UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2014 or
| ¨ | TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________________ to
___________________
Commission File Number: 000-51560
Sajan, Inc.
(Exact name of registrant as specified
in its charter)
Delaware |
41-1881957 |
(State of incorporation) |
(I.R.S. Employer Identification No.) |
|
|
625 Whitetail Blvd., River Falls,
Wisconsin |
54022 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including
area code: (715) 426-9505
Former name,
former address and former fiscal year, if changed since last report: N/A
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements
for the past 90 days.
x
Yes ¨
No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, 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).
x Yes
¨ No
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 definition of “accelerated
filer,” large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer ¨ Accelerated
filer ¨ Non-accelerated
filer ¨
Smaller reporting company x
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act).
¨
Yes x
No
As of October 31, 2014, the registrant had 4,773,189 shares
of common stock, $0.01 par value per share, outstanding.
Sajan, Inc.
Table of Contents
PART I. FINANCIAL
INFORMATION
Item 1. Financial Statements.
Sajan, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
Amounts in thousands except per share data
| |
September 30, 2014 | | |
December 31, 2013 | |
| |
(Unaudited) | | |
| |
Assets | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash and cash equivalents | |
$ | 4,909 | | |
$ | 1,364 | |
Accounts receivable, net of allowance | |
| 3,810 | | |
| 3,810 | |
Unbilled services | |
| 1,217 | | |
| 1,197 | |
Prepaid expenses and other current assets | |
| 547 | | |
| 431 | |
Total current assets | |
| 10,483 | | |
| 6,802 | |
| |
| | | |
| | |
Property and equipment, net | |
| 742 | | |
| 1,000 | |
| |
| | | |
| | |
Other assets: | |
| | | |
| | |
Intangible assets, net | |
| 301 | | |
| 446 | |
Capitalized software development costs, net | |
| 258 | | |
| 393 | |
Other assets | |
| 23 | | |
| 17 | |
Total other assets | |
| 582 | | |
| 856 | |
| |
| | | |
| | |
Total assets | |
$ | 11,807 | | |
$ | 8,658 | |
| |
| | | |
| | |
Liabilities and Stockholders’ Equity | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 2,903 | | |
| 2,555 | |
Deferred revenue and customer prepayments | |
| 1,505 | | |
| 1,423 | |
Accrued interest – related party | |
| 66 | | |
| 111 | |
Accrued compensation and benefits | |
| 1,040 | | |
| 848 | |
Accrued liabilities | |
| 163 | | |
| 195 | |
Current portion of capital lease obligations | |
| 140 | | |
| 185 | |
Total current liabilities | |
| 5,817 | | |
| 5,317 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Long-term liabilities: | |
| | | |
| | |
Capital lease obligations, net of current portion | |
| - | | |
| 93 | |
Note payable – related party | |
| 750 | | |
| 750 | |
Total long-term liabilities | |
| 750 | | |
| 843 | |
Total liabilities | |
| 6,567 | | |
| 6,160 | |
| |
| | | |
| | |
Stockholders’ equity: | |
| | | |
| | |
Preferred stock, $.01 par value, 10,000 shares authorized and no shares issued
and outstanding | |
| - | | |
| - | |
Common stock, $.01 par value, 35,000 shares authorized; 4,773 shares issued
and outstanding | |
| 48 | | |
| 41 | |
Additional paid-in capital | |
| 10,236 | | |
| 7,337 | |
Accumulated deficit | |
| (4,806 | ) | |
| (4,691 | ) |
Foreign currency adjustment | |
| (238 | ) | |
| (189 | ) |
Total stockholders’ equity | |
| 5,240 | | |
| 2,498 | |
Total liabilities and stockholders’
equity | |
$ | 11,807 | | |
$ | 8,658 | |
See
notes to unaudited condensed consolidated financial statements.
Sajan, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| |
Three months ended
September 30, | | |
Nine months ended
September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Revenue from translation and consulting services | |
$ | 7,340 | | |
$ | 5,720 | | |
$ | 20,734 | | |
$ | 17,377 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | |
Cost of revenues (exclusive of depreciation and amortization) | |
| 4,354 | | |
| 3,525 | | |
| 12,624 | | |
| 10,681 | |
Sales and marketing | |
| 884 | | |
| 830 | | |
| 2,521 | | |
| 2,415 | |
Research and development | |
| 382 | | |
| 297 | | |
| 1,214 | | |
| 683 | |
General and administrative | |
| 1,348 | | |
| 992 | | |
| 3,659 | | |
| 2,893 | |
Depreciation and amortization | |
| 247 | | |
| 203 | | |
| 726 | | |
| 596 | |
Total operating expenses | |
| 7,215 | | |
| 5,847 | | |
| 20,744 | | |
| 17,268 | |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) from operations | |
| 125 | | |
| (127 | ) | |
| (10 | ) | |
| 109 | |
| |
| | | |
| | | |
| | | |
| | |
Other (income) expense: | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| 20 | | |
| 27 | | |
| 64 | | |
| 83 | |
Foreign currency transaction loss (gain) | |
| (1 | ) | |
| 3 | | |
| 2 | | |
| 1 | |
Total expense, net | |
| 19 | | |
| 30 | | |
| 66 | | |
| 84 | |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) before income taxes | |
| 106 | | |
| (157 | ) | |
| (76 | ) | |
| 25 | |
| |
| | | |
| | | |
| | | |
| | |
Income tax expense | |
| 5 | | |
| 6 | | |
| 39 | | |
| 25 | |
| |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
$ | 101 | | |
$ | (163 | ) | |
$ | (115 | ) | |
$ | - | |
Effect of foreign currency translation adjustments | |
| (21 | ) | |
| 35 | | |
| (31 | ) | |
| - | |
Comprehensive income (loss) | |
$ | 80 | | |
$ | (128 | ) | |
$ | (146 | ) | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) per common share – basic | |
$ | 0.02 | | |
$ | (0.04 | ) | |
$ | (0.03 | ) | |
$ | 0.00 | |
Income (loss) per common share – diluted | |
$ | 0.02 | | |
$ | (0.04 | ) | |
$ | (0.03 | ) | |
$ | 0.00 | |
Weighted average shares outstanding – basic | |
| 4,216 | | |
| 4,067 | | |
| 4,117 | | |
| 4,067 | |
Weighted average shares outstanding – diluted | |
| 4,297 | | |
| 4,067 | | |
| 4,117 | | |
| 4,067 | |
See notes
to unaudited condensed consolidated financial statements.
Sajan, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
| |
Nine months ended September
30, | |
| |
2014 | | |
2013 | |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (115 | ) | |
$ | (0 | ) |
Adjustments to reconcile net (loss) income to net cash from operating
activities: | |
| | | |
| | |
Depreciation | |
| 410 | | |
| 246 | |
Amortization | |
| 316 | | |
| 350 | |
Stock-based compensation expense | |
| 205 | | |
| 170 | |
| |
| | | |
| | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| - | | |
| (418 | ) |
Unbilled services | |
| (20 | ) | |
| (84 | ) |
Prepaid expenses and other current assets | |
| (125 | ) | |
| 53 | |
Accounts payable | |
| 348 | | |
| (141 | ) |
Deferred revenue and customer prepayments | |
| 82 | | |
| 1,012 | |
Accrued interest-related party | |
| (45 | ) | |
| 15 | |
Accrued compensation and benefits | |
| 192 | | |
| 204 | |
Other | |
| (6 | ) | |
| (66 | ) |
Net cash flows provided by operating activities | |
| 1,242 | | |
| 1,341 | |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
| |
| | | |
| | |
Purchases of property and equipment | |
| (175 | ) | |
| (136 | ) |
Payments on long term licenses | |
| (36 | ) | |
| (107 | ) |
Capitalized software development costs | |
| - | | |
| (242 | ) |
Net cash flows used in investing activities | |
| (211 | ) | |
| (485 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Net proceeds from issuance of stock | |
| 2,701 | | |
| - | |
Payments on line of credit | |
| - | | |
| (200 | ) |
Payments on capital lease obligations | |
| (138 | ) | |
| (71 | ) |
Net cash flows provided by (used in) financing activities | |
| 2,563 | | |
| (271 | ) |
| |
| | | |
| | |
Net increase in cash and cash
equivalents | |
| 3,594 | | |
| 585 | |
| |
| | | |
| | |
Effect of exchange rate changes in cash | |
| (49 | ) | |
| 1 | |
Cash and cash equivalents – beginning of period | |
| 1,364 | | |
| 893 | |
| |
| | | |
| | |
Cash and cash equivalents – end of period | |
$ | 4,909 | | |
$ | 1,479 | |
| |
| | | |
| | |
Cash paid for taxes | |
$ | 31 | | |
$ | 35 | |
Cash paid for interest including loan fees | |
$ | 109 | | |
$ | 68 | |
Non-cash investing and financing transactions: | |
| | | |
| | |
Purchase of property and equipment via capital lease obligation | |
$ | 0 | | |
$ | 272 | |
See notes to unaudited condensed consolidated
financial statements.
