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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended: March 31, 2004 Commission File Number 000-21685
INTELIDATA TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 54-1820617
(State of Incorporation) (I.R.S. Employer Identification Number)
11600 Sunrise Valley Drive, Suite 100, Reston, VA 20191
(Address of Principal Executive Offices)
(703) 259-3000
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes X No
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The number of shares of the registrant's Common Stock outstanding on March 31,
2004 was 51,293,818.
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INTELIDATA TECHNOLOGIES CORPORATION
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets
March 31, 2004 and December 31, 2003 ............................... 3
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2004 and 2003 ......................... 4
Condensed Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 2004................................... 5
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2004 and 2003 ......................... 6
Notes to Condensed Consolidated Financial Statements ............... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..........................................11
Item 3. Quantitative and Qualitative Disclosures About Market Risk .........18
Item 4. Controls and Procedures ............................................18
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ...................................19
SIGNATURE ..................................................................20
PART I: FINANCIAL INFORMATION
- -----------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------------
INTELIDATA TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2004 AND DECEMBER 31, 2003
(in thousands, except share data; unaudited)
2004 2003
------------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,761 $ 7,603
Accounts receivable, net 2,074 2,890
Other receivables 129 180
Prepaid expenses and other current assets 552 625
------------ ------------
Total current assets 9,516 11,298
NONCURRENT ASSETS
Property and equipment, net 1,371 1,529
Goodwill, net 26,238 26,238
Intangible asset, net 4,880 5,060
Other assets 211 211
------------ ------------
TOTAL ASSETS $ 42,216 $ 44,336
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,705 $ 1,531
Accrued expenses 1,037 1,599
Deferred revenues 1,167 1,351
Accrued rent 344 364
Net liabilities of discontinued operations 45 45
------------ ------------
TOTAL CURRENT LIABILITIES 4,298 4,890
Accrued rent 302 380
Net liabilities of discontinued operations 28 75
------------ ------------
TOTAL LIABILITIES 4,628 5,345
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; authorized 5,000,000 shares;
no shares issued and outstanding -- --
Common stock, $0.001 par value; authorized 100,000,000 shares;
issued 52,129,000 shares in 2004 and 52,065,000 shares in 2003;
outstanding 51,294,000 shares in 2004 and 51,231,000 shares in 2003 52 52
Additional paid-in capital 307,037 306,963
Treasury stock, at cost: 835,000 shares in 2004 and 834,000 shares in 2003 (2,548) (2,546)
Deferred compensation (207) (228)
Accumulated deficit (266,746) (265,250)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 37,588 38,991
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 42,216 $ 44,336
============ ============
See accompanying notes to condensed consolidated financial statements.
INTELIDATA TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(in thousands, except per share data; unaudited)
2004 2003
------------- --------------
Revenues
Software $ -- $ 343
Consulting services, recurring and termination fees 3,592 5,282
------------- --------------
Total revenues 3,592 5,625
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Cost of revenues
Software -- --
Consulting services, recurring and termination fees 1,780 1,934
------------- --------------
Total cost of revenues 1,780 1,934
------------- --------------
Gross profit 1,812 3,691
------------- --------------
Operating expenses
General and administrative 1,551 2,089
Sales and marketing 315 393
Research and development 1,306 1,147
Amortization of intangible asset 180 180
------------- --------------
Total operating expenses 3,352 3,809
------------- --------------
Operating loss (1,540) (118)
Other income (expenses), net 44 (29)
------------- ---------------
Loss before income taxes (1,496) (147)
Provision for income taxes -- --
------------- ---------------
Net loss $ (1,496) $ (147)
============== ==============
Basic and diluted earnings (loss) per common share $ (0.03) $ (0.00)
============== =============
Basic and diluted weighted-average common shares outstanding 51,127 48,853
============= ==============
See accompanying notes to condensed consolidated financial statements.
6
INTELIDATA TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2004
(in thousands; unaudited)
Additional
Common Stock Paid-in Treasury Deferred Accumulated
-------------------------
Shares Amount Capital Stock Compensation Deficit
------------ ------------ -------------- ----------- -------------- ----------------
Balance at January 1, 2004 52,065 $ 52 $ 306,963 $ (2,546) $ (228) $ (265,250)
Issuances of common stock:
Exercise of stock options 44 - 34 - - -
Issuances of restricted stock 20 - 40 - (40) -
Cancellations of restricted stock - - - - - -
Purchase of treasury stock, at cost - - - (2) - -
Amortization of deferred compensation - - - - 61 -
Net loss - - - - - (1,496)
Comprehensive loss
------------ ------------ -------------- ----------- -------------- ----------------
Balance at March 31, 2004 52,129 $ 52 $ 307,037 $ (2,548) $ (207) $ (266,746)
============ ============ ============== =========== ============== ================
Comprehensive
Loss Total
--------------- ------------
Balance at January 1, 2004 $ 38,991
Issuances of common stock:
Exercise of stock options 34
Issuances of restricted stock -
Cancellations of restricted stock -
Purchase of treasury stock, at cost (2)
Amortization of deferred compensation 61
Net loss $ (1,496) (1,496)
--------------
Comprehensive loss $ (1,496)
==========
------------
Balance at March 31, 2004 $ 37,588
============
See accompanying notes to condensed consolidated financial statements.
