e424b3
Filed Pursuant to Rule 424(b)(3)
Registration File No. 333-123177
PROSPECTUS
1,193,179 Shares
Common Stock
This prospectus relates to the offer and sale from time to time
of up to an aggregate of 1,193,179 shares of our common
stock for the account of certain of our stockholders. See
Selling Stockholders in this prospectus. We issued
these shares in connection with our acquisition of ZettaWorks
LLC on December 20, 2004. We will not receive any proceeds
from this offering.
Concurrent with this offering, we have also registered
4,250,000 shares of our common stock, pursuant to the
Registration Statement on Form S-3 (File No. 333-123177),
to be offered by us from time to time in amounts, at prices and
on terms that we will determine at the times of the offerings.
Our shares of common stock are listed on the Nasdaq National
Market under the symbol PRFT.
Investing in our common stock involves risks that are
described in the Risk Factors section beginning on
page 2 of this prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities, or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is July 12, 2005.
TABLE OF CONTENTS
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About This Prospectus
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Our Company
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Risk Factors
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Forward-Looking Statements
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Use of Proceeds
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Selling Stockholders
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Plan of Distribution
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Legal Matters
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Experts
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Where you Can Find More Information
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Information We Incorporate by Reference
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Index to Financial Statements
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3 that we filed with the Securities and Exchange
Commission (SEC) utilizing a shelf registration
process. Under this shelf registration process, the selling
stockholders may, over time, offer and sell the common stock
described in this prospectus in one or more offerings. This
prospectus provides you with a general description of the common
stock the selling stockholders may offer. If required, each time
the selling stockholder offers common stock, we will provide a
prospectus supplement that will contain specific information
about the terms of the offering. This prospectus does not
contain all of the information included in the registration
statement. The prospectus supplement may also add, update or
change information contained in this prospectus. You should read
both this prospectus and any prospectus supplement together with
the additional information under the heading Where You Can
Find More Information.
You should rely only on the information contained or
incorporated by reference in this prospectus and any prospectus
supplement. We have not authorized anyone to provide you with
different information. We are not making offers to sell or
solicitations to buy the securities in any jurisdiction in which
an offer or solicitation is not authorized or in which the
person making that offer or solicitation is not qualified to do
so or anyone to whom it is unlawful to make an offer or
solicitation.
You should not assume that the information contained in this
prospectus or the prospectus supplement, as well as the
information we previously filed with the Securities and Exchange
Commission that is incorporated by reference herein, is accurate
as of any date other than its respective date.
The terms Perficient, we,
our, and us refer to Perficient, Inc.
and its subsidiaries unless the context suggests otherwise.
OUR COMPANY
We are a rapidly growing information technology consulting firm
serving Global 2000 and midsize companies in the central United
States. We help our clients gain competitive advantage by using
Internet-based technologies to make their businesses more
responsive to market opportunities and threats, strengthen
relationships with customers, suppliers and partners, improve
productivity and reduce information technology costs. We design,
build and deliver software solutions using a core set of
software products developed by our partners. These products,
which are based on open standards such as the Java 2 Enterprise
Edition, or J2EE, are commonly referred to as middleware and
include application servers, enterprise application integration
platforms, business process management, business activity
monitoring and business intelligence applications and enterprise
portal software. Using these products, our solutions enable our
clients to operate a real-time enterprise that dynamically
adapts business processes and the systems that support them to
the changing demands of an increasingly global, Internet-driven
and competitive marketplace.
Through our experience in developing and delivering eBusiness
integration solutions for more than 380 Global 2000 and
midsize companies, we have acquired significant domain expertise
that we believe differentiates our firm. We use small, expert
project teams that we believe deliver high-value, measurable
results by working collaboratively with clients and their
partners through a user-centered, technology-based and
business-driven solutions methodology. We believe this approach
enhances return-on-investment for our clients by significantly
reducing the time and risk associated with designing and
implementing eBusiness integration solutions.
We believe that the central United States represents an
attractive geographic market and that our focus on this region
and our network of nine offices throughout the central United
States are additional competitive differentiators. We believe
this geographic focus makes us the partner of choice both for
Global 2000 and midsize companies in the area that seek business
and technology consulting services and for software vendors that
seek consulting firm partners to sell and deliver solutions that
use their products.
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We place strong emphasis on building lasting relationships with
clients. In fiscal years 2002, 2003 and 2004, 81%, 85% and 91%
of revenue, respectively, excluding from the calculation for any
single period revenue from acquisitions completed in that single
period, was derived from customers that were clients in the
prior year. We have also built meaningful partnerships with
software providers, most notably IBM, whose products we use to
design and implement solutions for our clients. These
partnerships enable us to reduce our cost of sales and sales
cycle times and increase win rates through leveraging our
partners marketing efforts and endorsements.
We are expanding through a combination of organic growth and
acquisitions and have completed four acquisitions since
January 1, 2004 Genisys Consulting in April 2004,
Meritage Technologies in June 2004, ZettaWorks in December 2004
and iPath Solutions in June 2005. We believe that information
technology consulting is a fragmented industry and that there
are a substantial number of privately held information
technology consulting firms in our target markets that can be
acquired on financially accretive terms. We have a track record
of successfully identifying, executing and integrating
acquisitions that add strategic value to our business. Over the
past five years, we have acquired and integrated eight privately
held information technology consulting firms, three of which
were acquired in 2004 and one in 2005. We believe that we can
achieve significantly faster growth in revenues and
profitability through a combination of organic growth and
acquisitions than we could through organic growth alone.
RISK FACTORS
You should carefully consider the following risk factors
together with the other information contained in or incorporated
by reference into this prospectus before you decide to buy our
common stock. If any of these risks actually occur, our
business, financial condition, operating results or cash flows
could be materially adversely affected. This could cause the
trading price of our common stock to decline and you may lose
part or all of your investment.
Risks Related to Our Business
Prolonged economic weakness in the Internet software and
services market could adversely affect our business, financial
condition and results of operations.
The market for Internet software and services has changed
rapidly over the last six years. The market for Internet
software and services expanded dramatically during 1999 and most
of 2000, but declined significantly in 2001 and 2002. Market
demand for Internet software and services began to stabilize and
improve throughout 2003 and 2004, but this trend may not
continue. Our future growth is dependent upon the demand for
Internet software and services, and, in particular, the
information technology consulting services we provide. Demand
and market acceptance for Internet services are subject to a
high level of uncertainty. Prolonged weakness in the Internet
software and services industry has caused in the past, and may
cause in the future, business enterprises to delay or cancel
information technology projects, reduce their overall budgets
and/or reduce or cancel orders for our services. This, in turn,
may lead to longer sales cycles, delays in purchase decisions,
payment and collection, and may also result in price pressures,
causing us to realize lower revenues and operating margins. If
companies cancel or delay their business and technology
initiatives or choose to move these initiatives in-house, our
business, financial condition and results of operations could be
materially and adversely affected.
We may not be able to attract and retain information
technology consulting professionals, which could affect our
ability to compete effectively.
Our business is labor intensive. Accordingly, our success
depends in large part upon our ability to attract, train,
retain, motivate, manage and effectively utilize highly skilled
information technology consulting professionals. Additionally,
our technology professionals are primarily at-will employees.
Failure to retain highly skilled technology professionals would
impair our ability to adequately manage, staff and implement our
existing projects and to bid for or obtain new projects, which
in turn would adversely affect our operating results.
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Our success will depend on retaining our senior management
team and key personnel.
Our industry is highly specialized and the competition for
qualified management and key personnel is intense. We expect
this to remain so for the foreseeable future. We believe that
our success will depend on retaining our senior management team
and key technical and business consulting personnel. Retention
is particularly important in our business as personal
relationships are a critical element of obtaining and
maintaining strong relationships with our clients. If a
significant number of these individuals stop working for us, our
level of management, technical, marketing and sales expertise
could diminish. We may be unable to achieve our revenue and
operating performance objectives unless we can attract and
retain technically qualified and highly skilled sales,
technical, business consulting, marketing and management
personnel. These individuals would be difficult to replace, and
losing them could seriously harm our business.
We may have difficulty in identifying and competing for
strategic acquisition and partnership opportunities.
Our business strategy includes the pursuit of strategic
acquisitions. We may acquire or make strategic investments in
complementary businesses, technologies, services or products, or
enter into strategic partnerships or alliances with third
parties in the future in order to expand our business. We may be
unable to identify suitable acquisition, strategic investment or
strategic partnership candidates, or if we do identify suitable
candidates, we may not complete those transactions on terms
commercially favorable to us, or at all. If we fail to identify
and successfully complete these transactions, our competitive
position and our growth prospects could be adversely affected.
In addition, we may face competition from other companies with
significantly greater resources for acquisition candidates,
making it more difficult for us to acquire suitable companies on
favorable terms.