Sajan, Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated
Financial Statements
Amounts in thousands except per share
data
| 1. | Nature
of Business and Summary of Significant Accounting Policies |
Nature of Business / Basis of Presentation
Sajan, Inc. (the “Company” or “Sajan”),
a Delaware corporation, provides language translation services and technology solutions to companies located throughout the world,
particularly in the technology, consumer products, medical and life sciences, financial services, manufacturing, and retail industries
that are selling products into global markets. The Company is located in River Falls, Wisconsin and has active, wholly-owned subsidiaries
in the following countries:
| · | Ireland –
Sajan Software Ltd. |
| · | Spain –
Sajan Spain S.L.A. |
| · | Singapore –
Sajan Singapore Pte. Ltd. |
Interim Financial Information
The condensed consolidated balance sheet as of December 31,
2013, which has been derived from audited consolidated financial statements, and the unaudited interim condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”)
and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial
information. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements
prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Operating results for the three and
nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December
31, 2014 or any other period. The accompanying consolidated financial statements and related notes should be read in conjunction
with the audited consolidated financial statements of the Company, and notes thereto, contained in this report. The
financial information furnished in this report is unaudited and reflects all adjustments which are normal recurring adjustments
and which, in the opinion of management, are necessary to fairly present the results of the interim periods presented in order
to make the consolidated financial statements not misleading.
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Sajan, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been
eliminated in the consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an
original maturity of three months or less at the date of purchase to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts of the Company’s financial instruments,
which include cash equivalents, accounts receivable, accounts payable and other accrued expenses, approximate their fair values
due to their short maturities and/or market-consistent interest rates.
Accounts Receivable
The Company extends unsecured credit to customers in the normal
course of business. The Company provides an allowance for doubtful accounts when appropriate, the amount of which is based upon
a review of outstanding receivables, historical collection information, and existing economic conditions on an individual customer
basis. Normal accounts receivable are due 30 days after issuance of the invoice. Receivables are written off only after all collection
attempts have failed, and are based on individual credit evaluation and specific circumstances of the customer. Accounts receivable
have been reduced by an allowance for uncollectible accounts of $30 at September 30, 2014 and $15 at December 31, 2013. Management
believes all accounts receivable in excess of the allowance are fully collectible. The Company does not accrue interest on accounts
receivable.
Reverse Stock Split
At our 2014 Annual Meeting of Stockholders held on June 12,
2014, our stockholders approved a proposal granting our Board of Directors authority to effect a reverse stock split. On June
12, 2014 the Board approved a reverse stock split at a ratio of 1-for-4 and the reverse split was effective at 11:59 p.m. on June
16, 2014. The reverse stock split did not result in a reduction in the number of authorized shares of common stock. The accompanying
financial statements and footnotes have been adjusted retroactively to reflect the reverse stock split.
Income/Loss Per Common Share
Basic earnings (loss) per share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding.
Diluted earnings (loss) per share is computed based on the
weighted average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding
had the potentially dilutive common shares been issued.
For the three months ended September 30, 2014 and 2013 we excluded
options to purchase 54 and 384 shares, respectively, and warrants to purchase 13 and 44, respectively, shares from the diluted
weighted average shares outstanding calculation because the inclusion of these shares would have been anti-dilutive. For the nine
months ended September 30, 2014 and 2013 we excluded all options and warrants to purchase shares because the Company had a net
loss and inclusion of these shares would have been anti-dilutive.
A reconciliation of the denominator in the basic and diluted
income or loss per share is as follows:
| |
Three months ended September
30, | |
| |
2014 | | |
2013 | |
Numerator: | |
| | | |
| | |
Net income (loss) | |
$ | 101 | | |
$ | (163 | ) |
Denominator: | |
| | | |
| | |
Weighted average common shares outstanding - basic | |
| 4,216 | | |
| 4,067 | |
Effect of dilutive stock options and warrants | |
| 81 | | |
| - | |
Weighted average common shares outstanding - diluted | |
| 4,297 | | |
| 4,067 | |
Basic earnings (loss) per common share | |
$ | 0.02 | | |
$ | (0.04 | ) |
Diluted earnings (loss) per common share | |
$ | 0.02 | | |
$ | (0.04 | ) |
| |
Nine months ended September
30, | |
| |
2014 | | |
2013 | |
Numerator: | |
| | | |
| | |
Net loss | |
$ | (115 | ) | |
$ | (0 | ) |
Denominator: | |
| | | |
| | |
Weighted average common shares outstanding - basic | |
| 4,117 | | |
| 4,067 | |
Effect of dilutive stock options and warrants | |
| - | | |
| - | |
Weighted average common shares outstanding - diluted | |
| 4,117 | | |
| 4,067 | |
Basic loss per common share | |
$ | (0.03 | ) | |
$ | (0.00 | ) |
Diluted loss per common share | |
$ | (0.03 | ) | |
$ | (0.00 | ) |
Property and Equipment
Property and equipment are recorded at cost and depreciated
over their estimated useful lives, initially determined to be two to twelve years, using the straight-line method. Upon retirement
or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting
gain or loss is included in operating results. Repairs and maintenance costs are expensed as incurred.
Intangible Assets
The Company's intangible assets consist of customer lists,
patents and licenses, are subject to amortization, and consist of the following:
| |
September 30, 2014 | | |
December 31, 2013 | |
Customer lists acquired | |
$ | 784 | | |
$ | 784 | |
Patents and licenses | |
| 229 | | |
| 193 | |
Less accumulated amortization | |
| (712 | ) | |
| (531 | ) |
Total intangible assets, net | |
$ | 301 | | |
$ | 446 | |
Intangible assets are amortized over their expected useful
lives of 4 to 15 years and their weighted average remaining life is 2 years. Amortization of intangible assets was $60 and $84
for the three-month periods ended September 30, 2014 and 2013, respectively, and $181 and $168 for the nine-month periods ended
September 30, 2014 and 2013, respectively. Estimated amortization expense of intangible assets for the years ending December 31,
2014, 2015, 2016, 2017, 2018 and thereafter is $241, $221, $4, $2, $2 and $12, respectively.
Long-lived Assets
The Company annually reviews its long-lived assets for events
or changes that may indicate that the carrying amount of a long-lived asset may not be recoverable or exceeds its fair value.
There was no impairment for the three and nine months ended September 30, 2014 and 2013.
Capitalized Software Development Costs
The Company capitalizes software development costs incurred
during the application development stage related to new software or major enhancements to the functionality of existing software
that is developed solely to meet the Company’s internal operational needs and when no substantive plans exist or are being
developed to market the software externally. Costs capitalized include external direct costs of materials and services and internal
payroll and payroll-related costs. Any costs during the preliminary project stage or related to training or maintenance are expensed
as incurred. Capitalization ceases when the software project is substantially complete and ready for its intended use. The capitalization
and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain
external factors, including, but not limited to, technological and economic feasibility, and estimated economic life. The Company
did not capitalize any software development costs in either of the three or nine months ended September 30, 2014. During the three
and nine months ended September 30, 2013, the Company capitalized $0 and $242, respectively, related to software development activities.
