Filed
pursuant to Rule 424(b)(3)
Registration
Statement File No. 333-125669
PROSPECTUS
SUPPLEMENT DATED MAY 17, 2010
TO
PROSPECTUS
DATED MAY 2, 2006
as
amended by Post-Effective Amendment No. 4 dated June 10, 2009
INTEGRAL
VISION, INC.
This
prospectus supplement should be read in conjunction with our prospectus dated
May 2, 2006, as amended by Post-Effective Amendment No. 4 dated June 10, 2009,
in particular the “Risk Factors” beginning on page 3 of the
prospectus.
This
prospectus supplement includes the attached Quarterly Report on Form 10-Q
of Integral Vision, Inc. that was filed with the Securities and Exchange
Commission on May 17, 2010.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
OF 1934
|
For the
quarterly period ended: March 31, 2010
or
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from: _____________ to _____________
INTEGRAL
VISION, INC.
(Exact
name of registrant as specified in its charter)
[Michigan]
|
[0-12728]
|
[38-2191935]
|
(State
or other jurisdiction
|
(Commission
|
(I.R.S.
Employer
|
of
incorporation or organization)
|
File
Number)
|
Identification
No.)
|
49113
Wixom Tech Drive, Wixom, Michigan 48393
(Address
of principal executive offices) (Zip Code)
(248)-668-9230
(Registrant’s
telephone number, including area code)
N/A
(Former
name, former address and former fiscal year, if changed since last
report)
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.
þ
Yes
¨
No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
þ
Yes
¨
No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer
|
¨
|
|
Accelerated
filer
|
¨
|
Non-accelerated
filer (Do not check if a smaller reporting company)
|
¨
|
|
Smaller
reporting company
|
þ
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
|
¨
Yes
þ
No
|
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. 35,675,409 shares of common stock as
of May 14, 2010.
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by
a
court.
¨
Yes
¨
No
INTEGRAL
VISION, INC.
FORM
10-Q Report
March
31, 2010
TABLE OF
CONTENTS
PART
I. FINANCIAL
INFORMATION
|
|
|
|
Item
1. Financial Statements
(unaudited)
|
|
|
|
Condensed
Balance Sheets (unaudited)
|
|
as
of March 31, 2010 and December 31, 2009
|
2-3
|
|
|
Condensed
Statements of Operations
|
|
(unaudited)
for the three months ended
|
|
March
31, 2010 and 2009
|
4
|
|
|
Statement
of Stockholders’ Deficit (unaudited)
|
5
|
|
|
Condensed
Statements of Cash Flows
|
|
(unaudited)
for the three months ended
|
|
March
31, 2010 and 2009
|
6
|
|
|
Notes
to Condensed Financial Statements (unaudited)
|
7
|
|
|
Item
2. Management’s Discussion and
Analysis of
|
|
Financial Condition and Results of Operations
|
15
|
|
|
Item
3. Quantitative and Qualitative
Disclosures About Market Risk
|
19
|
|
|
Item
4. Controls and
Procedures
|
19
|
|
|
PART
II. OTHER INFORMATION
|
|
|
|
Item
6. Exhibits
|
20
|
|
|
Signatures
|
22
|
INTEGRAL
VISION, INC.
Condensed
Balance Sheets
|
|
March
31,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
|
|
$
|
45
|
|
|
$
|
28
|
|
Accounts
receivable
|
|
|
82
|
|
|
|
50
|
|
Inventories
- Note B
|
|
|
193
|
|
|
|
190
|
|
Other
current assets
|
|
|
90
|
|
|
|
98
|
|
Total
current assets
|
|
|
410
|
|
|
|
366
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment:
|
|
|
|
|
|
|
|
|
Building
Improvements
|
|
|
4
|
|
|
|
4
|
|
Production
and engineering equipment
|
|
|
354
|
|
|
|
354
|
|
Furniture
and fixtures
|
|
|
80
|
|
|
|
80
|
|
Computer
equipment
|
|
|
193
|
|
|
|
193
|
|
Marketing/demonstration
equipment
|
|
|
139
|
|
|
|
139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
770
|
|
|
|
770
|
|
Less
accumulated depreciation
|
|
|
(602
|
)
|
|
|
(580
|
)
|
Net
property and equipment
|
|
|
168
|
|
|
|
190
|
|
|
|
|
|
|
|
|
|
|
Other assets
- net of accumulated amortization of $1,565,000
|
|
|
|
|
|
|
|
|
($1,559,000
for 2009)
|
|
|
57
|
|
|
|
61
|
|
|
|
$
|
635
|
|
|
$
|
617
|
|
See notes
to condensed financial statements.
INTEGRAL
VISION, INC.
Condensed
Balance Sheets – Continued
|
|
March
31,
|
|
|
December
31,
|
|
|
|
20010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
(in
thousands)
|
|
Liabilities
and Stockholders' Deficit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Notes
payable - Note C
|
|
$
|
7,924
|
|
|
$
|
7,377
|
|
Accounts
payable
|
|
|
22
|
|
|
|
114
|
|
Customer
deposits
|
|
|
139
|
|
|
|
249
|
|
Accrued
compensation and related costs
|
|
|
285
|
|
|
|
276
|
|
Accrued
interest
|
|
|
788
|
|
|
|
774
|
|
Accrued
product warranty
|
|
|
133
|
|
|
|
108
|
|
Other
accrued liabilities
|
|
|
126
|
|
|
|
95
|
|
Deferred
revenue for product sales
|
|
|
80
|
|
|
|
72
|
|
Total
current liabilities
|
|
|
9,497
|
|
|
|
9,065
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt (Note C)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
9,497
|
|
|
|
9,065
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit:
|
|
|
|
|
|
|
|
|
Preferred
stock, 400,000 shares authorized; none issued
|
|
|
-
|
|
|
|
-
|
|
Common
stock, without par value; (See Note B) 70,000,000 shares authorized;
32,716,409 shares issued and outstanding for 2010 and (30,866,409) for
2009
|
|
|
53,742
|
|
|
|
53,701
|
|
Accumulated
deficit
|
|
|
(62,604
|
)
|
|
|
(62,149
|
)
|
Total
stockholders’ deficit
|
|
|
(8,862
|
)
|
|
|
(8,448
|
)
|
|
|
$
|
635
|
|
|
$
|
617
|
|
See notes
to condensed financial statements.
INTEGRAL
VISION, INC.
Condensed
Statements of Operations
(Unaudited)
|
|
Three
Months Ended March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In
thousands, except per share data)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Net
product sales
|
|
$
|
530
|
|
|
$
|
803
|
|
Total
revenues (See Note-B)
|
|
|
530
|
|
|
|
803
|
|
Costs
of sales:
|
|
|
|
|
|
|
|
|
Costs
of sales for products
|
|
|
199
|
|
|
|
326
|
|
Depreciation
and amortization
|
|
|
2
|
|
|
|
2
|
|
Total
costs of sales
|
|
|
201
|
|
|
|
328
|
|
Gross
margin
|
|
|
329
|
|
|
|
475
|
|
|
|
|
|
|
|
|
|
|
Other
costs and expenses:
|
|
|
|
|
|
|
|
|
Marketing
|
|
|
114
|
|
|
|
136
|
|
General
and administrative
|
|
|
245
|
|
|
|
400
|
|
Engineering
and development
|
|
|
183
|
|
|
|
288
|
|
Total
other costs and expenses
|
|
|
542
|
|
|
|
824
|
|
Operating
loss
|
|
|
(213
|
)
|
|
|
(349
|
)
|
Other
income
|
|
|
2
|
|
|
|
2
|
|
Extinguishment
loss from exchange of debt instruments (See note C)
|
|
|
-
|
|
|
|
(18
|
)
|
Interest
expense
|
|
|
(244
|
)
|
|
|
(162
|
)
|
Net
loss
|
|
$
|
(455
|
)
|
|
$
|
(527
|
)
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares of common stock and common stock
equivalents, where applicable
|
|
|
30,990
|
|
|
|
30,066
|
|
See notes
to condensed financial statements.
INTEGRAL
VISION, INC.
Statement
of Stockholders' Deficit
(Unaudited)
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
Number of
Shares
Outstanding
|
|
|
Amount
|
|
|
Accumulated
Deficit
|
|
|
Total
|
|
|
|
(in thousands, except number of common shares outstanding)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at January 1, 2010
|
|
|
30,866,409
|
|
|
$
|
53,701
|
|
|
$
|
(62,149
|
)
|
|
$
|
(8,448
|
)
|
(See
Note B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
of warrants
|
|
|
1,850,000
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
Issuance
of warrants for settlement of interest on Class 2 Notes
|
|
|
-
|
|
|
|
32
|
|
|
|
-
|
|
|
|
32
|
|
Net
loss for the period
|
|
|
|
|
|
|
|
|
|
|
(455
|
)
|
|
|
(455
|
)
|
Share-based
compensation
|
|
|
-
|
|
|
|
7
|
|
|
|
-
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2010
|
|
|
32,716,409
|
|
|
$
|
53,742
|
|
|
$
|
(62,604
|
)
|
|
$
|
(8,862
|
)
|
See notes
to condensed financial statements
INTEGRAL
VISION, INC.
