NOTE ON FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Statements in this report which are not purely historical facts or which necessarily depend upon future events, including statements about trends, uncertainties, hopes, beliefs, anticipations, expectations, plans, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. Forward-looking statements in this document include, among other things, statements about the proposed acquisition of Zix by OpenText, and the anticipated timing of various aspects of the proposed acquisition. Risks and uncertainties include, among other things, risks related to the satisfaction or waiver of the conditions to closing the proposed acquisition (including the failure to obtain necessary regulatory approvals) in the anticipated timeframe or at all, including uncertainties as to how many of Zix's stockholders will tender their shares in the tender offer and the possibility that the acquisition does not close; the possibility that competing offers may be received; risks related to obtaining the requisite consents to the acquisition, including the timing (including possible delays) and receipt of regulatory approvals from various governmental entities; risks and uncertainties related to how privacy and data security law mandates may affect demand for Zix's products, business disruptions, uncertainty and market instability stemming from the COVID-19 pandemic, or variants thereof, as well as governmental actions related thereto, and those risks additionally described in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2020. Any of these risk factors could have a material adverse effect on our business, financial condition or financial results and reduce the value of an investment in our securities. We may not succeed in addressing these and other risks associated with an investment in our securities, with our business and with our achieving any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. All forward-looking statements are based upon information available to us on the date the statements are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Overview ZixÂ® (the "Company," "we," "our," or "us") is a leading cloud provider of email security, productivity and compliance solutions. Trusted by the nation's most influential institutions in healthcare, finance and government, Zix delivers a superior experience and easy-to-use solutions for email encryption, data loss prevention ("DLP"), advanced threat protection, unified archiving and cloud data backup. As a leading provider of cloud-based cybersecurity, compliance, and productivity solutions for businesses of all sizes, we are focused on the protection of business communication, enabling our customers to better secure data and meet compliance needs. We serve organizations in many industries, with particular emphasis on the healthcare (including multiple major hospitals and several Blue Cross Blue Shieldplans), financial services (including several major U.S.Banks), and insurance and government (including the U.S. Securities and Exchange Commission(the "SEC")) sectors. Our email encryption and DLP capabilities enable the secure exchange of email that includes sensitive information. Through a comprehensive secure messaging service, called Email Encryption (formerly ZixEncrypt), we allow an enterprise to use policy-driven rules to determine which email messages should be sent securely or quarantined for review to comply with regulations or company-defined policies. The main differentiation for Email Encryption in the marketplace is our exceptional ease of use. The best example of this is our ability to provide transparent delivery of encrypted email. Most email encryption solutions are focused on the sender. They typically introduce an added burden on recipients, often requiring additional user authentication with the creation of a new user identity and password. We designed our solution to alleviate the recipient's burden by enabling the delivery of encrypted email automatically and transparently. Zix enables transparent delivery through (1) The Directory (formerly ZixDirectoryÂ®), an email encryption community which is designed to share identities of our tens of millions of members, (2) Zix's patented Best Method of DeliveryÂ®, which is designed to deliver email in the most secure, most convenient method possible for the recipient, and (3) policy-based encryption, which automatically encrypts and decrypts messages with sensitive content. Our Email Encryption also addresses a business's greatest source of data loss - corporate email- with an easy, straightforward DLP approach. By focusing strictly on the risks of email, Email Encryption simplifies DLP in comparison to other DLP solutions by decreasing complexity and cost, reducing deployment time and minimizing impact on customer resources and workflow. Our Email Encryption solution enables DLP capabilities for email by combining proven policy and content scanning capabilities with quarantine functionality. The quarantine system and its intuitive interface allow administrators to (1) easily define policies and create custom lexicons for quarantining email messages, (2) conveniently manage quarantined messages using flexible searching and filtering options, (3) release or delete individual or multiple quarantined messages with one click, (4) review reports that monitor quarantine activities and trends and (5) automate custom notifications informing employees of quarantined messages. 21 -------------------------------------------------------------------------------- In March 2017, Zix acquired Greenview Data, Inc.