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VOCERA COMMUNICATIONS, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations
(Edgar Glimpses Via Acquire Media NewsEdge) Forward-Looking Statements
The following discussion and analysis should be read in conjunction with our
condensed consolidated financial statements and the related notes that appear
elsewhere in this Form 10-Q. These discussions contain forward-looking
statements reflecting our current expectations that involve risks and
uncertainties which are subject to safe harbors under the Securities Act of
1933, as amended, or the Securities Act, and the Securities Exchange Act of
1934, as amended, or the Exchange Act. These forward-looking statements include,
but are not limited to, statements concerning our plans, objectives,
expectations and intentions, future financial position, future revenues,
projected costs, expectations regarding demand and acceptance for our
technologies, growth opportunities and trends in the market in which we operate,
prospects and plans and objectives of management. The words "anticipates,"
"believes," "estimates," "expects," "intends," "may," "plans," "projects,"
"will," "would" and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain these
identifying words. We may not actually achieve the plans, intentions or
expectations disclosed in our forward-looking statements, and you should not
place undue reliance on our forward-looking statements. These forward-looking
statements involve risks and uncertainties that could cause our actual results
to differ materially from those in the forward-looking statements, including,
without limitation, the risks set forth in Part II, Item 1A, "Risk Factors" in
this Quarterly Report on Form 10-Q and in our other filings with the Securities
and Exchange Commission. We do not assume any obligation to update any
forward-looking statements.
Business overview
We are a provider of mobile communication solutions focused on addressing
critical communication challenges facing hospitals today. We help our customers
improve patient safety and satisfaction, and increase hospital efficiency and
productivity through our Voice Communication, Secure Messaging, and Care
Transition solutions. Our Voice Communication solution, which includes a
lightweight, wearable, voice-controlled communication badge and a software
platform, enables users to connect instantly with other hospital staff simply by
saying the name, function or group name of the desired recipient. Our Secure
Messaging solution securely delivers text messages and alerts directly to and
from smartphones, replacing legacy pagers. Our Care Transition solution is a
hosted voice and text based software application that captures, manages and
monitors patient information when responsibility for the patient is transferred
or "handed-off" from one caregiver to another, or when the patient is discharged
from the hospital.
At the core of our Voice Communication solution is a patent-protected software
platform that we introduced in 2002. We have significantly enhanced and added
features and functionality to this solution through ongoing development based on
frequent interactions with our customers. Our software platform is built upon a
scalable architecture and recognizes more than 100 voice commands. Users can
instantly communicate with others using the Vocera communication badge, or
through Vocera Connect client applications available for BlackBerry, iPhone and
Android smartphones, as well as Cisco wireless IP phones and other mobile
devices. Our Voice Communication solution can also be integrated with nurse call
and other clinical systems to immediately and efficiently alert hospital workers
to patient needs. We have shipped over 400,000 communication badges to our
customers.
We outsource the manufacturing of our products. Our outsourced manufacturing
model allows us to scale our business without the significant capital investment
and on-going expenses required to establish and maintain manufacturing
operations. We work closely with our contract manufacturer, SMTC Corporation,
and key suppliers to manage the procurement, quality and cost of components. We
seek to maintain an optimal level of finished goods inventory to meet our
forecast sales and unanticipated shifts in sales volume and mix.
To date, substantially all of our revenue has been derived from sales of our
Voice Communication solution, including product maintenance and related
services. Revenue grew 28.0% from $57.8 million for the nine months ended
September 30, 2011 to $74.0 million for the nine months ended September 30,
2012. For the nine months ended September 30, 2012, we recorded net income of
$2.1 million.
Our diverse customer base ranges from large hospital systems to small local
hospitals, as well as other healthcare facilities and customers in
non-healthcare markets. We have very low customer revenue concentrations. For
2011, our largest end customer represented only 2.8% of revenue. While we have
international customers in other English speaking countries such as Canada,
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the United Kingdom and Australia, most of our customers are located in the
United States. International customers represented 11.4% and 8.2% of our revenue
for the nine months ended September 30, 2012 and September 30, 2011,
respectively. We are developing plans to expand our presence in other English
speaking markets and enter non-English speaking markets.