Condensed Statements of Cash
Flows
(Unaudited)
|
|
Three
Months Ended March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
Cash
Flows From Operating Activities
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(455
|
)
|
|
$
|
(527
|
)
|
|
|
|
|
|
|
|
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
22
|
|
|
|
23
|
|
Amortization
|
|
|
6
|
|
|
|
11
|
|
Gain
on sale of equipment
|
|
|
(2
|
)
|
|
|
-
|
|
Warrants
issued in settlement of interest
|
|
|
32
|
|
|
|
8
|
|
Share-based
compensation
|
|
|
7
|
|
|
|
112
|
|
Issuance
of Class 3 Notes in settlement of interest
|
|
|
176
|
|
|
|
160
|
|
Extinguishment
loss from exchange of debt instruments
|
|
|
-
|
|
|
|
18
|
|
Changes
in operating assets and liabilities which provided
|
|
|
|
|
|
|
|
|
(used)
cash:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(32
|
)
|
|
|
(334
|
)
|
Inventories
|
|
|
(3
|
)
|
|
|
(124
|
)
|
Prepaid
and other
|
|
|
8
|
|
|
|
46
|
|
Accounts
payable and other current liabilities
|
|
|
(122
|
)
|
|
|
(13
|
)
|
Deferred
revenue
|
|
|
8
|
|
|
|
(298
|
)
|
Net
Cash Used In Operating Activities
|
|
|
(355
|
)
|
|
|
(918
|
)
|
|
|
|
|
|
|
|
|
|
Cash
Flows Used In Investing Activities
|
|
|
|
|
|
|
|
|
Proceeds
from sale of equipment
|
|
|
2
|
|
|
|
-
|
|
Additional
patents
|
|
|
(2
|
)
|
|
|
(14
|
)
|
Net
Cash Used in Investing Activities
|
|
|
-
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
|
|
Cash
Flows From Financing Activities
|
|
|
|
|
|
|
|
|
Proceeds
from sale of Class 2 Notes
|
|
|
370
|
|
|
|
780
|
|
Proceeds
from sale of Class 3 Notes
|
|
|
-
|
|
|
|
90
|
|
Proceeds
from exercise of stock warrants
|
|
|
2
|
|
|
|
-
|
|
Net
Cash Provided By Financing Activities
|
|
|
372
|
|
|
|
870
|
|
Increase
(Decrease) in Cash
|
|
|
17
|
|
|
|
(62
|
)
|
Cash
at Beginning of Period
|
|
|
28
|
|
|
|
144
|
|
Cash
at End of Period
|
|
$
|
45
|
|
|
$
|
82
|
|
|
|
|
|
|
|
|
|
|
Supplemental
cash flows disclosure:
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
14
|
|
|
$
|
19
|
|
Supplemental non-cash investing
activit
y:
|
|
|
|
|
|
|
|
|
Reclassification
of inventory to equipment
|
|
$
|
-
|
|
|
$
|
113
|
|
See notes
to condensed financial statements.
Notes
to Condensed Financial Statements - Integral Vision, Inc.
The
condensed financial statements in this report have been prepared by Integral
Vision, Inc. without audit, pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America for annual financial
statements. These statements should be read in conjunction with the
financial statements and notes for the year ended December 31, 2009, included in
our amended Form 10-K filed with the Securities and Exchange Commission on April
30, 2010.
In the
opinion of management, information included in this report reflects all
adjustments, consisting only of normal, recurring adjustments, necessary for the
fair presentation of results for these interim periods and in order to make the
condensed financial statements not misleading.
The
results of operations for the three-month period ended March 31, 2010 are not
necessarily indicative of the results to be expected for the entire year ending
December 31, 2010.
Note
A – Nature of Business
Integral
Vision, Inc. develops, manufactures, and markets flat panel display inspection
systems to ensure product quality in the display manufacturing
process. We primarily inspect Microdisplays and small flat panel
displays, though the technology used is scalable to allow inspection of full
screen displays and components. Our customers and potential customers
are primarily large companies with significant investment in the manufacture of
displays. Nearly all of our sales originate in the United States,
Asia, or Europe. Our products are generally sold as capital
goods. Depending on the application, display inspection systems have
an indefinite life and are more likely to require replacement due to possible
technological obsolescence than from physical wear.
Note
B – Significant Accounting Policies
Use
of Estimates
The
preparation of condensed financial statements in conformity with generally
accepted accounting principles 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 condensed
financial statements. Estimates also affect the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Inventories
Inventories
are stated at the lower of first-in, first-out (“FIFO”) cost or
market. Cost is computed using currently adjusted standards, which
approximates actual costs on a FIFO basis. We assess the
recoverability of all inventories to determine whether adjustments for
impairment are required. At March 31, 2010 and December 31, 2009,
inventories consisted of the following amounts (net of obsolescence reserves of
$5,000 at March 31, 2010 and $0.00 at December 31, 2009):
|
|
31-Mar-10
|
|
|
31-Dec-09
|
|
|
|
(in
thousands)
|
|
Raw
materials
|
|
$
|
152
|
|
|
$
|
85
|
|
Work
in process
|
|
|
7
|
|
|
|
69
|
|
Finished
goods
|
|
|
34
|
|
|
|
36
|
|
|
|
$
|
193
|
|
|
$
|
190
|
|
Management
periodically performs an analysis of our inventory to determine if its cost
exceeds estimated net realizable value. During the quarter ended March 31, 2009,
we reclassified approximately $113,000 of inventory to engineering equipment for
use in research and development of our products. This equipment is being
amortized over three years.
Stockholders
Equity
On March
17, 2010 the Board of Directors changed the stated value of our common stock
from $0.20 to “no stated value”. As a result, we reclassified
$47,528,000 of Additional Paid in Capital to Common Stock for the year ended
December 31, 2009.
Deferred
revenue represents amounts periodically invoiced for sales orders in excess of
amounts recognized as revenues. At March 31, 2010, there was deferred revenue
for product sales of $80,000. At December 31, 2009, there was deferred revenue
of $72,000.
Revenue
Recognition
We
recognize revenue in accordance with ASC 605 “Revenue Recognition”, Software
Revenue Recognition, Staff Accounting Bulletin No. 101 (“SAB 101”), and Staff
Accounting Bulletin No. 104 (“SAB 104”) Revenue Recognition in Financial
Statements. Revenue is recognized when persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the selling price
is fixed or determinable and collectibility is reasonably assured.
We
recognize revenue at the time of shipment for product sales where the customer’s
acceptance criteria can be demonstrated as met prior to shipment and where title
transfers on shipment. We recognize revenue at the time of final
acceptance at the customer site when title does not transfer on shipment or if
acceptance criteria at the customer site are substantially different than
acceptance criteria for shipment. We recognize revenue for product
sales with no specific customer acceptance criteria, including spare parts, on
shipment. Revenue from service contracts is recognized over the term
of the contract. Revenue is reported net of sales commissions of
$61,000 and $47,000 for the three month periods ended March 31, 2010 and 2009,
respectively.
Share-Based
Compensation
We
account for our share based compensation plans according to the provisions of
ASC Topic 718 “Stock Compensation”. Accordingly, compensation costs attributable
to stock options or similar equity instruments granted are measured at the fair
value at the grant date and expensed over the expected vesting
period. ASC Topic 718 requires excess tax benefits to be
reported as a financing cash inflow rather than as a reduction of taxes
paid.
Supplemental
Disclosure of Non-cash Investing and Financing Activities
During
2009, we transferred $113,000 of inventory to Production and engineering
equipment.
During
2010, we exchanged $170,000 of Class 2 Notes for $170,000 of Class 3 Notes.
During 2009, we exchanged $110,000 of Class 2 Notes for $110,000 of Class 3
Notes.
During
2010, we issued $176,308 of Class 3 Notes in settlement of interest. During
2009, we issued $160,000 of Class 3 Notes in settlement of
interest.
Recently
Issued Accounting Standards
ASU
2009-14
ASU
2009-14, “Certain Revenue Arrangements that Include Software Elements,” amends
ASC Subtopic 985-605, “Software-Revenue Recognition,” to exclude from its scope
tangible products that contain both software and non-software components that
function together to deliver a product’s essential functionality. The ASU is
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early
adoption is permitted. If a company elects early adoption and the period of
adoption is not the beginning of its fiscal year, the requirements must be
applied retrospectively to the beginning of the fiscal year. While we are still
analyzing the effects of the adoption of ASU 2009-13, we do not believe that the
adoption of ASU 2009-13 will have a material effect on our financial position,
results of operations or cash flows.
