
deferred tax liabilities
|
$ | (642,000 | ) | $ | (880,000 | ) |
June 30,
|
||||||||
2010
|
2009
|
|||||||
Taxes
at statutory rates applied to loss from continuing operations
before taxes
|
$ | 23,000 | $ | (2,460,000 | ) | |||
State
taxes, net of federal effect
|
1,000 | (462,000 | ) | |||||
Non-deductible
goodwill impairment
|
- | 340,000 | ||||||
Other
net
|
(20,000 | ) | 82,000 | |||||
Increase
in acquired net operating losses
|
(4,057,000 | ) | - | |||||
Differential
in UK corporate tax rate
|
(208,000 | ) | (103,000 | ) | ||||
Change
in valuation allowance
|
4,955,000 | 2,989,000 | ||||||
Total
adjustments
|
671,000 | 2,846,000 | ||||||
Provision
for income taxes
|
$ | 694,000 | 386,000 |
|
(1)
|
On
August 1, 2007, the Company and Mr. McKenna entered into an agreement that
settled all outstanding actions by Mr. McKenna against the Company and its
subsidiaries related to the initial action against CarParts Technologies,
Inc., which is now known as ASNA. Pursuant to the settlement, the Company
paid Mr. McKenna $2,000,000 in cash, issued him an 8% promissory note in
the principal amount of $825,000, which is payable over 24 months, and
issued Mr. McKenna 1,718,750 shares of the Company’s Common Stock, which
represented $825,000 at a value of $0.48 per share (the closing price of
the Company’s Common Stock on the date of settlement). Mr. McKenna was
also entitled to warrants to purchase an equivalent number of shares of
Common Stock at the same price. Upon entering this agreement all parties
agreed to withdraw all existing litigation and claims. The Company
finalized its agreement with McKenna on December 6, 2007 and revised its
litigation accrual to $3,650,000 to reflect the settlement. The shares
were issued in August 2007. In November 2007,
the Company amended the settlement agreement and
issued 1,718,750 warrants to purchase Common Stock for $0.48 per share.
The warrants were issued to replace the Common Stock included in the
settlement agreement. In February 2009, the Company orally advised Mr.
McKenna that it would reduce the monthly payment on the note to $18,650
per month from $37,313 per month. Such amendment was not memorialized in
writing, Since February 2009, Mr. McKenna accepted the reduced monthly
payments, and has not notified the Company of any violations of the terms
and conditions of the payment agreement. The Company repaid the note
in full during the three month period ended March 31, 2010 (see Note
9).
|
|
(2)
|
Additionally,
the Company entered into a settlement agreement with Mr. Arthur
Blumenthal, a former shareholder of Anderson BDG, Inc. Mr. Blumenthal’s
lawsuit against the Company’s parent ADNW emanated from an agreement Mr.
Blumenthal had with a subsidiary of the Company, ASNA (f/k/a CarParts
Technologies, Inc.) for the purchase of Anderson BDG, that had not been
settled although it was past due. The Company assumed the liability as
part of a plan of spinning off certain businesses into the Company and
renegotiated the agreement with Mr. Blumenthal, the terms of which
required the Company to make a payment of $50,000 cash and the issuance to
Mr. Blumenthal and registration of 300,000 shares of the Company’s common
stock, which were issued in fiscal 2007 and valued at $0.48 per share,
(the closing price of the Company’s common stock on the date of
settlement) or $144,000. The Company subsequently completely settled the
lawsuit with Mr. Blumenthal and repaid his notes in fiscal
2008.
|
Years Ending
June 30,
|
||||
2011
|
$ | 459,000 | ||
2012
|
375,000 | |||
2013
|
349,000 | |||
2014
|
344,000 | |||
2015
|
326,000 | |||
Thereafter
|
2,535,000 | |||
$ | 4,388,000 |
Issuance
of warrants in connection with the ComVest Loan Agreement (see Note
6):
|
||||
ComVest
|
5,083,333
|
|||
Other
|
250,000
|
|||
5,333,333
|
||||
Issuance
of warrants to a service provider (valued at $27,000)
|
155,549
|
|||
Issuance of
warrants in McKenna settlement
|
3,437,500
|
|||
Issuance of
warrants to investors in private placement
|
5,208,337
|
|||
Issuance
of warrants Commonwealth in settlement for services offered (see
above)
|
700,000
|
|||
Issuance
of warrants Commonwealth in private placement (see above)
|
1,000,000
|
|||
Issuance
of warrants to placement agent in private placement
|
260,417
|
|||
Issuance
of warrants to Lewis Global Funds
|
6,402,999
|
|||
Total
issued
|
22,498,135
|
Description of Exhibit
|
||
3(i)
|
Certificate
of Incorporation of MAM Software Group, Inc., as amended (incorporated by
reference to Exhibit 3(i) to the Company’s Registration Statement on Form
S-1/A filed on July 15, 2008).
|
|
3(ii)
|
By
laws (incorporated by reference to Exhibit 3(ii) to the Company’s
Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
4.1
|
Form
of Certificate of Common Stock (incorporated by reference to Exhibit 4.1
to the Company’s Registration Statement on Form SB-2 filed on February 16,
2007).