INTELIDATA TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(in thousands; unaudited)
2004 2003
------------- -----------
Cash flows from operating activities
Net loss from continuing operations $ (1,496) $ (147)
Adjustments to reconcile loss from continuing operations
to net cash used in operating activities of continuing operations:
Unrealized loss on Sybase warrants -- 9
Amortization of intangible asset 180 180
Depreciation and amortization 177 389
Deferred compensation expense 61 53
Net loss on disposal of property and equipment -- 137
Changes in certain assets and liabilities:
Accounts receivable 816 (729)
Prepaid expenses and other current assets 124 (4)
Accounts payable 174 354
Accrued expenses and accrued rent (660) (192)
Deferred revenue (184) (209)
----------- ----------
Net cash used in operating activities of
continuing operations (808) (159)
Net cash used in discontinued operations (47) (28)
----------- -----------
Net cash used in operating activities (855) (187)
----------- ----------
Cash flows from investing activities
Purchases of property and equipment (19) (24)
----------- ----------
Net cash used in investing activities (19) (24)
----------- ----------
Cash flows from financing activities
Proceeds from issuance of common stock 34 --
Payments to acquire treasury stock (2) --
----------- ----------
Net cash provided by financing activities 32 --
----------- ----------
Decrease in cash and cash equivalents (842) (211)
Cash and cash equivalents, beginning of period 7,603 5,674
----------- ----------
Cash and cash equivalents, end of period $ 6,761 $ 5,463
=========== ==========
See accompanying notes to condensed consolidated financial statements.
INTELIDATA TECHNOLOGIES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(1) Basis of Presentation
The condensed consolidated balance sheet of InteliData Technologies
Corporation ("InteliData" or the "Company") as of March 31, 2004, the related
condensed consolidated statements of operations and cash flows for the three
month periods ended March 31, 2004 and 2003, and the related condensed
consolidated statement of changes in stockholders' equity for the three-month
period ended March 31, 2004 presented in this Form 10-Q are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consist only of normal
recurring items. The condensed consolidated balance sheet as of December 31,
2003 was derived from the Company's audited December 31, 2003 balance sheet.
Interim results are not necessarily indicative of results for a full year.
Certain amounts in the prior periods have been reclassified to conform to the
current period presentation.
The condensed consolidated financial statements and notes are presented as
required by Form 10-Q, and do not contain certain information included in the
Company's annual audited financial statements and notes. These financial
statements should be read in conjunction with the annual audited financial
statements of the Company and the notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in the Form 10-K for the fiscal year ended December 31, 2003.
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries after elimination
of all material intercompany balances and transactions. Certain
reclassifications have been made to the prior year financial statements to
conform to the 2004 financial statement presentation.
(b) Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the period. Estimates include, but are not
limited to, allowance for doubtful accounts, costs of environmental remediation
for real property previously sold, depreciation of fixed assets, valuation of
intangible assets which include goodwill, provision for discontinued operations,
and project plans for the completion and delivery of certain solutions. These
accounting estimates are based on information currently available. Actual
results could differ from those estimates and in some cases the actual results
could vary materially from the estimates.
(c) Revenue Recognition - The Company supplies online banking and bill payment
software to financial institutions ("FI's"). The Company's revenues associated
with integrated solutions that bundle software products with customization,
installation and training services are recognized using the percentage of
completion method of accounting based on cost incurred as compared to estimated
costs at completion.
The Company enters into contracts where the delivered software may not
require significant customization. Upon delivery, the Company either recognizes
revenue ratably over the contract period for contracts where vendor specific
objective evidence ("VSOE") of fair value for post contract customer support
("PCS") does not exist or recognizes revenue in full where VSOE of fair value
for PCS does exist.
The Company also enters into multiple element arrangements. Elements
typically include software, consulting, implementation and PCS. PCS contracts
generally require the Company to provide technical support and unspecified,
readily available software updates and upgrades to customers. Revenue from these
multiple element arrangements is recognized when there is persuasive evidence of
an arrangement and delivery to the customer has occurred, the fee is fixed and
determinable, and collectibility is considered probable. Advance
payments are recorded as deferred revenue until the products are shipped,
services are delivered and all obligations are met. Currently, the Company does
not have VSOE of fair value for some of the elements within its multiple element
arrangements. Therefore, all revenue under such arrangements is recognized
ratably over the term of the PCS contract. Revenue from transactional services,
which includes hosting and application services provider ("ASP") services, is
recognized as transactions are processed.
Emerging Issues Task Force Abstract Issue No. 00-3, Application of AICPA
Statement of Position 97-2 to Arrangements that Include the Right to Use
Software Stored on Another Entity's Hardware ("EITF 00-3"), provides guidance in
determining whether or not the provisions of Statement of Position No. 97-2,
Software Revenue Recognition ("SOP 97-2"), should be applied to hosting
arrangements. The Company has some contracts where the customers operate
software in an ASP environment. The customer may not take possession of the
software without incurring significant transition and infrastructure costs, as
well as potential payments of fees to the Company for the termination of such
arrangements. In cases where the customer has not licensed software from
InteliData, the customer must also purchase a license prior to having the right
to use the software in its own operating environment, in addition to the
aforementioned fees. In these situations, the Company applies the guidance under
EITF 00-3 and the Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, and recognizes the revenue associated with the license
and/or implementation fees ratably over the initial term of the contract.
Additionally, based on the EITF 00-3 guidance, the Company concluded that
SOP 97-2 should not be applied to certain of its software hosting contracts.
Accordingly, the related revenues for license and professional services were
recognized under the percentage of completion method. In addition to developing
and delivering the solution, the Company is entitled to use fees based on the
number of users and transactions. These use-based fees are earned based on the
monthly user counts and as transactions are processed.