ASU
2009-13
ASU
2009-13, “Multiple-Delivered Revenue Arrangements,” amends ASC Subtopic 650-25,
“Revenue Recognition – Multiple Element Arrangements,” to eliminate the
requirement that all undelivered elements have vendor-specific objective
evidence (“VSOE”) or third-party evidence (“TPE”) before an entity can recognize
the portion of an overall arrangement fee that is attributable to items that
already have been delivered. In the absence of VSOE or TPE of fair value for one
or more delivered or undelivered elements in a multiple element arrangement,
entities will be required to estimate the selling prices of those elements. The
overall arrangement fee will be allocated to each element (both delivered and
undelivered items) based on their relevant selling prices, regardless of whether
those selling prices are evidenced by VSOE or TPE or are based on the entity’s
estimated selling price. Upon adoption, application of the “residual method”
will no longer be permitted and entities will be required to disclose more
information about their multiple-element revenue arrangements. The ASU is
effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early
adoption is permitted. If a company elects early adoption and the period of
adoption is not the beginning of its fiscal year, the requirements must be
applied retrospectively to the beginning of the fiscal year. While we are still
analyzing the effects of the adoption of ASU 2009-13, we do not believe that the
adoption of ASU 2009-13 will have a material effect on our financial position,
results of operations or cash flows.
ASU
2010-09
In
February 2010, the Financial Accounting Standards Board issued ASU
No. 2010-09, “Amendments to Certain Recognition and Disclosure
Requirements,” that amends guidance on subsequent events. This amendment removes
the requirement for SEC filers to disclose the date through which an entity has
evaluated subsequent events. However, the date-disclosure exemption does not
relieve management of an SEC filer from its responsibility to evaluate
subsequent events through the date on which financial statements are issued.
This standard became effective for us in the second quarter of fiscal year 2010.
The adoption of this standard did not have a material impact on our consolidated
financial statements
Note
C - Long-Term Debt and Other Financing Arrangements
As of
January 1, 2010, we had $2,855,000 of outstanding Class 2 Notes. The Class 2
Notes are working capital notes secured by accounts receivable, inventory, and
intellectual property and have been issued primarily to related parties. The
Notes bear interest at 10% and earn warrants at the rate of five (5) warrants
per year per dollar invested. The holder can elect to
forgo warrants and earn an additional 2% interest. All notes are
presently earning 10% interest and receiving warrants. During the
quarter ended March 31, 2010, we issued $370,000 of Class 2 Notes and $170,000
of Class 2 Notes were paid by issuing Class 3 Convertible Notes. We
also issued 3,700,363 warrants and had 4,828,457 accrued warrants that were
earned but not issued as of March 31, 2010. The value of the issued
warrants was $32,843 and the value of the accrued but not issued warrants was
$98,432 as determined using the Black-Scholes option-pricing
model. The maturities of these notes are $1,566,000 on April 30, 2010
and $1,489,112 on June 30 2010. See Note I- Subsequent Events for
recent activity associated with the maturity of Class 2 Notes.
As of
January 1, 2010, we also had $4,522,000 of outstanding Class 3 Notes. The Class
3 Notes bear interest at 8% that is payable January 1 and July 1 of each year.
The Notes are secured by our intellectual property and have been issued
primarily to related parties. Also, the Notes are convertible into the Company’s
common stock at $0.25 per share and mature on July 1, 2010. The Board of
Directors (“Board”) effective December 16, 2008 amended the Fifth Amended Note
and Warrant Purchase Agreement to provide for any Class 3 Notes issued after
December 15, 2008 to bear interest at 12% and to be immediately convertible into
common shares at no less than $0.15 per share. During the quarter
ended March 31, 2010, we issued $176,308 of Class 3 Convertible Notes for the
payment of interest, and $170,000 of Class 3 Convertible Notes for the payment
of Class 2 Notes. All of our Class 3 Convertible Notes mature
on July 1, 2010.
See Note
I – Subsequent Events for recent activity associated with the issuance of Class
2 and Class 3 Notes.
A summary
of the Company’s debt obligations is as follows:
|
|
March
31
|
|
|
December
31
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Short
Term Debt:
|
|
|
|
|
|
|
Class
2 Notes
|
|
$
|
3,055
|
|
|
$
|
2,855
|
|
Class
3 Notes
|
|
$
|
4,869
|
|
|
$
|
4,522
|
|
Total
Short Term Debt
|
|
$
|
7,924
|
|
|
$
|
7,377
|
|
Note
D – Loss per Share
The
following table sets forth the computation of basic and diluted loss per
share:
|
|
Three
Months Ended March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(unaudited)
|
|
|
|
(in
thousands, except per share data)
|
|
Numerator
for basic and diluted loss per share – loss available to common
stockholders
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(455
|
)
|
|
$
|
(527
|
)
|
*there
was no effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
for basic and diluted loss per share – weighted average
shares
|
|
|
30,990
|
|
|
|
30,066
|
|
*there
was no effect of dilutive securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED LOSS PER SHARE:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
Note
E – Income Taxes
In
accordance with ASC Topic 740 “Income Taxes,” we assess our uncertain tax
positions for tax years that are still open for examination. Because
of our historical significant net operating losses, we have not paid income tax
since 1995.
We
classify all interest and penalties as income tax expense. We did not
have any accrued interest and penalties related to uncertain tax positions as of
March 31, 2010 and March 31, 2009.
We file
income tax returns in the United States federal jurisdiction and various state
jurisdictions. The tax years 2005 through 2009 remain open to
examination by taxing jurisdictions to which we are subject. As of
March 31, 2010, we did not have any tax examinations in process.
We
maintain deferred tax assets that reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax
purposes. These deferred tax assets include net operating loss carry
forwards and credit carry forwards. The net deferred tax asset has
been fully offset by a valuation allowance because of our history of
losses.
Note
F – Share-Based Compensation
We
currently have two active equity compensation plans, the 2004 Employee Stock
Option Plan (the “2004 Plan”) and the 2008 Integral Vision, Inc. Equity
Compensation Plan as amended (the “2008 Plan”).
The 2004
Plan provides for options that may be granted to eligible employees, officers
and directors of Integral Vision. The purpose of the 2004 Plan generally is to
retain and attract persons of appropriate education, experience and ability to
serve as our employees, to encourage a sense of proprietorship of such persons,
and to stimulate an active interest in our development and financial
success. We reserved 1,000,000 shares for future issuance under the
2004 Plan. As of March 31, 2010, 17,000 shares remain which can be
issued under the 2004 Plan.
The 2008
Plan is designed to promote the interests of the Company and its shareholders by
providing a means by which the Company can grant equity-based incentives to
eligible employees of the Company or any Subsidiary as well as non-employee
directors, consultants, or advisors who are in a position to contribute
materially to the Company’s success ("Participants"). The Plan
permits the Compensation Committee of the Company's Board of Directors to grant
incentive stock options, non-qualified stock options, restricted stock, and
shares of common stock. The maximum number of shares cumulatively
available is 7,328,000 plus (i) any shares that are forfeited or remain
unpurchased or undistributed upon termination or expiration of the awards from
the 2008 Plan or options from the 2004 Plan and (ii) any shares exchanged as
full or partial payment for the exercise price of any award under the 2008
Plan. As of March 31, 2010, 3,700,000 shares remain which can be
issued under the 2008 Plan.
The
Compensation Committee of the Board of Directors awarded 116,000 restricted
shares to a certain officer of the Company on January 1, 2009, but we did not
grant any options or shares to employees during the first quarter of
2010.
The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option valuation model. The fair value of all awards is amortized
on a straight-line basis over the requisite service periods. The
expected life of all awards granted represents the period of time that they are
expected to be outstanding. The expected life is determined using
historical and other information available at the time of
grant. Expected volatilities are based on historical volatility of
our common stock, and other factors. The risk-free rate for periods
within the contractual life of the option is based on the U.S. Treasury yield
curve in effect at the time of grant. We use historical data to
estimate pre-vesting option forfeitures.
A summary
of option activity under all plans for the quarters ended March 31, 2010 and
2009 is as follows:
|
|
|
|
|
2010
|
|
|
|
|
|
2009
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
|
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
(number of shares in
thousands)
|
|
Outstanding
at January 1
|
|
|
3,785
|
|
|
$
|
0.23
|
|
|
|
3,795
|
|
|
$
|
0.23
|
|
Granted
|
|
|
0
|
|
|
|
0.00
|
|
|
|
0
|
|
|
|
0.00
|
|
Exercised
|
|
|
0
|
|
|
|
0.00
|
|
|
|
0
|
|
|
|
0.00
|
|
Expired
or cancelled
|
|
|
0
|
|
|
|
0.00
|
|
|
|
0
|
|
|
|
0.00
|
|
Outstanding
at March 31 ($.10 to $0.30 per share)
|
|
|
3,785
|
|
|
$
|
0.23
|
|
|
|
3,795
|
|
|
$
|
0.23
|
|
Exercisable
($.10 to $0.30 per share)
|
|
|
3,661
|
|
|
$
|
0.23
|
|
|
|
3,060
|
|
|
$
|
0.23
|
|
See Note
I – Subsequent Events for recent activity with equity compensation.