Pursuing and completing potential acquisitions could divert
managements attention and financial resources and may not
produce the desired business results.
We do not have specific personnel dedicated to pursuing and
making strategic acquisitions. As a result, if we pursue any
acquisition, our management could spend a significant amount of
time and financial resources to pursue and integrate the
acquired business with our existing business. To pay for an
acquisition, we might use capital stock, cash or a combination
of both. Alternatively, we may borrow money from a bank or other
lender. If we use capital stock, our stockholders will
experience dilution. If we use cash or debt financing, our
financial liquidity may be reduced and the interest on any debt
financing could adversely affect our results of operations. From
an accounting perspective, an acquisition may involve
amortization or the write-off of significant amounts of
intangible assets that could adversely affect our results of
operations.
Despite the investment of these management and financial
resources, and completion of due diligence with respect to these
efforts, an acquisition may not produce the anticipated
revenues, earnings or business synergies for a variety of
reasons, including:
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difficulties in the integration of the technologies, services
and personnel of the acquired business; |
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the failure of management and acquired services personnel to
perform as expected; |
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the risks of entering markets in which we have no, or limited,
prior experience; |
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the failure to identify or adequately assess any undisclosed or
potential legal liabilities of the acquired business; |
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the failure of the acquired business to achieve the forecasts we
used to determine the purchase price; or |
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the potential loss of key personnel of the acquired business. |
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These difficulties could disrupt our ongoing business, distract
our management and colleagues, increase our expenses and
materially and adversely affect our results of operations.
The market for the information technology consulting services
we provide is competitive, has low barriers to entry and is
becoming increasingly consolidated, which may adversely affect
our market position.
The market for the information technology consulting services we
provide is competitive, rapidly evolving and subject to rapid
technological change. In addition, there are relatively low
barriers to entry into this market and therefore new entrants
may compete with us in the future. For example, due to the rapid
changes and volatility in our market, many well-capitalized
companies, including some of our partners, that have focused on
sectors of the Internet software and services industry that are
not competitive with our business may refocus their activities
and deploy their resources to be competitive with us.
Our future financial performance will depend, in large part, on
our ability to establish and maintain an advantageous market
position. We currently compete with regional and national
information technology consulting firms, and, to a limited
extent, offshore service providers and in-house information
technology departments. Many of the larger regional and national
information technology consulting firms have substantially
longer operating histories, more established reputations and
potential partner relationships, greater financial resources,
sales and marketing organizations, market penetration and
research and development capabilities, as well as broader
product offerings and greater market presence and name
recognition. We may face increasing competitive pressures from
these competitors as the market for Internet software and
services continues to grow. This may place us at a disadvantage
to our competitors, which may harm our ability to grow, maintain
revenue or generate net income.
In recent years, there has been substantial consolidation in our
industry, and we expect that there will be significant
additional consolidation in the near future. As a result of this
increasing consolidation, we expect that we will increasingly
compete with larger firms that have broader product offerings
and greater financial resources than we have. We believe that
this competition could have a significant negative effect on our
marketing, distribution and reselling relationships, pricing of
services and products and our product development budget and
capabilities. Any of these negative effects could significantly
impair our results of operations and financial condition. We may
not be able to compete successfully against new or existing
competitors.
Our business will suffer if we do not keep up with rapid
technological change, evolving industry standards or changing
customer requirements.
Rapidly changing technology, evolving industry standards and
changing customer needs are common in the Internet software and
services market. We expect technological developments to
continue at a rapid pace in our industry. Technological
developments, evolving industry standards and changing customer
needs could cause our business to be rendered obsolete or
non-competitive, especially if the market for the core set of
eBusiness solutions and software platforms in which we have
expertise does not grow or if such growth is delayed due to
market acceptance, economic uncertainty or other conditions.
Accordingly, our success will depend, in part, on our ability to:
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continue to develop our technology expertise; |
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enhance our current services; |
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develop new services that meet changing customer needs; |
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advertise and market our services; and |
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influence and respond to emerging industry standards and other
technological changes. |
We must accomplish all of these tasks in a timely and
cost-effective manner. We might not succeed in effectively doing
any of these tasks, and our failure to succeed could have a
material and adverse effect on
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our business, financial condition or results of operations,
including materially reducing our revenue and operating results.
We may also incur substantial costs to keep up with changes
surrounding the Internet. Unresolved critical issues concerning
the commercial use and government regulation of the Internet
include the following:
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security; |
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intellectual property ownership; |
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privacy; |
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taxation; and |
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liability issues. |
Any costs we incur because of these factors could materially and
adversely affect our business, financial condition and results
of operations, including reduced net income.
A significant portion of our revenue is dependent upon
building long-term relationships with our clients and our
operating results could suffer if we fail to maintain these
relationships.
Our professional services agreements with clients are in most
cases terminable on 10 to 30 days notice. A client
may choose at any time to use another consulting firm or choose
to perform services we provide through their own internal
resources. Accordingly, we rely on our clients interests
in maintaining the continuity of our services rather than on
contractual requirements. Termination of a relationship with a
significant client or with a group of clients that account for a
significant portion of our revenues could adversely affect our
revenues and results of operations.
If we fail to meet our clients performance
expectations, our reputation may be harmed.
As a services provider, our ability to attract and retain
clients depends to a large extent on our relationships with our
clients and our reputation for high quality services and
integrity. We also believe that the importance of reputation and
name recognition is increasing and will continue to increase due
to the number of providers of information technology services.
As a result, if a client is not satisfied with our services or
does not perceive our solutions to be effective or of high
quality, our reputation may be damaged and we may be unable to
attract new, or retain existing, clients and colleagues.
We may face potential liability to customers if our
customers systems fail.
Our eBusiness integration solutions are often critical to the
operation of our customers businesses and provide benefits
that may be difficult to quantify. If one of our customers
systems fails, the customer could make a claim for substantial
damages against us, regardless of our responsibility for that
failure. The limitations of liability set forth in our contracts
may not be enforceable in all instances and may not otherwise
protect us from liability for damages. Our insurance coverage
may not continue to be available on reasonable terms or in
sufficient amounts to cover one or more large claims. In
addition, a given insurer might disclaim coverage as to any
future claims. If we experience one or more large claims against
us that exceed available insurance coverage or result in changes
in our insurance policies, including premium increases or the
imposition of large deductible or co-insurance requirements, our
business and financial results could suffer.
The loss of one or more of our significant software partners
would have a material adverse effect on our business and results
of operations.
Our partnerships with software vendors enable us to reduce our
cost of sales and increase win rates through leveraging our
partners marketing efforts and strong vendor endorsements.
The loss of one or more of these relationships and endorsements
could increase our sales and marketing costs, lead to longer
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sales cycles, harm our reputation and brand recognition, reduce
our revenues and adversely affect our results of operations.
In particular, a substantial portion of our solutions are built
on IBM WebSphere platforms and a significant number of our
clients are identified through joint selling opportunities
conducted with IBM, through sales leads obtained from our
relationship with IBM and through a services agreement we have
with IBM. Revenue from IBM was approximately 17% of total
revenue for the year ended December 31, 2004 and
approximately 13% of total revenue for the three months ended
March 31, 2005. The loss of our relationship with, or a
significant reduction in the services we perform for IBM would
have a material adverse effect on our business and results of
operations.
Our quarterly operating results may be volatile and may cause
our stock price to fluctuate.
Our quarterly revenue, expenses and operating results have
varied in the past and may vary significantly in the future. In
addition, many factors affecting our operating results are
outside of our control, such as:
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demand for Internet software and services; |
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customer budget cycles; |
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changes in our customers desire for our partners
products and our services; |
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pricing changes in our industry; |
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government regulation and legal developments regarding the use
of the Internet; and |
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general economic conditions. |
As a result, if we experience unanticipated changes in the
number or nature of our projects or in our employee utilization
rates, we could experience large variations in quarterly
operating results and losses in any particular quarter.
Our services revenues may fluctuate quarterly due to
seasonality or timing of completion of projects.
We may experience seasonal fluctuations in our services
revenues. We expect that services revenues in the fourth quarter
of a given year may typically be lower than in other quarters in
that year as there are fewer billable days in this quarter as a
result of vacations and holidays. In addition, we generally
perform services on a project basis. While we seek wherever
possible to counterbalance periodic declines in revenues on
completion of large projects with new arrangements to provide
services to the same client or others, we may not be able to
avoid declines in revenues when large projects are completed.
Our inability to obtain sufficient new projects to
counterbalance any decreases in work upon completion of large
projects could adversely affect our revenues and results of
operations.
Our software revenue may fluctuate quarterly, leading to
volatility in the price of our stock.