Capitalized software development costs consist of the following
as of:
| |
September 30, 2014 | | |
December 31, 2013 | |
Capitalized software development costs | |
$ | 543 | | |
$ | 746 | |
Less accumulated amortization | |
| (285 | ) | |
| (353 | ) |
Total capitalized software development costs, net | |
$ | 258 | | |
$ | 393 | |
When the projects are ready for their intended use, the Company
amortizes such costs over their estimated useful lives of three years. In the nine months ended September 30, 2014, $203 of fully
amortized capitalized development costs were written off due to the software no longer being in use. Capitalized software amortization
expense was $45 and $43 for the three months ended September 30, 2014 and 2013, respectively, and $135 and $105 for the nine months
ended September 30, 2014 and 2013, respectively. Amortization expense for capitalized software costs is expected to be $181, $169
and $43 in 2014, 2015, and 2016, respectively.
Stock-Based Compensation
The Company measures and recognizes compensation expense for
all stock-based compensation at fair value. The Company recognizes stock-based compensation costs on a straight-line basis over
the requisite service period of the award, which is generally the option vesting term. Total stock-based compensation expense
was $76 and $70 for the three months ended September 30, 2014 and 2013, respectively, and $205 and $170 for the nine months ended
September 30, 2014 and 2013, respectively. As of September 30, 2014, there was approximately $648 of total unrecognized
compensation cost related to non-vested share-based compensation arrangements granted under the Company’s 2004 Amended and
Restated Long-Term Incentive Plan and 2014 Equity Incentive Plan. That cost is expected to be recognized over a weighted-average
period of three years.
There were 52 and 59 options issued during the three and nine
months ended September 30, 2014. There were 102 and 181 options issued during the three and nine months ended September 30, 2013,
respectively. In determining the compensation cost of the options granted, the fair value of each option grant has been estimated
on the date of grant using the Black-Scholes option pricing model, and the weighted average assumptions used in these calculations
are summarized as follows:
| |
Three months ended September
30, | |
| |
2014 | | |
2013 | |
Risk-free interest rate | |
| 1.6 | % | |
| 1.4 | % |
Expected life of options granted | |
| 7
Yrs. | | |
| 7
Yrs. | |
Expected volatility range | |
| 91.5 | % | |
| 89.0 | % |
Expected dividend yield | |
| - | | |
| - | |
Using the Black-Scholes option pricing model, management has
determined that the options issued in the three months ended September 30, 2014 and 2013 have a weighted-average grant date fair
value of $3.90 and $3.96 per share, respectively.
| |
Nine months ended September
30, | |
| |
2014 | | |
2013 | |
Risk-free interest rate | |
| 1.4 | % | |
| 1.2 | % |
Expected life of options granted | |
| 6
Yrs. | | |
| 7
Yrs. | |
Expected volatility range | |
| 79.9 | % | |
| 88.4 | % |
Expected dividend yield | |
| - | | |
| - | |
Using the Black-Scholes option pricing model, management has
determined that the options issued in the nine months ended September 30, 2014 and 2013 have a weighted-average grant date fair
value of $4.00 and $3.44 per share, respectively.
Revenue Recognition
The Company derives revenues primarily from language translation
services and professional consulting services.
Translation services utilize the Company’s proprietary
translation management system – Transplicity – to provide a solution for all of the customer’s language translation
requirements. Services include content analysis, translation memory and retrieval, language translation, account management, graphic
design services, technical consulting and professional services. Services associated with translation of content are
generally billed on a “per word” basis. Professional services, including technical consulting and project management,
are billed on a per hour rate basis.
The Company considers revenue earned and realizable at the
time services are performed and amounts are earned. Sajan considers amounts to be earned when (1) persuasive evidence of an arrangement
has been obtained; (2) services are delivered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.
Determination of criteria (3) and (4) is based on management’s judgments regarding the fixed nature of the fee charged for
services rendered and products delivered and the collectability of those fees. The Company recognizes revenue for translations
services on a standard “per word” basis at the time the translation is completed. The Company recognizes revenue for
professional services when the services have been completed in accordance with the statement of work.
Sajan’s agreements with its customers may provide the
customer with a limited time period following delivery of the project for the customer to identify any non-conformities to the
pre-defined project specifications. The Company has the opportunity to correct these items. Historically, errors in project deliverables
have been minimal and accordingly, revenue is recognized as services are performed.
Revenues recognized in excess of billings are recorded as unbilled
services. Billings in excess of revenues recognized and customer prepayment for services are recorded as deferred revenue and
customer prepayments; to the extent cash has been received.
Cost of Revenues
Cost of revenues consists primarily of expenses incurred for
translation services provided by third parties as well as salaries and associated employee benefits for personnel related to client
projects.
Research and Development
Research and development expenses primarily represent costs
incurred for development of maintenance and enhancements to the Company’s operating software system and include costs incurred
during the preliminary project stage of development or related to training or maintenance activities. To a lesser degree, research
and development expenses also consist of costs to add features to the Company’s operating software system that could make
portions of the system licensable to outside third parties. Research and development expenses consist primarily of salaries and
related costs of software engineers, and fees paid to third party consultants. All research and development expenses are expensed
as incurred.
Foreign Currency Translation
For operations in local currency environments, assets and liabilities
are translated at year-end exchange rates with cumulative translation adjustments included as a component of shareholders’
equity. Income and expense items are translated at average foreign exchange rates prevailing during the year. For operations in
which the U.S. dollar is not considered the functional currency, certain financial statements amounts are re-measured at
historical exchange rates, with all other asset and liability amounts translated at year-end exchange rates. These re-measured
adjustments are reflected in the results of operations. Gains and losses from foreign currency transactions are included in the
Consolidated Statements of Operations and Comprehensive Income (Loss).
Income Tax
Current income taxes are recorded based on statutory obligations
for the current operating period for the various countries in which the Company has operations.
Deferred taxes are provided on an asset and liability method
whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities
and their tax basis. 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.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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. Management bases its estimates on historical experience
and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from
those estimates.
Reclassification of Prior
Year Balances
Certain amounts related to amortization of prepaid expenses
in the financial statements for the three and nine months ended September 30, 2013 have been reclassified to conform to the current
year presentation. These reclassifications had no effect on net income (loss) or stockholders’ equity.
New Accounting Pronouncements
Revenue from Contracts with Customers – In May 2014,
the Financial Accounting Standards Board (FASB) issued guidance creating Accounting Standards Codification (“ASC”)
Section 606, “Revenue from Contracts with Customers”. The new section will replace Section 605, “Revenue Recognition”
and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section
is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards with
previously differing treatment between United States practice and those of much of the rest of the world, as well as, to enhance
disclosures related to disaggregated revenue information. The updated guidance is effective for annual reporting periods beginning
on or after December 15, 2016, and interim periods within those annual periods. The Company will adopt the new provisions of this
accounting standard at the beginning of fiscal year 2017, given that early adoption is not an option. The Company will further
study the implications of this statement in order to evaluate the expected impact on the consolidated financial statements.
| 2. | Concentrations
of Credit Risk |
Financial instruments which potentially subject the Company
to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable.
Cash concentration – The Company places its cash
at financial institutions with balances that, at times, may exceed federally insured limits. The Company evaluates the creditworthiness
of these financial institutions in determining the risk associated with these deposits. The Company has not experienced any losses
on such accounts.
Accounts receivable concentration – Concentrations
of credit risk with respect to trade accounts receivable are limited due to the dispersion of customers across different industries
and geographic regions. At September 30, 2014, one customer accounted for 18% and at December 31, 2013, one customer accounted
for 22% of accounts receivable.
Sales concentration – For the three months ended
September 30, 2014, no customers accounted for over 10% and for the three months ended September 30, 2013, one customer, IBM,
accounted for 15% of net revenues. For the nine months ended September 30, 2014 and 2013, IBM accounted for 12% and 17% of net
revenues, respectively.
| 3. | Segment
Information and Major Customers |
The Company views its operations and manages its business as
one reportable segment, providing language translation solutions to a variety of companies, primarily in its targeted vertical
markets. Factors used to identify the Company’s 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. The
Company markets its products and services through its headquarters in the United States and its wholly-owned subsidiaries operating
in Ireland, Spain, and Singapore.