We qualify as an "emerging growth company" pursuant to the provisions of the
JOBS Act, enacted on April 5, 2012. Section 102 of the JOBS Act provides that an
"emerging growth company" can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or
revised accounting standards. However, we have chosen to "opt out" of such
extended transition period, and as a result, we will comply with new or revised
accounting standards on the relevant dates on which adoption of such standards
is required for non-emerging growth companies. The decision to opt out of the
extended transition period is irrevocable.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and
estimates as compared to the critical accounting policies and estimates
described in the final prospectus for our public offering filed pursuant to Rule
424(b) under the Securities Act with the Securities and Exchange Commission on
September 7, 2012.
Components of operating results
Revenue. We generate revenue from the sale of products and services. Revenue is
recognized when persuasive evidence of an arrangement exists, delivery has
occurred, the price is fixed or determinable and collection is probable.
Revenue is comprised of the following:
• Product. Our solutions include both hardware and software. We refer to
hardware revenue as device revenue, which includes revenue from sales of
our communication badges, badge accessories, including batteries, battery
chargers, lanyards, clips and other ancillary badge components, and our
Vocera smartphone. Software revenue is derived primarily from the sale of
perpetual licenses to our Voice Communication solution. We derive
additional software revenue from the sale of term licenses which can be
renewed on a subscription basis. Product revenue is generally recognized
upon shipment of hardware and perpetual licenses and, in the case of term
licenses, ratably over the applicable term.
• Service. We receive service revenue from sales of software maintenance,
extended warranties and professional services. Software maintenance is
typically invoiced annually in advance, recorded as deferred revenue and recognized as revenue ratably over the service period. Our professional
services revenue is based on both time and materials, and fixed price
contracts, and is recognized as the services are provided. Extended
warranties are invoiced in advance, recorded as deferred revenue and
recognized ratably over the extended warranty period.
Cost of revenue. Cost of revenue is comprised of the following:
• Cost of product. Cost of product is comprised primarily of materials
costs, software license costs, warranty and manufacturing overhead for
test engineering, material requirements planning and our shipping and
receiving functions. Cost of product also includes facility costs,
information technology costs and write-offs for excess and obsolete
inventory, as well as depreciation and amortization expenses. As we
introduce new products, we expect material costs will increase as a
percent of revenue for a period of time.
• Cost of service. Cost of service is comprised primarily of employee wages,
benefits and related personnel expenses of our technical support team, our
professional consulting personnel and our training teams. Cost of service
also includes facility and information technology costs. We expect our
cost of service will increase as we continue to invest in support services
to meet the needs of our customer base.
Operating expenses. Operating expenses are comprised of the following:
• Research and development. Research and development expenses consist
primarily of employee wages, benefits and related personnel expenses,
hardware materials and consultant fees and expenses related to the design,
development, testing and enhancements of our solutions. We intend to
continue to invest in improving the functionality of our solutions and the
development of new solutions. As a result, we expect research and
development expense to increase for the foreseeable future.
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• Sales and marketing. Sales and marketing expenses consist primarily of
employee wages, benefits and related personnel expenses, as well as trade
shows, marketing and public relations programs and advertising. Sales commissions are earned when an order is received from a customer and, as a
result, in some cases these commissions are expensed in an earlier period
than the period in which the related revenue is recognized. Historically,
our bookings have tended to peak in the fourth quarter of each year
driving higher sales commissions, and to be lowest in the first quarter.
We intend to continue to expand our direct sales force for the foreseeable
future and, accordingly, expect sales and marketing expenses to increase.
• General and administrative. General and administrative expenses consist
primarily of employee wages, benefits and related personnel expenses,
consulting, audit fees, legal fees and other general corporate expenses.
We expect general and administrative expense to increase for the
foreseeable future due to the significant costs we expect to incur as we
continue to build and maintain the infrastructure necessary to comply with
the regulatory requirements of being a public company and as we add
personnel to support our growth.
Interest income, interest expense and other income (expense), net.
• Interest income. Interest income consists primarily of interest income
earned on our cash and cash equivalent balances. Our interest income will
vary each reporting period depending on our average cash and cash
equivalent balances during the period and market interest rates.
• Interest expense. Interest expense includes interest expense related to
debt and financing obligations resulting from our credit facility and
security agreement, which was paid in full on April 3, 2012. We expect
interest expense to fluctuate in the future with changes in our
borrowings.