A summary
of the status of our non-vested shares as of March 31, 2010 and 2009, and
changes during quarters ended March 31, 2010 and 2009, is presented
below:
|
|
2010
|
|
|
2009
|
|
|
|
Shares
|
|
|
Weighted
Average Grant-
Date Fair Value
|
|
|
Shares
|
|
|
Weighted
Average Grant-
Date Fair Value
|
|
Nonvested
at January 1
|
|
|
590,000
|
|
|
$
|
0.25
|
|
|
|
2,496,000
|
|
|
$
|
0.27
|
|
Granted
|
|
|
0
|
|
|
|
0.00
|
|
|
|
0
|
|
|
|
0.00
|
|
Forfeited
|
|
|
0
|
|
|
|
0.00
|
|
|
|
0
|
|
|
|
0.00
|
|
Vested
|
|
|
(466,000
|
)
|
|
|
0.26
|
|
|
|
(1,761,000
|
)
|
|
|
0.19
|
|
Nonvested
at March 31
|
|
|
124,000
|
|
|
$
|
0.22
|
|
|
|
735,000
|
|
|
$
|
0.26
|
|
The
following table summarizes share-based compensation expense for the quarters
ended March 31, 2010 and 2009 related to share-based awards under ASC Topic 718
“Stock Compensation” as recorded in the statement of operations in the following
expense categories:
|
|
March
31
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(in
thousands)
|
|
Marketing
|
|
$
|
2
|
|
|
$
|
15
|
|
Engineering
and Development
|
|
|
3
|
|
|
|
23
|
|
General
and Administrative
|
|
|
2
|
|
|
|
74
|
|
Total
share-based compensation expense
|
|
$
|
7
|
|
|
$
|
112
|
|
As of
March 31, 2010, we had $3,017 of unrecognized expense related to un-vested
share-options that will be recognized ratably as compensation expense over the
remaining vesting period from April 2010 through September 2010.
Additional
information regarding the range of exercise prices and weighted average
remaining life of options outstanding at March 31, 2010 and 2009 is as
follows:
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
Range of
Exercise
Prices
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining Life
|
|
|
Number
Exercisable
|
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining Life
|
|
|
Number
Exercisable
|
|
|
|
(number of shares in thousands)
|
|
|
(number of shares in thousands)
|
|
$.10
to $.30
|
|
|
3,785
|
|
|
|
7.7
|
|
|
|
3,661
|
|
|
|
3,795
|
|
|
|
8.7
|
|
|
|
3,060
|
|
A summary
of the outstanding warrants, options, and shares available upon the conversion
of debt at March 31, 2010 and 2009 is as follows:
|
|
2010
|
|
2009
|
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining
Life
|
|
|
Number
Exercisable
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining
Life
|
|
|
Number
Exercisable
|
|
|
|
(number of shares in thousands)
|
|
|
(number of shares in thousands)
|
|
Warrants
|
|
$
|
0.001
|
|
|
|
8,650
|
|
|
|
2.81
|
|
|
|
8,650
|
|
|
$
|
0.001
|
|
|
|
10,500
|
|
|
|
3.32
|
|
|
|
10,500
|
|
Class
2 Note Warrants
|
|
$
|
0.17
|
|
|
|
8,316
|
|
|
|
3.30
|
|
|
|
8,316
|
|
|
$
|
0.25
|
|
|
|
2,275
|
|
|
|
2.68
|
|
|
|
2,275
|
|
Class
3 Convertible Notes
|
|
$
|
0.22
|
|
|
|
22,666
|
|
|
|
0.25
|
|
|
|
22,666
|
|
|
$
|
0.24
|
|
|
|
17,087
|
|
|
|
1.25
|
|
|
|
17,087
|
|
1995
Employee Stock Option Plan
|
|
$
|
0.17
|
|
|
|
184
|
|
|
|
1.71
|
|
|
|
184
|
|
|
$
|
0.17
|
|
|
|
184
|
|
|
|
2.71
|
|
|
|
184
|
|
1999
Employee Stock Option Plan
|
|
$
|
0.17
|
|
|
|
290
|
|
|
|
5.94
|
|
|
|
290
|
|
|
$
|
0.17
|
|
|
|
290
|
|
|
|
6.94
|
|
|
|
290
|
|
2004
Employee Stock Option Plan
|
|
$
|
0.25
|
|
|
|
983
|
|
|
|
7.88
|
|
|
|
983
|
|
|
$
|
0.25
|
|
|
|
993
|
|
|
|
8.88
|
|
|
|
522
|
|
2008
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
Plan
|
|
$
|
0.24
|
|
|
|
2,328
|
|
|
|
8.30
|
|
|
|
2,204
|
|
|
$
|
0.24
|
|
|
|
2,328
|
|
|
|
9.30
|
|
|
|
2,064
|
|
|
|
$
|
0.17
|
|
|
|
43,417
|
|
|
|
1.99
|
|
|
|
43,293
|
|
|
$
|
0.17
|
|
|
|
33,657
|
|
|
|
2.83
|
|
|
|
32,922
|
|
Note
G – Contingencies and Litigation
Product
Warranties
We
provide standard warranty coverage for most of our products, generally for one
year from the date of customer acceptance. We record a liability for estimated
warranty claims based on historical claims and other factors. We review these
estimates on a regular basis and adjust the warranty reserves as actual
experience differs from historical estimates or other information becomes
available. This warranty liability primarily includes the anticipated cost of
materials, labor and travel, and shipping necessary to repair and service the
equipment.
The
following table illustrates the changes in our warranty liability for the
quarter ended March 31, 2010 and 2009:
|
|
Amount
|
|
|
Amount
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(in
thousands)
|
|
Balance
as of January 1
|
|
$
|
108
|
|
|
$
|
84
|
|
Charges/(credits)
to expense
|
|
|
28
|
|
|
|
24
|
|
Utilization/payment
|
|
|
(3
|
)
|
|
|
-
|
|
Balance
as of March 31
|
|
$
|
133
|
|
|
$
|
108
|
|
Note
H – Going Concern Matters
The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. As shown in the financial
statements, we incurred losses in the first quarters of 2010 and 2009 of
$455,000 and $527,000 respectively. Additionally, we incurred losses
from operations in the years of 2009 and 2008 of $2.7 and $10.7 million each
year, respectively. The continuing losses raise substantial doubt
about our ability to continue operating as a going
concern.
We are
currently working with a number of large customers who are using our
technologies to evaluate their microdisplay production or are evaluating our
technology for the inspection of LCD displays and components. We
expect that additional sales orders will be placed by these customers throughout
2010 and into 2011 provided that markets for these products continue to grow and
the customers continue to have interest in our technology-assisted inspection
systems. Ultimately, our ability to continue as a going concern will
be dependent on these large companies getting their emerging display technology
products into high volume production and placing sales orders with us for
inspection products to support that production. However, there can be
no assurance that we will be successful in securing sales orders sufficient to
continue operating as a going concern.
From
November 2006 through March 31, 2010, we have used $7,923,744 of Class 2 and
Class 3 Notes to fund operations. $4,868,632 of these are Class 3
Notes which mature on July 1, 2010. The remaining $3,055,112 are Class 2 Notes
of which $1,566,000 were extended and mature on May 31, 2010 and $1,489,112
mature on June 30, 2010. Taking into account existing and
anticipated orders, we expect that we may need to raise an additional $500,000
to $1,000,000 to fund operations through the first quarter of 2011.
For
further information regarding our obligations, see Note C – Long Term Debt and
Other Financing Arrangements and Note I – Subsequent Events in the Notes to
Condensed Financial Statements.
The
financial statements do not include any adjustments that might be necessary
should we be unable to continue as a going concern.
Note
I – Subsequent Events
On April
2, 2010, the Compensation Committee of the Board of Directors approved a plan to
offer key employees the opportunity to surrender certain outstanding stock
options in exchange for replacement options effective April 2,
2010. The replacement options vest immediately. The
program received 100% participation. 3,301,000 options with an
average exercise price of $0.24 were surrendered and 3,301,000 options with an
exercise price of $0.0679, the closing price of the stock on April 2, 2010, were
issued as replacements. The exchange resulted in a net additional
expense of $46,985 which was recognized immediately as compensation
expense.
On April
12, 2010, we issued 1,617,000 shares of common stock against warrants held by
participants of the 2005 Private Offering which were exercised on a cashless
basis.
On April
19, 2010, at the Compensation Committee’s recommendation, the Board of Directors
approved an amendment to the 2008 Equity Compensation plan, subject to
shareholder approval, that increases the maximum number of shares awardable by
6,672,000 shares and eliminates the limitations on the number of Shares
available for Awards to an individual participant in a given year.
On April
28, 2010, $1,566,000 of Class 2 Notes due April 30, 2010, were extended to May
31, 2010.