(d) Recent Accounting Pronouncements - In May 2003, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity ("SFAS 150"), which requires that
an issuer classify financial instruments that are within the scope of SFAS 150
as a liability. Under prior guidance, these same instruments would be classified
as equity. SFAS 150 is effective for all financial instruments entered into or
modified after May 31, 2003. Otherwise, it is effective on July 1, 2003. The
adoption of SFAS 150 did not have a material effect on our financial position,
results of operations, or cash flows.
In May 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities ("SFAS 149"), which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149
is effective for contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. The adoption of SFAS 149
did not have a material impact on our financial position, results of operations,
or cash flows.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of FAS 123 ("SFAS 148").
SFAS 148 amends SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS
123"), to provide alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee compensation. It also amends the disclosure provisions of SFAS 123 to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. SFAS 148 also amends Accounting Principles Board Opinion No. 28,
Interim Financial Reporting, to require disclosure about those effects in
interim financial information. SFAS 148 is effective for annual and interim
periods beginning after December 15, 2002. As the Company has elected not to
change to the fair value based method of accounting for stock-based employee
compensation, SFAS 148 did not have any impact on our financial position,
results of operations, or cash flows.
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities (including Certain Costs Incurred in a
Restructuring) ("SFAS 146"), which supersedes Emerging Issues Task Force Issue
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity ("EITF 94-3"). SFAS 146 requires recognition of
a liability for costs associated with an exit or
disposal activity when the liability is incurred, rather than when the entity
commits to an exit plan under EITF 94-3. The provisions of SFAS 146 are
effective for exit or disposal activities that are initiated after September 30,
2002. As of March 31, 2003, the Company ceased using one of its leased spaces at
its offices in Reston, Virginia. The remaining obligation on this lease was
approximately $1,080,000 through December 31, 2006. In accordance with SFAS 146,
the Company estimated the fair value of net sublease rent to be approximately
$465,000 over the remaining term. Accordingly, the Company recorded an expense
of $625,000 and a corresponding liability as of March 31, 2003. As of May 1,
2003, the Company has a subtenant for this space for the majority of the
remaining lease term and the actual results of net sublease rent could differ
from the above estimates. As of March 31, 2004, the estimated remaining
liability was approximately $402,000.
(e) Goodwill and Other Intangible Assets - In June 2001, the FASB issued SFAS
No. 141, Business Combinations ("SFAS 141"), and SFAS No. 142, Goodwill and
Other Intangible Assets ("SFAS 142"). SFAS 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting, and broadens the criteria for recording intangible assets separate
from goodwill. SFAS 142 requires the use of an amortization and non-amortization
approach to account for certain intangibles and purchased goodwill. Under a
non-amortization approach, goodwill and certain intangibles are not to be
amortized into results of operations, but instead would be reviewed for
impairment and written down and charged to results of operations only in the
periods in which the recorded value of goodwill and certain intangibles is more
than its fair value. The amortization and non-amortization provisions of SFAS
142 are to be applied to all goodwill and intangible assets acquired after June
30, 2001. The provisions of each statement that apply to goodwill and intangible
assets acquired prior to June 30, 2001 was adopted by the Company on January 1,
2002.
As of January 1, 2002, in accordance with SFAS 142, the Company ceased
recognizing amortization expense on goodwill and the assembled workforce
intangible asset, and the assembled workforce intangible asset was combined with
goodwill for financial accounting and reporting. Accordingly, the goodwill and
intangible asset (which is subject to amortization) consisted of the following
components (in thousands):
As of As of
March 31, 2004 December 31, 2003
-------------- -----------------
Goodwill $ 26,238 $ 26,238
============== =================
Intangible asset, gross carrying amount $ 7,200 $ 7,200
Accumulated amortization (2,320) (2,140)
-------------- -----------------
Net intangible asset $ 4,880 $ 5,060
============== =================
In accordance with SFAS 142, the Company had six months from adoption (up
until June 30, 2002) to complete the initial test for impairment as of January
1, 2002, the adoption date of SFAS 142. In accordance with the transition
provisions of SFAS 142, the Company conducted the first step of the impairment
tests. The Company assessed the fair value of its only reporting unit by
considering its projected cash flows, comparable company valuations, and recent
purchase prices paid for entities within our industry. Given consideration of
these factors, the Company concluded that the fair value of the reporting unit
exceeded the carrying amount of its net assets. The Company is required to
perform reviews for impairment in future periods, at least annually, that may
result in future periodic write-downs. Tests for impairment between annual tests
may be required if events occur or circumstances change that would more likely
than not reduce the fair value of the net carrying amount. As of June 30, 2003,
the Company performed the required annual review for impairment using the same
approach and similar considerations as the initial test. As a result, the
Company concluded that the fair value of the reporting unit exceeds the carrying
amount of its net assets. As of March 31, 2004, the Company is not aware of such
events or circumstances that could indicate potential impairment.