• Other income (expense), net. Other income (expense), net consisted primarily of a stipend for market research regarding the industry in which
our company operates that we provided to a market research firm, and the
change in the fair value of our convertible preferred stock warrants. Our
convertible preferred stock warrants were classified as liabilities and,
as such, were marked-to-market at each balance sheet date with the
corresponding gain or loss from the adjustment recorded as other income
(expense), net. Upon the consummation of the initial public offering, on
April 2, 2012, these warrants converted into warrants to purchase common
stock and are no longer marked-to-market. Other income (expense), net also
includes any foreign exchange gains and losses.
Provision for income taxes. We are subject to income taxes in the countries
where we sell our solutions. Historically, we have primarily been subject to
taxation in the United States because we have sold the majority of our solutions
to customers in the United States. We anticipate that in the future as we expand
our sale of solutions to customers outside the United States, we will become
subject to taxation based on the foreign statutory rates in the countries where
these sales took place and our effective tax rate could fluctuate accordingly.
Currently, each of our international subsidiaries is operating under cost plus
agreements where the U.S. parent company reimburses the international subsidiary
for its costs plus a reasonable profit.
Income taxes are computed using the asset and liability method, under which
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. Changes in
valuation allowances are reflected as component of provision for income taxes.
Results of Operations
The following table presents our results of operations for the periods
indicated. The period-to-period comparisons of results are not necessarily
indicative of results for future periods.
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Three months ended September 30, Nine months ended September 30,
(in thousands) 2012 2011 2012 2011
Consolidated statement of
operations data: (unaudited)
Revenue
Product $ 16,851 $ 13,087 $ 47,643 $ 36,648
Service 9,117 7,314 26,322 21,149
Total revenue 25,968 20,401 73,965 57,797
Cost of revenues
Product 5,237 4,290 16,138 11,968
Service 3,743 3,861 11,134 10,569
Total cost of revenues 8,980 8,151 27,272 22,537
Gross profit 16,988 12,250 46,693 35,260
Operating expenses:
Research and development 3,043 2,379 8,248 6,970
Sales and marketing 8,532 7,542 24,064 20,717
General and administrative 3,745 3,197 10,449 8,278
Total operating expenses 15,320 13,118 42,761 35,965
Income (loss) from operations 1,668 (868 ) 3,932 (705 )
Interest income 60 5 86 13
Interest expense - (112 ) (74 ) (234 )
Other income (expense) 50 132 (1,442 ) (1,085 )
Income (loss) before income
taxes 1,778 (843 ) 2,502 (2,011 )
Provision for income taxes (41 ) (57 ) (420 ) (231 )
Net income (loss) $ 1,737 $ (900 ) $ 2,082 $ (2,242 )
Comparison of the three and nine months ended September 30, 2011 and 2012
Revenue:
Three months ended September 30, Nine months ended September 30,
2012 2011 Change 2012 2011 Change(in thousands) Amount % Revenue Amount % Revenue Amount % Amount % Revenue Amount % Revenue Amount %
Revenue
Product $ 16,851 64.9 % $ 13,087 64.1 % $ 3,764 28.8 % $ 47,643 64.4 % $ 36,648 63.4 % $ 10,995 30.0 %
Service
9,117 35.1 % 7,314 35.9 % 1,803 24.7 % 26,322 35.6 % 21,149 36.6 % 5,173 24.5 %
Total revenue $ 25,968 100.0 % $ 20,401 100.0 % $ 5,567 27.3 % $ 73,965 100.0 % $ 57,797 100.0 % $ 16,168 28.0 %
Total revenue increased $5.6 million, or 27.3%, from the three months ended
September 30, 2011 to the three months ended September 30, 2012. Total revenue
increased $16.2 million, or 28.0%, from the nine months ended September 30, 2011
to the nine months ended September 30, 2012. We achieved these growth rates in
revenues in the three and nine month periods ended September 30, 2012, from the
comparable prior year periods, notwithstanding a lower volume than we had
expected of orders in the third quarter of 2012. This lower quarterly order
volume was largely due to delays in the issuance of government orders which we
are continuing to pursue.