Our quarterly revenues from sales of third-party software have
varied in the past and may vary significantly from quarter to
quarter, making them difficult to predict. This may lead to
volatility in our share price. The factors that are likely to
cause these variations are:
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the business decisions of our clients regarding the investment
in new technology; |
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customer demand in any given quarter; and |
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the stage of completion of existing projects and/or their
termination. |
Our software revenue may fluctuate quarterly and be higher in
the fourth quarter of a given year as procurement policies of
our clients may result in higher technology spending towards the
end of budget cycles. This seasonal trend may materially affect
our quarter-to-quarter revenues, margins and operating results.
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Our overall gross margin fluctuates quarterly based on our
services and software revenue mix, which may cause our stock
price to fluctuate.
The gross margin on our services revenue is, in most instances,
greater than the gross margin on our software revenue. As a
result, our gross margin will be higher in quarters where our
services revenue, as a percentage of total revenue, has
increased, and will be lower in quarters where our software
revenue, as a percentage of total revenue, has increased. In
addition, gross margin on software revenue may fluctuate as a
result of variances in gross margin on individual software
products. Our stock price may be negatively affected in quarters
in which our gross margin decreases.
Our services gross margins are subject to fluctuations as a
result of variances in utilization rates and billing rates.
Our services gross margins are affected by trends in the
utilization rate of our professionals, defined as the percentage
of our professionals time billed to customers divided by
the total available hours in a period, and in the billing rates
we charge our clients. Our operating expenses, including
employee salaries, rent and administrative expenses are
relatively fixed and cannot be reduced on short notice to
compensate for unanticipated variations in the number or size of
projects in process. If a project ends earlier than scheduled,
we may need to redeploy our project personnel. Any resulting
non-billable time may adversely affect our gross margins.
The average billing rates for our services may decline due to
rate pressures from significant customers and other market
factors, including innovations and average billing rates charged
by our competitors. Also, our average billing rates will decline
if we acquire companies with lower average billing rates than
ours. To sell our products and services at higher prices, we
must continue to develop and introduce new services and products
that incorporate new technologies or high-performance features.
If we experience pricing pressures or fail to develop new
services, our revenues and gross margins could decline, which
could harm our business, financial condition and results of
operations.
If we fail to complete fixed-fee contracts within budget and
on time, our results of operations could be adversely
affected.
We perform a limited number of projects on a fixed-fee, turnkey
basis, rather than on a time-and-materials basis. Under these
contractual arrangements, we bear the risk of cost overruns,
completion delays, wage inflation and other cost increases. If
we fail to estimate accurately the resources and time required
to complete a project or fail to complete our contractual
obligations within the scheduled timeframe, our results of
operations could be adversely affected. We cannot assure you
that in the future we will not price these contracts
inappropriately, which may result in losses.
We may not be able to maintain our level of profitability.
Although we have been profitable for the past eight quarters, we
may not be able to sustain or increase profitability on a
quarterly or annual basis in the future. We cannot assure you of
any operating results. In future quarters, our operating results
may not meet public market analysts and investors
expectations. If this occurs, the price of our common stock will
likely fall.
If we do not effectively manage our growth, our results of
operations could be adversely affected.
Our ability to operate profitably depends largely on how
effectively we manage our growth. In order to create the
additional capacity necessary to accommodate the demand for our
services, we may need to implement a variety of new and upgraded
operational and financial systems, procedures and controls, open
new offices or hire additional colleagues. Implementation of
these new systems, procedures and controls may require
substantial management efforts and our efforts to do so may not
be successful. The opening of new offices or the hiring of
additional colleagues may result in idle or underutilized
capacity. We periodically assess the expected long-term capacity
utilization of our offices and professionals. We may not be able
to achieve or maintain optimal utilization of our offices and
professionals. If demand for our
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services does not meet our expectations, our revenues will not
be sufficient to offset these expenses and our results of
operations could be adversely affected.
We have recorded deferred offering costs in connection this
registration statement, and our inability to net these costs
against the proceeds of future offerings off of this shelf
registration statement could result in a non-cash expense in our
Statement of Operations in a future period.
We initially filed this registration statement with the
Securities and Exchange Commission on March 7, 2005 to
register the offer and sale by the Company and certain selling
stockholders of shares of our common stock. Due to overall
market conditions during the second quarter, we converted this
registration statement into a shelf registration statement to
allow for offers and sales of common stock from time to time as
market conditions permit. To date, we have recorded
approximately $766,000 of deferred offering costs (approximately
$467,000 after tax, if ever expensed) in connection with this
offering and have classified these costs as prepaid expenses in
other non-current assets on our balance sheet. If we sell shares
of common stock off of this shelf registration statement, we
will be allowed to net these accumulated deferred offering costs
against the proceeds of the offering. If we do not raise funds
through an equity offering off of this shelf registration
statement or fail to maintain the effectiveness of the shelf
registration statement, the currently capitalized deferred
offering costs will be expensed. Such expense would be a
non-cash accounting charge as substantially all of these
expenses have already been paid.
We may be exposed to potential risks resulting from new
requirements under Section 404 of the Sarbanes-Oxley Act of
2002.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
we will be required, beginning with our fiscal year ending
December 31, 2005, to include in our annual report our
assessment of the effectiveness of our internal control over
financial reporting as of the end of fiscal 2005. Furthermore,
our independent registered public accounting firm, BDO Seidman,
LLP, may be required to attest to whether our assessment of the
effectiveness of our internal control over financial reporting
is fairly stated in all material respects and separately report
on whether it believes we have maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2005. We have not yet completed our
assessment of the effectiveness of our internal control over
financial reporting. We expect to incur additional expenses and
diversion of managements time as a result of performing
the system and process evaluation, testing and remediation
required in order to comply with the management certification
and auditor attestation requirements. If we fail to timely
complete this assessment, or if our independent registered
public accounting firm cannot timely attest to our assessment,
we could be subject to regulatory sanctions and a loss of public
confidence in our internal control. In addition, any failure to
implement required new or improved controls, or difficulties
encountered in their implementation, could harm our operating
results or cause us to fail to timely meet our regulatory
reporting obligations.
Risks Relating to Ownership of Our Common Stock
The trading volume of our common stock has been limited and,
as a result, our stock price may fluctuate widely.
Our common stock is traded on the Nasdaq National Market under
the symbol PRFT. The trading volume of our common
stock has been limited and our stock price has been volatile.
Our stock price may continue to fluctuate widely as a result of
the limited trading volume, announcements of new services and
products by us or our competitors, quarterly variations in
operating results, the gain or loss of significant customers,
changes in public market analysts estimates and market
conditions for information technology consulting firms and other
technology stocks in general.
We periodically review and consider possible acquisitions of
companies that we believe will contribute to our long-term
objectives. In addition, depending on market conditions,
liquidity requirements and other factors, from time to time we
consider accessing the capital markets. These events may also
affect the market price of our common stock.
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Our officers, directors, and 5% and greater stockholders own
a large percentage of our voting securities and their interests
may differ from other stockholders.
Our executive officers, directors and existing 5% and greater
stockholders beneficially own or control approximately 30% of
the voting power of our common stock. This concentration of
ownership of our common stock may make it difficult for our
other stockholders to successfully approve or defeat matters
that may be submitted for action by our stockholders. It may
also have the effect of delaying, deterring or preventing a
change in control of our company.
We may need additional capital in the future, which may not
be available to us. The raising of any additional capital may
dilute your ownership percentage in our stock.
We intend to continue to make investments to support our
business growth and may require additional funds to pursue
business opportunities and respond to business challenges.
Accordingly, we may need to engage in equity or debt financings
to secure additional funds. If we raise additional funds through
further issuances of equity or convertible debt securities, our
existing stockholders could suffer significant dilution, and any
new equity securities we issue could have rights, preferences
and privileges superior to those of holders of our common stock.
Any debt financing secured by us in the future could involve
restrictive covenants relating to our capital raising activities
and other financial and operational matters, which may make it
more difficult for us to obtain additional capital and to pursue
business opportunities, including potential acquisitions. In
addition, we may not be able to obtain additional financing on
terms favorable to us, if at all. If we are unable to obtain
adequate financing or financing on terms satisfactory to us,
when we require it, our ability to continue to support our
business growth and to respond to business challenges could be
significantly limited.
It may be difficult for another company to acquire us, and
this could depress our stock price.
Provisions contained in our certificate of incorporation, bylaws
and Delaware law could make it difficult for a third party to
acquire us, even if doing so would be beneficial to our
stockholders. Our certificate of incorporation and bylaws may
discourage, delay or prevent a merger or acquisition that a
stockholder may consider favorable by authorizing the issuance
of blank check preferred stock. In addition,
provisions of the Delaware General Corporation Law also restrict
some business combinations with interested stockholders. These
provisions are intended to encourage potential acquirers to
negotiate with us and allow the board of directors the
opportunity to consider alternative proposals in the interest of
maximizing stockholder value. However, these provisions may also
discourage acquisition proposals or delay or prevent a change in
control, which could harm our stock price.