("Greenview"), an email security company. Zix's acquisition of Greenview addresses increasing buyer demand for email security bundles by adding advanced threat protection, antivirus, anti-spam and archiving capabilities to its industry-leading email encryption. Greenview was a good fit for Zix's business based on its employees' expertise in email security and its emphasis on customer success, which align with Zix's reputation for delivering industry-leading solutions and a superior experience. Through the acquisition of Greenview, Zix launched two new solutions in April 2017- ZixProtectSM and ZixArchiveSM. ZixProtect is now called Advanced Email Threat Protection while ZixArchive is now called Information Archive. Advanced Email Threat Protection defends organizations from zero-day malware, ransomware, phishing, CEO fraud, W-2 phishing attacks, spam and viruses in email with multi-layer filtering techniques. Accuracy in protecting organizations from email threats is increased further with automated traffic analysis, machine learning and real-time threat analysis. The solution is available as a cloud-based service in a variety of bundles. Information Archive is a low-cost, cloud-based email retention solution that easily enables user retrieval, compliance and eDiscovery. Available as a standalone or add-on solution for other products, Zix's Information Archive includes policy-based retention, automatic indexing and flexible search capabilities for audit and legal requirements. With on-demand access through the cloud, organizations can conveniently share messages with employees, auditors and outside consultants or legal counsel, as well as revoke access when needed. In April 2018, Zix acquired Erado, a unified archiving company. Erado strengthened Zix's comprehensive archiving solutions with unified archiving, supervision, security, and messaging solutions for customers that demand bundled services. Erado's long standing focus on helping its customers comply with FINRAand SECregulations helped further strengthen Zix's offerings for customers with compliance requirements. This acquisition also expanded Zix's cloud-based email archiving capabilities into more than 50 content channels, including social media, instant message, mobile, web, audio and video. On February 20, 2019, Zix acquired AppRiver, a leading provider of cloud-based cybersecurity solutions for Small and Medium Businesses ("SMB"). The combined company creates one of the leading cloud-based security solutions providers, particularly for the small and mid-size enterprise market. This acquisition further strengthened that alignment by bolstering our Advanced Threat Protection offerings, expanding our go-to-market channels, and providing a stronger cloud platform to drive even more value for our customers and partners. In addition, we now can directly offer Microsoft's substantial catalog of productivity and Microsoft Office 365 cloud email solutions.
November 5, 2020, Zix acquired CloudAlly, a pioneer of enterprise-grade, software-as-a-service (SaaS) cloud backup and recovery solutions. CloudAlly provides a secure cloud data backup solution for critical business information, including backup services for Microsoft O365 cloud email, Google applications, and Salesforce. Our business operations and service offerings are supported by the ZixData Centerâ¢, which is ISO 27001 certified, SOC2 accredited and SOC 3 certified for applicable services. The operations of the ZixData Center are independently audited annually to maintain ISO 27001 certification covering numerous categories and controls and AICPA SOC3 certification in the areas of security, confidentiality, integrity and availability. Auditors also produce a SOC2 report on the effectiveness of operational controls used over the audit period. Our company was incorporated as a corporation in Texasin 1988. Originally named Amtech Corporation, we changed our name to ZixItÂ® Corporation in 1999 when we entered the encrypted email market. In 2002, we became Zix Corporation, and in 2017, the Company rebranded to Zix.
Impacts of COVID-19
March 2020, the World Health Organizationdeclared the outbreak of a novel strain of the coronavirus ("COVID-19") to be a pandemic. The pandemic has resulted in significant, unpredictable, and rapidly changing impacts on the United Statesand global economies. The COVID-19 pandemic and government responses have included limiting the operations of non-essential businesses and may result in long-term harm or permanent closures impacting our customers and our vendors. While COVID-19 had a minimal impact to our first, second and third quarter 2021 financial results, Zix has taken steps to ensure the resilience of our company, while protecting the email security of our customers and the health of our employees, including the following actions:
â¢ Offer healthy email checks and evaluate other efficiency solutions
for our customers;
â¢ Work with partners and customers to provide more flexible billing
â¢ Initially, over 95% of our employees opted for remote working arrangements
then move towards a mainly hybrid approach to working methods
while maintaining the integrity of our data center operations and providing continued support for our customers; 22
â¢ Maintain effective governance and internal controls in remote work
â¢ Reduce the salaries and fees of the officers of our board of directors in 2020;
â¢ Implementation of a workforce reduction in 2020 and 2021, supplemented by
both voluntary and involuntary separation;
â¢ Slowdown in our hiring plans and reduction in planned trips and conferences
â¢ Continued review and adjustment of other operating expenses for
savings, including reduction of excess capacities in our network data centers; We have continued to provide our cloud email security, productivity and compliance solutions services to our customers and vendors during this ongoing pandemic. The full extent of the impact of the COVID-19 pandemic, or variants thereof, on the Company's operational and financial performance is currently uncertain and will depend on many factors outside the Company's control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, or variants thereof, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the impact of the pandemic and its variants on the global economy, demand for consumer products, and the labor market competition resulting in increased employee turnover. See the additional risk factor regarding COVID-19 included in Part I - Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended
December 31, 2020.