On April
19, 2010, the Board and the Note Holders approved an amendment to the Fifth
Amended Note and Warrant Purchase Agreement. This amendment (i)
clarified how the number of warrants, the exercise price of warrants, and the
rate at which warrants are earned by outstanding Class 2 Notes would change in
the event the Company issued stock dividends, recapitalized, etc.; (ii) updated
Section 4.15 per the current stock ownership; (iii) modified Section 8.11 to
clarify what equity awards are allowable under the restriction and increase the
number of awards allowable under the restriction; and (iv) modified the form of
issued and future warrants to clarify how the number of warrants and the
exercise price of warrants would change in the event of a stock dividend,
recapitalization, etc.
Effective
April 22, 2010, the Board of Directors and the holders of 7,000,000 warrants
issued September 15, 2008 approved an amendment to the warrants clarifying how
the number of warrants and the exercise price of the warrants would change in
the event of a reverse stock split, stock combination or similar
transaction.
On May 5,
2010, the Compensation Committee of the Board of Directors removed the vesting
restriction on 800,000 shares of common stock granted to certain executives
because the April 19, 2010 amendment to Section 8.11 of the Fifth Amended Note
and Warrant Purchase Agreement made the restriction unnecessary.
On May 5,
2010, the Compensation Committee of the Board of Directors awarded (i) 2,375,000
Incentive Stock Options from the Amended 2008 Equity Compensation Plan to
various key employees and (ii) a grant of 1,342,000 shares to the Chief
Executive Officer, both contingent on shareholder approval of the proposed
amendment to the 2008 Equity Compensation Plan. These issuances
resulted in an expense of $118,629 which was recognized immediately as
compensation expense.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Forward
- Looking Statements
This
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual
results could differ materially from those projected in the forward-looking
statements as a result of a number of factors, risks and
uncertainties. Generally, the words “anticipate”, “expect”, “intend”,
“believe” and similar expressions identify forward-looking
statements. The information included in this Form 10-Q is as of the
filing date with the Securities and Exchange Commission and future events or
circumstances could differ significantly from the forward-looking statements
included herein. Accordingly, we caution readers not to place undue
reliance on such statements.
Overview
Integral
Vision, Inc., a Michigan corporation (or the "Company"), was incorporated in
1978. We develop, manufacture and market flat panel display
inspection systems to ensure product quality in the display manufacturing
process. We primarily inspect microdisplays and small flat panel
displays, though the technology used is scalable to allow inspection of full
screen displays and components. Our products primarily use machine
vision to evaluate operating displays for cosmetic and functional defects, but
can also provide electrical testing if required for a given
application. Our customers and potential customers are primarily
large companies with significant investments in the manufacture of
displays. Nearly all of our sales originate in the United States,
Asia, or Europe. Our products are generally sold as capital
goods. Depending on the application, display inspection systems have
an indefinite life and are more likely to require replacement due to possible
technological obsolescence than from physical wear.
Automated
inspection has become a necessity for manufacturers who need to continually
improve production efficiency to meet the increasing demand for high quality
products. Our automatic inspection systems can inspect parts at a
lower cycle time and with greater repeatability than is possible with human
inspectors. While we have several large companies as customers, these
customers are working with emerging display technologies. Our success
will be substantially dependant on these customers getting their emerging
display technologies into high volume production.
Products
Our
products are generally sold under the trade name SharpEye™. SharpEye™
systems provide Flat Panel Display (“FPD”) inspection for reflective, emissive
and transmissive display technologies. SharpEye is designed for the
detection of functional and cosmetic defects in Liquid Crystal Display (LCD)
displays as well as Liquid Crystal on Silicon (LCoS), OLED,
Microelectromechanical systems (MEMS), 3LCD/High Temperature Poly-Silicon
(HTPS), e-paper and other emerging display technologies. These
technologies are applied to consumer products including a broad range of hand
held devices, e-books, computer monitors, digital still cameras, HDTV,
projectors, and video headsets. The core technology of SharpEye™
inspection algorithms is the ability to quantize data to the level of a single
display pixel. SharpEye™ can be configured for production inspection
or for display evaluation in a laboratory based on the equipment configuration
selected.
Results
of Operations
Three
Months Ended March 31, 2010 Compared with Three Months Ended March 31,
2009
Net
revenues decreased $273,000 (34%) to $530,000 in the first quarter of 2010 from
$803,000 in the first quarter of 2009. The decrease in net revenue
was primarily attributable to a decrease in revenue from sales of our
flat panel display inspection products in the first quarter of
2010.
In the
three months ended March 31, 2010 and 2009, we shipped flat panel display
inspection systems of approximately $80,000 and $478,000, respectively, which
was not recognized in those periods’ revenue because final acceptance had not
been received from the customer.
Costs of
sales decreased $127,000 (39%) to $201,000 (38% of sales) in the first quarter
of 2010 compared to $328,000 (41% of sales) in the first quarter of
2009. This was primarily due to an decrease in material costs of
$121,000 as a result of the lower sales of flat panel display inspection systems
in the 2010 period and reduced material cost as a percentage of sales in the
2010 period.
Marketing
costs decreased $22,000 (16%) to $114,000 in the first quarter of 2010 compared
to $136,000 in the first quarter of 2009. This decrease was attributable to
reduced compensation, related benefits and travel costs. Expense
allocated to Marketing for amortization of share based compensation as required
by ASC Topic 718 for 2010 was approximately $2,000 and for the first
quarter of 2009 was approximately $15,000.
General
and administrative (“G&A”) costs decreased $155,000 (39%) to $245,000 in the
first quarter of 2010 compared to $400,000 in the first quarter of 2009. The
decrease was a result of decreases in personnel, legal costs and stockholder
relations. Expense allocated to G&A for amortization of share- based
compensation as required by ASC Topic 718 for 2010 was approximately $2,000 for
the first quarter of 2010 and $74,000 for the first quarter of
2009.
Engineering
and development expenditures decreased $105,000 (36%) to $183,000 in the first
quarter of 2010 compared to $288,000 in the first quarter of 2009. The decrease
was primarily a result of decreases in personnel, contract engineering services,
and travel costs. Expense allocated to Engineering and Development for
amortization of share-based compensation as required by ASC Topic 718 for 2010
was approximately $3,000 for the first quarter of 2010 and $23,000 for the first
quarter of 2009.
Other
income for the three months ended March 31, 2010 was comparable to the three
months ended March 31, 2009.
Interest
expense increased $82,000 to $244,000 in the first quarter of 2010 compared to
$162,000 in the first quarter of 2009. The increase is primarily
attributable to the issuance of $1,437,000 of additional Class 2 and Class 3
Notes between March 31, 2010 and March 31, 2009.
Liquidity
and Capital Resources
Net cash
used in operating activities was $355,000 for the three months ended March 31,
2010, compared to $918,000 for the first three months of 2009. Operating cash
flow for both periods primarily reflected net losses of $455,000 for 2010 and
$527,000 for 2009 adjusted for non-cash charges and changes in working capital.
Working capital changes in the first three months of 2010 primarily reflected
decreases as a result of decreases in our product sales and decreases in
accounts payable and other accrued liabilities as a result of decreases in
accounts payable trade and customer deposits and offset by increases in accrued
interest, accrued product warranty and other accrued
liabilities. Working capital changes in the first three months of
2009 primarily reflected increases in accounts receivable and inventories as a
result of increases in our product sales and increases in accounts payable and
other accrued liabilities as a result of increases in deferred revenue and
accrued interest.
Investing
activities for the three months ended March 31, 2010 included an increase in
patents of $2,000 offset by $2,000 in proceeds from the sale of equipment. Our
investing activities for the three months ended March 31, 2009 included an
increase in patents of $14,000.
Financing
activities for the three months ended March 31, 2010 included proceeds of
$370,000 from the issuance of Class 2 Notes and proceeds of $2,000 from the
exercise of warrants. Our financing activities for the three months ended March
31, 2009 included proceeds of $780,000 from the issuance of Class 2 Notes and
the issuance of $90,000 of Class 3 Notes. We paid $14,000 of interest
on Class 3 Notes during the three-month period ended March 31, 2010 and $19,000
during the three-month period ended March 31, 2009.
During
the quarter ended March 31, 2010, we issued $370,000 of Class 2 Notes, $176,308
of Class 3 for the payment of interest, and $170,000 of Class 3 Convertible
Notes for the payment of Class 2 Notes.
For
further discussion regarding our obligations, see Note C – Long Term Debt and
Other Financing Arrangements and Note I – Subsequent Events.
Management’s
Discussion of Critical Accounting Policies
Our
condensed financial statements are prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and judgments 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 reporting
period. The accounting policies discussed below are considered by
management to be the most important to an understanding of our financial
statements, because their application places the most significant demands on
management's judgment and estimates about the effect of matters that are
inherently uncertain. Our assumptions and estimates were based on the
facts and circumstances known at March 31, 2009; future events rarely develop
exactly as forecast, and the best estimates routinely require
adjustment. These policies are also described in Note B of the
Condensed Financial Statements included in this Form 10-Q.