In addition, under our agreement with IBM, we have granted IBM a
right of first offer and a right to terminate its agreement with
us with respect to any transaction involving a change of control
of us with a company that has a substantial portion of its
business in the web application server product and services
market, other than a systems integrator or professional services
firm. As a result, a potential acquirer may be discouraged from
making an offer to buy us.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus and in the
documents we incorporate by reference that are not purely
historical statements discuss future expectations, contain
projections of results of operations or financial condition or
state other forward-looking information. Those statements are
subject to known and unknown risks, uncertainties and other
factors that could cause the actual results to differ materially
from those contemplated by the statements. The
forward-looking information is based on various
factors and was derived using numerous assumptions. In some
cases, you can identify these so-called forward-looking
statements by words like may, will,
should, expects, plans,
anticipates, believes,
estimates, predicts,
potential or continue or the negative of
those words and other comparable words. You should be aware that
those statements only reflect our predictions. Actual events or
results may differ substantially. Important factors that could
cause our actual results to be materially
9
different from the forward-looking statements are disclosed
under the heading Risk Factors in this prospectus.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform such
statements to actual results.
All forward-looking statements, express or implied, included in
this prospectus and the documents we incorporate by reference
and attributable to Perficient are expressly qualified in their
entirety by this cautionary statement. This cautionary statement
should also be considered in connection with any subsequent
written or oral forward-looking statements that Perficient or
any persons acting on our behalf may issue.
USE OF PROCEEDS
This prospectus related to the offer and sale from time to time
of up to an aggregate of 1,193,179 shares of common stock
for the account of the selling stockholders referred to in this
prospectus. We will not receive any proceeds from the sale of
any shares of common stock by the selling stockholders.
10
SELLING STOCKHOLDERS
On December 20, 2004, we consummated the acquisition of
substantially all of the assets and assumed certain liabilities
of ZettaWorks LLC, or ZettaWorks, pursuant to an Asset Purchase
Agreement by and among us, Perficient ZettaWorks, Inc., our
wholly owned subsidiary, and ZettaWorks LLC. In the acquisition
of ZettaWorks, we paid approximately $10.7 million,
excluding transaction costs, consisting of approximately
$2.9 million in cash and 1.2 million shares of our
common stock. In accordance with the Asset Purchase Agreement,
we are registering for resale 1,193,179 shares of our
common stock issued in connection with the acquisition.
The following table sets forth information as of June 30,
2005 regarding the number of shares of common stock beneficially
owned by the selling stockholders prior to the offering, the
number of shares of common stock offered by the selling
stockholders, and the number of shares of common stock that will
be owned by the selling stockholders upon completion of the
offering or offerings pursuant to this prospectus, assuming the
selling stockholders sell all of the shares of common stock
offered hereby. The percentage of shares beneficially owned
prior to this offering in the following table is based on
22,082,720 shares of common stock outstanding as of
June 30, 2005.
Beneficial ownership is determined under the rules of the
Securities and Exchange Commission. These rules deem common
stock subject to options currently exercisable, or exercisable
within 60 days, to be outstanding for purposes of computing
the percentage ownership of the person holding the options or of
a group of which the person is a member, but they do not deem
such stock to be outstanding for purposes of computing the
percentage ownership of any other person or group. To our
knowledge, except under applicable community property laws, or
as otherwise indicated, each person named in the table has sole
voting and sole investment control with regard to all shares
beneficially owned by such person.
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Shares Beneficially |
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Owned Prior to |
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Shares Beneficially Owned |
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Offering |
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After Offering |
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Number of Shares |
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Name of Beneficial Owner |
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Number |
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Percent |
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Being Offered |
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Number |
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Percent |
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AB Holdings L.L.C.(1)
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1,042,757 |
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4.7 |
% |
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1,042,757 |
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0 |
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Kenneth Neusanger(2)
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55,863 |
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* |
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55,863 |
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0 |
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Thomas Pash(3)
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55,863 |
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* |
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55,863 |
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0 |
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Yifeng Huang(4)
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9,208 |
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* |
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9,208 |
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0 |
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Keith Brenton(5)
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6,664 |
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* |
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6,664 |
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0 |
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Michael Lundberg(6)
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5,316 |
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* |
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5,316 |
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0 |
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Douglas Kelly(7)
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5,060 |
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* |
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5,060 |
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0 |
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John Biedermann(8)
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3,771 |
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* |
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3,771 |
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0 |
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Aleksander Memca(9)
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3,603 |
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* |
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3,603 |
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0 |
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Eric Roch(10)
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2,544 |
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* |
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2,544 |
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0 |
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Hoang D. Trinh(11)
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2,530 |
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* |
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2,530 |
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0 |
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TOTAL
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1,193,179 |
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5.4 |
% |
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1,193,179 |
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0 |
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* |
Represents less than 1% of the outstanding shares. |
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(1) |
Includes 168,623 shares currently held in escrow by
Continental Stock Transfer & Trust Company until
December 20, 2005 pursuant to the Escrow Agreement dated
December 17, 2004 among Perficient, Inc., ZettaWorks LLC
and Continental Stock Transfer & Trust Company (the
Escrow Agreement). Includes (i) 622,236 shares
held by AB Holdings L.L.C. and (ii) 420,521 shares
beneficially held by the trusts described in this footnote.
Robert G. Ackerley and Leland C. Ackerley are the managers of AB
Holdings L.L.C. and have shared voting and dispositive power
with respect to the shares of common stock held by AB Holdings
L.L.C. Robert G. Ackerley and Leland C. Ackerley disclaim
beneficial ownership of such shares. AB Holdings L.L.C.s
address is 2215 B. Renaissance Drive, Suite 5, Las Vegas,
Nevada 89119. Pursuant to powers of attorney, AB Holdings L.L.C.
has been granted the authority to dispose of the shares held by
the following |
11
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described trusts in accordance with the instructions of the
respective trustees who retain investment discretion and voting
power over such shares. AB Holdings L.L.C., Robert G. Ackerley
and Leland C. Ackerley each disclaim beneficial ownership of
such shares. The beneficial ownership of the shares held by each
of the trusts is as follows: |
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a. |
70,087 shares of common stock are beneficially owned by the
Eve E. Ackerley 1999 Trust. Bernard Smith, in his capacity as
trustee of the Eve E. Ackerley 1999 Trust may be deemed to have
investment discretion and voting power over the
70,087 shares of common stock beneficially owned by the Eve
E. Ackerley 1999 Trust. Bernard Smith disclaims any such
beneficial ownership of the shares. |
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b. |
70,087 shares of common stock are beneficially owned by the
Sydney E. Ackerley 1999 Trust. Bernard Smith, in his capacity as
trustee of the Sydney E. Ackerley 1999 Trust may be deemed to
have investment discretion and voting power over the
70,087 shares of common stock beneficially owned by the
Sydney E. Ackerley 1999 Trust. Bernard Smith disclaims any such
beneficial ownership of the shares. |
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c. |
52,565 shares of common stock are beneficially owned by the
Andrew L. Ackerley 1999 Trust. Margaret Ackerley, in her
capacity as trustee of the Andrew L. Ackerley 1999 Trust may be
deemed to have investment discretion and voting power over the
52,565 shares of common stock beneficially owned by the
Andrew L. Ackerley 1999 Trust. Margaret Ackerley disclaims any
such beneficial ownership of the shares. |
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d. |
52,565 shares of common stock are beneficially owned by the
Leland T. Ackerley 1999 Trust. Margaret Ackerley, in her
capacity as trustee of the Leland T. Ackerley 1999 Trust may be
deemed to have investment discretion and voting power over the
52,565 shares of common stock beneficially owned by the
Leland T. Ackerley 1999 Trust. Margaret Ackerley disclaims any
such beneficial ownership of the shares. |
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e. |
52,565 shares of common stock are beneficially owned by the
William B. Ackerley 1999 Trust. Margaret Ackerley, in her
capacity as trustee of the William B. Ackerley 1999 Trust may be
deemed to have investment discretion and voting power over the
52,565 shares of common stock beneficially owned by the
William B. Ackerley 1999 Trust. Margaret Ackerley disclaims any
such beneficial ownership of the shares. |
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f. |
52,565 shares of common stock are beneficially owned by the
Alexis A. Ackerley 1999 Trust. Margaret Ackerley, in her
capacity as trustee of the Alexis A. Ackerley 1999 Trust may be
deemed to have investment discretion and voting power over the
52,565 shares of common stock beneficially owned by the
Alexis A. Ackerley 1999 Trust. Margaret Ackerley disclaims any
such beneficial ownership of the shares. |
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g. |
70,087 shares of common stock are beneficially owned by the
Benjamin L. Ackerley 1999 Trust. Bernard Smith, in his capacity
as trustee of the Benjamin L. Ackerley 1999 Trust may be deemed
to have investment discretion and voting power over the
70,087 shares of common stock beneficially owned by the
Benjamin L. 1999 Trust. Bernard Smith disclaims any such
beneficial ownership of the shares. |
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(2) |
Includes 9,387 shares currently held in escrow until
December 20, 2005 pursuant to the Escrow Agreement. |
(3) |
Includes 9,387 shares currently held in escrow until
December 20, 2005 pursuant to the Escrow Agreement.