(3) Discontinued Operations
As of March 31, 2004, the net liabilities of discontinued operations of
$73,000 relate to the telecommunications divisions. These liabilities relate to
the environmental clean up associated with prior tenants'
operations at InteliData's former New Milford, Connecticut property. In January
2000, InteliData sold the New Milford, Connecticut property and the building
located thereon, its only remaining asset in its discontinued operations of the
telecommunications division. In the context of this sale, InteliData agreed to
undertake limited remediation of the site in accordance with applicable state
and federal law. The subject site is not a listed federal or state Superfund
site and InteliData has not been named a "potentially responsible party" at the
site. The remediation plan agreed to with the purchaser allows InteliData to use
engineering and institutional controls (e.g., deed restrictions) to minimize the
extent and costs of the remediation. Further, at the time of the sale of the
facility, InteliData established a $200,000 escrow account from the proceeds of
the sale for certain investigation/remediation costs. As of March 31, 2004, this
escrow account balance was approximately $224,000, which would be paid out to
InteliData. Moreover, InteliData has obtained environmental insurance to pay for
remediation costs up to $6,600,000 in excess of a retained exposure limit of
$600,000. InteliData estimates its remaining liability at March 31, 2004 related
to this matter and other costs to be approximately $73,000 and has recorded a
liability for this amount.
The Company has engaged a legal firm and an environmental specialist firm
to represent it regarding this matter. The timing of the ultimate resolution of
this matter is estimated to be from two to four years under the Company's
proposed compliance plan, which involves a natural attenuation and periodic
compliance monitoring approach. Management does not believe that the resolution
of this matter will likely have a material adverse effect on the Company's
financial condition or results of operations.
In April 2004, the escrow account balance of approximately $224,000 was
released and paid to InteliData. The net liabilities of discontinued operations
continue to be consistent with the discussion above.
(4) Stockholders' Equity
During July 2003, the Company issued 1,431,364 shares of its common stock
pursuant to the exercise of warrants, as amended, by institutional investors who
participated in the Company's private placement of common stock in November and
December, 2001. The warrant exercise resulted in gross proceeds of approximately
$3,335,000. The placement agent in the transaction received approximately
$200,000 in commissions. All of the warrants that were issued as part of the
2001 private placement have now been exercised.
(5) Commitments and Contingencies
Purchase Obligations - The Company entered into multiple vendor agreements
for outsourced services as part of its ASP solution offering for certain Online
Banking and Payment Solutions clients. Some of these vendor agreements are
long-term (i.e., expire in April and May 2005) and commit the Company to
specified minimum charges during the terms of the contracts. These long-term
obligations are disclosed below. During 2003, several of the Company's clients
migrated from this ASP environment to an in-house solution utilizing
InteliData's licensed software. As a result, a possibility exists for future
losses due to the decrease in estimated future revenue streams when compared
with the Company's current contractual cost structure for outsourced services
within this ASP environment. Entering the second quarter of 2004, the projected
costs are estimated to exceed projected revenues by approximately $67,000 on a
monthly basis; this gap will fluctuate based on monthly activity.
In assessing potential future losses associated with the Company's ASP
business, the Company may include the possibility of new clients that would add
incremental revenue to this ASP environment. Additionally, the Company may have
the opportunity to restructure vendor contracts and decrease contractual charges
(i.e., extend the current contract with lower minimum charges or migrate to
different vendors). Management continues to assess both the potential for new
business prospects and the possibility of reducing the Company's costs through
renegotiation of existing agreements. In accordance with generally accepted
accounting principles, the Company is accounting for these contract costs as
they are incurred.
* * * * * *
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Results of Operations for the Three Months Ended March 31, 2004 and 2003
The following represents the results of operations for InteliData
Technologies Corporation for the three months ended March 31, 2004 and 2003.
Such information should be read in conjunction with the interim financial
statements and the notes thereto in Part I, Item 1 of this Quarterly Report.
Revenues
The Company generates revenues from each of its three product offerings -
Payment Solutions, Card Services, and Online Banking. Within these product
offerings, the Company obtains revenues from various sources - software license
fees, consulting services fees, use-based fees, maintenance fees, and other
fees. Software license fees include revenues generated from license sales.
Consulting services fees include revenues generated from professional services
rendered. Use-based fees include revenues generated from user accounts,
transactions, remittances and other related activities. Maintenance fees include
revenues generated from maintenance agreements for support services for licensed
software. Other fees are termination charges levied for early termination of
contracts.
Within revenues generated from Payment Solutions, consulting services will
fluctuate with the demand of services based on client internal projects as well
as new system implementations. Use-based fees will fluctuate based on the
addition of new clients and user adoption rates that translate into additional
users and additional transactions. Additionally, use-based revenues may decline
with departures of clients for other solutions and/or clients' migrating the
InteliData solution in-house through a license arrangement that may eliminate
user fees.
Within revenues generated from Card Services, consulting services will
fluctuate with the demand of services based on client internal projects as well
as new client implementations. Use-based fees will fluctuate based on the
addition of new clients and user adoption rates that translate into additional
users and additional transactions. Additionally, use-based revenues may increase
due to added functionalities or may decline with departures of clients for other
solutions.
Within revenues generated from Online Banking, use-based revenues will
fluctuate based on the addition of new clients and user adoption rates that
translate into additional users and additional transactions. However, use-based
revenues may decline with departures of clients for other solutions and/or
clients' migrating the InteliData solution in-house through a license
arrangement that may eliminate user fees.