Net sales per geographic region, based on the billing location
of the end customer, are summarized below.
| |
Three Months Ended September
30, | |
| |
2014 | | |
2013 | |
| |
Sales | | |
Percent | | |
Sales | | |
Percent | |
United States | |
$ | 5,359 | | |
| 73 | % | |
$ | 4,116 | | |
| 72 | % |
Asia | |
| 246 | | |
| 3 | % | |
| 275 | | |
| 5 | % |
Europe | |
| 1,490 | | |
| 20 | % | |
| 1,257 | | |
| 22 | % |
Other International | |
| 244 | | |
| 4 | % | |
| 72 | | |
| 1 | % |
Total Sales | |
$ | 7,340 | | |
| 100 | % | |
$ | 5,720 | | |
| 100 | % |
| |
Nine months Ended September
30, | |
| |
2014 | | |
2013 | |
| |
Sales | | |
Percent | | |
Sales | | |
Percent | |
United States | |
$ | 15,157 | | |
| 73 | % | |
$ | 11,873 | | |
| 68 | % |
Asia | |
| 763 | | |
| 4 | % | |
| 938 | | |
| 5 | % |
Europe | |
| 4,077 | | |
| 20 | % | |
| 3,846 | | |
| 22 | % |
Other International | |
| 737 | | |
| 3 | % | |
| 720 | | |
| 5 | % |
Total Sales | |
$ | 20,734 | | |
| 100 | % | |
$ | 17,377 | | |
| 100 | % |
For the three and nine months ended September 30, 2014, no
single foreign country accounted for 10% or more of net revenues. For the three and nine months ended September 30, 2013, one
foreign country, Spain, accounted for 11% and 10% of net revenues, respectively.
| 4. | Related
Party Transactions |
Note Payable
Note payable and accrued interest are payable to Shannon and
Angela Zimmerman, each of whom is an executive officer and director of the Company, and a beneficial owner of the Company's outstanding
voting common stock. The note has a maturity date of August 23, 2015, and carries an interest rate of 8%. No payments of the principal
balances are allowed while there are amounts outstanding under the Company’s line of credit with Silicon Valley Bank (see
Note 5).
Accrued interest was $66 as of September 30, 2014 and $111
as of December 31, 2013, and is subordinated to the Credit Facility (see Note 5). Interest expense was $15 in both
three-month periods ended September 30, 2014 and 2013 and $45 in both nine-month periods ended September 30, 2014 and 2013.
Lease
Sajan leases its office space under three non-cancelable operating
leases from River Valley Business Center, LLC (“RVBC”), a limited liability company that is owned by Shannon and Angela
Zimmerman. The space consists of approximately 20,000 square feet and is leased pursuant to three agreements. These lease agreements
require the Company to pay a minimum monthly rental plus certain operating expenses and expire in January 2017. Payment of rent
under these leases is secured by goods, chattels, fixtures and personal property of the Company. Rent expense was $86 in both
three-month periods ended September 30, 2014 and 2013 and $258 in both nine-month periods ended September 30, 2014 and 2013.
In March 2012, the Company entered into a one year revolving
working capital line of credit with Silicon Valley Bank (“SVB”). In March 2013, the line of credit was replaced with
a new credit facility (the “Credit Facility”) with SVB which consists of a two year revolving working capital line
of credit. The Credit Facility permits borrowings of up to a principal amount equal to the lesser of (a) $1,500 or (b) eighty
percent (80%) of the aggregate amount of Sajan’s outstanding eligible accounts receivable, subject to customary limitations
and exceptions. The Credit Facility matures on March 28, 2015. Any unpaid principal amount borrowed under the Credit Facility
accrues interest at a floating rate per annum equal to (a) 1.0% above the “prime rate” published from time to time
in the money rates section of the Wall Street Journal (the “Prime Rate”) when the liquidity ratio is greater than
or equal to 2.0 to 1.0 and (b) 2.25% above the Prime Rate when the liquidity ratio is less than 2.0 to 1.0. The interest rate
floor is set at 4.0% per annum. The unused line of credit accrues interest at a rate of 0.3% per annum on the average unused portion.
There was no outstanding balance as of September 30, 2014 under the Credit Facility.
The Credit Facility is governed by the terms of an Amended
and Restated Loan and Security Agreement, dated as of March 28, 2013, entered into by and between Sajan and SVB (the “A&R
Loan Agreement”). The A&R Loan Agreement contains several financial and customary affirmative and negative covenants,
including requiring Sajan to maintain a consolidated minimum tangible net worth of at least $1,500, increasing as of the last
day of each of our fiscal quarters by an amount equal to 25% of the sum of (i) net income for such quarter, (ii) any increase
in the principal amount of outstanding subordinated debt during such quarter, and (iii) the net amount of proceeds received by
Sajan in such quarter from the sale or issuance of equity securities. It also contains customary events of default, which, if
triggered, permit SVB to exercise customary remedies such as acceleration of all then outstanding obligations arising under the
A&R Loan Agreement, to terminate its obligations to lend under the Credit Facility, to apply a default rate of interest to
such outstanding obligations, and to exercise customary remedies under the Uniform Commercial Code. The Company was in compliance
with all covenants of the credit facility as of September 30, 2014.
The Credit Facility is secured by all of Sajan’s domestic
assets except for intellectual property (which the Company has agreed not to pledge to others), and the pledge of the Company’s
equity interests in its foreign subsidiaries that are controlled foreign corporations (as defined in the Internal Revenue Code).
The obligations under the A&R Loan Agreement are guaranteed on an unsecured basis by certain of Sajan’s subsidiaries.
2014 Equity Incentive Plan
On June 12, 2014 our stockholders approved the 2014 Equity
Incentive Plan as a replacement for the 2004 Amended and Restated Long Term Incentive Plan. This plan allows our Board of Directors,
or a committee of the Board, to grant awards to our employees (including our named executive officers), directors, or consultants
of the Company and its affiliates. The awards may take the form of incentive stock options, non-qualified stock options, restricted
stock awards, restricted stock units, performance awards and stock appreciation rights. A total of 375 shares were reserved for
issuance under this plan. As of September 30, 2014 there are 316 shares of Company common stock reserved for issuance under the
2014 Equity Incentive Plan. As of June 12, 2014, there will be no further grants of equity awards under the 2004 Amended and Restated
Long Term Incentive Plan.
As of September 30, 2014, there were a total of 414 options
outstanding with a weighted average exercise price of $5.15 per share. Additionally there were 34 warrants outstanding with a
weighted average exercise price of $46.73 per share.
The Company has cumulative net operating losses available to
offset future income for federal and state reporting purposes of $30,169 and $3,408, respectively, as of September 30, 2014.
There are also available research and development credit carry forwards at September 30, 2014 of $709. The Company's federal and
state net operating loss carry forwards expire in various calendar years from 2015 through 2030 and the tax credit carry forwards
expire in calendar years 2020 through 2028. Accordingly, income tax expense recognized during the three months and Nine months
ended September 30, 2014 and 2013 relates solely to taxes due in foreign jurisdictions where the Company does business.
The Company’s policies with respect to the recording
of deferred tax assets and liabilities have not changed in 2014. All balances and valuation allowances as of December 31, 2013
were evaluated and no changes were deemed necessary as of September 30, 2014.
The Company expenses legal costs as incurred. In the ordinary
course of business, the Company is subject to legal actions, proceedings and claims. As of the date of this report, management
is not aware of any undisclosed actual or threatened litigation that would have a material adverse effect on the Company’s
financial condition or results of operations.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (“Securities Exchange Act ”). Forward-looking statements reflect the current
view about future events. When used in this Quarterly Report on Form 10-Q the words “anticipate,” “will,”
“believe,” “estimate,” “expect,” “future,” “intend,” “plan”
and similar expressions or the negative of these terms, as they relate to Sajan, Inc. (the “Company,” “Sajan,”
“we,” “us” or “our”), its subsidiaries or its management, identify forward-looking statements.