Mr. Pash is general manager of our wholly owned subsidiary,
Perficient ZettaWorks, Inc. |
(4) |
Mr. Huang is employed as a director for us. |
(5) |
Mr. Brenton is employed as a business development director
for us. |
(6) |
Mr. Lundberg is a business development executive for us. |
(7) |
Includes 925 shares currently held in escrow until
December 20, 2005 pursuant to the Escrow Agreement. |
(8) |
Includes 689 shares currently held in escrow until
December 20, 2005 pursuant to the Escrow Agreement. |
(9) |
Mr. Memca is employed as a director for us. |
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(10) |
Mr. Roch is employed as a director of technology for us. |
12
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(11) |
Includes 463 shares currently held in escrow until
December 20, 2005 pursuant to the Escrow Agreement. |
The Escrow Agreement was entered into in connection with our
acquisition of ZettaWorks to secure the indemnification
obligations of ZettaWorks under the Asset Purchase Agreement. In
the event we are entitled to indemnification under the Asset
Purchase Agreement for claims arising prior to December 20,
2005, the indemnification will be satisfied with shares of our
common stock held in escrow under the Escrow Agreement. In that
event, the selling stockholders will no longer beneficially own
the shares of common stock used to satisfy the indemnification
obligations and such shares may not be offered pursuant to this
prospectus. We will file a prospectus supplement in the event
any shares of common stock held in escrow pursuant to the Escrow
Agreement are used to satisfy indemnification obligations under
the Asset Purchase Agreement.
Other Resale Registration Statements
On June 26, 2002, Perficient entered into a Convertible
Preferred Stock Purchase Agreement with 2M Technology Ventures,
L.P., or 2M, pursuant to which 2M purchased
1,111,000 shares of Series B Preferred Stock for a
purchase price of $0.900090009 per share. Pursuant to the
Certificate of Designation, Rights and Preferences of the
Series B Preferred Stock, on November 10, 2003, all
then outstanding shares of Series B Preferred Stock
automatically converted into shares of common stock. In
connection with its purchase of Series B Preferred Stock,
2M also received a warrant to purchase up to 555,500 shares
of common stock. 2M exercised this warrant on February 3,
2004 and March 29, 2004. We received proceeds of $1,100,000
as a result of the exercise of this warrant. We have registered
2,166,500 shares of our common stock, pursuant to a
Registration Statement on Form S-3 (File
No. 333-100490), for resale by 2M of the shares issued upon
conversion of the shares of Series B Preferred Stock
purchased from us, shares issued upon exercise of the warrant,
and shares acquired upon purchase from certain of our
stockholders in a private transaction.
In the acquisition of iPath Solutions, Ltd., or iPath, on
June 10, 2005, we paid approximately $7.9 million,
excluding transaction costs, consisting of $3.9 million in
cash and approximately 624,000 shares of our common stock.
We granted certain registration rights in connection with the
issuance of these shares. As a result, we intend to register
326,430 shares of our common stock for resale in
satisfaction of those registration rights in accordance with the
terms of the Asset Purchase Agreement entered into with iPath.
In the acquisition of Meritage Technologies, Inc., or Meritage,
on June 18, 2004, we paid approximately $7.1 million,
excluding transaction costs, to the Meritage stockholders
consisting of approximately $2.9 million in cash and
1.2 million shares of our common stock. In connection with
the acquisition of Meritage, on June 16, 2004 we raised
approximately $2.5 million through a private placement of
800,000 shares of our common stock to a group of
institutional investors led by Tate Capital Partners. The
investors were also issued warrants for the purchase of an
additional 160,000 shares of our common stock. In our
acquisition of Meritage, we granted certain registration rights
to the stockholders of Meritage, and in our private placement we
granted certain registration rights to the investors in the
private placement. As a result, we have registered
1.9 million shares of our common stock, pursuant to a
Registration Statement on Form S-3 (File
No. 333-117216) for resale by the former stockholders of
Meritage and by the investors in the private placement.
In the acquisition of Genisys Consulting, Inc., or Genisys, on
April 2, 2004, we paid approximately $8.3 million,
excluding transaction costs, to the Genisys stockholders
consisting of approximately $1.5 million in cash,
1.7 million shares of our common stock and options for
187,500 shares of our common stock. In our acquisition of
Genisys, we granted certain registration rights to the
stockholders of Genisys. As a result, we have registered
253,116 shares of our common stock, pursuant to a
Registration Statement on Form S-3 (File
No. 333-116549), for resale by the former stockholders of
Genisys.
13
PLAN OF DISTRIBUTION
Subject to the restrictions described below, the selling
stockholders, including their donees, transferees or
successors-in-interest selling shares received after the date of
this prospectus from a named selling stockholder as a gift,
liquidating distribution or other non-sale related transfer, may
sell the shares of common stock offered by this prospectus from
time to time in one or more transactions on the Nasdaq National
Market, or any other stock exchange, market or trading facility
on which the shares of common stock may from time to time be
trading, in negotiated transactions or in a combination of any
such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The
shares of common stock may be offered directly to or through
brokers or dealers, or through any combination of these methods
of sale. The methods by which the selling stockholders,
including donees, transferees or other successors-in-interest,
may sell their shares of common stock also include:
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a block trade (which may involve crosses) in which the broker or
dealer will attempt to sell the stocks as agent but may position
and resell a portion of the block as principal to facilitate the
transaction; |
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purchases by a broker or dealer as principal and resale by such
broker or dealer for its own account pursuant to this prospectus; |
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secondary distributions in accordance with Nasdaq rules; |
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ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and |
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privately negotiated transactions. |
The selling stockholders, including donees, transferees or other
successors-in-interest, may also sell their shares in accordance
with Rule 144 under the Securities Act, or pursuant to
other available exemptions from the registration requirements of
the Securities Act, rather than pursuant to this prospectus.
The shares held by the selling stockholders that are currently
held in escrow pursuant to the Escrow Agreement may not be sold
by the selling stockholders until after December 20, 2005
when they are released from escrow, to the extent any such
shares have not been used to satisfy indemnification obligations
under the Asset Purchase Agreement.
Pursuant to Stockholder Representation Letters delivered by AB
Holdings L.L.C., Kenneth Neusanger, Douglas Kelly, John
Biedermann and Hoang D. Trinh in connection with our acquisition
of ZettaWorks, the resale of the shares of common stock held by
each such selling stockholder is limited to no more than 12% of
the shares of our common stock held by such selling stockholder
in each of the nine monthly periods following the effective date
of the registration statement of which this prospectus forms a
part. The restrictions on transfer shall immediately terminate
in the event we experience a change in control. To the extent
any such shares are held in escrow pursuant to the Escrow
Agreement, such shares may not be sold until after
December 20, 2005 when they are released to the selling
stockholders.
Pursuant to Stock Restriction Agreements entered into by Yifeng
Huang, Keith Brenton, Michael Lundberg, Aleksander Memca and
Eric Roch in connection with our acquisition of ZettaWorks, 50%
of the shares held by such selling stockholders are restricted
until December 17, 2007 and may be forfeited by each such
selling stockholder if the employment of the selling stockholder
is terminated prior to December 17, 2007 by us for cause or
by the selling stockholder for any reason other than good reason
or his death or disability. The forfeiture restrictions shall
immediately lapse if the employment of the selling stockholder
is terminated prior to December 17, 2007 by us without
cause or by the selling stockholder for good reason or as a
result of his death or disability. The forfeiture restrictions
shall immediately lapse as to all such selling stockholders in
the event we experience a change of control. Pursuant to an
Employment Agreement entered into by Thomas Pash, 50% of the
shares held by Mr. Pash have been pledged to us to secure
his obligations to pay liquidated damages in the event we
terminate his employment for cause or if Mr. Pash
terminates his employment without good reason prior to
December 20, 2007.
14
Pursuant to Stockholder Representation Letters delivered by
Messrs. Huang, Brenton, Lundberg, Memca, Roch and Pash in
connection with our acquisition of ZettaWorks, the resale of the
remaining 50% of the shares of our common stock held by each
such selling stockholder is limited to (i) no more than 25%
of the total number of shares of our common stock held by such
selling stockholder prior to December 20, 2005,
(ii) no more than an aggregate of 37.5% of the total number
of shares of our common stock held by such selling stockholder
prior to December 20, 2006, and (iii) no more than an
aggregate of 50% of the total number of shares of our common
stock held by such selling stockholder prior to
December 20, 2007. In the event the employment of Messrs.
