Chordiant Software 8-K 2005
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 2005
CHORDIANT SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
Commission file number:
20400 Stevens Creek Boulevard, Suite 400
Registrant's telephone number, including area code: (408) 517-6100
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
In the course of preparing its 2005 financial results for the year ended September 30, 2005, the Company and its independent registered public accounting firm, BDO Seidman, LLP, identified certain errors in the Company's 2005 interim financial statements for the quarters ended December 31, 2004, March 31, 2005, and June 30, 2005. The Company evaluated the errors in accordance with the quantitative and qualitative guidance set forth in SEC Staff Accounting Bulletin No. 99.
On December 6, 2005, management concluded that the Company should restate the Company's interim financial statements for the quarters ended December 31, 2004, March 31, 2005, and June 30, 2005 due to the relative percentages represented by the errors in the previously issued interim financial statements to be restated. These errors related to: (i) the method by which the Company valued 1,964,279 shares of restricted stock (the "Stock") issued to two principals of KiQ Limited ("KiQ") who subsequently became employees of the Company after the Company's acquisition of KiQ on December 21, 2004, (ii) the method by which the Company amortized the stock-based compensation attributable to the issuance of the Stock and (iii) the classification of certain cash expenditures for capitalized costs associated with the development of a banking product, which were incorrectly reported in the Company's interim Consolidated Statements of Cash Flows as "Net Cash Used in Operating Activities" as opposed to "Net Cash Used for Investing Activities" for the previously reported interim periods ended December 31, 2004, March 31, 2005 and June 30, 2005.
On December 6, 2005, senior management of the Company met with the Audit Committee of the Board of Directors of the Company to discuss management's conclusion. The Audit Committee concurred with management's conclusion to restate the Company's financials for the quarters ended December 31, 2004, March 31, 2005, and June 30, 2005. The Company's Audit Committee and management discussed this conclusion with the Company's independent registered public accounting firm. Accordingly, the previously issued financial statements for such interim periods should no longer be relied upon.
The Company's preliminary assessment of the impact of the errors for the quarters ended December 31, 2004, March 31, 2005, and June 30, 2005 is expressed in the estimated ranges of adjustments identified in the table below. The restated results will be reflected in the Company's Report on Form 10-K for the year ended September 30, 2005, subject to completion of reviews by management and the Company's independent registered public accounting firm.
Consolidated Statements of Cash Flows
Item 8.01 Other Events
In completing its assessment of the effectiveness of its internal control
over financial reporting, the Company determined that certain material
weaknesses (as defined below) in the Company's internal control over financial
reporting existed as of September 30, 2005. Management determined that the
Company did not maintain effective control over its accounting for its non-cash
stock-based compensation and related financial statement disclosures, since the
method by which the Company originally valued the common stock and amortized
deferred stock-based compensation for such common stock were determined to be
incorrect. In addition, management determined that the Company did not maintain
effective control over the preparation of its Statement of Cash Flows, in
particular, with regard to the classification of cash expenditures for certain
capitalized costs. Management has concluded that each of these matters
constitutes a material weakness in internal control over financial reporting.
Each of these matters is described in more detail in Item 4.02
Item 9.01 Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Chordiant Software, Inc.