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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
For the quarterly period ended March 31, 2012
For the transition period from to
(Commission File Number)
(Exact name of registrant as specified in its charter)
7615 Golden Triangle Drive, Suite M
Eden Prairie, Minnesota 55344-3848
(Address of principal executive offices)
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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). Yes x 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 the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: As of April 29, 2012 there were 4,859,644 shares of Common Stock outstanding.
(In thousands of U.S. dollars, except share data)
See Notes to Condensed Financial Statements
(In thousands of U.S. dollars, except share and per share data)
See Notes to Condensed Financial Statements
(In thousands of U.S. dollars)
See Notes to Condensed Financial Statements
Net Loss Per Share
We use the Black-Scholes option pricing model to estimate the fair value of stock-based awards with the weighted average assumptions noted in the following table.
Expected volatility is based on the historical volatility of our share price in the period prior to option grant equivalent to the expected life of the options. The expected term is based on managements estimate of when the option will be exercised which is generally consistent with the vesting period. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
Equity Award Activity
The following table represents stock option and restricted stock activity under the 2003 Plan for the three months ended March 31, 2012:
MakeMusic reports results of operations by two unique reportable segments, Notation and SmartMusic.
The following table presents results of operations by reportable segment:
products, technology, brands and resources that are complementary to MakeMusic and provide growth opportunities for the future. The combined purchase price was $2,500,000, including, in connection with the acquisition of Garritan, $125,000 which is subject to an 18-month holdback. The holdback is payable in shares of MakeMusics common stock, with a share price equal to $4.52, which represented the average closing price of MakeMusic common stock for the 20 trading days prior to the closing of the acquisition. Net cash paid upon closing of the transactions was $2,344,000 which includes the purchase price, net of the 18-month holdback and cash received.
The fair value of assets acquired and liabilities assumed from Garritan and Recordare include the following:
The Garritan operations results are included in the consolidated financial statements since the date of acquisition on December 30, 2011. The table below reflects our pro forma combined results of operations for the quarter ended March 31, 2011 as if the acquisition had taken place on January 1, 2011.
Combined results for the Company and Garritan for the quarter ended March 31, 2011 were adjusted for the following in order to create the unaudited pro forma results in the table above:
The pro forma unaudited results do not purport to be indicative of the results which would have been obtained had the acquisition been completed as of the beginning of the first quarter of 2011. In addition, they do not include any benefits that may result from the acquisition due to synergies that may be derived. Goodwill represents the cost in excess of fair value of the tangible and identified intangible assets of businesses acquired. In accordance with ASC 350, Intangibles Goodwill and Other, goodwill is not amortized but rather is reviewed for impairment annually in the fourth quarter of MakeMusics fiscal year, or more often if indicators of impairment exist.
MakeMusics mission is to develop and market solutions that transform how music is composed, taught, learned and performed. This is accomplished by:
MakeMusic develops and markets two product lines, notation and SmartMusic, that reinforce each others features and competitiveness. The notation product line includes the well-established Finale® family of music notation software products which are utilized by music colleges and composers around the world in the creation of music scores. Finale serves a large and stable customer base, and generates revenue through sales of new version releases. Also included in the notation product line is MusicXMLTM, the industry standard open format for notation software and Garritan TM sound sample libraries.
SmartMusic® is a subscription-based product directed toward the very large and constantly renewing market of music students and music teachers. SmartMusic combines a software application with a library of thousands of music titles and skill-development exercises. It provides students and musicians with a compelling practice or audition experience and music teachers with the efficiency and effectiveness to reach more students and assess student achievement and growth.
In the fourth quarter of 2011, we announced the acquisition of select assets of Recordare, LLC and the acquisition of Garritan Corporation. We believe these acquisitions provide new products, technology, brands and employees that are complementary to MakeMusic and provide growth and technology opportunities for the future.
Our first quarter of 2012 resulted in a growth in sales for MakeMusic. Overall, net revenue increased 5% compared to the first quarter of 2011. SmartMusic revenue grew 16% due to our year over year subscription growth from 164,836 to 183,331. Notation revenue decreased 3% due to reductions in our sales to distribution partners. We attribute these decreases primarily to the timing of our transition to a new distributor in Japan and lower sales to our distributor in Germany. In addition, sales of Finale NotePad were lower compared to the first quarter of 2011 because we began offering the product as a free download effective with the release of Finale NotePad 2012 on February 15, 2012. The decreases in revenue were partially offset by the added sales of Garritan sound libraries resulting from the acquisition of Garritan Corporation. Gross margin percentages were comparable at 84% in 2012 and 85% in 2011.