The Company's first quarter revenues were $3,592,000 in 2004 compared to
$5,625,000 in 2003, a decrease of $2,033,000. The following table sets forth the
Company's sources of revenue for each of the three-month periods ended March 31,
2004, and 2003:
2004 2003
-------- --------
Payment Solutions
Software license $ - $ 160
Consulting services 266 641
Use-based 1,311 941
Maintenance 296 206
-------- --------
Subtotal 1,873 1,948
-------- --------
Card Services
Consulting services 93 88
Use-based 1,130 1,071
Other - 13
-------- --------
Subtotal 1,223 1,172
-------- --------
Online Banking
Software license - 183
Consulting services 57 389
Use-based 257 1,811
Maintenance 182 122
-------- --------
Subtotal 496 2,505
-------- --------
Total
Software license - 343
Consulting services 416 1,118
Use-based 2,698 3,823
Maintenance 478 328
Other - 13
-------- --------
Total $ 3,592 $ 5,625
======== ========
The first quarter revenues from Payment Solutions were $1,873,000 in 2004
compared to $1,948,000 in 2003, a decrease of $75,000. These revenues included
items related to the Company's billpay warehouse, funds transfer and certain OFX
solutions, as well as the billpay portions of the ASP offerings. Consulting
services fees decreased $375,000, while use-based fees increased $370,000
quarter over quarter. The decrease in consulting services fees was primarily due
to the completion of projects in 2003 and limited new projects in 2004, while
the increase in use-based fees was due to the growth from existing clients.
Software license fees decreased $160,000 because there were no software license
sales in 2004.
The first quarter revenues from Card Services were $1,223,000 in 2004
compared to $1,172,000 in 2003, an increase of $51,000. Consulting services fees
increased $5,000, use-based fees increased $59,000, while other fees decreased
$13,000 quarter over quarter. The increase in use-based fees was due to the
growth in users and transactions from existing clients. The $13,000 in other
fees in the first quarter of 2003 related to one-time early termination fees.
The first quarter revenues from Online Banking were $496,000 in 2004
compared to $2,505,000 in 2003, a decrease of $2,009,000. These revenues include
items related to the Company's Interpose(R) Web Banking, Interpose(R)
Transaction Engine, and certain OFX solutions, as well as the online banking
portions of the ASP offerings. The decrease was primarily attributable to the
$1,554,000 decrease in use-based fees. Three large customers who were operating
in the ASP environment during the first quarter of 2003 did not pay recurring
fees during 2004. In one instance, a bank that used the Company's online banking
platform based on older Home
Account Canopy(TM) Banking technology, converted to a competitor's product. Two
other banks paid the Company a one-time license fee in 2003 and moved the
InteliData software in-house in 2003, which resulted in a decrease to the
Company's monthly fees for hosting the software in an ASP arrangement. The
resulting decrease was partially offset by growth in user fees from existing
clients. Additionally, software license and consulting services fees decreased
$183,000 and $332,000, respectively. The decreases were primarily due to the
completion of projects in 2003 and fewer new projects in 2004.
Cost of Revenues and Gross Profit
The Company's cost of revenues decreased $154,000 to $1,780,000 in the
first quarter of 2004 from $1,934,000 in the first quarter of 2003. The decrease
was primarily due to decreases in cost of revenues associated with decreased
professional services. The cost structures to generate the revenues are bundled
together and cannot be broken out in the same manner as the revenues. Costs of
revenues include vendors for outsourced services and employees directly working
to generate revenues.
Overall gross profit margins decreased to 50% for the first quarter of 2004
from 66% for the first quarter of 2003. The decrease in gross profit margin was
attributable to decreases in software licenses, consulting services, and
use-based revenues. The Company's cost of revenues does not necessarily
fluctuate proportionately in relation to revenues as there are certain fixed
costs to maintain the current infrastructure. Accordingly, while revenues
declined by $2,033,000, cost of revenues declined by only $154,000. The Company
anticipates that gross profit margins may fluctuate in the future due to changes
in product mix and distribution, outsourcing activities associated with an ASP
business model, competitive pricing pressure, the introduction of new products,
and changes in volume.
The Company entered into multiple vendor agreements for outsourced services
as part of its ASP solution offering for certain Online Banking and Payment
Solutions clients. Some of these vendor agreements are long-term (i.e., expire
in April and May 2005) and commit the Company to specified minimum charges
during the terms of the contracts. During 2003, several of the Company's clients
migrated from this ASP environment to an in-house solution utilizing
InteliData's licensed software. As a result, a possibility exists for future
losses due to the decrease in estimated future revenue streams when compared
with the Company's current contractual cost structure for outsourced services
within this ASP environment. Entering the second quarter of 2004, the projected
costs are estimated to exceed projected revenues by approximately $67,000 on a
monthly basis; this gap will fluctuate based on monthly activity.
In assessing potential future losses associated with the Company's ASP
business, the Company may include the possibility of new clients that would add
incremental revenue to this ASP environment. Additionally, the Company may have
the opportunity to restructure vendor contracts and decrease contractual charges
(i.e., extend the current contract with lower minimum charges or migrate to
different vendors). Management continues to assess both the potential for new
business prospects and the possibility of reducing the Company's costs through
renegotiation of existing agreements. In accordance with generally accepted
accounting principles, the Company is accounting for these contract costs as
they are incurred. There can be no assurance that the Company will be successful
in mitigating these factors. In the event that new client revenues do not
materialize, user growth rates from existing clients do not meet expected
projections and/or the Company is not successful in its renegotiation efforts,
the Company may experience future period losses from the Company's ASP business,
which could have a material adverse impact on the Company's financial position,
results of operations, and cash flows.
General and Administrative
General and administrative expenses decreased $538,000 to $1,551,000 in the
first quarter of 2004 from $2,089,000 in the first quarter of 2003. The decrease
was primarily attributable to the Company's reduction of corporate and
administrative expenses that resulted from employee-related actions and
aggressive expense controls. The Company plans to continually assess its
operations to manage its expenses and infrastructures in light of anticipated
business levels.