Revenue
Recognition
We
recognize revenue in accordance with ASC 605 “Revenue Recognition”, and Staff
Accounting Bulletin No. 101 (“SAB 101”), and Staff Accounting Bulletin No. 104
(“SAB 104”) Revenue Recognition in Financial Statements. Revenue is recognized
when persuasive evidence of an arrangement exists, delivery has occurred or
services have been rendered, the selling price is fixed or determinable and
collectability is reasonably assured.
We
recognize revenue at the time of shipment for product sales where the customer’s
acceptance criteria can be demonstrated as met prior to shipment and where title
transfers on shipment. We recognize revenue at the time of final
acceptance at the customer site when title does not transfer on shipment or if
acceptance criteria at the customer site are substantially different than
acceptance criteria for shipment. We recognize revenue for product
sales with no specific customer acceptance criteria, including spare parts, on
shipment. Revenue from service contracts is recognized over the term
of the contract. Revenue is reported net of sales
commissions.
Inventories
Inventories
are stated at the lower of standard cost, which approximates actual cost
determined on a first-in, first-out basis, or market. Inventories are
recorded net of allowances for unsalable or obsolete raw materials,
work-in-process and finished goods. We evaluate on a quarterly basis
the status of our inventory to ensure the amount recorded in our financial
statements reflects the lower of our cost or the value we expect to receive when
we sell the inventory. This estimate is based on several factors,
including the condition and salability of our inventory and the forecasted
demand for the particular products incorporating these
components. Based on current backlog and expected orders, we forecast
the upcoming usage of current stock. We record reserves for obsolete
and slow-moving parts ranging from 0% for active parts with sufficient
forecasted demand up to 100% for excess parts with insufficient demand or
obsolete parts. Amounts in work-in-process and finished goods inventory
typically relate to firm orders and, therefore, are not subject to obsolescence
risk.
Impairment
of Long-lived Assets
We review
our long-lived assets, including property, equipment and intangibles, for
impairment whenever events or changes in business circumstances indicate that
the carrying amount of the assets may not be fully recoverable. An
impairment loss would be recognized when estimated undiscounted future cash
flows expected to result from the use of the asset and its eventual disposition
are less than the carrying amount of the asset.
Share
Based Compensation
We
account for our share based compensation plans according to the provisions of
ASC 718 “Stock Based Compensation”. Accordingly, compensation costs attributable
to stock options or similar equity instruments granted are measured at the fair
value at the grant date and expensed over the expected vesting
period.
The fair
value of each option award is estimated on the date of grant using the
Black-Scholes option valuation model. The fair value of all awards is
amortized on a straight-line basis over the requisite service
periods. The expected life of all awards granted represents the
period of time that they are expected to be outstanding. The expected
life is determined using historical and other information available at the time
of grant. Expected volatilities are based on historical volatility of
our common stock, and other factors. The risk-free rate for periods
within the contractual life of the option is based on the U.S. Treasury yield
curve in effect at the time of grant. We use historical data to
estimate pre-vesting option forfeitures.
Contingencies
and Litigation
We make
an assessment of the probability of an adverse judgment resulting from current
and threatened litigation. We accrue the cost of an adverse judgment
if, in management’s estimation, an adverse settlement is probable and management
can reasonably estimate the ultimate cost of such litigation. We have
made no such accruals as of March 31, 2010 and 2009.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
This Item
3 is not applicable to us as, pursuant to Item 305(e) of Regulation S-K, a
smaller reporting company is not required to provide the information required by
Item 305 of Regulation S-K.
Item
4. Controls and Procedures
The
Company’s chief executive officer and chief financial officer have each reviewed
and evaluated the effectiveness of the Company’s disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
the end of the period covered by this report as required by Exchange Act Rules
13a-15(b) and 15d-15(b). Based on that evaluation, the chief executive officer
and chief financial officer have each concluded that the Company’s current
disclosure controls and procedures are effective. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer’s management, including its principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Changes
in Internal Controls Over Financial Reporting
There
have been no changes in the Company’s internal controls over financial reporting
that occurred during the Company’s first quarter of the fiscal year 2010 that
materially affected, or are reasonably likely to materially affect, the
Company’s internal controls over financial reporting.
PART
II. OTHER INFORMATION
Item
6. Exhibits
Exhibit
|
|
|
Number
|
|
Description of Document
|
3.1
|
|
Articles
of Incorporation, as amended (filed as Exhibit 3.1 to the registrant's
Form 10-K for the year ended December 31, 1995, SEC file 0-12728, and
incorporated herein by reference).
|
|
|
|
3.2
|
|
Bylaws
of the Registrant, as amended (filed as Exhibit 3.2 to the registrant's
Form 10-K for the year ended December 31, 1994, SEC file 0-12728, and
incorporated herein by reference).
|
|
|
|
3.3
|
|
Certificate
of Designation effective April 11, 2005 and amendment to the By-Laws of
the Registrant effective March 23, 2005 (filed as Exhibit 4(b) to the
registrant’s Form 8-K dated April 14, 2005, SEC file 0-12728, and
incorporated herein by reference).
|
|
|
|
3.4
|
|
Certificate
of Amendment of Restated Articles of Incorporation, filed with the
Secretary of State of the State of Michigan on May 27, 2005 (filed as
Exhibit 3.4 to the registrant’s Registration Statement on Form SB-2 filed
on June 9, 2005, SEC File No. 333-125669, and incorporated herein by
reference).
|
|
|
|
3.5
|
|
Certificate
of Amendment of Restated Articles of Incorporation, filed with the
Secretary of State of the State of Michigan on April 19, 2007 (file as
Exhibit 3.5 to the registrant’s Registration Statement on Form S-1 filed
on April 18, 2008, SEC file No. 333-125669, and incoprorated herein by
reference).
|
|
|
|
3.6
|
|
Certificate
of Amendment of Restated Articles of Incorporation, filed with the
Secretary of State of the State of Michigan on May 28, 2008 (filed as
Exhibit 3.6 to the registrant’s Form 10-Q for the quarter ended June 30,
2008, SEC file No. 000-12728, and incorporated herein by
reference).
|
|
|
|
3.7
|
|
Certificate
of Amendment of Restated Articles of Incorporation, filed with the
Secretary of State of the State of Michigan on May 21, 2009 (filed as
Exhibit 3.7 to the registrant’s Form 10-Q for the quarter ended September
30, 2009, SEC file No. 000-12728, and incorporated herein by
reference).
|
|
|
|
4.1
|
|
Form
of Fourth Amended Note and Warrant Purchase Agreement including Form of
Integral Vision, Inc. Class 3 Note (filed as Exhibit 4.8 to registrant’s
Form 10-K for the year ended December 31, 2003, SEC file 0-12728, and
incorporated herein by reference).
|
|
|
|
4.2
|
|
Securities
Purchase Agreement, Effective April 12, 2005 (filed as Exhibit 4.(A) to
registrant’s Form 8-K filed April 14, 2005, SEC file 0-12728, and
incorporated herein by reference).
|
|
|
|
4.3
|
|
Form
of Consent to Modifications dated November 14, 2006 modifying the terms of
the Fourth Amended Note and Warrant Purchase Agreement including Form of
Integral Vision, Inc. Class 2 Warrant (filed as Exhibit 4.9 to
registrant’s Form 10-Q for the quarter ended September 30, 2006, SEC file
0-12728, and incorporated herein by reference).
|
|
|
|
4.4
|
|
Form
of Consent to Modifications dated August 13, 2007 modifying the terms of
the Fourth Amended Note and Warrant Purchase Agreement (filed as Exhibit
4.4 to registrant’s Form 10-QSB for the quarter ended June 30, 2007, SEC
file 0-12728, and incorporated herein by reference).
|
|
|
|
4.5
|
|
Form
of Consent to Modifications dated October 10, 2007 modifying the terms of
the Fourth Amended Note and Warrant Purchase Agreement (filed as Exhibit
4.7 to registrant’s Form 10-QSB for the quarter ended September
30, 2007, SEC file 0-12728, and incorporated herein by
reference).
|
|
|
|
4.6
|
|
Form
of Consent to Modifications dated January 18, 2008 modifying the terms of
the Fourth Amended Note and Warrant Purchase Agreement (filed as Exhibit
4.6 to the registrant’s Form 10-KSB for the year ended December 31, 2007,
SEC file 000-12728, and incorporated herein by
reference).
|
|
|
|
4.7
|
|
Form
of Amended Collateral Assignment of Proprietary Rights dated March 5, 2008
(filed as Exhibit 4.7 to the registrant’s Form 10-KSB for the year ended
December 31, 2007, SEC file 000-12728, and incorporated herein by
reference).
|
|
|
|
4.8
|
|
Form
of Amended Security Agreement dated March 6, 2008 (filed as Exhibit 4.8 to
the registrant’s Form 10-KSB for the year ended December 31, 2007, SEC
file 000-12728, and incorporated herein by reference).
|
|
|
|
4.9
|
|
Form
of Consent to Amend and Replace Agreements dated March 12, 2008 (filed as
Exhibit 4.9 to the registrant’s Form 10-KSB for the year ended December
31, 2007, SEC file 000-12728, and incorporated herein by
reference).