Operating expenses increased in the first quarter of 2012, due to increased selling and marketing expenses as a result of the planned expansion of our direct sales force and company-wide strategic sales and marketing initiatives. General and administrative expenses increased primarily due to increased legal and consulting fees relating to the Tax Asset Protection Plan effective February 21, 2012 and increased accounting fees for reporting requirements relating to the December 30, 2011 acquisition and dissolution of Garritan Corporation. Development expenses were greater in the first quarter of 2012 primarily due to personnel costs resulting from the Chief Technology Officer position, which was open in the first of quarter of 2011, and added personnel and development costs to support technology initiatives and the addition of the Garritan sound libraries and MusicXML technologies. In the first quarter of 2011, we incurred expenses of $225,000 relating to a patent infringement settlement. There were no comparable expenses in the first quarter of 2012.
Our net loss before taxes in the first quarter of 2012 was $1,267,000 compared to $354,000 in 2011. The tax benefit in the first quarter of 2012 was $427,000 compared to $174,000 in the first quarter of 2011. As a result of the factors mentioned, we reported net loss of $840,000 in the first quarter of 2012 compared to net loss of $180,000 in the first quarter of 2011.
We believe there is growth potential with SmartMusic software, an interactive music teaching, practicing and learning solution for band, orchestra and vocal programs. SmartMusic is subscription-based software for use in the classroom and in the students home. SmartMusic enhances and transforms the hours spent practicing by putting students inside a professional band or orchestra, so that they can hear how the music is supposed to be performed and how their part fits in. This makes practicing much more engaging, causing students to practice longer and more often. SmartMusic also offers a rich variety of effective practice tools that make practice time more efficient and productive. The combination of making practice time more engaging and productive leads to rapid student skill-development, increased student confidence, higher student retention, and stronger music programs.
Teachers use the SmartMusic Gradebook capability of the educators subscription to issue assignments to students, receive completed assignments from students, assess student achievement, and manage student records. Music teachers are challenged to reach all of their students in the way they passionately desire. The SmartMusic technology allows teachers to be more efficient and effective, allowing them to affect more of their students in ways they never imagined. SmartMusic also addresses the increasing desire and need of administrators to document the assessment of students achievement. Assessment standards have become topics of intense interest at the level of state education administrators and MakeMusic is becoming recognized as providing the technology that allows them to accomplish their goals. Students also find that SmartMusic is a more satisfying and helpful way to practice and learn to sing or play a musical instrument. SmartMusic allows practice to be more engaging and rewarding, which results in the acceleration of students growth and achievement.
SmartMusic 2012 introduced new vocal and site-reading technology and included site-singing exercises which can be assessed for both pitch and rhythm. Choral directors and general music teachers now have access to the same award-winning interactive technology that has been available to band and orchestra directors.
In July of 2011, we released a mobile application called SmartMusic InboxTM. SmartMusic Inbox is a free application for both Android and iOS platforms for mobile use by SmartMusic teachers that enables them to listen and grade assignments with ease and mobility.
We believe that our technological investments in SmartMusic have created a digital pipeline between our growing subscriber base of more than 183,000 and the music publishers who provide SmartMusic content. This growing platform is a strategic asset for MakeMusic. The following table illustrates our quarterly SmartMusic metrics:
Our educational sales organization focuses on direct school district sales, aiming at the 17,000 schools who match our ideal demographic profile. We increased the size of our educational sales force from 7 to 13 in 2011 to strengthen our strategic sales initiatives. During the first quarter of 2012, we hired a sales executive to lead our sales and business development initiatives.
The following table illustrates the total net new SmartMusic educator subscriptions for each quarter during the year ended December 31, 2011 and the quarter ended March 31, 2012:
We define renewed subscriptions as those subscriptions that educators purchase within the two-month period after their prior subscription ended. Because of changes to the start of school from year to year, fluctuations in the date that music teachers implement their curriculum, and promotional programs that encourage early renewals, the majority of subscribers renew their subscriptions within approximately a two-month window of the anniversary date of their previous subscription rather than exactly on the anniversary date. As a result, we believe that using the above definition of a renewal more accurately reflects the renewal rate for SmartMusic educator subscriptions. In the first quarter of 2012, the educator renewal rate was generally comparable with prior quarters. The educator renewal rate for the first quarter of 2012 was 76% compared to 79% in the fourth quarter of 2011. The educator renewal rate in the first quarter of 2012 decreased slightly compared to the first quarter of 2011 rate of 77%.
In 2012, we are focused on four strategic initiatives that include enhancing our technology architecture, extending our core product value into new product innovations and platforms, developing new and leveraging existing distribution channels and strengthening our marketing strategy focusing on our brand promise.