Critical accounting conventions and estimates
The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in
the United Statesrequires the Company's management to make estimates and assumptions that affect the amounts reported in the Company's condensed consolidated financial statements and accompanying notes. These estimates and assumptions take into account historical and forward-looking factors that the Company believes are reasonable, including but not limited to the potential impacts arising from COVID-19, or variants thereof, and public and private sector policies and initiatives aimed at reducing its transmission. As the extent and duration of the impacts of COVID-19, and variants thereof, remain unclear, the Company's estimates and assumptions may evolve as conditions change. Actual results could differ from these estimates and assumptions. Critical accounting policies and estimates are defined as those that are both most important to the portrayal of the Company's financial condition and results and require management's most subjective judgments. We describe our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the "Notes to Consolidated Financial Statements" included in our Annual Report on Form 10-K for the year ended December 31, 2020. We discuss our Critical Accounting Policies and Estimates in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2020. Results of Operations
Summary of operations for the third quarter of 2021
â¢ Revenue for the quarter ended
â¢ Gross margin for the quarter ended
(i.e. 44% of turnover), against
the comparable period in 2020.
â¢ Net loss for the quarter ended
compared with net loss of
$0.7 millionin the comparable period in 2020. â¢ Net loss attributable to common shareholders for the quarter ended
to common shareholders of
$3.0 millionin the comparable period in 2020. The Company's net loss attributable to common shareholders includes a
deemed and accrued dividend to preferred shareholders of
$2.3 million, for the three month periods ended September 30, 2021and 2020, respectively.
â¢ The net loss per diluted share was
2021, compared to the net loss per diluted share of
period in 2020.
â¢ Closing cash and cash equivalents were
$23.7 millionon September 30, 2020, and $21.4 millionon December 31, 2020. 23
â¢ Total billings for the quarter ended
September 30, 2021, were $61.6 million, compared with $54.6 millionfor the same period in 2020, representing a 13% increase.
â¢ The annual value of recurring revenue from our customer subscriptions to the
the same period in 2020, which represents an increase of
â¢ Net cash provided by operations during the nine months ended
operations for the same period in 2020, representing a
â¢ From the
Our company provides subscription services. The following table presents the quarter-to-quarter comparison of the Company’s revenues:
Three Months Ended 3-month Variance Nine Months ended 9-month Variance September 30, 2021 vs. 2020 September 30, 2021 vs. 2020 (in thousands) 2021 2020 $ % 2021 2020 $ % Revenues
$ 64,850 $ 54,840 $ 10,01018 % $ 187,694 $ 160,611 $ 27,08317 % Our revenue increase is the result of 14% and 12% growth in our core business in the three and nine months ended September 30, 2021, respectively, due to continued success in our subscription-based business model with both steady additions to the subscriber base and a high rate of existing customer renewals and the realization of previously contracted revenue in our backlog. Our CloudAlly business, acquired in November 2020, additionally contributed $2.1 millionand $7.0 millionin revenue to our three and nine months ended September 30, 2021, respectively. Additionally, with continued expansion into Europe, our German subsidiary, launched in the second quarter of 2021, contributed $92 thousandand $329 thousandof revenue in our three and nine months ended September 30, 2021, respectively. Annual Recurring Revenue We measure the health of our subscriber base by the growth of our Annual Recurring Revenue ("ARR"), which is defined as the aggregate annualized contract value attributable to recurring revenue contracts as of the end of the applicable reporting period. We calculate ARR by determining the annual or monthly revenue of subscription agreements that are active as of the end of the applicable period and multiplying by 1 or 12. ARR aids us in determining to what extent individual customer relationships, considered in the aggregate, are growing or declining in financial magnitude. ARR is summarized in the table below: Variance As of September 30, 2021 vs. 2020 (in thousands) 2021 2020 $ % Annual Recurring Revenue $ 262,813 $ 222,335 $ 40,47818 % Backlog Our end-user order backlog is comprised of contractually binding agreements that we expect to amortize into revenue as the services are performed. The timing of revenue is affected by both the length of time required to deploy a service and the length of the