Our forward-looking statements in this report generally relate to: (i) our intent to invest in growth initiatives, including
sales and marketing programs and enhancements to our translation management system; (ii) our expectations regarding the flow of
business from our existing customers; (iii) our beliefs regarding the strength of our business model; (iv) our beliefs regarding
the demand for translation services and the industry in general; (v) our expectation to generate positive cash flow from operations;
(vi) our estimates of operating expenses; and (vii) our beliefs regarding the adequacy of our capital resources.
Forward-looking statements are based on information available
at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results,
levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking
statements. Such statements reflect the current view of our management with respect to future events and are subject to
risks, uncertainties, assumptions and other factors relating to the Company’s industry, its operations and results of operations,
and any businesses that may be acquired by it. These factors include:
| · | our
rate of growth in the global multilingual content delivery industry; |
| · | our
ability to effectively manage our growth; |
| · | lack
of acceptance of any existing or new solutions we offer; |
| · | our
ability to continue increasing the number of our customers or the revenues we derive
from our recurring revenue customers; |
| · | economic
weakness and constrained globalization spending by businesses operating in international
markets; |
| · | our
ability to effectively develop new solutions that compete effectively with the solutions
that our current and future competitors offer; |
| · | risk
of increased regulation of the Internet and business conducted via the Internet; |
| · | our
ability to identify attractive acquisition opportunities, successfully negotiate acquisition
terms and effectively integrate any acquired companies or businesses; |
| · | availability
of capital on acceptable terms to finance our operations and growth |
| · | risks
of conducting international commerce, including foreign currency exchange rate fluctuations,
changes in government policies or regulations, longer payment cycles, trade restrictions,
economic or political instability in foreign countries where we may increase our business
and reduced protection of our intellectual property; |
| · | our
ability to add sales and marketing, research and development or other key personnel who
are able to successfully sell or develop our solutions; |
| · | our
ability to operate as a public company and comply with applicable disclosure and other
requirements and to hire additional personnel with public company compliance experience; and |
| · | other
risk factors included under “Risk Factors” in our Annual Report on Form 10-K
filed with the SEC on March 21, 2014. |
Should one or more of these risks or uncertainties materialize,
or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned. Although our management believes that the expectations reflected in the forward-looking
statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Except as required
by applicable law, including the securities laws of the United States, Sajan does not intend to update any of the forward-looking
statements to conform these statements to actual results. The following discussion should be read in conjunction with the financial
statements and the related notes included in our Annual Report Form on 10-K filed with the SEC on March 21, 2014.
General Overview
Sajan,
Inc. (the “Company” or “Sajan”), a Delaware corporation, provides language translation services and technology
solutions to companies located throughout the world, particularly in the technology, consumer products, medical and life sciences,
financial services, manufacturing, and retail industries that are selling products into global markets. The Company is located
in River Falls, Wisconsin and has active, wholly-owned subsidiaries in the following countries:
| · | Ireland –
Sajan Software Ltd. |
| · | Spain –
Sajan Spain S.L.A. |
| · | Singapore –
Sajan Singapore Pte. Ltd. |
Customers
who purchase translation services from us need completely accurate, high-quality translation for materials that are critically
important to their businesses, such as instruction manuals, training materials, marketing programs, legal documents and websites.
We provide these translation services in a fast, cost-effective manner through the use of our proprietary technology, Transplicity,
as well as our network of outside translators and our internal staff, who manage the project to ensure all our customer deliverables
are met.
Our customer base consists principally of large multi-national
companies, but also includes smaller organizations that need high quality translation done in a timely and cost effective manner.
We generally expect to receive ongoing business from established customers due to the increasing benefits that Transplicity and
our business model afford as we continue to service a particular customer. The flow of such projects, however, can be unpredictable.
Therefore our strategy has been a combination of enhancing and nurturing current customer relationships, and aggressively seeking
new customer opportunities. We believe that demand for language translation services is growing and that we are positioned to
capitalize on the highly-fragmented industry by leveraging technological solutions and pursuing strategic acquisition opportunities.
Our success will be dependent upon maintaining a high level of customer satisfaction and a strong reputation, as well as achieving
the benefits that we expect our business model to afford.
We believe that the launch of Transplicity as our translation
technology platform in March of 2013 has differentiated us from our competitors and has given us the opportunity to greatly expand
our customer base. It drove our revenue growth during 2013 and has continued to do so in the first three quarters of 2014. It
has fueled a more aggressive sales strategy which has included the implementation of a strategic account management program, restructured
incentive plans for sales personnel, additions to staff, and expanded international sales efforts. Our focus in the future will
be to continue to drive revenue growth by enhancing the capabilities of Transplicity and further investing in sales and marketing
activities. As a result of these efforts, our revenues in the third quarter of 2014 grew 28% over the same period in 2013 and
were the highest quarterly revenue in the Company’s history, surpassing the previous record just set in the second quarter
of 2014.
From
an operations standpoint, cost of revenues primarily consists of payments to outside translators. These costs can vary widely
from quarter to quarter based on the type of project, the languages being translated, and the needs of our customers. Also included
in our cost of revenues is the salary and benefits we pay to our operations staff. These costs tend to be more stable because
our technology enables us to maintain a relatively consistent number of employees as revenue increases. However, we assess staffing
on a regular basis and may hire additional staff in the future if customer and project demands necessitate doing so.
We intend to continue to invest in Transplicity and other technologies
in the foreseeable future to make our service offering more attractive to our customers, drive continued revenue growth, make
our operations more efficient and, ultimately, improve profitability. These investments will result in increased research and
development expense both in dollars and as a percentage of revenue in 2014. We believe that the cash we generate from operations,
the net proceeds from our recent equity offering, and the availability of funds through our $1.5 million line of credit are adequate
to fund these additional investments.
Discussion of Critical Accounting Policies and Estimates
Discussion of the financial condition and results of our operations
is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of
these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates
and judgments, including those discussed below. These estimates are based on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances. The results of our analysis form the basis for making assumptions
about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions, and the impact of such differences may be material to the consolidated
financial statements.
Our critical accounting policies are identified in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2013 in Management’s Discussion and Analysis of Financial Condition
and Results of Operations under the heading “Discussion of Critical Accounting Policies and Estimates.” There were
no significant changes to our critical accounting policies during the three or nine months ended September 30, 2014.
Results of Operations - Three Months Ended September 30,
2014 Compared to Three Months Ended September 30, 2013
The major components of revenues, cost of revenue, operating
expenses, other income (expense), and income tax expense are discussed below.
| |
Three Months Ended September
30, | | |
% Change | |
Item | |
2014 | | |
2013 | | |
(Year Over Year) | |
| |
(in thousands) | | |
(in thousands) | | |
| |
Revenues | |
$ | 7,340 | | |
$ | 5,720 | | |
| 28 | % |
Operating expenses: | |
| | | |
| | | |
| | |
Cost of revenues | |
| 4,354 | | |
| 3,525 | | |
| 24 | % |
Sales and marketing | |
| 884 | | |
| 830 | | |
| 7 | % |
Research and development | |
| 382 | | |
| 297 | | |
| 29 | % |
General and administrative | |
| 1,348 | | |
| 992 | | |
| 36 | % |
Depreciation and amortization | |
| 247 | | |
| 203 | | |
| 21 | % |
Income (loss) from operations | |
| 125 | | |
| (127 | ) | |
| 198 | % |
Other expense: | |
| | | |
| | | |
| | |
Interest | |
| 20 | | |
| 27 | | |
| (26 | )% |
Foreign currency | |
| (1 | ) | |
| 3 | | |
| (133 | )% |
Income tax expense | |
| 5 | | |
| 6 | | |
| (17 | )% |
Net income (loss) | |
$ | 101 | | |
$ | (163 | ) | |
| 161 | % |
Revenues
Revenues totaled $7,340,000 in the third quarter of 2014 compared
to $5,720,000 in the same period in 2013, an increase of 28%. The increase was due to several factors, including the continued
acceptance of Transplicity which was launched in late March 2013, the implementation of a strategic account management program,
and revenue from recently added customers in the United States. Domestic revenue grew 30% during the third quarter while international
revenue grew 24%. Excluding revenue from our largest customer, IBM, total revenues grew 34% and international revenues grew 55%
during the third quarter. Revenue from IBM was $729,000 in the third quarter of 2014 compared to $798,000 in the same period of
2013, a decline of 9%. The decrease is due to a worldwide reduction of translation spending at IBM. We expect further declines
in revenue from IBM in the fourth quarter of 2014.
