UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K/A
(Amendment
No. 1)
(Mark
one)
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|
x |
Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
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For
the
fiscal year-ended December 31, 2005
or
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o |
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
For
the transition period from__________ to
__________
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Commission
file number 001-15169
PERFICIENT,
INC.
(Exact
Name of Registrant as Specified in Its Charter)
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Delaware
(State
or other jurisdiction of
incorporation
or organization)
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No.
74-2853258
(I.R.S.
Employer Identification
No.)
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1120
South Capital of Texas Highway, Building 3, Suite 220
Austin,
Texas 78746
(Address
of principal executive offices)
(512)
531-6000
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, $0.001 par value
(Title
of
Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act. Yes o No
þ
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No
þ
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes þ No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K
or any amendment to this Form 10-K. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer o Accelerated
filer x Non-accelerated
filer o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No
þ
The
aggregate market value of the voting stock held by non-affiliates of the Company
was approximately $144.4 million on June 30, 2005 based on the last
reported sale price of the Company’s common stock on the NASDAQ National Market
on June 30, 2005.
As
of
March 8, 2006, there were 24,212,964 shares of Common Stock
outstanding.
This
Annual Report on Form 10-K/A is being filed as Amendment No. 1 to our
Annual
Report on Form 10-K for the fiscal year ended December 31, 2005, which
was filed
with the Securities and Exchange Commission on March 31, 2006 (the "Original
Filing"). We are filing this Amendment No. 1 to correctly reflect on
the cover
page that the report contains disclosure of delinquent filers pursuant
to Item
405 of Regulation S-K and to add the following sentence to the end of
the second
paragraph of Item 9A: "The Company's Chief Executive Officer and Chief
Financial
Officer have concluded that as a result of the material weakness, as
of December
31, 2005, the Company's disclosure controls and procedures were not effective."
This additional sentence does not change the conclusions as previously
disclosed.
This
Amendment No. 1 does not reflect events occurring
after the filing date of the Original Filing or modify or update those
disclosures that may have been affected by subsequent events.
Item
9A. Disclosure
Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
We
have
established disclosure controls and procedures to ensure that material
information relating to the Company, including its consolidated subsidiaries,
is
made known to the officers who certify the Company’s financial reports and to
other members of senior management and the Board of Directors.
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the Company’s reports under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to management, including the principal
executive officer and principal financial officer of the Company,
as
appropriate, to allow timely decisions regarding required disclosure. The
Company’s management, with the participation of the Company’s principal
executive officer and principal financial officer,
has
evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the end of the fiscal year covered by this Annual Report on Form 10-K.
As
described below under Management’s Annual Report on Internal Control Over
Financial Reporting, the Company has identified significant deficiencies
related
to inadequate staffing levels which aggregated to a material weakness in
the
Company’s internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)). The Company's Chief Executive Officer and
Chief
Financial Officer have concluded that as a result of the material weakness,
as
of December 31, 2005, the Company's disclosure controls and procedures were
not
effective.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f). Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer,
we
conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
A
significant deficiency is a control deficiency, or combination of control
deficiencies, that adversely affects our ability to initiate, authorize, record,
process, or report external financial data reliably in accordance with generally
accepted accounting principals such that there is more than a remote likelihood
that a misstatement of our annual or interim financial statements that is more
than inconsequential will not be prevented or detected. A material weakness
is a
control deficiency, or combination of control deficiencies, that results in
more
than a remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. As of December 31,
2005,
certain significant deficiencies were identified,
principally caused by inadequate staffing levels, as described
below:
| § |
Lack
of segregation of duties, with certain accounting personnel being
assigned
inappropriate access to the automated general ledger system, such
as in
our procure to pay and order to cash processes;
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| § |
The
design of our internal control structure emphasized significant reliance
on manual detect controls, primarily performed by a single individual,
and
limited reliance on application and prevent controls;
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Lack
of detail review of key financial spreadsheets, including spreadsheets
supporting journal entries affecting revenue such as unbilled revenue
and
deferred revenue.
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In
our
assessment, we determined that the aggregation of the significant deficiencies
described above constitutes a material weakness as of December 31, 2005 which
results in a more than a remote likelihood that a material misstatement of
the
annual or interim financial statements will not be prevented or detected.
Based
on
this material weakness and the criteria set forth by the COSO Framework, we
have
concluded that our internal control over financial reporting at
December 31, 2005 was not effective.
Our
management’s assessment of the effectiveness of our internal control over
financial reporting as of December 31, 2005 has been audited by BDO Seidman,
LLP, an independent registered public accounting firm, as stated in their report
which is included herein.