Three months ended September 30, 2011 compared to three months ended September
30, 2012
Product revenue increased $3.8 million, or 28.8% from the three months ended
September 30, 2011 to the three months ended September 30, 2012. Device revenue
increased $2.6 million, or 27.6%, and software revenue increased $1.1 million,
or 31.8%. The increase in device revenue, which relates entirely to our Voice
Communication solution, was driven primarily by existing
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customers expanding deployments within their facilities to new departments and
users, new customers making initial purchases, and customers replacing badges
and related accessories.
A portion of the increase in device revenue was due to higher average selling
prices as a result of lower discounts and a change in mix, as customers purchase
the B3000 badge, which has a higher list price than the B2000 badge. The list
prices for our products did not change substantially in the three months ended
September 30, 2012. The increase in software revenue was a result of an increase
in sales of Voice Communication software licenses to new and existing customers.
Service revenue increased $1.8 million, or 24.7% from the three months ended
September 30, 2011 to the three months ended September 30, 2012. Software
maintenance and support revenue increased $1.2 million, or 20.8%, and
professional services and training revenue increased $0.7 million, or 36.7%. An
increase of $0.9 million in software maintenance and support revenue was
primarily a result of a larger customer base. The increase in professional
services and training revenue included $0.4 million as a result of an increase
in professional services related to our ExperiaHealth services, which are
focused on helping customers improve the patient experience.
Nine months ended September 30, 2011 compared to nine months ended September 30,
2012
Product revenue increased $11.0 million, or 30.0%, from the nine months ended
September 30, 2011 to the nine months ended September 30, 2012. Device revenue
increased $8.0 million, or 29.6%, and software revenue increased $3.0 million,
or 31.1%. The increase in device revenue, which related entirely to our Voice
Communication solution, was driven primarily by an increase in unit sales of
badges and related accessories from new customers making initial purchases,
existing customers expanding deployments within their facilities to new
departments and users, and customers replacing badges. A portion of the increase
in device revenue was a result of higher average selling prices for our
communications badge as customers purchased the B3000 badge, which has a higher
list price than the B2000 badge. The list prices for our products did not change
substantially in the nine months ended September 30, 2012. The increase in
software revenue was a result of an increase in sales of Voice Communication
software licenses to new and existing customers.
Service revenue increased $5.2 million, or 24.5% from the nine months ended
September 30, 2011 to the nine months ended September 30, 2012. Software
maintenance and support revenue increased $3.5 million, or 22.0%, and
professional services and training revenue increased $1.7 million, or 31.6%. An
increase of $2.9 million in software maintenance and support revenue was
primarily a result of a larger customer base with the remaining increase
resulting from an increase in extended warranty contracts related to our
communications badge. The increase in professional services and training revenue
included $1.0 million as a result of an increase in professional services
related to our ExperiaHealth services, with the remaining increase due to an
increase in the number of customer deployments for our Voice Communication
solution.
Cost of revenue:
Three months ended September 30, Nine months ended September 30,
2012 2011 Change 2012 2011 Change
Amount Amount Amount % Amount Amount Amount %
Cost of
revenue
Product $ 5,237 $ 4,290 $ 947 22.1 % $ 16,138 $ 11,968 $ 4,170 34.8 %
Service 3,743 3,861 (118 ) (3.1 )% 11,134 10,569 565 5.3 %
Total cost of
revenue $ 8,980 $ 8,151 $ 829 10.2 % $ 27,272 $ 22,537 $ 4,735 21.0 %
Gross margin
Product 68.9 % 67.2 % 1.7 % 66.1 % 67.3 % (1.2 )%
Service 58.9 % 47.2 % 11.7 % 57.7 % 50.0 % 7.7 %
Total gross
margin 65.4 % 60.0 % 5.4 % 63.1 % 61.0 % 2.1 %
Three months ended September 30, 2011 compared to three months ended September
30, 2012
Cost of product revenue increased $0.9 million, or 22.1%, from the three months
ended September 30, 2011 to the three months ended September 30, 2012. The
increase in cost of product revenue was primarily due to higher unit shipments
and the change in product mix from B2000 badges to B3000 badges. This was offset
by a decrease in warranty expenses of $0.3 million due to
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lower anticipated product return rates. Gross margin as a percentage of product
revenue increased in the three months ended September 30, 2012 compared to the
three months ended September 30, 2011 as we incurred lower manufacturing costs
for the B3000 badges and Voice Software license sales increased to new and
existing customers.