We have achieved positive cash flow from operations for the last seven years, including the most recent year ended December 31, 2011. Our quarterly results will fluctuate as a result of the seasonality of the education market and timing of our Finale release cycle. Due to current economic conditions, concerns over school budgets and our planned strategic investments, we are cautious regarding our future financial projections. We expect increased revenues and, in particular, growth in SmartMusic subscriptions and sound library sales from the acquisition of Garritan Corporation. However, we are making investments in our operations and technology which we expect will result in reduction in cash balances during 2012.
In our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2011, we identified critical accounting policies and estimates for our business that we are incorporating herein by reference.
Results of Operations
Comparison of the three-month period ended March 31, 2012 to the three-month period ended March 31, 2011
Net revenue for the three months ended March 31, 2012 increased compared to net revenue for the three months ended March 31, 2011.
Notation revenue decreased by $63,000 to $2,271,000 when comparing the three-month periods ended March 31, 2012 and 2011. Decreases during the quarter were due to reductions in our channel sales with the largest decline by our distributor in Japan. Additionally, sales of Finale NotePad were lower compared to the first quarter of 2011 because we began offering the product as a free download effective with the release of Finale NotePad 2012 on February 15, 2012. The decreases in revenue were offset by $212,000 of added sales of Garritan sound libraries due to the acquisition of Garritan Corporation.
SmartMusic revenue for the quarter ended March 31, 2012, was $1,930,000, an increase of $270,000, or 16%, over the quarter ended March 31, 2011. The increase in revenue is due to the growth of total SmartMusic subscriptions and an increase in accessory revenue. SmartMusic subscriptions have increased due in part to our direct sales force which focuses on district level sales. Revenue for these subscriptions is recognized over the life of the subscription which is typically 12 months. Total earned SmartMusic subscription revenue for the three-month period ended March 31, 2012 was $1,707,000, an increase of $277,000, or 19%, over the three-month period ended March 31, 2011. This increase was due to the increase in the total number of subscriptions. Total unearned SmartMusic subscription revenue (deferred revenue) was $3,791,000 as of March 31, 2012, an increase of $535,000, or 16%, over the balance at March 31, 2011 and a decrease of $494,000, or 12%, compared to the balance of $4,285,000 at December 31, 2011. Deferred SmartMusic revenue represents the future revenue to be recorded on current subscriptions and fluctuates based on new subscription sales, the total number of subscriptions and the remaining life of those subscriptions.
SmartMusic has shown sustained growth since its launch. More than 11,326 educators have purchased SmartMusic, an increase of 16% over the 9,727 educators that had purchased it as of March 31, 2011. Total SmartMusic subscriptions as of March 31, 2012 number 183,331, representing a net gain of 18,495, or 11%, over the March 31, 2011 subscription count of 164,836.
Many SmartMusic customers, especially new customers, also purchase accessories (primarily microphones) that are used with the software. Revenue for the sales of accessories, included in the SmartMusic revenue category, for the quarter ended March 31, 2012 was $173,000, which was an increase of $16,000, or 10%, from the revenue of $157,000 for SmartMusic accessories in the quarter ended March 31, 2011. This increase is primarily due to an increase in the number of net new subscriptions added during the quarter ended March 31, 2012 as compared to the number of net new subscriptions added during the same period of the prior year.
Gross profit in the quarter ended March 31, 2012 increased by $130,000, to $3,530,000, compared to the quarter ended March 31, 2011. Gross profit for notation decreased for the three months ended March 31, 2012 due to the decrease in notation revenue. The increase in SmartMusic gross profit for the three months ended March 31, 2012 is a result of the increase in SmartMusic revenue and slightly improved accessory margins.
Cost of revenue includes product costs, royalties paid to publishers, amortization of capitalized software development costs for repertoire, software development costs related to the Garritan sound libraries and SmartMusic Gradebook, shipping, and credit card fees. Capitalized SmartMusic repertoire added into SmartMusic is amortized over a five-year period and repertoire development amortization as a percentage of SmartMusic revenue was 11% in the first quarter of 2012 and 12% in the first quarter of 2011. Gross margin as a percentage of sales was 84% for the three months ended March 31, 2012 and 85% for the three months ended March 31, 2011.