Remediation
Plan for Material Weakness in Internal Control over Financial
Reporting
During
2005, the Company implemented significant new internal information technology
systems and applications including a new general ledger system and a new time
and expense reporting system which can be utilized to deliver more automated
information technology application controls and reduce the reliance on financial
accounting personnel and the need for segregation of duties. In addition, given
our significant growth, we understand that our financial accounting group must
expand and that we must automate many of our information technology application
controls in order to meet the internal control requirements of our rapidly
growing organization. By hiring more financial accounting personnel and by
leveraging the capabilities of our new internal information systems and
accounting systems to automate controls, we believe will remedy the material
weakness described in Management’s Report on Internal Control Over Financial
Reporting. However,
we do not believe that all of these changes will be in effect at the end of
the
first quarter of 2006, and therefore, we will likely report that a material
weakness in internal control continues to exist in our Quarterly Report on
Form
10-Q for the first quarter of fiscal 2006.
Changes
in Internal Controls
There
have been no changes in our internal control over financial reporting or in
factors affecting internal control over financial reporting during the fourth
quarter ended December 31, 2005, that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
Report
of
Independent Registered Public Accounting Firm
The
Board
of Directors and Stockholders of Perficient, Inc.
Austin,
Texas
We
have
audited management's assessment, included in the accompanying Management’s
Report on Internal Control Over Financial Reporting,
that
Perficient, Inc. did not maintain effective internal control over financial
reporting as of December 31, 2005, because of the effect of a material weakness
identified in management’s assessment, based on criteria established in
Internal
Control—Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Perficient,
Inc.’s management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion
on
management's assessment and an opinion on the effectiveness of the company's
internal control over financial reporting based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control
over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing
such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.
A
company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of America.
A
company's internal control over financial reporting includes those policies
and
procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of
the
assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
A
material weakness is a control deficiency, or a combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected.
The
following material weakness, which encompasses an aggregation of significant
deficiencies, has been identified and included in management’s assessment as of
December 31, 2005:
The
Company did not maintain a sufficient number of personnel to fill key accounting
functions which resulted in the existing accounting staff to be assigned to
perform incompatible duties, such as in the procure to pay and order to cash
processes, and some personnel having inappropriate access to the automated
general ledger system. Further, the lack of adequate staff levels contributed
to
the Company placing limited reliance on prevent and application controls and
an
over reliance on detect controls, primarily performed by one individual. In
addition, this weakness contributed to the lack of detail reviews of key
spreadsheet controls, such as in the unbilled revenue and deferred revenue
accounts. This situation could result in accounting personnel effecting
unauthorized transactions or overlooking valid transactions to be recorded
or
accounting errors to go undetected. Consequently, a material misstatement of
significant accounts and disclosures could occur resulting in a material
misstatement to the Company’s interim and annual consolidated financial
statements.
This
material weakness was considered in determining the nature, timing and extent
of
audit tests applied in our audit of the financial statements as of and for
the
year ended December 31, 2005, and this report does not affect our report dated
March 30, 2006 on those financial statements.
In
our
opinion, management's assessment that Perficient, Inc. did not maintain
effective internal control over financial reporting as of December 31, 2005,
is
fairly stated, in all material respects, based on the COSO criteria. Also
in
our opinion, because of the effect of the material weakness described above
on
the achievement of the objectives of the control criteria, Perficient, Inc.
has
not maintained effective internal control over financial reporting as of
December 31, 2005, based on the criteria established in Internal
Control-Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
We
have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated
balance sheets of Perficient, Inc. as of December 31, 2005 and 2004, and the
related consolidated statements of operations, stockholders’ equity and
comprehensive income, and cash flows for each of the two years in the period
ended December 31, 2005, of
Perficient, Inc. and our report dated March 30, 2006, expressed
an unqualified opinion.
BDO
Seidman, LLP
Houston,
Texas
March
30,
2006
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
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PERFICIENT,
INC. |
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| Date: May
10,
2006 |
By: |
/s/ John
T.
McDonald |
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John
T. McDonald |
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Chief
Executive Officer |
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| Date: May
10,
2006 |
By: |
/s/ Michael
D. Hill |
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Michael
D. Hill |
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Chief
Financial Officer
Principal
Financial and Accounting
Officer
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Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/
John T. McDonald
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Chief
Executive Officer and
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May 10,
2006
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John
T. McDonald
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Chairman
of the Board (Principal Executive Officer)
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/s/
Ralph C. Derrickson*
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Director
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Ralph
C. Derrickson
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/s/
Max D. Hopper*
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Director
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Max
D. Hopper
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/s/
Kenneth R. Johnsen*
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Director
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Kenneth
R. Johnsen
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/s/
David S. Lundeen*
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Director
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David
S. Lundeen
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| * |
By: |
/s/ Michael
D. Hill
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Michael D. Hill |
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Attorney-in-Fact |
EXHIBITS
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Exhibit
Number
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Description
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23.1*
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Consent of BDO Seidman, LLP
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31.1*
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Certification
by the Chief Executive Officer of Perficient, Inc. as required
by Section
302 of the Sarbanes-Oxley Act of 2002
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31.2*
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Certification
by the Chief Financial Officer of Perficient, Inc. as required
by Section
302 of the Sarbanes-Oxley Act of
2002
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