|
4.10
|
|
Form
of Fifth Amended and Restated Note and Warrant Purchase Agreement (filed
as Exhibit 4.10 to the registrant’s Form 10-KSB for the year ended
December 31, 2007, SEC file 000-12728, and incorporated herein by
reference).
|
|
|
|
4.11
|
|
Waiver
and Amendment Agreement, effective September 15, 2008, and the
Registration Rights Agreement and common stock Warrants, made a part
thereof, among the respective parties thereto (filed as Exhibit 4.1 to the
registrant’s Form 8-K filed September 15, 2008, SEC file 0-12728, and
incorporated herein by reference).
|
|
|
|
4.12
|
|
Exchange
Agreements, effective September 15, 2008, among the respective parties
thereto (filed as Exhibit 4.3 to the registrant’s Form 8-K filed September
15, 2008, SEC file 0-12728, and incorporated herein by
reference).
|
|
|
|
4.13
|
|
Form
of Consent to Amend and Replace Agreements dated June 10, 2009 (filed as
Exhibit 4.13 to the registrant’s Form 10-Q for the quarter ended September
30, 2009, SEC file 000-12728, and incorporated herein by
reference).
|
|
|
|
4.14
|
|
Form
of Consent to Amend and Replace Agreements dated June 24, 2009 (filed as
Exhibit 4.13 to the registrant’s Form 10-Q for the quarter ended September
30, 2009, SEC file 000-12728, and incorporated herein by
reference).
|
|
|
|
4.15
|
|
Form
of Consent to Amend and Replace Agreements dated September 16, 2009 (filed
as Exhibit 4.13 to the registrant’s Form 10-Q for the quarter ended
September 30, 2009, SEC file 000-12728, and incorporated herein by
reference).
|
|
|
|
4.16
|
|
Form
of Consent to Modifications dated April 19, 2010, modifying the terms of
the Fifth Amended Note and Warrant Purchase Agreement.
|
|
|
|
4.17
|
|
Form
of Amendment Agreement dated April 22, 1010, modifying the terms of
certain warrants issued pursuant to the Waiver and Amendment
Agreement.
|
|
|
|
10.1
|
|
Integral
Vision, Inc. Employee Stock Option Plan (filed as Exhibit 10.5 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC file
0-12728, and incorporated herein by reference).
|
|
|
|
10.2
|
|
Form
of Confidentiality and Non-Compete Agreement Between the Registrant and
its Employees (filed as Exhibit 10.4 to the registrant's Form 10-K for the
year ended December 31, 1992, SEC File 0-12728, and incorporated herein by
reference).
|
|
|
|
10.3
|
|
Integral
Vision, Inc. 1999 Employee Stock Option Plan (filed as exhibit 10.5 to the
registrant’s Form 10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference).
|
|
|
|
10.4
|
|
Integral
Vision, Inc. 2004 Employee Stock Option Plan (filed as exhibit 10.11 to
the registrant’s Form 10-Q for the quarter ended June 30, 2004 and
incorporated herein by reference).
|
|
|
|
10.5
|
|
Integral
Vision, Inc. 2008 Equity Incentive Plan (filed as exhibit 10.5 to the
registrant’s Form 10-KSB for the year ended December 31, 2008 and
incorporated herein by reference).
|
|
|
|
10.6
|
|
Amendment
and Restatement of Integral Vision, Inc. 2008 Equity Incentive Plan (filed
as Exhibit 10.6 to the registrant’s Schedule 14A filed March 26, 2009, SEC
file 000-12728, and incorporated herein by reference).
|
|
|
|
10.7
|
|
Form
of Amendment and Restatement of Integral Vision, Inc. 2008 Equity
Incentive Plan.
|
|
|
|
31.1
|
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a).
|
|
|
|
31.2
|
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule
15d-14(a).
|
|
|
|
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. 1350.
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C.
1350.
|
SIGNATURES
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 thereunto
duly authorized.
|
|
INTEGRAL
VISION, INC.
|
|
|
|
Dated: May
14, 2010
|
By:
|
/s/ Charles J. Drake
|
|
|
Charles
J. Drake
|
|
|
Chairman
of the Board and
|
|
|
Chief
Executive Officer
|
|
|
|
Dated: May
14, 2010
|
By:
|
/s/ Mark R. Doede
|
|
|
Mark
R. Doede
|
|
|
President,
Chief Operating Officer
|
|
|
and
Chief Financial Officer
|
EXHIBIT
31.1
CERTIFICATION
I,
Charles J. Drake, certify that:
1. I
have reviewed this quarterly report on Form 10-Q of Integral Vision,
Inc.;
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: May
14, 2010
/s/
Charles J. Drake
|
Charles
J. Drake
|
Chief
Executive Officer
|
EXHIBIT
31.2
CERTIFICATION
I, Mark
R. Doede, certify that:
1.
|
I
have reviewed this quarterly report on Form 10-Q of Integral Vision,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: May
14, 2010
/s/
Mark R. Doede
|
Mark
R. Doede
|
Chief
Financial Officer
|
EXHIBIT
32.1
CERTIFICATION
Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350, as
adopted), the undersigned, Charles J. Drake, Chairman of the Board and Chief
Executive Officer of Integral Vision, Inc. (the
“Company”
), hereby certifies
that, to the best of his knowledge:
1.
|
The
Company's Quarterly Report on Form 10-Q for the period ended March
31, 2010 (the
“Quarterly
Report”
), to which this Certification is attached as
Exhibit 32.1, fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended; and
|
2.
|
The
information contained in the Quarterly Report fairly presents, in all
material respects, the financial condition of the Company at the end of
the period covered by the Quarterly Report and results of operations of
the Company for the period covered by the Quarterly
Report.
|
DATED: May
14, 2010
/s/ Charles J. Drake
|
Charles
J. Drake
|
Chairman
of the Board and
|
Chief
Executive Officer
|
EXHIBIT
32.2
CERTIFICATION
Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350, as
adopted), the undersigned, Mark R. Doede, President, Chief Operating Officer,
and Chief Financial Officer of Integral Vision, Inc. (the
“Company”
), hereby certifies
that, to the best of his knowledge:
1.
|
The
Company's Quarterly Report on Form 10-Q for the period ended March
31, 2010 (the
“Quarterly
Report”
), to which this Certification is attached as
Exhibit 32.2, fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended; and
|
2.
|
The
information contained in the Quarterly Report fairly presents, in all
material respects, the financial condition of the Company at the end of
the period covered by the Quarterly Report and results of operations of
the Company for the period covered by the Quarterly
Report.
|
DATED: May 14,
2010
/s/ Mark R. Doede
|
Mark
R. Doede
|
President,
Chief Operating Officer,
|
and
Chief Financial Officer
|
Execution
Copy
AMENDMENT
AGREEMENT
This
Amendment Agreement, dated as of April __, 2010 (this “
Agreement
”),
is by and between INTEGRAL VISION, INC.,
a Michigan corporation
(the “
Company
”),
and each person or entity that is named on
Schedule A
hereto. Each such person or entity, together with its successors and
permitted assigns, is referred to herein as an “
Investor
”,
and all such persons and entities, together with their respective successors and
permitted assigns, are collectively referred to herein as the “
Investors
”.
Each of
the Investors is the holder of a warrant dated as of September 15, 2008, as
identified on
Schedule A
(each, a “
Warrant
”
and, collectively, the “
Warrants
”). The
Parties wish to amend the Warrants.
In
consideration of the mutual covenants made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1.
Amendment of
Warrants
.
1.1 As
of the date of this Agreement, paragraph 6(c) of each of the Warrants shall be
deemed amended by the insertion of the following sentence at the end of such
Warrant:
Upon a
reverse stock split, stock combination or similar transaction that results in a
decrease in the number of outstanding shares of the Company’s capital stock, the
number of shares of Common Stock for which this Warrant is exercisable shall
also be proportionately reduced so that the percentage of the Company’s
outstanding capital stock for which this Warrant is exercisable will remain
unchanged.
1.2 Except
as amended hereby, each Warrant shall continue in full force and effect in
accordance with its terms.
2.
Representations of the
Company
. The Company hereby represents and warrants to each Investor that
(i) the Company has the requisite corporate power and authority to enter into
this Agreement and to amend the Warrants as described herein; and (ii) this
Agreement constitutes the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (a)
applicable bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or other similar laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (b) general
principles of equity.
3.
Representations of Each
Investor
. Each Investor hereby represents and warrants to the Company
that this Agreement constitutes such Investor’s valid and legally binding
obligation, enforceable in accordance with its terms, subject to (a) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (b) general principles of
equity.
4.
Successors and
Assigns
. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties.
5.
Governing
Law
. This Agreement shall be governed by and construed under
the laws of the State of New York applicable to contracts made and to be
performed entirely within the State of New York.
6.
Notices
. Any notice,
demand or request given by the Company or the Investor concerning this Agreement
shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission, unless such delivery is made on a day
that is not a Business Day, or after 5:00 p.m. (eastern time) on a Business Day,
in which case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to an
overnight courier and (iii) on the Business Day actually received if deposited
in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid), addressed as follows:
If to the
Company
:
Integral
Vision, Inc.