|
|
10.1
|
Share
Sale Agreement relating to EXP Dealer Software Limited dated August 4,
2006 among Auto Data Network, Inc., MAM Software Group, Inc. and MAM
Software Dealer Software Limited (incorporated by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K filed on August 31,
2006).
|
|
10.2
|
Share
Sale Agreement relating to Dealer Software and Services Limited dated
February 1, 2007 between MAM Software Group, Inc. and Auto Data Network,
Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on February 7, 2007).
|
|
10.4
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
10.2 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.5
|
Form
of Registration Rights Agreement (incorporated by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed July 6,
2007).
|
|
10.6
|
Settlement
and Release Agreement between ASNA and Aidan J. McKenna (incorporated by
reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K
filed August 6, 2007).
|
|
10.7
|
Share
Sale Agreement, dated November 12, 2007, between EU Web Services, Ltd., as
Purchaser, MAM Software Group, Inc., as Vendor, and EXP Dealer Software
Ltd. (incorporated by reference to Exhibit 99.1 of the Company’s Current
Report on Form 8-K filed November 16,
2007)
|
10.8
|
Revolving
Credit and Term Loan Agreement dated as of December 21, 2007, by and
between ComVest Capital LLC, as Lender, and MAM Software Group, Inc., as
Borrower (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed December 31, 2007).
|
|
10.9
|
Revolving
Credit Note dated December 21, 2007 in the principal amount of $1,000,000
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
10.10
|
Convertible
Term Note, dated December 21, 2007 in the principal amount of $5,000,000
(incorporated by reference to Exhibit 10.3 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
|
Collateral
Agreement dated as of December 21, 2007 by and among MAM Software Group,
Inc., Aftersoft Network, N.A. Inc., MAM Software Ltd., MAM Software Group
(UK) Ltd., AFS Warehouse Distribution Management, Inc., AFS Tire
Management, Inc. and AFS Autoservice Inc., and ComVest Capital LLC
(incorporated by reference to Exhibit 10.4 of the Company’s Current Report
on Form 8-K filed December 31, 2007).
|
||
10.12
|
Guaranty
Agreement dated December 21, 2007 by Aftersoft Network, N.A. Inc., MAM
Software Ltd., MAM Software Group (UK) Ltd., AFS Warehouse Distribution
Management, Inc., AFS Tire Management, Inc. and AFS Autoservice Inc., in
favor of ComVest Capital LLC (incorporated by reference to Exhibit 10.5 of
the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.13
|
Form
of Validity Guaranty (incorporated by reference to Exhibit 10.6 of the
Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.14
|
Warrant,
dated as of December 21, 2007, to Purchase 1,000,000 Shares of Common
Stock of MAM Software Group, Inc. (incorporated by reference to Exhibit
10.7 of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.15
|
Warrant,
dated as of December 21, 2007, to purchase 2,000,000 Shares of Common
Stock of MAM Software Group, Inc. (incorporated by reference to Exhibit
10.8 of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.16
|
Warrant,
dated as of December 21, 2007, to purchase 2,083,333 Shares of Common
Stock of MAM Software Group, Inc. (incorporated by reference to Exhibit
10.9 of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
10.17
|
Registration
Rights Agreement dated as of December 21, 2007 by MAM Software Group, Inc.
for the benefit of the holders (incorporated by reference to Exhibit 10.10
of the Company’s Current Report on Form 8-K filed December 31,
2007).
|
|
10.18
|
2007
Long-Term Stock Incentive Plan (incorporated by reference to Exhibit D of
the Company’s revised Definitive Proxy Statement filed on May 19,
2008).
|
|
10.19
|
Employment
Agreement dated as of December 1, 2008 between the Company and Ian Warwick
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K filed December 5, 2008).
|
|
10.20
|
Employment
Agreement dated as of December 1, 2008 between the Company and Charles F.
Trapp (incorporated by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K filed December 5, 2008).
|
|
10.21
|
Employment
Agreement dated as of December 1, 2008 between the Company and Simon
Chadwick (incorporated by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K filed December 5, 2008).
|
|
10.22
|
May
15, 2008 Waiver and Amendment (incorporated by reference to Exhibit 10.1
of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.23
|
September
23, 2008 Waiver and Amendment (incorporated herein by reference to Exhibit
10.2 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
10.24
|
February
10, 2009 Waiver and Amendment (incorporated herein by reference to Exhibit
10.3 of the Company’s Current Report on Form 8-K filed March 27,
2009).
|
|
April
22, 2009 Amendment (incorporated by reference to Exhibit 10.1 of the
Company’s current Report on Form 8-K filed April 23,
2009).
|
||
10.26
|
Consulting
Agreement with Commonwealth Associates LP dated June 3, 2008 (incorporated
herein by reference to Exhibit 10.25 to the Company's Registration
Statement on Form S-1/A filed on April 3, 2009).
|
|
14
|
Code
of Ethics (incorporated by reference to Exhibit 14 to the Company’s Annual
report on Form 10-K/A for the fiscal year ended June 30, 2007 filed
October 15, 2007.)
|
|
21
|
List
of subsidiaries (incorporated by reference to Exhibit 21 to the Company’s
Registration Statement on Form S-1/A filed on July 15,
2008).
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|
32.2
|
Certification
of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|