Development expenses increased 36% to $1,656,000, from $1,215,000, when comparing the three months ended March 31, 2012 and 2011. Development expenses consist primarily of internal payroll, payments to independent contractors and related expenses for the development and maintenance of our Finale notation, Garritan sound libraries, MusicXML, SmartMusic and SmartMusic Gradebook products as well as non-capitalized SmartMusic repertoire development, business systems and quality assurance. Notation development expenses increased due to personnel costs relating to the Chief Technology Officer position, which was open in the first quarter of 2011, and added personnel and contractor costs to support technology initiatives and the Garritan sound libraries and MusicXML technologies. SmartMusic development expenses increased primarily due to personnel costs relating to the Chief Technology Officer position. During the quarter ended March 31, 2012, 144 new SmartMusic large ensemble band, jazz ensemble, and orchestra titles with pre-authored assignments were released, compared to 76 new titles in the quarter ended March 31, 2011. A total of 3,031 large ensemble titles are available in SmartMusic as of March 31, 2012.
Selling and marketing expenses primarily consist of marketing, advertising and promotion expenses, business development and customer service activities and payroll. Sales and marketing expenses increased 36% to $1,683,000 in the quarter ended March 31, 2012 compared to $1,233,000 for the quarter ended March 31, 2011. Notation selling and marketing expenses increased primarily due to company-wide strategic marketing initiatives. SmartMusic selling and marketing expenses increased due to increased personnel relating to our direct sales organization and strategic sales and marketing initiatives for SmartMusic. Other selling expenses increased primarily due to website, branding and social media investments.
General and administrative expenses consist primarily of payroll and related expenses for executive and administrative personnel, professional services, facility costs, amortization of certain intangible assets with finite lives, bad debt and other general corporate expenses. General and administrative expenses increased by 34% to $1,483,000 during the first quarter of 2012 compared to $1,108,000 for the same period of 2011. Other general and administrative costs increased primarily due to legal and consulting fees relating to the Tax Asset Protection Plan that was effective February 21, 2012 and accounting fees for reporting requirements relating to the December 30, 2011 acquisition and dissolution of Garritan Corporation.
Patent litigation accrual
Patent litigation costs of $225,000 were accrued and included in operating expenses during the quarter ended March 31, 2011. There were no comparable expenses in the first quarter of 2012.
Net loss from operations was $1,292,000 for the three months ended March 31, 2012 compared to $381,000 in the three months ended March 31, 2011.
The notation segment results for the first quarter of 2012 reflect a decrease in income from operations due to lower net revenue and increased development and selling and marketing expenses. Overall, SmartMusic income from operations was comparable. SmartMusic revenue increases due to the increased number of subscriptions were offset by the increased development and selling and marketing expenses. The increase in the other loss is due to increased legal and consulting fees relating to the Tax Asset Protection Plan effective February 21, 2012 and accounting fees for reporting requirements relating to the December 30, 2011 acquisition and dissolution of Garritan Corporation.
Net loss in the first quarter of 2012 was $840,000, or $0.17 per basic and diluted share, compared to net loss of $180,000, or $0.04 per basic and diluted share, in the first quarter of 2011. The increase in net loss in the first quarter of 2012 is primarily due to increased operating expenses as explained above. The tax benefit in the first quarter of 2012 was $427,000, compared to a tax benefit of $174,000 in the first quarter of 2011. The increased tax benefit is attributed to the greater loss from operations.
Liquidity and capital resources
Net cash used by operating activities was $1,083,000 for the quarter ended March 31, 2012, compared to $943,000 of cash used by operating activities in the quarter ended March 31, 2011. The increase in cash used in the first quarter of 2012 compared to the same period in 2011 is primarily due to the greater net loss reported in the first quarter of 2012 partially offset by reduced accounts receivable.
Net cash used in investing activities was $477,000 for the quarter ended March 31, 2012, compared to $186,000 cash used in investing activities for the comparable quarter of 2011. The increase is primarily due to an increase in capitalization of software development, primarily relating to our technology architecture modernization, repertoire development and Garritan sound libraries. Our spending on repertoire development increased due to the overall number of titles being developed.
Net cash used by financing activities was $1,000 in the first quarter of 2012 compared to $324,000 in the first quarter of 2011. During the first quarter of 2011, $291,000 was used to repurchase company shares under the Stock Repurchase Program. The Stock Repurchase Program was discontinued effective May 6, 2011. Therefore, no cash was used to repurchase shares during the first quarter of 2012.
Cash and cash equivalents as of March 31, 2012 was $7,735,000 compared to $10,079,000 as of March 31, 2011. The decrease in cash is due to the purchases of Garritan Corporation and the select assets of Recordare, LLC in the fourth quarter of 2011 for which net cash of $2,344,000 was used. Our quarterly revenues and operating cash flows are typically seasonal, with the first and second quarters being historically lower than the third and fourth quarters. This seasonal pattern is primarily due to timing of the historical upgrade releases of Finale, which in recent years has occurred in the second or third quarters, and school budget cycles. We are not anticipating a product release during 2012 as we focus on upgrading the underlying technology and further product enhancements for future releases.