Cost of service revenue decreased $0.1 million, or 3.1%, from the three months
ended September 30, 2011 to the three months ended September 30, 2012. Gross
margin as a percentage of revenue increased for the three months ended September
30, 2012 compared to the three months ended September 30, 2011 due to higher
utilization of our services personnel.
Nine months ended September 30, 2011 compared to nine months ended September 30,
2012
Cost of product revenue increased $4.2 million, or 34.8%, from the nine months
ended September 30, 2011 to the nine months ended September 30, 2012. The
increase in cost of product revenue was primarily due to higher unit shipments
and the change in product mix from B2000 badges to B3000 badges. This was offset
by a decrease in warranty expenses of $0.4 million due to lower anticipated
product return rates. Gross margin as a percentage of product revenue decreased
in the nine months ended September 30, 2012 compared to the nine months ended
September 30, 2011, due to the higher cost of the B3000 badge, which was
released in October 2011. The higher badge costs were partially offset by higher
margins from an increase in software revenue.
Cost of service revenue increased $0.6 million, or 5.3%, from the nine months
ended September 30, 2011 to the nine months ended September 30, 2012. This
increase was primarily due to a $0.7 million increase in employee wages and
other personnel costs in our services organization to support growth in customer
deployments and technical support. Gross margin as a percentage of service
revenue increased for the nine months ended September 30, 2012 compared to the
nine months ended September 30, 2011 due to higher utilization of our services
personnel.
Operating expenses:
Three months ended September 30, Nine months ended September 30,
2012 2011 Change 2012 2011 Change
Amount % Revenue Amount % Revenue Amount % Amount % Revenue Amount % Revenue Amount %
Operating
expenses:
Research and
development $ 3,043 11.7 % $ 2,379 11.7 % $ 664 27.9 % $ 8,248 11.2 % $ 6,970 12.1 % $ 1,278 18.3 %
Sales and
marketing 8,532 32.9 % 7,542 37.0 % 990 13.1 % 24,064 32.5 % 20,717 35.8 % 3,347 16.2 %
General and
administrative 3,745 14.4 % 3,197 15.7 % 548 17.1 % 10,449 14.1 % 8,278 14.3 % 2,171 26.2 %
Total
operating
expenses $ 15,320 59.0 % $ 13,118 64.3 % $ 2,202 16.8 % $ 42,761 57.8 % $ 35,965 62.2 % $ 6,796 18.9 %
Three months ended September 30, 2011 compared to three months ended September
30, 2012
Research and development expense. Research and development expense increased
$0.7 million, or 27.9%, from the three months ended September 30, 2011 to three
months ended September 30, 2012. This increase was primarily due to higher
employee wages and other personnel costs associated with an increase in
headcount from 47 as of September 30, 2011 to 55 as of September 30, 2012, and
higher stock-based compensation expense. This was offset by lower consulting
expenses associated with the B3000 development program.
Sales and marketing expense. Sales and marketing expense increased $1.0 million,
or 13.1%, from the three months ended September 30, 2011 to the three months
ended September 30, 2012. This increase was primarily due to a $1.0 million
increase in employee wages and other personnel costs associated with an increase
in headcount from 104 as of September 30, 2011, to 132 as of September 30, 2012.
General and administrative expense. General and administrative expense increased
$0.5 million, or 17.1%, from the three months ended September 30, 2011 to the
three months ended September 30, 2012. This increase was due to a $0.3 million
increase in employee wages and other personnel costs, a $0.3 million increase in
bonuses due to an amendment to the executive compensation plan and expansion of
eligible employees, and a $0.1 million increase in stock-based compensation
expense. This was offset by a $0.1 million decrease in outside consulting and
services fees.
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Nine months ended September 30, 2011 compared to nine months ended September 30,
2012.
Research and development expense. Research and development expense increased
$1.3 million, or 18.3%, from the nine months ended September 30, 2011 to the
nine months ended September 30, 2012. This increase was primarily due to higher
employee wages and other personnel costs associated with an increase in
headcount from 47 as of September 30, 2011 to 55 as of September 30, 2012 and
higher stock-based compensation expense This was offset by lower consulting
expenses associated with the B3000 development program.