Operating Expenses
Cost of Revenues. Cost of revenues in the third quarter
of 2014 increased $829,000, or 24%, compared to the same period in 2013. The increase was due to hiring additional staff
to service new clients added in late 2013 and in 2014 along with an increase in translator costs resulting from the 28% increase
in revenue. Translator costs can vary from quarter to quarter based on the specific language needs of our customers. Cost of revenues
were 59% of revenue in the third quarter of 2014 compared to 62% in the same period in 2013. The improvement was due to not having
to hire staff at the same rate as our 28% growth in revenue. This operating efficiency is a result of our continued technology
investments in Transplicity.
Sales and Marketing. Sales and marketing expense in
the third quarter of 2014 increased $54,000, or 7%, compared to the same period in 2013. For the same periods, as a percentage
of revenue, sales and marketing expense was 12% in 2014 compared to 15% in 2013. The increase in dollars was due principally to
higher compensation costs. The decrease in percentage was due to modifications to commission plans which included higher revenue
quotas for sales personnel
Research and Development. Research and development
expense in the third quarter of 2014 increased $85,000, or 29%, compared to the same period in 2013. For the same periods, as
a percentage of revenue, research and development expense was 5% in both 2014 and 2013. The increase in dollars was primarily
due to one factor, which is that we added additional development staff in early 2014, which resulted in higher compensation costs.
This staff was added to accelerate enhancements to our operating system and to develop features that could be sold on a subscription
basis to third parties.
General and Administrative. General and administrative
expense in the third quarter of 2014 increased $356,000, or 36%, compared to the same period in 2013. For the same periods, as
a percentage of revenue, general and administrative expense was 18% in 2014 compared to 17% in 2013. The principal reason for
the increase in dollars and percentage of revenue was due to incentive compensation of $263,000 earned under the Company’s
Short-Term Incentive Plan. The Short-Term Incentive Plan was adopted by the board at the beginning of 2014 and rewards all eligible
employees when the Company exceeds its pre-determined quarterly financial targets. There were no such amounts paid in the third
quarter of 2013. The remaining increase in dollars was primarily due to increased wages and benefits relating to the addition
of personnel, including a Chief Financial Officer in August 2013, and additional stock compensation expense.
Depreciation and Amortization. Depreciation
and amortization expense in the third quarter of 2014 increased $44,000, or 22%, compared to the same period in 2013. The increase
was a result of higher fixed asset balances.
Interest Expense
Interest expense in the third quarter of 2014 decreased by
$7,000 compared to the same period in 2013. The decrease was due to the Company having no amounts outstanding under its
line of credit during the third quarter of 2014 compared to $200,000 outstanding during the same period in 2013.
Income Tax Expense
Income tax expense in the third quarter of 2014 decreased by
$1,000 compared to the same period in 2013 due to a reduction in taxes withheld on business in China.
Results of Operations - Nine months Ended September 30,
2014 Compared to Nine months Ended September 30, 2013
The major components of revenues, cost of revenue, operating
expenses and other income (expense) are discussed below.
| |
Nine months Ended September
30, | | |
% Change | |
Item | |
2014 | | |
2013 | | |
(Year Over Year) | |
| |
(in thousands) | | |
(in thousands) | | |
| |
Revenues | |
$ | 20,734 | | |
$ | 17,377 | | |
| 19 | % |
Operating expenses: | |
| | | |
| | | |
| | |
Cost of revenues | |
| 12,624 | | |
| 10,681 | | |
| 18 | % |
Sales and marketing | |
| 2,521 | | |
| 2,415 | | |
| 4 | % |
Research and development | |
| 1,214 | | |
| 683 | | |
| 78 | % |
General and administrative | |
| 3,659 | | |
| 2,893 | | |
| 26 | % |
Depreciation and amortization | |
| 726 | | |
| 596 | | |
| 22 | % |
(Loss) income from operations | |
| (10 | ) | |
| 109 | | |
| (109 | )% |
Other expense: | |
| | | |
| | | |
| | |
Interest | |
| 64 | | |
| 83 | | |
| (23 | )% |
Foreign currency | |
| 2 | | |
| 1 | | |
| 100 | % |
Income tax expense | |
| 39 | | |
| 25 | | |
| 56 | % |
Net loss | |
$ | (115 | ) | |
$ | (0 | ) | |
| | |
Revenues
Revenues totaled $20,734,000 in the first nine months of 2014
compared to $17,377,000 in the same period in 2013, an increase of 19%. The increase was due to several factors, including the
continued acceptance of Transplicity, which was launched in late March 2013, the implementation of a strategic account management
program, and revenue from new customers in the United States. During the first nine months of 2014, domestic revenue grew 28%
while international revenue grew only 1%. Excluding revenue from IBM, total revenues grew 26% and international revenues grew
16% during the first nine months of 2014. Revenue from IBM was $2,537,000 in the first nine months of 2014 compared to $2,802,000
in the same period of 2013, a decline of 12%. The decrease is due to a worldwide reduction of translation spending at IBM. We
expect further declines in revenue from IBM in the fourth quarter of 2014.
Operating Expenses
Cost of Revenues. Cost of revenues in the first nine
months of 2014 increased $1,943,000, or 18%, compared to the same period in 2013. For the same periods, as a percentage
of revenue, cost of revenues was 61% in both periods. The increase in dollars was due to hiring additional staff during the year
to service new clients and to the 19% increase in revenue. Translator costs can vary from period to period based on the specific
language needs of our customers.
Sales and Marketing. Sales and marketing expense in
the first nine months of 2014 increased $106,000, or 4%, compared to the same period in 2013. For the same periods, as a percentage
of revenue, sales and marketing expense was 12% in 2014 compared to 14% in 2013. The increase in dollars was due principally to
higher compensation costs. The decrease in percentage was due to modifications in the commission plans, which included higher
revenue quotas for sales personnel.
Research and Development. Research and development
expense in the first nine months of 2014 increased $531,000, or 78%, compared to the same period in 2013. For the same periods,
as a percentage of revenue, research and development expense was 6% in 2014 compared to 4% in 2013. The increase in dollars and
percentage are primarily due to one factor, which is that we added additional development staff, which resulted in higher compensation
and costs and hiring fees in 2014. This staff was added to accelerate enhancements to our operating system and to develop features
that could be sold on a subscription basis to third parties.
General and Administrative. General and administrative
expense in the first nine months of 2014 increased $766,000, or 26%, compared to the same period in 2013. For the same periods,
as a percentage of revenue, general and administrative expense was 18% in 2014 compared to 17% in 2013. The principal reason for
the increase in dollars and percentage of revenue was due to incentive compensation of $414,000 earned in the second and third
quarter of 2014 under the Company’s Short-Term Incentive Plan. The Short-Term Incentive Plan was adopted by the board at
the beginning of 2014 and rewards all eligible employees when the Company exceeds its pre-determined quarterly financial targets.
There were no incentive payments made in the same period of 2013. The remaining increase in dollars was primarily due to increased
wages and benefits relating to the addition of personnel, including a Chief Financial Officer in August 2013, additional stock
compensation expense and legal expenses related to evaluating potential acquisitions.
Depreciation and Amortization. Depreciation
and amortization expense in the first nine months of 2014 increased $130,000, or 22%, compared to the same period in 2013. The
increase was a result of higher fixed asset balances plus capitalized software projects (principally related to the launch of
Transplicity) placed in service in the first half of 2013.
Interest Expense
Interest expense in the first nine months of 2014 decreased
by $19,000 compared to the same period in 2013. The decrease was due to the Company having no amounts outstanding under
its line of credit during the first nine months of 2014 compared to $200,000 outstanding during the first nine months of 2013.
Income Tax Expense
Income tax expense in the first half of 2014 increased by $14,000
compared to the same period in 2013. The higher taxes are due to an increase in the Company’s taxable activities in China.