We are investing in our technology, development and sales and marketing initiatives, and while we expect an increase in our revenues and, in particular, continued growth in SmartMusic subscriptions, plus sales of Garritan sound libraries, we expect an overall reduction in our cash balances over the next twelve months.
(a) Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covering this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commissions rules and forms and that our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal controls. There were no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Forward Looking and Cautionary Statements
The preceding discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. Managements Discussion and Analysis may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and can be identified by the use of terminology such as believe, estimate, expect, intend, may, could, will, anticipate, and similar words or expressions. The forward-looking statements in this report generally relate to: our expectations relating to the synergies that exist between our two product lines, future operating results, cash flows from operations and revenue growth from new SmartMusic subscriptions; our expectations with regard to the growth potential of SmartMusic and the growth opportunities created by our recent acquisitions; our expectations, including release dates, regarding our future product offerings; our intent to expand our notation platform; our expectations regarding our target business model, future subscription growth for SmartMusic and our ability to leverage the SmartMusic platform; our plans relating to marketing and sales efforts, including staff increases; our plans regarding strategic initiatives, including enhancement of our technology architecture, product innovation and extension to new platforms, development and leveraging of existing distribution channels, and strengthening of our marketing strategy; and our beliefs relating to adequacy of capital resources. Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and risks, known and unknown, associated with such statements. MakeMusic cautions investors that many important factors have affected, and in the future could affect our actual results of operations and cause such results to differ materially from those anticipated in forward-looking statements made in this release and elsewhere by MakeMusic or on its behalf. These factors include, but are not limited to: unforeseen capital demands; the market acceptance of Finale, SmartMusic, SmartMusic Gradebook and other products; the success of our direct sales efforts; our ability to leverage our recent acquisitions; the maintenance of strategic partnerships and customer relationships; our ability to license titles from music publishers; the effectiveness of, and our ability to implement, our target business model; our ability to execute strategic development plans with regard to technology and product improvements and the strengthening of marketing and distribution; the limited and fluctuating sales of certain of our products; the intense competition that we face; the rapid technological changes and obsolescence in the software industry; our dependence on key personnel and the proprietary nature of our technology; other general business and economic conditions (including changes to discretionary spending by schools and students); and those factors described from time to time in our reports to the Securities and Exchange Commission (including our Annual Report on Form 10-K). It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historic results. As such, investors should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or potentially inaccurate assumptions that investors should take into account when making investment decisions. Shareholders and other readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. We do not intend to update publicly or revise any forward-looking statements
As previously disclosed, on September 14, 2010, a complaint was filed against us by Uniloc USA, Inc. and Uniloc Singapore Private Limited (collectively Uniloc) in the United States District Court for the Eastern District of Texas. The complaint alleged infringement of Unilocs patent for securely registering software and other digital media to prevent illicit copying and software piracy and seeks a permanent injunction. In addition, Uniloc sought compensatory damages in an unspecified amount, and interest, costs and expenses associated with the litigation. We are one of approximately 120 companies that have been similarly sued by Uniloc. We entered into a confidential settlement with Uniloc on April 28, 2011, pursuant to which we incurred expenses of approximately $225,000. As part of the settlement, we received a license to the patent in question. We do not expect the settlement to have a material impact on our business, financial condition, or results of operations.
In the ordinary course of business, we may be party to additional legal actions, proceedings, or claims. Corresponding costs are accrued when it is reasonably possible that loss will be incurred and the amount can be precisely or reasonably estimated. We are not aware of any actual or threatened litigation that would have a material adverse effect on its financial condition or results of operations.
Unregistered Sales of Equity Securities
There were no sales of unregistered equity securities during the quarter ended March 31, 2012.
Issuer Purchases of Equity Securities
There were no stock repurchases in the quarter ended March 31, 2012.
On February 23, 2012, the Compensation Committee approved 2012 base salaries of $296,640 for Karen T. van Lith, our Chief Executive Officer, $212,764 for Karen L. VanDerBosch, our Chief Financial Officer/Chief Operating Officer, and $170,000 for Paul D. Carlson, our Chief Technology Officer.
On March 7, 2012, the Compensation Committee awarded Ms. van Lith, Ms. VanDerBosch, and Mr. Carlson discretionary cash bonuses of $50,000, $20,000, and $10,000, respectively, in each case for such officers leadership in successfully completing the Companys acquisitions of Garritan Corporation and select assets of Recordare LLC during fiscal 2011.
See the attached exhibit index.
Pursuant to the requirements 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.
Three months ended March 31, 2012