Sales and marketing expense. Sales and marketing expense increased $3.3 million,
or 16.2%, from the nine months ended September 30, 2011 to the nine months ended
September 30, 2012. This increase was primarily due to a $2.8 million increase
in employee wages and other personnel costs associated with an increase in
headcount from 104 as of September 30, 2011, to 132 as of September 30, 2012 and
a $0.5 million increase in stock-based compensation expense.
General and administrative expense. General and administrative expense increased
$2.2 million, or 26.2%, from the nine months ended September 30, 2011 to the
nine months ended September 30, 2012. This increase was due to a $1.0 million
increase in employee wages and other personnel costs, a $1.0 million increase in
bonuses due to an amendment to the executive compensation plan and expansion of
eligible employees and a $0.3 million increase in stock-based compensation
expense.
Other income (expense):
Three months ended September 30, Nine months ended September 30,
(in thousands) 2012 2011 Change 2012 2011 Change
Interest income $ 60 $ 5 $ 55 $ 86 $ 13 $ 73
Interest expense - (112 ) 112 (74 ) (234 ) 160
Other income
(expense), net 50 132 (82 ) (1,442 ) (1,085 ) (357 )
Three months ended September 30, 2011 compared to three months ended September
30, 2012
Interest income. Interest income increased from the three months ended September
30, 2011 to the three months ended September 30, 2012 due to higher cash
balances.
Interest expense. Interest expense decreased due to lower borrowings for three
months ended September 30, 2012, as we repaid all outstanding borrowings under
our credit facility and term loan in April 2012. If we borrow funds in the
future, we expect that interest expense will fluctuate with changes in our
borrowings.
Other income (expense), net. Other income decreased $0.1 million. In the three
months ended September 30, 2011, we recorded a $0.3 million gain from the change
in fair market value of convertible preferred warranty and a $0.2 million loss
on foreign exchange translation. For the three months ended September 30,
2012,we did not have any preferred stock warrants outstanding and recorded a
gain on foreign exchange translation of $0.1 million.
Nine months ended September 30, 2011 compared to nine months ended September 30,
2012
Interest income. Interest income increased from the nine months ended September
30, 2011 to September 30, 2012 due to higher cash balances.
Interest expense. Interest expense decreased due to lower borrowings for the
nine months ended September 30, 2012.
Other income (expense), net. The $0.4 million increase in other expenses for the
nine months ended September 30, 2012 is due primarily to $0.7 million of higher
preferred warrant liability expense, offset by a $0.1 million reduction in loss
on foreign exchange and the receipt of a $0.2 million stipend for market
research regarding the industry in which we operate that we provided to a market
research firm.
Liquidity and capital resources
As of September 30, 2012, we had cash and cash equivalents and short-term
investments of $121.0 million and no debt borrowings.
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On April 2, 2012, we completed our initial public offering in which we and
existing stockholders sold 6,727,500 shares of common stock at $16.00 per share,
before underwriting discounts and commissions. We sold 5,000,000 shares and
existing stockholders sold an aggregate of 1,727,500 shares, including 877,500
shares as a result of the underwriters' exercise of their over-allotment option.
The Company recorded net proceeds of $70.5 million for the IPO, after
subtraction of underwriters' discounts and commissions, and offering expenses
incurred in both 2011 and 2012. We did not receive any proceeds from the sale of
shares by existing stockholders in our initial public offering.
On September 12, 2012, we completed a secondary public offering in which we and
existing shareholders sold 5,548,750 shares of common stock at $28.75 per share,
before underwriting discounts and commissions. We sold 1,337,500 shares and
existing stockholders sold an aggregate of 4,211,250 shares, including an
aggregate of 723,750 shares as a result of the underwriters' exercise of their
over-allotment option. We received net proceeds of approximately $36.0 million,
after deducting underwriting discounts and commissions and other expenses of the
offering. We did not receive any proceeds from the sale of shares by existing
stockholders in our secondary public offering.
On April 3, 2012, we paid in full the outstanding amount under the revolving
line of credit. We allowed the line of credit to expire in April 2012.
We believe that our existing sources of liquidity will satisfy our working
capital and capital requirements for at least the next twelve months.
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