Non-GAAP Financial Measure – Adjusted EBITDA
| |
Three months ended September
30, | | |
Nine months ended September
30, | |
(amounts in thousands) | |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Net income (loss) | |
$ | 101 | | |
$ | (163 | ) | |
$ | (115 | ) | |
$ | 0 | |
Interest expense | |
| 20 | | |
| 27 | | |
| 64 | | |
| 83 | |
Income taxes | |
| 5 | | |
| 6 | | |
| 39 | | |
| 25 | |
Depreciation and amortization | |
| 247 | | |
| 203 | | |
| 726 | | |
| 596 | |
Stock-based compensation | |
| 76 | | |
| 70 | | |
| 205 | | |
| 170 | |
Adjusted EBITDA | |
$ | 449 | | |
$ | 143 | | |
$ | 919 | | |
$ | 874 | |
We calculate Adjusted EBITDA by taking net income (loss) calculated
in accordance with GAAP, and adding interest expense, income taxes, depreciation and amortization, and stock-based compensation.
We believe that this non-GAAP measure of financial results provides useful information to management and investors regarding certain
financial and business trends relating to our financial condition and results of operations. Our management uses this non-GAAP
measure to compare our performance to that of prior periods for trend analyses and for budgeting and planning purposes. This measure
is also used in financial reports prepared for management and our board of directors. We believe that the use of this non-GAAP
financial measure provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing
our financial measures with other companies, many of which present similar non-GAAP financial measures to investors.
Our management does not consider this non-GAAP measure in isolation
or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of this non-GAAP financial
measure is that it excludes significant expenses and income that are required by GAAP to be recorded in our consolidated financial
statements. In addition, it is subject to inherent limitations as it reflects the exercise of judgments by management about which
expenses and income are excluded or included in determining this non-GAAP financial measure. In order to compensate for these
limitations, management presents this non-GAAP financial measure in connection with GAAP results. We urge investors to review
the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures and not to rely on any single
financial measure to evaluate our business.
Liquidity and Capital Resources
Summary cash flow data is as follows:
| |
Nine months ended September
30, | |
(amounts in thousands) | |
2014 | | |
2013 | |
Cash flows provided by (used in) : | |
| | | |
| | |
Operating activities | |
$ | 1,242 | | |
$ | 1,341 | |
Investing activities | |
| (211 | ) | |
| (485 | ) |
Financing activities | |
| 2,563 | | |
| (271 | ) |
Net increase in cash | |
| 3,594 | | |
| 585 | |
Effect of exchange rate changes in cash | |
| (49 | ) | |
| 1 | |
Cash and equivalents, beginning of period | |
| 1,364 | | |
| 893 | |
Cash and equivalents, end of period | |
$ | 4,909 | | |
$ | 1,479 | |
Net Cash Provided by Operating Activities
Net cash generated in the first nine months of 2014 and 2013
was due to our Adjusted EBITDA (see explanation of Adjusted EBITDA above) and to changes in our operating assets and liabilities.
Net Cash Used in Investing Activities
Net cash used in investing activities in the first nine months
of 2014 related to the purchase of equipment for the business. In the first nine months of 2013, $243,000 of the net cash used
in investing activities related to the purchase of equipment for the business and $242,000 related to capitalized software costs.
Net Cash Provided by (Used in) Financing Activities
In September 2014, the Company sold 700,000 shares of its common
stock in a public offering and received net proceeds of $2,701,000. (See Sources of Capital below). Net cash provided by financing
activities in the first nine months of 2014 consisted of the aforementioned equity offering offset by principal payments on our
capital lease obligations of $138,000. Net cash used in financing activities in the first nine months of 2013 related to payments
on our capital lease obligations of $71,000 and payments on our line of credit of $200,000.
Sources of Capital
For the first nine months of 2014, our principal source of
liquidity was funds generated from the operations of the business and the net proceeds from our equity offering. On September
9, 2014 we completed a follow-on equity offering of 700,000 shares of common stock at a price of $5.00 per share to the public.
Total net proceeds of the follow-on equity offering were $2,701,000 after deducting underwriting discounts and commissions and
other offering expenses. As described in Note 5 to the Condensed Consolidated Financial Statements included in Part I, Item 1
of this Quarterly Report on Form 10-Q, the Company also has a credit facility with Silicon Valley Bank which allows us to borrow
up to the lesser of $1,500,000 or 80% of our aggregate outstanding domestic accounts receivable. As of September 30, 2014, the
credit facility did not have an outstanding balance. The Company was in compliance with all covenants of the credit facility as
of September 30, 2014.
Uses of Capital
Sajan’s primary uses of capital in the first nine months
of 2014 were to fund our operations and working capital needs and to make investments in equipment and software development projects.
We intend to utilize our cash generated from operations and the proceeds from our equity offering to support our business, including
investing in software development, ongoing sales and marketing activities both domestically and internationally, enhancing our
translation management system, and where appropriate, acquiring businesses, technologies and products that may add to our operations
and client base. We currently have no current understandings, commitments or arrangements in place for such acquisitions.
We believe that our existing capital resources, including cash
and cash equivalents, operating cash flows, the availability of cash under our $1,500,000 line of credit facility, and the net
proceeds from the equity offering described above, will be sufficient to meet our working capital, investment in software development,
and capital expenditure requirements for at least the next 12 months.
If required, additional financing may not be available on terms
that are favorable to us, if at all. If we raise additional funds through the issuance of equity securities, the percentage ownership
of our stockholders will be reduced and these securities might have rights, preferences and privileges senior to those of our
current stockholders or we may be subject to covenants that restrict how we conduct our business. No assurance can be given that
additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders
and us.
Off-Balance Sheet Arrangements
The Company had no off-balance sheet arrangements as of September
30, 2014.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
As a smaller reporting company, we are not required to provide
disclosure pursuant to this item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We, under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).
Based on our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2014,
our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports that
we file or submit under the Securities Exchange Act of 1934 is (1) recorded, processed, summarized, and reported within the time
periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.
Changes in Internal Control
over Financial Reporting
During the fiscal quarter ended September 30, 2014 there have
been no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
We may be subject to legal actions, proceedings
and claims in the ordinary course of business. As of the date of this report management is not aware of any undisclosed actual
or threatened litigation that would have a material adverse effect on our financial condition or results of operations.
Item 1A. Risk Factors.
Other than the risk factors set forth below, there have been
no material changes to the Company’s Risk Factors as disclosed in our Annual Report on Form 10-K for the year ended December
31, 2013, as filed with the SEC on March 21, 2014.
Risks Related to our Business and Industry
If our solutions are not accepted by the market, our
business will not grow and we will not be profitable.
Our market is intensely competitive, and we expect competition
to increase in the future from established competitors, consolidations and new market entrants. Competitors’ solutions may
in the future perform better or faster, offer better features, or be offered at lower prices than our solutions, including Transplicity,
our translation management system, or embody new technologies, which could render our existing solutions obsolete or less attractive
to customers. In addition, our competitors have existing relationships with many of the companies that are in our target market.
These existing relationships will make it difficult for us to convince such prospective customers to choose our solutions, even
if our solutions are competitive with or superior to those of our competitors. In addition, our proposed technology solution approaches
translation from a subscription software model, rather than a services model, which is a model that potential customers have not
been receptive to in the past and may not be receptive to in the future. If our solutions do not gain broad market acceptance
and maintain that acceptance, our business, results of operations and financial condition will be adversely affected.
Compliance with public company regulatory requirements,
including those relating to our internal control over financial reporting, have and will likely continue to result in significant
expenses and if we are unable to maintain effective internal control over financial reporting in the future, investors may lose
confidence in the accuracy and completeness of our financial reports and the market price of our common stock may be negatively
affected.
As a public reporting company, we are subject to the Sarbanes-Oxley
Act of 2002, or Sarbanes-Oxley, as well as to the information and reporting requirements of the Securities Exchange Act of 1934,
as amended, or the Exchange Act, and other federal securities laws. As a result, we incur significant legal, accounting, and other
expenses, including costs associated with our public company reporting requirements and corporate governance requirements. As
an example of public reporting company requirements, we evaluate the effectiveness of disclosure controls and procedures and of
our internal control over financing reporting in order to allow management to report on such controls. In addition, any updates
to our finance and accounting systems, procedures and controls, which may be required as a result of our ongoing analysis of internal
controls, or results of testing by our independent auditor, may require significant time and expense. As a company with limited
accounting resources, a significant amount of management’s time and attention has been and will continue to be diverted
from our business to ensure compliance with these regulatory requirements. This diversion of management’s time and attention
may have a material adverse effect on our business, financial condition and results of operations.
