LIVEPERSON,
INC.
|
(Exact
Name of Registrant as Specified in Its
Charter)
|
DELAWARE
|
13-3861628
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(IRS
Employer Identification No.)
|
462
SEVENTH AVENUE
NEW
YORK, NEW YORK
|
10018
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(212)
609-4200
|
(Registrant’s
Telephone Number, Including Area
Code)
|
PAGE
|
||
PART
I. FINANCIAL INFORMATION
|
4
|
|
ITEM
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
4
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2006 (UNAUDITED) AND DECEMBER
31, 2005
|
4
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX
MONTHS
ENDED JUNE 30, 2006 AND 2005
|
5
|
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
ENDED
JUNE 30, 2006 AND 2005
|
6
|
|
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
7
|
|
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
|
16
|
|
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
24
|
|
ITEM
4. CONTROLS AND PROCEDURES
|
24
|
|
PART
II. OTHER INFORMATION
|
25
|
|
ITEM
1. LEGAL PROCEEDINGS
|
25
|
|
ITEM
1A. RISK FACTORS
|
25
|
|
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
26
|
|
ITEM
6. EXHIBITS
|
26
|
June
30, 2006
|
December
31, 2005
|
||||||
(Unaudited)
|
(Note
1(B))
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
19,104
|
$
|
17,117
|
|||
Accounts
receivable, net of allowances for doubtful accounts of $67 and $67
as of
June 30, 2006 and December 31, 2005, respectively
|
2,424
|
1,727
|
|||||
Prepaid
expenses and other current assets
|
939
|
591
|
|||||
Deferred
tax assets
|
518
|
—
|
|||||
Total
current assets
|
22,985
|
19,435
|
|||||
Property
and equipment, net
|
689
|
575
|
|||||
Intangibles,
net
|
559
|
790
|
|||||
Security
deposits
|
204
|
180
|
|||||
Other
assets
|
534
|
446
|
|||||
Total
assets
|
$
|
24,971
|
$
|
21,426
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
389
|
$
|
346
|
|||
Accrued
expenses
|
2,072
|
1,803
|
|||||
Deferred
revenue
|
1,831
|
1,618
|
|||||
Total
current liabilities
|
4,292
|
3,767
|
|||||
Other
liabilities
|
534
|
446
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $.001 par value per share; 5,000,000 shares authorized, 0
shares
issued and outstanding at June 30, 2006 and December 31,
2005
|
—
|
—
|
|||||
Common
stock, $.001 par value per share; 100,000,000 shares authorized,
38,931,768 shares issued and outstanding at June 30, 2006 and 37,979,271
shares issued and outstanding at December 31, 2005
|
39
|
38
|
|||||
Additional
paid-in capital
|
120,789
|
118,556
|
|||||
Accumulated
deficit
|
(100,681
|
)
|
(101,381
|
)
|
|||
Accumulated
other comprehensive loss
|
(2
|
)
|
—
|
||||
Total
stockholders’ equity
|
20,145
|
17,213
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
24,971
|
$
|
21,426
|
Three
Months Ended
June
30,
|
Six
Months Ended
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Revenue
|
$
|
7,416
|
$
|
5,283
|
$
|
14,293
|
$
|
10,237
|
|||||
Operating
expenses:
|
|||||||||||||
Cost
of revenue
|
1,642
|
1,019
|
3,103
|
1,882
|
|||||||||
Product
development
|
1,018
|
688
|
1,898
|
1,363
|
|||||||||
Sales
and marketing
|
2,856
|
1,690
|
5,502
|
3,175
|
|||||||||
General
and administrative
|
1,437
|
1,096
|
2,939
|
2,367
|
|||||||||
Amortization
of intangibles
|
232
|
232
|
464
|
467
|
|||||||||
Total
operating expenses
|
7,185
|
4,725
|
13,906
|
9,254
|
|||||||||
Income
from operations
|
231
|
558
|
387
|
983
|
|||||||||
Other
income:
|
|||||||||||||
Interest
income
|
170
|
59
|
313
|
102
|
|||||||||
Total
other income
|
170
|
59
|
313
|
102
|
|||||||||
Income
before provision for income taxes
|
401
|
617
|
700
|
1,085
|
|||||||||
Provision
for income taxes
|
—
|
216
|
—
|
380
|
|||||||||
Net
income
|
$
|
401
|
$
|
401
|
$
|
700
|
$
|
705
|
|||||
Basic
net income per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.02
|
$
|
0.02
|
|||||