Huang, Brenton, Lundberg, Memca, Roch or Pash is terminated by
us without cause or by such selling stockholder with good
reason, the foregoing restrictions on resale shall terminate
with respect to such selling stockholder and the shares of
common stock held by such selling stockholder shall instead be
subject to the restrictions applicable to AB Holdings, L.L.C.
and Messrs. Neusanger, Kelly, Biedermann and Trinh described
above.
An underwriter, agent, broker or dealer may receive compensation
in the form of discounts, concessions or commissions from the
selling stockholders or the purchasers of the shares of common
stock for whom such broker-dealers may act as agents or to whom
they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary
commissions).
The selling stockholders and any underwriters, broker-dealers or
agents participating in the distribution of the common stock may
be deemed to be underwriters within the meaning of
the Securities Act of 1933, and any profit on the sale of common
stock by the selling stockholders and any underwriting
discounts, commissions or fees received by such persons may be
deemed to be underwriting commissions or discounts under the
Securities Act.
Any underwriters, brokers, dealers and agents who participate in
any sale of the shares of common stock may also engage in
transactions with, or perform services for, us or our affiliates
in the ordinary course of their business.
Under the Securities Exchange Act of 1934, any person engaged in
the distribution of the shares of common stock may not
simultaneously engage in market-making activities with respect
to common stock for five business days prior to the start of the
distribution. In addition, the selling shareholder and any other
person participating in a distribution will be subject to the
Exchange Act, which may limit the timing of purchases and sales
of common stock by the selling shareholder or any other person.
We cannot assure you that the selling stockholders will sell any
or all of the shares of common stock offered by this prospectus.
15
LEGAL MATTERS
Our legal counsel, Vinson & Elkins L.L.P., Austin,
Texas have passed upon certain legal matters in connection with
the offered securities. Any underwriters will be advised about
other issues relating to any offering by their own legal counsel.
EXPERTS
The consolidated financial statements of Perficient, Inc. at
December 31, 2004 and the year then ended incorporated by
reference in this prospectus have been audited by BDO Seidman,
LLP, an independent registered public accounting firm, to the
extent and for the period set forth in their report incorporated
herein by reference, and are incorporated herein in reliance
upon such report given upon the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of Perficient, Inc. and
Genisys Consulting, Inc. incorporated by reference in this
Prospectus and Registration Statement have been audited by Ernst
& Young LLP, independent registered public accounting firm,
with respect to Perficient, Inc. as of December 31, 2003
and for the year then ended, and Ernst & Young LLP,
independent auditors, with respect to Genisys Consulting, Inc.
as of December 31, 2003 and 2002 and for each of the two
years in the period ended December 31, 2003, to the extent
indicated in their reports thereon incorporated by reference.
Such consolidated financial statements have been incorporated
herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
The financial statements of Meritage Technologies, Inc. as of
December 31, 2002 and 2003 incorporated by reference in
this prospectus have been audited by Grant Thornton LLP as
set forth in their report incorporated herein by reference, and
are incorporated in reliance upon such report, given on their
authority as experts in accounting and auditing.
The financial statements of ZettaWorks LLC as of
December 31, 2002 and 2003 incorporated by reference in
this prospectus have been audited by BKD LLP as set forth
in their report incorporated herein by reference, and are
incorporated in reliance upon such report, given on their
authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other periodic reports, proxy
statements and other information with the SEC. Our SEC filings
are available over the Internet at the SECs web site at
http://www.sec.gov. You may also read and copy any document we
file with the SEC at the SECs public reference room
located at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference room and its copy charges.
You may also inspect our SEC reports and other information at
our website at http://www.perficient.com. We do not intend for
information contained in our website to be part of this
prospectus.
INFORMATION WE INCORPORATE BY REFERENCE
Some of the important business and financial information that
you may want to consider is not included in this prospectus, but
rather is incorporated by reference to documents
that have been filed by us with the Securities and Exchange
Commission pursuant to the Exchange Act of 1934. The information
that is incorporated by reference consists of:
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Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2004, as amended by Amendment No. 1; |
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Quarterly Report on Form 10-Q for the quarter ended
March 31, 2005; |
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Current Reports on Form 8-K filed on February 3, 2005,
April 8, 2005, May 13, 2005 and June 15, 2005; |
16
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Current Reports on Form 8-K filed on April 16, 2004,
as amended on June 16, 2004 and June 17, 2004; filed
on June 23, 2004, as amended August 30, 2004; and
filed on December 22, 2004, as amended on March 4,
2005; and |
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The description of our common stock contained in our
Form 8-A filed with SEC on July 22, 1999 (File
No. 000-15169). |
All documents filed by us pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, after the date of the initial
registration statement and prior to the effectiveness of the
registration statement and subsequent to the date of this
prospectus and prior to the termination of this offering, shall
be deemed incorporated by reference in this prospectus and made
a part hereof from the date of filing of those documents. Any
statement contained in a document incorporated or deemed
incorporated by reference in this prospectus shall be deemed
modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed
incorporated by reference herein or in any prospectus supplement
modifies or supersedes that statement. Any statement so modified
or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
We will provide without charge to each person who is delivered a
prospectus, on written or oral request, a copy of any or all of
the documents incorporated by reference herein (other than
exhibits to those documents unless those exhibits are
specifically incorporated by reference into those documents).
Requests for copies should be directed to Investor Relations,
Perficient, Inc., 1120 South Capital of Texas Highway,
Building 3, Suite 220, Austin, Texas 78746, Telephone:
(512) 531-6000.
17
INDEX TO FINANCIAL STATEMENTS
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PERFICIENT, INC. PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS
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Preliminary Notes
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F-2 |
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Unaudited Pro Forma Condensed Combined Statement of Operations
for the year ended December 31, 2004
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F-4 |
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Notes to Pro Forma Condensed Combined Financial Statements
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F-5 |
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F-1
PERFICIENT, INC.
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined financial information includes
a statement of operations for the year ended December 31,
2004 which assumes the acquisitions for Genisys Consulting,
Inc., Meritage Technologies, Inc. and ZettaWorks LLC occurred on
January 1, 2004.
On December 17, 2004, Perficient, Inc. (the
Company), Perficient ZettaWorks, Inc., a Delaware
corporation and a wholly-owned subsidiary of Perficient (the
Acquisition Sub) and ZettaWorks LLC
(ZettaWorks), a Texas limited liability company,
entered into an Asset Purchase Agreement (the Purchase
Agreement) pursuant to which Acquisition Sub acquired
substantially all of the assets and assumed certain liabilities
of ZettaWorks (the Acquisition). The Acquisition
closed on December 20, 2004. The total consideration paid
in the Acquisition is $11.4 million, which amount includes
approximately $2.9 million in cash, approximately
$7.8 million worth of the Companys common stock
(1,193,179 shares of the Companys common stock),
based on the average closing price of the Companys common
stock for the three trading days immediately preceding the
acquisition, and transaction costs of approximately
$0.7 million. The following unaudited pro forma condensed
combined statement of operations gives effect to the acquisition
by the Company of ZettaWorks. This acquisition was accounted for
as a purchase business combination. The consideration paid in
the Acquisition has been preliminarily allocated to the tangible
and identifiable intangible assets acquired and liabilities
assumed according to their estimated respective fair values,
with the excess purchase consideration being allocated to
goodwill at the closing of the transaction. These unaudited pro
forma condensed combined financial statements have been prepared
from the historical consolidated financial statements of the
Company and ZettaWorks and should be read in conjunction
therewith. The historical operating results of ZettaWorks
reflected in the pro forma statement of operations do not
include amounts of the Australian subsidiary of ZettaWorks.
Those amounts are included in the historical financial
statements of ZettaWorks included elsewhere herein. Operating
results of ZettaWorks are included in operating results of the
Companys condensed combined financial statements as of
December 20, 2004.
On June 18, 2004, the Company consummated the acquisition
of Meritage Technologies, Inc. (Meritage), a
Delaware corporation, by merging our wholly owned subsidiary
Perficient Meritage, Inc., a Delaware corporation, with and into
Meritage. Meritage survived the merger as our direct wholly
owned subsidiary, under the name Perficient Meritage,
Inc. The Company paid approximately $10.4 million
consisting of approximately $2.9 million in cash, assumed
debt of approximately $2.4 million, approximately
$4.2 million worth of the Companys common stock
(1,168,219 shares of the Companys common stock), and
transaction costs of approximately $0.9 million. The shares
of common stock issued in connection with the merger were
ascribed a value of $3.595 per share, which was the average
closing price of the Companys common stock for the 23
consecutive trading days ending on June 15, 2004, which
value is consistent with the valuation under EITF-99-12,
Determination of the Measurement Date for the Market Price of
Acquired Securities Issued in a Purchase Business
Combination.