service contract. As of September 30, 2021, total backlog was $82.8 million, and we expect approximately 76% of the total backlog, or approximately $63.0 million, to be recognized as revenue during the next twelve months. As of September 30, 2021, the backlog was comprised of the following elements: $42.5 millionof deferred revenue that has been billed and paid, $12.9 millionbilled but unpaid, and approximately $27.4 millionof unbilled contracts. The backlog at September 30, 2021, was 3% lower than the $85.0 millionbacklog at the end of the third quarter 2020, and 1% lower than the ending backlog of $83.4 millionat December 31, 2020. Our decrease in backlog is the result of timing of our customer contracts and our continued shift toward a monthly subscription model. 24 --------------------------------------------------------------------------------
Cost of income
The following table sets forth the quarter-over-quarter comparison of the cost of revenues: Three Months Ended 3-month Variance Nine Months ended 9-month Variance September 30, 2021 vs. 2020 September 30, 2021 vs. 2020 (in thousands) 2021 2020 $ % 2021 2020 $ % Cost of revenues
$ 36,219 $ 27,928 $ 8,29130 % $ 103,961 $ 82,265 $ 21,69626 % Cost of revenues is comprised of costs related to operating and maintaining the ZixData Center, a field deployment team, customer service and support, Microsoft fees associated with the resale of Microsoft Office365 and hosted exchange products, and the amortization of Company-owned, customer-based computer appliances. The increases in 2021 compared to 2020 reflected in the table above result from our sales of Microsoft Office365 and hosted exchange products, which comprise 54% and 53% of total Company revenue earned in the three and nine months ended September 30, 2021, respectively.
Research and development costs
The following table presents the quarter-to-quarter comparison of our research and development expenses:
Three Months Ended 3-month Variance Nine Months ended 9-month Variance September 30, 2021 vs. 2020 September 30, 2021 vs. 2020 (in thousands) 2021 2020 $ % 2021 2020 $ % Research and development expenses
$ 6,429 $ 5,720 $ 709
$ 19,371 $ 16,926 $ 2,44514 % Research and development expenses consist primarily of salary, benefits, and stock-based compensation for our development staff, independent development contractor expenses, amortization of internally developed software, and other direct and indirect costs associated with enhancing our existing products and services and developing new products and services. The increase in 2021 compared to 2020 reflected in the table above resulted primarily from the amortization of previously capitalized internal use software due to project completions.
Sales and marketing costs
The following table shows the quarter-over-quarter comparison of our sales and marketing expenses:
Three Months Ended 3-month Variance Nine Months ended 9-month Variance September 30, 2021 vs. 2020 September 30, 2021 vs. 2020 (in thousands) 2021 2020 $ % 2021 2020 $ %
Sales and Marketing
$ 15,657 $ 13,489 $ 2,16816 % $ 46,225 $ 42,288 $ 3,9379 % Selling and marketing expenses consist primarily of salary, commissions, travel, stock-based compensation and employee benefits for selling and marketing personnel as well as costs associated with promotional activities and advertising. The increase in the three months ended September 30, 2021, compared to the same period in 2020, was due primarily to increases in stock-based compensation, higher commission expense, increased amortization of intangible customer assets related to our CloudAlly acquisition, and additional credit card fees attributable to increased monthly billings. The increase in the nine months ended September 30, 2021, compared to the same period in 2020, resulted primarily from increases in stock-based compensation, commission expense, credit card fees, and amortization of intangible customer assets.
General and administrative expenses
The following table shows the quarter-to-quarter comparison of our general and administrative expenses:
Three Months Ended 3-month Variance Nine Months ended 9-month Variance September 30, 2021 vs. 2020 September 30, 2021 vs. 2020 (in thousands) 2021 2020 $ % 2021 2020 $ %
general and administrative
$ 6,811 $ 5,324 $ 1,48728 % $ 19,931 $ 15,770 $ 4,16126 % 25
-------------------------------------------------------------------------------- General and administrative expenses consist primarily of salary and bonuses, travel, stock-based compensation and benefits for administrative and executive personnel as well as fees for professional services and other general corporate activities. The increase in the three months ended
September 30, 2021, compared with the same period in 2020, resulted primarily from increases in our stock-based compensation expense and in our salaries and benefits, offset by decreases in acquisition-related expenses.