Diluted
net income per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.02
|
$
|
0.02
|
|||||
Weighted
average shares outstanding used in basic net income per common share
calculation
|
38,900,328
|
37,487,015
|
38,578,791
|
37,460,574
|
|||||||||
Weighted
average shares outstanding used in diluted net income per common
share
calculation
|
42,818,687
|
39,400,983
|
42,471,432
|
39,408,879
|
Six
Months Ended
June
30,
|
|||||||
2006
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
700
|
$
|
705
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Stock-based
compensation expense
|
1,022
|
—
|
|||||
Depreciation
|
140
|
92
|
|||||
Loss
on disposal of leasehold improvements
|
51
|
—
|
|||||
Amortization
of intangibles
|
464
|
467
|
|||||
Tax
benefit from employee stock option exercises
|
—
|
353
|
|||||
Provision
for doubtful accounts, net
|
—
|
30
|
|||||
CHANGES
IN OPERATING ASSETS AND LIABILITIES:
|
|||||||
Accounts
receivable
|
(697
|
)
|
(426
|
)
|
|||
Prepaid
expenses and other current assets
|
(363
|
)
|
(281
|
)
|
|||
Security
deposits
|
(24
|
)
|
—
|
||||
Accounts
payable
|
43
|
(78
|
)
|
||||
Accrued
expenses
|
269
|
(293
|
)
|
||||
Deferred
revenue
|
213
|
350
|
|||||
Net
cash provided by operating activities
|
1,818
|
919
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchases
of property and equipment, including capitalized software
|
(305
|
)
|
(225
|
)
|
|||
Acquisition
of intangible asset
|
(233
|
)
|
—
|
||||
Net
cash used in investing activities
|
(538
|
)
|
(225
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuance of common stock in connection with the exercise of
options
|
709
|
66
|
|||||
Net
cash provided by financing activities
|
709
|
66
|
|||||
Effect
of foreign exchange rate changes on cash and cash
equivalents
|
(2
|
)
|
—
|
||||
Net
increase in cash and cash equivalents
|
1,987
|
760
|
|||||
Cash
and cash equivalents at the beginning of the period
|
17,117
|
12,425
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
19,104
|
$
|
13,185
|
|||
Supplemental
Disclosures:
|
|||||||
Cash
paid during
the period for:
|
|||||||
Income
taxes
|
$
|
—
|
$
|
30
|
(D) |
STOCK-BASED
COMPENSATION
|
Three
Months Ended June 30, 2006
|
Six
Months Ended June 30, 2006
|
||||||
Cost
of revenue
|
$
|
40
|
$
|
83
|
|||
Product
development expense
|
102
|
229
|
|||||
Sales
and marketing expense
|
112
|
296
|
|||||
General
and administrative expense
|
185
|
414
|
|||||
Total
stock based compensation included in operating expenses
|
$
|
439
|
$
|
1,022
|
Three
Months Ended June 30, 2006
|
||||
Dividend
yield
|
0.0
|
%
|
||
Risk-free
interest rate
|
4.8
|
%
|
||
Expected
life (in years)
|
4
|
|||
Historical
volatility
|
79.0
|
%
|
Three
Months Ended June 30, 2005
|
Six
Months Ended June 30, 2005
|
||||||
Net
income as reported
|
$
|
401
|
$
|
705
|
|||
Deduct:
Pro forma stock-based compensation cost
|
$
|
(514
|
)
|
$
|
(1,008
|
)
|
|
Pro
forma net (loss)
|
$
|
(113
|
)
|
$
|
(303
|
)
|
|
Basic
net income (loss) per common share:
|
|||||||
As
reported
|
$
|
0.01
|
$
|
0.02
|
|||
Pro
forma
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
|
Diluted
net income (loss) per common share:
|
|||||||
As
reported
|
$
|
0.01
|
$
|
0.02
|
|||
Pro
forma
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
Options
|
Weighted
Average
Exercise Price
|
||||||
Options
outstanding at December 31, 2005
|
8,300,053
|
$
|
2.16
|
||||
Options
granted
|
569,000
|
$
|
6.05
|
||||
Options
exercised
|
(952,497
|
)
|
$
|
0.76
|
|||
Options
cancelled
|
(259,125
|
)
|
$
|
2.15
|
|||
Options
outstanding at June 30, 2006
|
7,657,431
|
$
|
2.60
|
||||
Options
exercisable at June 30, 2006
|
3,935,806
|
$
|
2.06
|
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||||
Exercise
Price
|
Number
Outstanding
|
Weighted
Average Remaining Contractual Life
|
Weighted