On April 2, 2004, the Company consummated the acquisition
by way of merger of Genisys Consulting, Inc.
(Genisys), an Illinois corporation, with and into
our wholly owned subsidiary, Perficient Genisys, Inc., a
Delaware corporation. Perficient Genisys, Inc. is the surviving
corporation to the merger. The Company paid approximately
$8.8 million consisting of approximately $1.5 million
in cash, approximately $6.4 million worth of the
Companys common stock (1,687,439 shares of the
Companys common stock), stock options valued at $400,000,
and transaction costs of approximately $0.5 million. The
shares of common stock issued in connection with the merger were
ascribed a value of $3.77 per share, which was the average
closing price of the Companys common stock for the 30
consecutive trading days ending on April 1, 2004, which
value is consistent with the valuation under EITF-99-12,
Determination of the Measurement Date for the Market Price of
Acquired Securities Issued in a Purchase Business Combination.
The common stock issued in connection with the merger
included 825,459 shares, which are restricted based upon
the continued employment with Perficient of certain
F-2
employees of Genisys through April 1, 2007, and another
352,055 shares held in escrow until April 1, 2005.
The pro forma amounts for the Genisys, Meritage and ZettaWorks
acquisitions are based on the historical financial statements of
Genisys, Meritage and ZettaWorks and should be read in
conjunction with those historical financial statements and
related notes.
The following pro forma condensed combined financial statements
are presented to illustrate the effects of the acquisitions on
the historical operating results of the Company. The unaudited
pro forma condensed combined statements of operations for the
year ended December 31, 2004 give effect to the
acquisitions as if they occurred on January 1, 2004 and
combine the respective statements of operations for the Company
and the above entities for the respective periods. These pro
forma historical results do not reflect operational efficiencies
and cost savings that may be achieved with respect to the
combined companies. Therefore, these pro forma historical
results reflect operating costs which are not indicative or
predictive of future period results.
The pro forma information is presented for illustrative purposes
only and is not necessarily indicative of the operating results
or financial position that would have occurred if the merger had
been consummated on the indicated dates, nor is it necessarily
indicative of future operating results. The pro forma
adjustments are based on information available at the time of
this filing.
F-3
PERFICIENT, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
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For the year ended December 31, 2004 | |
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Pro Forma | |
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Perficient | |
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Genisys | |
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Meritage | |
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ZettaWorks | |
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Pro forma | |
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Income | |
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(Historical) | |
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(Historical) | |
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(Historical) | |
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(Historical) | |
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Adjustments | |
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Statement | |
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Revenue
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Services
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$ |
43,330,757 |
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$ |
2,656,359 |
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$ |
6,973,058 |
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$ |
16,618,760 |
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$ |
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$ |
69,578,934 |
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Software
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13,169,693 |
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13,169,693 |
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Reimbursed expenses
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2,347,223 |
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23,288 |
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182,149 |
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293,406 |
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2,846,066 |
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Total revenue
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58,847,673 |
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2,679,647 |
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7,155,207 |
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16,912,166 |
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85,594,693 |
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Cost of revenue
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Project personnel costs
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26,072,516 |
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1,784,907 |
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4,553,303 |
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11,144,677 |
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43,555,403 |
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Software costs
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11,341,145 |
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11,341,145 |
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Reimbursable expenses
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2,347,223 |
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12,010 |
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182,149 |
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293,406 |
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2,834,788 |
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Other project related costs
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267,416 |
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1,543,441 |
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1,810,857 |
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Cost of revenue
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40,028,300 |
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1,796,917 |
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4,735,452 |
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12,981,524 |
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59,542,193 |
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Gross margin
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18,819,373 |
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882,730 |
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2,419,755 |
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3,930,642 |
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26,052,500 |
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Selling, general and administrative
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11,067,792 |
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636,939 |
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2,411,626 |
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4,203,919 |
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18,320,276 |
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Depreciation
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512,076 |
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10,336 |
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103,551 |
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83,258 |
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709,221 |
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Intangibles amortization
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696,420 |
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738,542 |
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Note 3 |
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1,434,962 |
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Income (loss) from operations
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6,543,085 |
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235,455 |
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(95,422 |
) |
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(356,535 |
) |
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(738,542 |
) |
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5,588,041 |
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Interest income (expense), net
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(134,714 |
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9,213 |
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(49,823 |
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(81,983 |
) |
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(55,177 |
) |
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Note 5 |
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(312,484 |
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Change in fair value in redeemable member units
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418,232 |
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(418,232 |
) |
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Note 8 |
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Other income (expense)
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32,586 |
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|
924 |
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(383 |
) |
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4,000 |
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37,127 |
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Income (loss) before income taxes
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6,440,957 |
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245,592 |
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(145,628 |
) |
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(16,286 |
) |
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(1,211,951 |
) |
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5,312,684 |
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(Provision) benefit for income taxes
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(2,527,669 |
) |
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440,026 |
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Note 6 |
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(2,087,643 |
) |
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Net income (loss)
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$ |
3,913,288 |
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$ |
245,592 |
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$ |
(145,628 |
) |
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$ |
(16,286 |
) |
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$ |
(771,925 |
) |
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$ |
3,225,041 |
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|
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|
|
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Accretion of dividends on preferred stock
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|
|
|
|
|
|
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(589,257 |
) |
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|
589,257 |
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Note 7 |
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Net income (loss) available to common stockholders
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$ |
3,913,288 |
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$ |
245,592 |
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$ |
(734,885 |
) |
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$ |
(16,286 |
) |
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$ |
(771,925 |
) |
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$ |
3,225,041 |
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Net income per share:
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Basic
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$ |
0.22 |
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$ |
0.16 |
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Diluted
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$ |
0.19 |
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$ |
0.14 |
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Shares used in computing net income per share:
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Basic
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17,648,575 |
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|
425,327 |
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|
540,901 |
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|
1,147,413 |
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|
452,604 |
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Note 4 |
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20,214,820 |
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Diluted
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|
20,680,507 |
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|
425,327 |
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|
540,901 |
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|
1,147,413 |
|
|
|
537,071 |
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Note 4 |
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23,331,219 |
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F-4
PERFICIENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Basis of presentation
The accompanying unaudited pro forma statement of operations
presents the pro forma effects of the Genisys, Meritage and
ZettaWorks acquisitions as though the acquisitions occurred on
January 1, 2004.
ZettaWorks
LLC
The Company has recorded total consideration of approximately
$11.4 million, including approximately $0.7 million in
transaction costs for the ZettaWorks acquisition. The
acquisition was completed on December 20, 2004. The
following table shows the components of total consideration:
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The consideration paid is approximately as follows:
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Cash
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$ |
2,900,000 |
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Common stock (1,193,179 shares at $6.53 per share)
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|
7,800,000 |
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Acquisition costs
|
|
|
700,000 |
|
|
|
|
|
Total consideration
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$ |
11,400,000 |
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|
In accordance with SFAS 141, Business Combinations,
the total purchase consideration of approximately
$11.4 million, including transaction costs of approximately
$0.7 million, has been preliminarily allocated to the
assets acquired and liabilities assumed, including identifiable
intangible assets, based on their respective fair values at the
date of acquisition, with excess purchase consideration
allocated to goodwill. Such allocation resulted in goodwill of
approximately $8.1 million. Goodwill is expected to be
deductible for income tax purposes.
Meritage
Technologies, Inc.
The Company has recorded total consideration of approximately
$10.4 million, including approximately $0.9 million in
transaction costs for the Meritage acquisition. The acquisition
was completed on June 18, 2004.
The following table shows the components of total consideration:
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The consideration paid is approximately as follows:
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Cash
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$ |
2,900,000 |
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Common stock (1,168,219 shares at $3.59 per share)
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4,200,000 |
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Acquisition costs
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|
900,000 |
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Debt assumed
|
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|
2,400,000 |
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Total consideration
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$ |
10,400,000 |
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In accordance with SFAS 141, Business Combinations,
the total purchase consideration of approximately
$10.4 million, including transaction costs of approximately
$0.9 million, has been preliminarily allocated to the
assets acquired and liabilities assumed, including identifiable
intangible assets, based on their respective fair values at the
date of acquisition, with excess purchase consideration
allocated to goodwill. Such allocation resulted in goodwill of
approximately $7.4 million. The Company has yet to finalize
the purchase price allocation pending resolution of certain
contingent liabilities. Management expects to finalize the
purchase price allocation within twelve months from acquisition.
Goodwill is assigned at the enterprise level and not expected to
be deductible for income tax purposes.
F-5
PERFICIENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
Genisys
Consulting, Inc.
The Company has recorded total consideration of approximately
$8.8 million, including approximately $0.5 million in
transaction costs for the Genisys acquisition. This
consideration has been allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed
according to their respective fair values, with the excess
purchase consideration being allocated to goodwill at the
closing of the transaction. The acquisition was completed on
April 2, 2004.