Sales and Marketing
Sales and marketing expenses decreased $78,000 to $315,000 in the first
quarter of 2004 from $393,000 in the first quarter of 2003. This was primarily
attributable to employee-related actions, lower travel costs and a reduction in
tradeshow-related expenses. The Company plans to continually assess its
operations to manage its expenses and infrastructures in light of anticipated
business levels.
Research and Development
Research and development costs increased $159,000 to $1,306,000 in the
first quarter of 2004 from $1,147,000 in the first quarter of 2003. The increase
was primarily attributable to the Company's increased funding of research and
development efforts in Payment Solutions during the first quarter. The Company
plans to continually assess its operations to manage its expenses and
infrastructures in light of anticipated business levels.
In 2004, the Company expects to focus its research and development efforts
on its Payment Solutions product offerings. The development efforts for Online
Banking and Card Services products will likely be focused primarily on product
upgrades and product maintenance.
Amortization of Goodwill and Intangibles
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets ("SFAS 142"), requires the Company to not amortize goodwill
and certain intangibles into results of operations, but instead the Company
would review these assets for impairment. The assets would be written down and
impairment losses would be charged to results of operations only in the periods
in which the recorded values are determined to be more than their fair values.
The amortization of certain intangibles continued at an annualized rate of
$720,000. As of January 1, 2002, in accordance with SFAS 142, the Company ceased
recognizing amortization expense on goodwill and the assembled workforce
intangible asset, and the assembled workforce intangible asset was combined with
goodwill for financial accounting and reporting.
In accordance with SFAS 142, the Company had six months from adoption (up
until June 30, 2002) to complete the initial test for impairment as of January
1, 2002, the adoption date of SFAS 142. In accordance with the transition
provisions of SFAS No. 142, the Company conducted the first step of the
impairment tests. The Company assessed the fair value of its only reporting unit
by considering its projected cash flows, comparable company valuations, and
recent purchase prices paid for entities within our industry. Given
consideration of these factors, the Company concluded that the fair value of the
reporting unit exceeded the carrying amount of its net assets. The Company is
required to perform reviews for impairment in future periods, at least annually,
that may result in future periodic write-downs. Tests for impairment between
annual tests may be required if events occur or circumstances change that would
more likely than not reduce the fair value of the net carrying amount. As of
June 30, 2003, the Company performed the required annual review for impairment
using the same approach and similar consideration as the initial test. As a
result, the Company concluded that the fair value of the reporting unit exceeds
the carrying amount of its net assets. As of March 31, 2004, the Company is not
aware of such events or circumstances that could indicate potential impairment.
Other Income
Other income (expense), primarily rental receipts, interest income and
other expenses including state and local taxes, increased $73,000 to $44,000 in
the first quarter of 2004 from ($29,000) in the first quarter of 2003. The
increase is primarily attributable to sub-lease rental receipts supplemented by
increased interest income resulting from higher levels of average cash and cash
equivalents in 2004, as compared to 2003.
Weighted-Average Common Shares Outstanding and Basic and Diluted Loss Per Common
Share
The basic and diluted weighted-average common shares increased to
51,127,000 for the first quarter of 2004 compared to 48,853,000 for the first
quarter of 2003. The increase resulted primarily from stock awards to employees,
exercises of stock options, stock purchases under the Employee Stock Purchase
Plan, and exercises of warrants. During July 2003, the Company issued 1,431,364
shares of its common stock pursuant to the exercise of
warrants, as amended, by institutional investors who participated in the
Company's private placement of common stock in November and December, 2001.
Losses from continuing operations were $1,496,000 and $147,000 for the
three-month periods ended March 31, 2004 and 2003, respectively, while there was
no gain or loss from discontinued operations in either period. Net losses were
$1,496,000 and $147,000 for 2004 and 2003, respectively. As a result of the
foregoing, basic and diluted net loss per common share was $0.03 for the first
quarter of 2004 compared to a basic and diluted net loss per common share of
$0.00 for the first quarter of 2003.
Liquidity and Capital Resources
During the first three months of 2004, the Company's cash and cash
equivalents decreased by $842,000. At March 31, 2004, the Company had $6,761,000
in cash and cash equivalents, $5,218,000 of working capital with no long-term
debt, and $37,588,000 in stockholders' equity. The Company's principal needs for
cash in the first three months of 2004 were for funding operating losses and
changes in working capital. The Company had decreases in accounts receivable of
$816,000 for the three months ended March 31, 2004, and increases in accounts
payable of $174,000 for the same period.
The Company's cash requirements for operating activities in the first three
months of 2004 were financed primarily by cash and cash equivalents on hand.
Net cash used in investing activities in the first three months of 2004 was
$19,000 for the purchases of property and equipment.
Net cash provided by financing activities in the first three months of 2004
was $32,000 and consisted of $34,000 from the issuance of the company's common
stock through stock option exercises, offset by $2,000 related to payments made
to acquire treasury stock.
