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SEC Filings

10-Q
INCONTACT, INC. filed this Form 10-Q on 11/09/2016
Entire Document
 

 

On March 30, 2015, we issued $115.0 million in aggregate principal amount of 2.50% Convertible Senior Notes (the “Convertible Notes”) due April 1, 2022, unless earlier converted by the holder pursuant to their terms.  Net proceeds from the Convertible Notes were approximately $111.2 million, net of transaction fees.  The Convertible Notes pay interest in cash semiannually in arrears at a rate of 2.50% per annum.  Upon consummation of the proposed merger, the Convertible Notes will become convertible by the holder.  For further information, see Note 8 to the Condensed Consolidated Financial Statements contained in Part 1, Item 1.

We continue to take a proactive approach in managing our operating expenditures and cash flow from operations.  Absent the proposed merger, we expect to rely on internally generated cash and the proceeds from the Convertible Notes to finance operations and capital requirements.

Our future capital requirements will depend on many factors including our growth rate, continuing market acceptance of our solution, customer retention, ability to gain new customers, the timing and extent of spending to support development efforts, the expansion of sales and marketing activities, and the introduction of new and enhanced offerings. We may also acquire or invest in complementary businesses, technologies and intellectual property rights.

We believe our existing cash and short-term investments will be sufficient to meet our needs during the next twelve months.

Cash Flows

In summary, our cash flows for the nine months ended September 30, 2016 were as follows (in thousands):

 

 

 

2016

 

Net cash provided by operating activities

$

18,855

 

Net cash used in investing activities

 

(9,909

)

Net cash provided by financing activities

 

2,877

 

 

We experienced a net loss of $16.5 million during the nine months ended September 30, 2016. Significant non-cash items affecting operations during the nine months ended September 30, 2016 included a $2.7 million partial reversal of the deferred tax asset valuation allowance as a result of the acquisition of AC2, $20.4 million of depreciation and amortization and $6.9 million of stock-based compensation.

Sources of working capital primarily related to an increase in accounts payable of $1.6 million due to the timing of the payment of vendor invoices, an increase of $7.0 million in deferred rent and lease incentive obligation related to lease incentives received as part of a new operating lease of Company’s corporate headquarters and an increase of $4.0 million in PCS-related deferred revenue associated to the delivery of perpetual licenses as of September 30, 2016. Uses of working capital included an increase in accounts receivable of $3.7 million due to the growth in revenues and the timing of cash receipts from customers and an increase of $3.1 million related to other assets.

Net cash used in investing activities was $9.9 million, primarily from the net purchases and maturities of available for sale short-term investments. Additionally, we used $9.9 million, net of $6.9 million in tenant incentive leasehold improvements, for purchases of equipment primarily for use within our network infrastructure, $10.9 million of capitalization of internally developed software costs and $18.4 million for the acquisition of AC2 and Attensity.

Financing activities provided $2.9 million related to employee exercises of stock options of $3.4 million, $0.8 million from the sale of stock under the employee stock purchase plan, offset by purchases of treasury stock of $1.3 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of our significant accounting policies and estimates is discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 1 of our Annual Report on Form 10-K for the year ended December 31, 2015. The preparation of the financial statements in accordance with GAAP requires us to make judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets and liabilities. Significant areas of uncertainty that require judgments, estimates and assumptions include the accounting for income taxes and other contingencies as well as asset impairment and collectability of accounts receivable. We use historical and other information that we consider to be relevant to make these judgments and estimates. However, actual results may differ from those estimates and assumptions that are used to prepare our financial statements.

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