The following table shows the components of total consideration:
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The consideration paid is as follows:
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Cash
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$ |
1,500,000 |
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Common stock (1,687,439 shares at $3.77 per share)
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6,400,000 |
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Stock options
|
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|
400,000 |
|
Acquisition costs
|
|
|
500,000 |
|
|
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|
|
Total consideration
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$ |
8,800,000 |
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In accordance with SFAS 141, Business Combinations,
the total purchase consideration of approximately
$8.8 million, including transaction costs of approximately
$0.5 million, has been allocated to the assets acquired and
liabilities assumed, including identifiable intangible assets,
based on their respective fair values at the date of
acquisition. Such allocation resulted in goodwill of
approximately $7.4 million. Goodwill is assigned at the
enterprise level and not expected to be deductible for income
tax purposes.
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Note 2 |
Purchase Price Allocations |
ZettaWorks
LLC
The accompanying unaudited condensed consolidated pro forma
income statement reflects the allocation of the purchase price
based on the estimated fair value of the assets acquired and
liabilities assumed. The preliminary allocation of the purchase
price is based on a preliminary evaluation of tangible and
intangible assets acquired and liabilities assumed. The fair
values of the intangible assets acquired are based on
managements estimate with assistance from an independent
appraisal. The excess of purchase price over the fair value of
net assets acquired (goodwill) reflects the benefits from
expansion of the Companys existing line of business and
expected benefits resulting from consolidation and economies of
scale.
F-6
PERFICIENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
|
|
|
|
|
Non-compete (5 year useful life)
|
|
$ |
100,000 |
|
Revenue backlog (1 year useful life)
|
|
|
200,000 |
|
Customer relationships (5 year useful life)
|
|
|
1,100,000 |
|
|
|
|
|
Total intangible assets
|
|
|
1,400,000 |
|
Goodwill
|
|
|
8,100,000 |
|
|
|
|
|
Total intangible assets acquired
|
|
|
9,500,000 |
|
Add fair value of net tangible assets in excess of liabilities
acquired, which approximates book value
|
|
|
1,900,000 |
|
|
|
|
|
Net assets acquired
|
|
$ |
11,400,000 |
|
|
|
|
|
The consideration paid is approximately as follows:
|
|
|
|
|
Cash
|
|
$ |
2,900,000 |
|
Common stock
|
|
|
7,800,000 |
|
Acquisition costs
|
|
|
700,000 |
|
|
|
|
|
Total consideration
|
|
$ |
11,400,000 |
|
|
|
|
|
The Company believes that the intangible assets acquired from
ZettaWorks have useful lives of one to five years. In addition,
the Company intends to continue to expand the combined
companys existing lines of business, and take advantage of
synergies that exist between the Company and ZettaWorks to
further strengthen existing lines of business. The Company
believes that it will benefit from the acquisition for a period
of at least five years and, therefore, considers the
amortization periods appropriate. Using this information, the
Company has made an allocation of the purchase consideration,
including allocation to tangible assets and liabilities,
identifiable intangible assets and goodwill.
Meritage
Technologies, Inc.
The accompanying unaudited condensed consolidated pro forma
income statement reflects the allocation of the purchase price
based on the fair value of the assets acquired and liabilities
assumed. The preliminary allocation of the purchase price is
based on a preliminary evaluation of tangible and intangible
assets acquired and liabilities assumed. The fair values of the
intangible assets acquired are based on an independent
appraisal. The excess of purchase price over the fair value of
net assets acquired reflects the benefits from expansion of the
Companys existing line of business and expected benefits
resulting from consolidation and economies of scale.
F-7
PERFICIENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
|
|
|
|
|
Non-compete (5 year useful life)
|
|
$ |
1,500,000 |
|
Customer relationships (5 year useful life)
|
|
|
300,000 |
|
|
|
|
|
Total intangible assets
|
|
|
1,800,000 |
|
Goodwill
|
|
|
7,400,000 |
|
|
|
|
|
Total assets acquired
|
|
|
9,200,000 |
|
Add fair value of net tangible assets in excess of liabilities
acquired, which approximately book value
|
|
|
1,200,000 |
|
|
|
|
|
Net assets acquired
|
|
$ |
10,400,000 |
|
|
|
|
|
The consideration paid is approximately as follows:
|
|
|
|
|
Cash
|
|
$ |
2,900,000 |
|
Liabilities assumed
|
|
|
2,400,000 |
|
Common stock
|
|
|
4,200,000 |
|
Acquisition costs
|
|
|
900,000 |
|
|
|
|
|
Total consideration
|
|
$ |
10,400,000 |
|
|
|
|
|
The Company believes that the intangible assets acquired from
Meritage have useful lives of five years. In addition, the
Company intends to continue to expand the combined
companys existing lines of business, and take advantage of
synergies that exist between the Company and Meritage to further
strengthen existing lines of business. The Company believes that
it will benefit from the acquisition for a period of at least
five years and, therefore, considers the amortization periods
appropriate. Using this information, the Company has made an
allocation of the purchase consideration, including allocation
to tangible assets and liabilities, identifiable intangible
assets and goodwill.
Genisys Consulting, Inc.
The accompanying unaudited condensed consolidated pro forma
income statement reflects the allocation of the purchase price
based on the fair value of the assets acquired and liabilities
assumed. The allocation of the purchase price is based on an
evaluation of tangible and intangible assets acquired and
liabilities assumed. The fair values of the intangible assets
acquired are based on an independent appraisal. The excess of
purchase price over the fair value of net assets acquired
reflects the benefits from expansion of the Companys
existing line of business and expected benefits resulting from
consolidation and economies of scale.
F-8
PERFICIENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
|
|
|
|
|
Customer Relationships (8 year useful life)
|
|
$ |
1,100,000 |
|
Non-compete (5 year useful life)
|
|
|
350,000 |
|
Backlog (9 month useful life)
|
|
|
200,000 |
|
|
|
|
|
Total intangible assets
|
|
|
1,650,000 |
|
Goodwill
|
|
|
7,450,000 |
|
|
|
|
|
Total assets acquired
|
|
|
9,100,000 |
|
Less fair value of net tangible assets in excess of liabilities
acquired, which approximates book value
|
|
|
(300,000 |
) |
|
|
|
|
Net assets acquired
|
|
$ |
8,800,000 |
|
|
|
|
|
The consideration paid is as follows:
|
|
|
|
|
Cash
|
|
$ |
1,500,000 |
|
Common stock
|
|
|
6,400,000 |
|
Stock options
|
|
|
400,000 |
|
Acquisition costs
|
|
|
500,000 |
|
|
|
|
|
Total consideration
|
|
$ |
8,800,000 |
|
|
|
|
|
Based on an independent appraisal, the Company believes that the
intangible assets acquired from Genisys have useful lives of
nine months to eight years. In addition, the Company intends to
continue to expand the combined companys existing lines of
business, and take advantage of synergies that exist between the
Company and Genisys to further strengthen existing lines of
business. The Company believes that it will benefit from the
acquisition for a period of at least eight years and, therefore,
considers the amortization periods appropriate. Using this
information, the Company has made an allocation of the purchase
consideration, including allocation to tangible assets and
liabilities, identifiable intangible assets and goodwill.
The preceding unaudited pro forma condensed combined statement
of operations does not include any pro forma adjustments for the
following:
|
|
|
|
|
Any operating efficiencies and cost savings that may be achieved
with respect to the combined companies. As a result, these pro
forma historical results are not indicative or predictive of
future periods. |
|
|
|
The combined companies incurred integration-related expenses as
a result of the elimination of duplicate facilities and
functions, operational realignment and related workforce
reductions. Such costs related to the acquired companies were
recognized as a liability assumed as of the acquisition date,
resulting in additional goodwill, while the Companys
related costs are recognized as an expense through the
statements of operations. |
F-9
PERFICIENT, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
|
|
|
|
Note 3 |
Amortization of acquired intangibles is based on the estimated
economic lives as outlined in Note 2 above. |
|
|
Note 4 |
Pro forma weighted average shares includes 800,000 shares
of common stock issued by the Company during second quarter to
raise proceeds for the acquisition of Meritage, and proceeds
from the exercise of 550,000 warrants to fund the acquisitions. |
|
|
Note 5 |
The Company borrowed to finance these acquisitions. The pro
forma adjustment reflects the debt and the incremental interest
on the debt borrowed to finance these acquisitions. |
|
|
Note 6 |
Tax effects on pro forma income (loss) before income taxes. |
|
|
Note 7 |
Redeemable Preferred Stock and related obligations on accretion
of dividends were not assumed by the Company as part of the
acquisition. |
|
|
Note 8 |
To record the elimination of redeemable members units and
changes in the values of those units which were not acquired by
the Company. |
F-10