Based on the Company's current capital levels and its assumptions about
future operating results, the Company believes that it will have sufficient
resources to fund existing operating plans. The Company's achievement of its
operating plan remains predicated upon both existing and prospective customer
decisions to procure certain products and services in a timeframe consistent
with the operating plan assumptions. Historically, these decisions have not
evolved timely for varying reasons, including slower than expected market
demand, budgetary constraints, and internal product development and resource
initiatives. As such, the Company believes it would be able to adjust certain
expense structures, if necessary, to mitigate the potential impact that customer
delays would have on its capital levels. These opportunities include additional
reductions in selling, general and administrative expenditures, the potential of
consolidating certain operational activities, the ability to negotiate more
favorable terms associated with existing service provider contracts and the
elimination of certain marketing costs. However, if actual results differ
materially from current assumptions, the Company may not have sufficient capital
resources and may have to modify operating plans and/or seek additional capital
resources. If the Company engages in efforts to obtain additional capital, it
can make no assurances that these efforts will be successful or that the terms
of such funding would be beneficial to the common stockholders. Additionally,
the Company announced that it has engaged Wachovia Securities as its financial
advisor to help the Company assess a variety of strategic alternatives. The
engagement of Wachovia Securities will be focused on enhancing InteliData's
position in the electronic banking marketplace by exploring strategic
opportunities intended to enhance stockholder value. There can be no assurance
that any transaction will result from this effort.
Critical Accounting Policies
The following accounting policies are either ones that the Company
considers to be the most important to its financial position and results of
operations or ones that require the exercise of significant judgment and/or
estimates.
Revenue Recognition - The Company considers its revenue recognition policy
critical to the understanding of its business operations and results of
operations. The Company supplies online banking and bill payment software to
financial institutions ("FI's"). The Company's revenues associated with
integrated solutions that bundle software products with customization,
installation and training services are recognized using the percentage of
completion method of accounting.
The Company enters into contracts where the delivered software may not
require significant customization. Upon delivery, the Company either recognizes
revenue ratably over the contract period for contracts where vendor specific
objective evidence ("VSOE") of fair value for post contract customer support
("PCS") does not exist or recognizes revenue in full where VSOE of fair value
for PCS does exist.
The Company enters into multiple element arrangements. Elements typically
include software, consulting, implementation and PCS. PCS contracts generally
require the Company to provide technical support and unspecified readily
available software updates and upgrades to customers. Revenue from these
multiple element arrangements is recognized when there is persuasive evidence of
an arrangement and delivery to the customer has occurred, the fee is fixed and
determinable, and collectibility is considered probable. Advance payments are
recorded as deferred revenue until the products are shipped, services are
delivered and all obligations are met. Currently, the Company does not have VSOE
of fair value for some of the elements within its multiple element arrangements.
Therefore, all revenue under such arrangements is recognized ratably over the
term of the PCS contract. Revenue from transactional services, which includes
hosting and application services provider ("ASP") services, is recognized as
transactions are processed.
Emerging Issues Task Force Abstract Issue No. 00-3, Application of AICPA
Statement of Position 97-2 to Arrangements that Include the Right to Use
Software Stored on Another Entity's Hardware ("EITF 00-3"), provides guidance in
determining whether or not the provisions of Statement of Position No. 97-2,
Software Revenue Recognition ("SOP 97-2"), should be applied to hosting
arrangements. The Company has some contracts where the customers operate
software in an ASP environment. The customer may not take possession of the
software without incurring significant transition and infrastructure costs, as
well as potential payments of fees to the Company for the termination of such
arrangements. In cases where the customer has not licensed software from
InteliData, the customer must also purchase a license prior to having the right
to use the software in its own operating environment, in addition to the
aforementioned fees. In these situations, the Company applies the guidance under
EITF 00-3 and the Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, and recognizes the revenue associated with the license
and/or implementation fees ratably over the initial term of the contract.
Additionally, based on the EITF 00-3 guidance, the Company concluded that
SOP 97-2 should not be applied to certain of its software hosting contracts.
Accordingly, the related revenues for license and professional services were
recognized under the percentage of completion method. In addition to developing
and delivering the solution, the Company is entitled to use fees based on the
number of users and transactions. These use-based fees are earned based on the
monthly user counts and as transactions are processed.
Estimates at Completion - Revenues related to some of the Company's
contracts are recognized using the percentage of completion method of
accounting, which requires that we make estimates and judgments as to
anticipated project scope, timing and costs to complete the projects. The
completion of certain development efforts is critical for the Company to perform
on certain contracts. Delays in product implementation or new product
development at customer locations and product defects or errors could affect
estimates and judgments. Additionally, we may experience delays when
implementing our products at customer locations, and customers may be unable to
implement our products in the time frames and with the functionalities that they
expect or require. The accuracy of these estimates and judgments could affect
the Company's business, operations, cash flows and financial condition.
Allowance for Doubtful Accounts - Determination of our allowance for
doubtful accounts requires significant estimates. Financial instruments that
potentially subject the Company to credit risk consist principally of trade
receivables. The Company sells its products primarily to FI's in the United
States. The Company believes that the concentration of credit risk in its trade
receivables is substantially mitigated by the Company's on-going credit
evaluation process and the financial position of the FI's that are highly
regulated. The Company does not generally require collateral from customers. The
Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific customers, historical trends and other
information. As of March 31, 2004, the Company's top eight customers comprised
approximately 53% of the net accounts receivable balance.
A number of factors are considered in establishing the allowance, including
historical collection experience, the macro-economic environment, estimates of
forecasted write-offs, the aging of the accounts receivable portfolio, and
others. If the financial condition of our accounts receivable portfolio
deteriorates, additional allowances would be required.
Valuation of Goodwill and Intangible Assets - On an annual basis (as of
June 30th), the Company conducts a review of goodwill for impairment.