Management works to continuously monitor and improve its internal
controls over financial reporting. Although we have never had a significant deficiency or material weakness, in the event significant
deficiencies or material weaknesses are identified in our internal control over financial reporting that we cannot remediate in
a timely manner, investors and others may lose confidence in the reliability of our financial statements and the trading price
of our common stock and ability to obtain any necessary equity or debt financing could suffer. This would likely have an adverse
effect on the trading price of our common stock and our ability to secure any necessary additional equity or debt financing, and
could result in the delisting of our common stock from the Nasdaq Capital Market which would severely limit the liquidity of our
common stock.
Risks Associated with Our Reverse Stock Split and Listing
on the NASDAQ Capital Market
There are risks associated with the 1-for-4 Reverse Stock
Split that we effected on June 16, 2014.
On June 16, 2014 we effected a 1-for-4 Reverse Stock Split.
As a result of the Reverse Stock Split we will be subject to certain risks, including that we have additional authorized shares
of common stock, with each share reflecting a greater ownership interest of the company, that the Board could issue in the future
without stockholder approval, and such additional shares could be issued, among other purposes, in financing transactions or to
resist or frustrate a third-party transaction that is favored by a majority of the independent stockholders. This could have an
anti-takeover effect, in that additional shares could be issued, within the limits imposed by applicable law, in one or more transactions
that could make a change in control or takeover of us more difficult.
There can be no assurance that we will be able to comply
with the continued listing standards of the Nasdaq Capital Market.
The Company’s stock is now listed on the NASDAQ Capital
Market. However, we cannot assure you that we will be able to comply with the standards that we are required to meet in order
to maintain a listing of our common stock on the Nasdaq Capital Market. Our failure to meet these continued listing requirements
may result in our common stock being delisted from such exchange. In addition to maintenance standards, the Nasdaq Capital Market
has broad discretionary authority over the continued listing of securities, which it could exercise with respect to the listing
of our common stock.
The liquidity of the shares of our common stock may be
decreased as a result of the Reverse Stock Split.
The liquidity of the shares of our common stock may be affected
adversely by the Reverse Stock Split given the reduced number of shares that are now outstanding. In addition, the Reverse Stock
Split may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential
for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting such sales.
Although we believe that a higher market price of our common
stock may help generate greater or broader investor interest, there can be no assurance that our increased share price following
the Reverse Stock Split will actually attract new investors, including institutional investors. In addition, there can be no assurance
that the market price of our common stock will satisfy the investing requirements of those investors. As a result, the trading
liquidity of our common stock may not necessarily improve.
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds.
On August 1, 2014, we issued an aggregate of 6,175 shares of
our common stock upon the cashless exercise of two stock purchase warrants that were exercisable for an aggregate of 10,284 shares
of common stock at an exercise price of $2.44 per share. There were no proceeds from the issuances as a result of the cashless
exercise of the warrants. The shares of common stock were issued in accordance with the contractual terms of the warrants and
as part of a private placement pursuant to Section 4(2) of Securities Act of 1933, as amended, as transactions by an issuer not
involving any public offering.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
See the attached Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities
and Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 6, 2014 |
Sajan, Inc. |
|
|
|
|
|
By: |
/s/ Shannon
Zimmerman |
|
|
|
Shannon Zimmerman |
|
|
|
Chief Executive Officer and President |
|
|
By: |
/s/ Thomas Skiba |
|
|
|
Thomas Skiba |
|
|
|
Chief Financial Officer |
|
Exhibit Index
Sajan, Inc.
Quarterly Report for the period ended
September 30, 2014
2.1 |
|
Agreement and Plan of Merger, dated January
8, 2010, among MathStar, Inc., Sajan, Inc., Garuda Acquisition, LLC, and Thomas Magne (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on January 11,
2010). |
|
|
|
3.1 |
|
Certificate of Incorporation of the Company as amended through
June 16, 2014 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed with the
SEC on July 23, 2014). |
|
|
|
3.2 |
|
Bylaws of the Company (incorporated by reference to Exhibit 3.2
to the Company’s Registration Statement on Form S-1 filed by MathStar Inc. with the SEC on August 3, 2005, Registration
No. 333-127164 (“Registration Statement”).. |
|
|
|
4.1 |
|
Form of common stock certificate of the Company (incorporated by
reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on July 23, 2014). |
|
|
|
4.2 |
|
Tax Benefit Preservation Plan and Rights Agreement, dated as of
February 25, 2010, between the Company and Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association,
as Rights Agent, together with the following exhibits thereto: Exhibit A - Form of Certificate of Designation of Series A
Preferred Stock of the Company; Exhibit B — Form of Right Certificate; Exhibit C — Summary of Rights
to Purchase Shares of Preferred Stock of the Company (incorporated by reference to Exhibit 4.1 to the Company’s Current
Report on Form 8-K filed with the SEC on February 25, 2010). |
|
|
|
4.3 |
|
Amendment No. 1 to Tax Benefit Preservation Plan and Rights Agreement
by and between Sajan, Inc. and Wells Fargo Bank, N.A., as Rights Agent (incorporated by reference to Exhibit 4.2 to the Company’s
Amendment No. 1 to Registration Statement on Form 8-A, dated and filed May 1, 2014, SEC File No. 000-51360). |
|
|
|
31.1 |
|
Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a)
(filed herewith). |
|
|
|
31.2 |
|
Certification of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a)
(filed herewith). |
|
|
|
32.1 |
|
Certification of principal executive officer pursuant to 18 U.S.C.
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.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith). |
|
|
|
101 |
|
The following financial information from the Company’s Quarterly
Report on Form 10-Q for the period ended September 30, 2014, formatted in Extensible Business Reporting Language (XBRL): (i)
the Consolidated Balance Sheets, (ii) the Consolidated Statement of Operations, (iii) the Consolidated Statement of Cash Flows,
and (iv) Notes to the Consolidated Financial Statements (filed herewith). |
Exhibit 31.1
SECTION 302 CERTIFICATION
I, Shannon Zimmerman, certify that:
|
1. |
I have reviewed this quarterly report on Form
10-Q of Sajan, Inc.; |
|
2. |
Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report; |
|
3. |
Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 6, 2014 |
/s/ Shannon
Zimmerman |
|
Shannon Zimmerman,
Chief Executive Officer and President |
Exhibit 31.2
SECTION 302 CERTIFICATION
I, Thomas Skiba, certify that:
|
1. |
I have reviewed this quarterly report on Form
10-Q of Sajan, Inc.; |
|
2. |
Based on my knowledge, this report does not
contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report; |
|
3. |
Based on my knowledge, the financial statements,
and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer(s)
and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have: |
|
(a) |
Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; |
|
(b) |
Designed such internal control over financial
reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles; |
|
(c) |
Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d) |
Disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer(s)
and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and |
|
(b) |
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 6, 2014 |
/s/ Thomas Skiba |
|
Thomas Skiba,
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C.
§ 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report
on Form 10-Q of Sajan, Inc. (the “Company”) for the fiscal period ended September 30, 2014, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Shannon Zimmerman, Chief Executive Officer, and President
of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information
contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company. |
Date: November 6, 2014 |
/s/ Shannon
Zimmerman |
|
Shannon Zimmerman, Chief Executive Officer and President |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C.
§ 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report
on Form 10-Q of Sajan, Inc. (the “Company”) for the fiscal period ended September 30, 2014, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Thomas Skiba, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of the Company. |
Date: November 6, 2014 |
/s/ Thomas Skiba |
|
Thomas Skiba, Chief Financial Officer |
Sajan, Inc. (NASDAQ:SAJA)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Sajan, Inc. (NASDAQ:SAJA)
Historical Stock Chart
Von Jul 2023 bis Jul 2024