The increase in the nine months ended
Other income (expenses)
Our other income (expense) consists primarily of interest expense associated with our debt. During the three months ended
September 30, 2021and 2020, we recorded interest expense of $2.2 millionand $2.0 million, respectively. During the nine months ended September 30, 2021and 2020, we recorded interest expense of $6.5 millionand $7.2 million, respectively. At September 30, 2021, our outstanding debt balance was $211.1 millionbased on 4.09% effective interest rate during the period. See above Note 7 "Long-term Debt" for additional information regarding our debt.
Provision for income taxes
The provision for income taxes was a
$113 thousandbenefit and a $1.2 milliontax expense for the three month periods ended September 30, 2021and 2020, respectively, and a $568 thousandand a $244 thousandbenefit for each of the nine months ended September 30, 2021and 2020, respectively. The operating losses incurred by the Company's U.S.operations in past years and the resulting net operating losses for U.S.Federal income tax purposes are subject to a $22.9 millionreserve because of the uncertainty of future taxable income levels sufficient to utilize our net operating losses and credits. Our September 30, 2021, provision benefit of $568 thousandincluded $1.1 milliondeferred taxes benefit, offset by state taxes payable based on gross revenues. Our September 30, 2020, provision benefit of $244 thousandincluded $76 thousandin deferred taxes, and a $337 thousandtax benefit related to the return of federal Alternative Minimum Tax credits, all of which was offset by state taxes then payable based on gross revenues. No tax penalty-related charges were accrued or recognized for the nine month periods ended September 30, 2021and 2020. Additionally, we have not taken a tax position that would have a material effect on our financial statements or our effective tax rate for the nine-month period ended September 30, 2021. We are currently subject to a three-year statute of limitations by major tax jurisdictions. At September 30, 2021, the Company partially reserved its U.S.net deferred tax assets due to the uncertainty of future taxable income being sufficient to utilize net loss carryforwards prior to their expiration, as noted above. The Company did not reserve $33.7 millionof its U.S.net deferred tax assets. The majority of this unreserved portion related to $25.5 millionin U.S.net operating losses ("NOLs") because we believe the Company will generate sufficient taxable income in future years to utilize these NOLs prior to their expiration. The remaining balance consists of $6.7 millionrelating to temporary differences between GAAP and tax-related expense, Federal R&D credits of $1.9 million, and $873 thousandrelating to U.S.state income tax credits and net operating loss carryovers. These items are offset by a $1.3 millionIsraeli deferred tax liability. Any reduction or increase to the $22.9 millionvaluation allowance related to our deferred tax asset would be based on an assessment of future utilization following accounting guidance, which relies largely on historical and projected earnings. For this reason, the Company has recognized its first, second and third quarter 2021 federal deferred tax provision in full. If in future periods we conclude our future U.S.federal taxable estimate established at the end of the year will either fail to meet or exceed the prior year estimate, the Company will offset its federal deferred tax provision by increasing or reducing its valuation allowance accordingly by an equal amount, thereby eliminating from its deferred tax provision federal taxes from the Company's financial statements. Significant judgment is required in determining any valuation allowance recorded against the deferred tax asset. In assessing the need for such an allowance, we consider all available evidence, including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. The Company will continue to reevaluate the need for its valuation allowance each quarter, following the same assessment methodology described above. An increase or decrease to our valuation allowance could have a significant impact on operating results for each period during which it becomes more likely than not that an additional portion of our deferred tax assets will or will not be realized. We have determined that utilization of existing net operating losses against future taxable income is not currently subject to limitation by Section 382 of the Internal Revenue Code. Future ownership changes, however, may limit the Company's ability to fully utilize its existing net operating loss carryforwards against future taxable income. At September 30, 2021, the Company had U.S.federal net operating loss carryforwards of approximately $232 million, which begin to expire in 2021. 26
Our net loss for the three months ended
September 30, 2021, of $2.4 millionwas an increase of $1.7 millioncompared to our net loss of $725 thousandfor the same period last year. The increase in our net loss was primarily due to increases in our operating expenses, offset by increased revenue.