Additionally, we review our intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be
recoverable. The Company assesses the fair value of its only reporting unit by
considering its projected cash flows, comparable company valuations, and recent
purchase prices paid for entities within our industry. Given consideration of
these factors, we determine whether the fair value of the reporting unit exceeds
the carrying amount of our net assets. This review requires the Company to make
estimates of projected cash flows in order to determine if its assets are
impaired. We make significant assumptions and estimates in this process
regarding matters that are inherently uncertain, such as making revenue
projections, calculating remaining useful lives and assuming discount rates and
costs of capital. Reviews for impairment between annual reviews may be required
if events occur or circumstances change that would more likely than not reduce
the fair value of the net carrying amount. While we believe that our estimates
are reasonable, different assumptions regarding such cash flows (for example,
either based on varying costs of capital, changes in underlying economic
assumptions, or any resulting transaction from the aforementioned Wachovia
Securities effort) could materially affect our valuation.
Depreciation of Fixed Assets - The Company's business requires our
investment in office and computer equipment to facilitate certain research and
development activities and to support the operations in serving our customers.
We record these assets at cost and depreciate the assets over their estimated
useful lives. We periodically reassess the economic life of these elements and
make adjustments to these useful lives using, among others, historical
experience, capacity requirements, and assessments of new product and market
demands. When these factors indicate certain elements may not be useful for as
long as anticipated, we depreciate the remaining book value over the remaining
useful life. Further, the timing and deployment of any new technologies could
affect the estimated lives of our assets, which could have significant impacts
on results of operations in the future.
Recent Accounting Pronouncements - In May 2003, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity ("SFAS 150"), which requires that
an issuer classify financial instruments that are within the scope of SFAS 150
as a liability. Under prior guidance, these same instruments would be classified
as equity. SFAS 150 is effective for all financial instruments entered into or
modified after May 31, 2003. Otherwise, it is effective on July 1, 2003. The
adoption of SFAS 150 did not have a material effect on our financial position,
results of operations, or cash flows.
In May 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities ("SFAS 149"), which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149
is effective for contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. The adoption of SFAS 149
did not have a material impact on our financial position, results of operations,
or cash flows.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
The information contained in this report includes forward-looking
statements, the realization of which may be impacted by the factors discussed
below. The forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 (the "Act").
This report contains forward
looking statements that are subject to risks and uncertainties, including, but
not limited to, the uncertainty as to whether the Company will be successful in
consummating any financial or strategic transaction, our ability to continue
funding operating losses, our ability to develop, sell, deliver and implement
our payment solution products and services, some of which are largely unproven
in a production environment, to financial institution customers, our ability to
manage our expenses in line with anticipated business levels, the ability of the
Company to complete product implementations in required time frames and the
Company's ability to maintain customers and increase its recurring revenues
and/or reduce operating costs associated with its ASP business in order to make
this operation profitable, the Company's ability to retain key customers and to
increase revenues from existing customers, the impact of customers deconverting
from use of our products and services to the use of competitive products or
in-house solutions, the effect of planned customer migrations from outsourced
solutions to in-house solutions with a resulting loss of recurring revenue, the
impact of competitive products, pricing pressure, product demand and market
acceptance risks, pace of consumer acceptance of home banking and reliance on
the Company's bank clients to increase usage of Internet banking by their
customers, the effect of general economic conditions on the financial services
industry, mergers and acquisitions, risk of integration of the Company's
technology by large software companies, the ability of financial institution
customers to implement applications in the anticipated time frames or with the
anticipated features, functionality or benefits, reliance on key strategic
alliances and newly emerging technologies, the ability of the Company to
leverage its third party relationships into new business opportunities in the
electronic bill payment and presentment ("EBPP") market, the on-going viability
of the mainframe marketplace and demand for traditional mainframe products, the
ability to attract and retain key employees, the availability of cash for
long-term growth, product obsolescence, ability to reduce product costs,
fluctuations in operating results, delays in development of highly complex
products and other risks detailed from time to time in InteliData filings with
the Securities and Exchange Commission, including the risk factors disclosed in
the Company's Form 10-K for the fiscal year ended December 31, 2003. These risks
could cause the Company's actual results for 2004 and beyond to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, InteliData. The foregoing list of factors should not be construed as
exhaustive or as any admission regarding the adequacy of disclosures made by the
Company prior to the date hereof or the effectiveness of said Act. InteliData is
not under any obligation (and expressly disclaims an obligation) to update or
alter its forward-looking statements, whether as a result of new information or
otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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The Company currently has no long-term debt and is not currently engaged in
any transactions that involve foreign currency. The Company does not engage in
hedging activities.
ITEM 4. CONTROLS AND PROCEDURES
- -------------------------------------
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, the
Company carried out an evaluation, with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the Company's disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of
1934 as of the end of the period covered by this report. Based upon that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company (including
its consolidated subsidiaries) required to be included in the Company's periodic
SEC filings.
(b) CHANGE IN INTERNAL CONTROLS
There has been no change in the Company's internal control over financial
reporting during the quarter ended March 31, 2004 that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
PART II: OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------------
(a) EXHIBITS
10.5.5 Fourth Amendment to Employment Agreement between InteliData
Technologies Corporation and Alfred S. Dominick, Jr., dated January
5, 2004.
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) REPORTS ON FORM 8-K
The Company furnished a Current Report on Form 8-K (Item 12) to the
Securities and Exchange Commission on February 26, 2004, to report that
InteliData issued a press release announcing results of operations and financial
condition for the quarter ended December 31, 2003 (not incorporated by
reference).
* * * * * *
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on May 6, 2004.
INTELIDATA TECHNOLOGIES CORPORATION
By: /s/ Alfred S. Dominick, Jr.
-----------------------------------------
Alfred S. Dominick, Jr.
Chairman, Chief Executive Officer,
and Acting Chief Financial Officer