Average Exercise Price
|
Number
Outstanding
|
Weighted
Average Exercise Price
|
||||||||||||
|
$0.00-$1.00
|
2,237,732
|
5.58
|
$
|
0.58
|
1,754,107
|
$
|
0.54
|
|||||||||
|
$1.01-$2.00
|
1,104,449
|
6.10
|
$
|
1.93
|
704,449
|
$
|
1.92
|
|||||||||
|
$2.01-$5.00
|
3,430,625
|
8.04
|
$
|
3.15
|
1,130,625
|
$
|
3.04
|
|||||||||
|
$5.01-$11.00
|
884,625
|
7.41
|
$
|
6.45
|
346,625
|
$
|
6.83
|
|||||||||
7,657,431
|
3,935,806
|
Shares
|
Weighted
Average
Grant-Date Fair Value
|
||||||
Nonvested
Shares at January 1, 2006
|
3,827,250
|
$
|
1.65
|
||||
Granted
|
569,000
|
$
|
3.73
|
||||
Vested
|
(529,250
|
)
|
$
|
2.25
|
|||
Cancelled
|
(145,375
|
)
|
$
|
2.15
|
|||
Nonvested
Shares at June 30, 2006
|
3,721,625
|
$
|
3.18
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Basic
|
38,900,328
|
37,487,015
|
38,578,791
|
37,460,574
|
|||||||||
Effect
of assumed exercised options/warrants
|
3,918,359
|
1,913,968
|
3,892,641
|
1,948,305
|
|||||||||
Diluted
|
42,818,687
|
39,400,983
|
42,471,432
|
39,408,879
|
June
30, 2006
|
December
31, 2005
|
||||||
(Unaudited)
|
|||||||
Computer
equipment and software
|
$
|
2,117
|
$
|
1,936
|
|||
Furniture,
equipment and building improvements
|
222
|
182
|
|||||
2,339
|
2,118
|
||||||
Less
accumulated depreciation
|
1,650
|
1,543
|
|||||
Total
|
$
|
689
|
$
|
575
|
June
30, 2006
|
December
31, 2005
|
||||||
(Unaudited)
|
|||||||
Payroll
and related costs
|
$
|
1,342
|
$
|
1,182
|
|||
Professional
services and consulting fees
|
502
|
461
|
|||||
Sales
commissions
|
172
|
99
|
|||||
Other
|
56
|
61
|
|||||
Total
|
$
|
2,072
|
$
|
1,803
|
ITEM 2. |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
· |
compensation
costs relating to employees who provide customer support and
implementation services to our clients;
|
· |
compensation
costs relating to our network support
staff;
|
· |
allocated
occupancy costs and related overhead; and
|
· |
the
cost of supporting our infrastructure, including expenses related
to
server leases, infrastructure support costs and Internet connectivity,
as
well as depreciation of certain hardware and
software.
|
Payments
due by period
|
||||||||||||||||
(in
thousands)
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
|||||||||||
Operating
leases
|
$
|
4,158
|
$
|
512
|
$
|
2,751
|
$
|
895
|
$
|
—
|
||||||
Total
|
$
|
4,158
|
$
|
512
|
$
|
2,751
|
$
|
895
|
$
|
—
|
Director
Nominee or Proposal
|
For
|
Against/Withheld
|
Abstentions
|
Broker
Non-
Votes
|
|||||||||
Kevin
C. Lavan
|
30,679,034
|
150,470
|
—
|
—
|
|||||||||
Robert
P. LoCascio
|
29,019,875
|
1,809,629
|
—
|
—
|
|||||||||
Ratification
of BDO Seidman, LLP
|
30,696,141
|
42,520
|
90,841
|
—
|
2.1
|
Agreement
and Plan of Merger, dated as of June 22, 2006, among LivePerson,
Inc.,
Soho Acquisition Corp., Proficient Systems, Inc. and Gregg Freishtat
as
Shareholders’ Representative (incorporated by reference to the identically
numbered exhibit in the Registrant’s Current Report on Form 8-K filed on
June 22, 2006)
|
31.1
|
Certification
by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
LIVEPERSON,
INC.
(Registrant)
|
||
|
|
|
Date: August 9, 2006 | By: | /s/ ROBERT P. LOCASCIO |
Name: Robert
P. LoCascio
|
||
Title: Chief
Executive Officer (duly authorized officer)
|
||
Date: August 9, 2006 | By: | /s/ TIMOTHY E. BIXBY |
Name: Timothy E. Bixby |
||
Title:
President,
Chief Financial Officer and Secretary (principal financial and accounting
officer)
|
2.1
|
Agreement
and Plan of Merger, dated as of June 22, 2006, among LivePerson,
Inc.,
Soho Acquisition Corp., Proficient Systems, Inc. and Gregg Freishtat
as
Shareholders’ Representative (incorporated by reference to the identically
numbered exhibit in the Registrant’s Current Report on Form 8-K filed on
June 22, 2006)
|
31.1
|
Certification
by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|