Liquidity and capital resources
Based on our performance over the last four quarters and current expectations, including our assessment of the COVID-19 pandemic's potential impact to our Company, we believe our cash and cash equivalents, cash generated from operations, and availability under our
$25 millionRevolving Facility (which was undrawn as of September 30, 2021and available to fund working capital and for other general corporate purposes, including the financing of permitted acquisitions, investments, and restricted payments, subject, in both cases, to the conditions contained in the Credit Agreement) will satisfy our working capital needs, capital expenditure requirements, investment requirements, contractual obligations, commitments, and other liquidity requirements associated with our operations through at least the next twelve months. We plan for and measure our liquidity and capital resources through an annual budgeting process and quarterly reviews, and we will continue to monitor our position to protect our Company against uncertainties related to the COVID-19 pandemic. During the first nine months of 2021, net cash provided by operations was $35.5 million, an increase of $11.3 millioncompared with the $24.2 millionof net cash provided by operations in the first nine months of 2020. At September 30, 2021, our cash and cash equivalents totaled $39.0 million, an increase of $17.6 millionfrom the December 31, 2020balance, and we had outstanding debt of $211.1 million.
Sources and uses of cash
Nine Months Ended September 30, (In thousands) 2021 2020 Net cash provided by operations $ 35,479 $ 24,245 Net cash used in investing activities
$ (13,171 ) $ (13,992 )Net cash (used in) provided by financing activities $ (4,430 ) $ 18 Our primary source of liquidity from our operations is the collection of revenue in advance from our customers and collection of accounts receivable from our customers, net of the timing of payments to our vendors and service providers. Our investing activities in the first nine months of 2021 consisted of $12.8 millionfor capital expenditures, which includes $11.2 millionin capitalized internal-use software, $1.4 millionin computer and networking equipment and $0.2 millionin other acquired technology. The Company additional incurred a $339 thousandworking capital adjustment for our CloudAlly acquisition completed in November 2020. Our investing activities in the first nine months of 2020 consisted of $14.0 millionfor capital expenditures, which included $10.9 millionin capitalized internal-use software, $2.9 millionin computer and networking equipment and $0.2 millionin other acquired technology. Financing activities in the first nine months of 2021 include using $2.5 millionin the repurchase of common stock related to the tax impact of vesting restricted awards, $1.7 millionfor principal payments of our long-term debt, and $528 thousandfor payments on our finance leases. This usage was offset by $251 thousandreceived from the exercise of stock options. Financing activities in the first nine months of 2020 included $6.0 milliondrawn from our Revolving Facility and $334 thousandreceived from the exercise of stock options. We used $2.7 millionin the repurchase of common stock related to the tax impact of vesting restricted awards, $1.1 millionfor contingent consideration payment associated with our acquisition of Erado, $1.4 millionfor principal payments of our long-term debt, and $1.1 millionfor payments on our finance leases. 27 --------------------------------------------------------------------------------
Zix Common Stock Options
We have significant stock options outstanding that are currently vested. There is no assurance that any of these options will be exercised; therefore, the extent of future cash inflow from additional option activity is not certain. The following table summarizes the options that were outstanding as of
September 30, 2021. The vested shares are a subset of the outstanding shares. The value of the shares is the number of shares multiplied by the exercise price for each share. Summary of Outstanding Options Total Value of Vested Options Outstanding (included in Total Value of Outstanding Options outstanding Vested Options Exercise Price Range Options (In thousands) options) (In thousands) $2.00- $3.49180,000 $ 481 180,000 $ 481 $3.50- $4.99397,010 1,504 397,010 1,504 $5.00- $6.49- - - - $6.50- $7.99100,000 670 18,750 125 $8.00- $9.50100,000 803 37,500 301 Total 777,010 $ 3,458 633,260 $ 2,411
Off-balance sheet provisions
Contractual obligations, contingent liabilities and commitments
We have not made any material, non-cancellable purchase commitments to
We have severance agreements with certain employees which would require the Company to pay approximately
$5.6 millionif all such employees were terminated from employment with our Company following a triggering event (e.g., change of control) as defined in the severance agreements.
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