49113
Wixom Tech Drive
Wixom,
Michigan 48393
Attn: Mark
R. Doede, President
Tel: (248)
668-9230 x203
Fax: (248)
668-9384
With a copy (which shall not constitute
notice) to:
Mazzeo
Song & Bradham LLP
708 Third
Avenue
New York,
New York 10017
Attn: David
S. Song, Esq.
Tel: 212-599-0700
Fax: 212-599-8400
and if to
any Investor, to such address for such Investor as shall appear next to such
Investor’s name on
Schedule A
hereto, or as shall be designated by such Investor in writing to the Company in
accordance with this
Section
6
.
7.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. This Agreement may be executed and delivered by facsimile
transmission or email of an electronic file.
8.
Entire Agreement;
Amendments
. This Agreement constitutes the entire agreement
between the parties with regard to the subject matter hereof and thereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended except pursuant to a
written instrument executed by the Company and each Investor. Any waiver or
consent given by a party shall be in writing and shall be effective only in the
specific instance and for the specific purpose for which given.
[
Signature Page to
Follow
]
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INTEGRAL
VISION, INC.
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
BONANZA
MASTER FUND LTD.
|
|
By:
|
|
|
Name: Brian
Ladin
|
|
Title: Managing
Director
|
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INTEGRAL
VISION, INC.
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
SRB
GREENWAY OPPORTUNITY FUND, L.P.
|
By:
|
SRB
Management, L.P., General Partner
|
By:
|
BC
Advisors, L.L.C., General Partner
|
|
|
By:
|
|
|
Name: Steven
R. Becker
|
|
Title: Member
|
|
SRB
GREENWAY OPPORTUNITY FUND (QP), L.P.
|
By:
|
SRB
Management, L.P., General Partner
|
By:
|
BC
Advisors, L.L.C., General Partner
|
|
|
By:
|
|
|
Name: Steven
R. Becker
|
|
Title: Member
|
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INTEGRAL
VISION, INC.
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
KIRCHER
FAMILY TRUST
|
|
By:
|
|
|
Name: Stephen
C. Kircher
|
|
Title:
|
Schedule
A
SCHEDULE
OF INVESTORS
Investor
Name
|
|
Address for Notices
|
|
Jurisdiction of
Residence
|
|
Number of
Warrant Shares
in Warrant
|
Bonanza
Master Fund Ltd.
|
|
300
Crescent Court, Suite 1740
Dallas,
TX 75201
Attention:
Brian Ladin
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
SRB
Greenway Opportunity Fund, L.P.
|
|
300
Crescent Court, Suite 1111
Dallas,
TX 75201
Attention:
Joe Worsham
|
|
|
|
42,600
|
|
|
|
|
|
|
|
SRB
Greenway Opportunity Fund (QP), L.P.
|
|
300
Crescent Court, Suite 1111
Dallas,
TX 75201
Attention:
Joe Worsham
|
|
|
|
305,150
and
27,250
|
|
|
|
|
|
|
|
Kircher
Family Trust
|
|
6000
Greystone Place
Granite
Bay, CA 95746
Attention:
Stephen C. Kircher
|
|
|
|
25,000
|
Execution
Copy
AMENDMENT
AGREEMENT
This
Amendment Agreement, dated as of April __, 2010 (this “
Agreement
”),
is by and between INTEGRAL VISION, INC.,
a Michigan corporation
(the “
Company
”),
and each person or entity that is named on
Schedule A
hereto. Each such person or entity, together with its successors and
permitted assigns, is referred to herein as an “
Investor
”,
and all such persons and entities, together with their respective successors and
permitted assigns, are collectively referred to herein as the “
Investors
”.
Each of
the Investors is the holder of a warrant dated as of September 15, 2008, as
identified on
Schedule A
(each, a “
Warrant
”
and, collectively, the “
Warrants
”). The
Parties wish to amend the Warrants.
In
consideration of the mutual covenants made herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1.
Amendment of
Warrants
.
1.1 As
of the date of this Agreement, paragraph 5(c) of each of the Warrants shall be
deemed amended by the insertion of the following sentence at the end of such
Warrant:
Upon a
reverse stock split, stock combination or similar transaction that results in a
decrease in the number of outstanding shares of the Company’s capital stock, the
number of shares of Common Stock for which this Warrant is exercisable shall
also be proportionately reduced so that the percentage of the Company’s
outstanding capital stock for which this Warrant is exercisable will remain
unchanged.
1.2 Except
as amended hereby, each Warrant shall continue in full force and effect in
accordance with its terms.
2.
Representations of the
Company
. The Company hereby represents and warrants to each Investor that
(i) the Company has the requisite corporate power and authority to enter into
this Agreement and to amend the Warrants as described herein; and (ii) this
Agreement constitutes the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (a)
applicable bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or other similar laws of general application relating to or
affecting the enforcement of creditors’ rights generally and (b) general
principles of equity.
3.
Representations of Each
Investor
. Each Investor hereby represents and warrants to the Company
that this Agreement constitutes such Investor’s valid and legally binding
obligation, enforceable in accordance with its terms, subject to (a) applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (b) general principles of
equity.
4.
Successors and
Assigns
. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties.
5.
Governing
Law
. This Agreement shall be governed by and construed under
the laws of the State of New York applicable to contracts made and to be
performed entirely within the State of New York.
6.
Notices
. Any notice,
demand or request given by the Company or the Investor concerning this Agreement
shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission, unless such delivery is made on a day
that is not a Business Day, or after 5:00 p.m. (eastern time) on a Business Day,
in which case such delivery will be deemed to be made on the next succeeding
Business Day, (ii) on the next Business Day after timely delivery to an
overnight courier and (iii) on the Business Day actually received if deposited
in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid), addressed as follows:
If to the
Company
:
Integral
Vision, Inc.
49113
Wixom Tech Drive
Wixom,
Michigan 48393
Attn: Mark
R. Doede, President
Tel: (248)
668-9230 x203
Fax: (248)
668-9384
With a copy (which shall not constitute
notice) to:
Mazzeo
Song & Bradham LLP
708 Third
Avenue
New York,
New York 10017
Attn: David
S. Song, Esq.
Tel: 212-599-0700
Fax: 212-599-8400
and if to
any Investor, to such address for such Investor as shall appear next to such
Investor’s name on
Schedule A
hereto, or as shall be designated by such Investor in writing to the Company in
accordance with this
Section
6
.
7.
Counterparts
. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same
instrument. This Agreement may be executed and delivered by facsimile
transmission or email of an electronic file.
8.
Entire Agreement;
Amendments
. This Agreement constitutes the entire agreement
between the parties with regard to the subject matter hereof and thereof,
superseding all prior agreements or understandings, whether written or oral,
between or among the parties. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended except pursuant to a
written instrument executed by the Company and each Investor. Any waiver or
consent given by a party shall be in writing and shall be effective only in the
specific instance and for the specific purpose for which given.
[
Signature Page to
Follow
]
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INTEGRAL
VISION, INC.
|
|
By:
|
|
|
Name:
|
|
Title:
|
|
SPECIAL
SITUATIONS CAYMAN FUND, L.P.
|
|
By:
|
|
|
Name: David
Greenhouse
|
|
Title: General
Partner
|
|
SPECIAL
SITUATIONS PRIVATE EQUITY FUND, L.P.
|
|
By:
|
|
|
Name: David
Greenhouse
|
|
Title: General
Partner
|
|
SPECIAL
SITUATIONS TECHNOLOGY FUND, L.P.
|
|
By:
|
|
|
Name: David
Greenhouse
|
|
Title: General
Partner
|
|
SPECIAL
SITUATIONS TECHNOLOGY FUND II, L.P.
|
|
By:
|
|
|
Name: David
Greenhouse
|
|
Title: General
Partner
|
Schedule
A
SCHEDULE
OF INVESTORS
Investor
Name
|
|
Address for Notices
|
|
Jurisdiction of
Residence
|
|
Number of
Warrant Shares
in Warrant
|
Special
Situations Cayman Fund, L.P.
|
|
527
Madison Avenue, Suite 2600
New
York, NY 10022
Attention:
Marianne Kelly
|
|
Delaware
|
|
681,081
|
|
|
|
|
|
|
|
Special
Situations Private Equity Fund, L.P.
|
|
527
Madison Avenue, Suite 2600
New
York, NY 10022
Attention:
Marianne Kelly
|
|
Delaware
|
|
1,459,459
|
|
|
|
|
|
|
|
Special
Situations Technology Fund, L.P.
|
|
527
Madison Avenue, Suite 2600
New
York, NY 10022
Attention:
Marianne Kelly
|
|
Delaware
|
|
204,325
|
|
|
|
|
|
|
|
Special
Situations Technology Fund II, L.P.
|
|
527
Madison Avenue, Suite 2600
New
York, NY 10022
Attention:
Marianne Kelly
|
|
Delaware
|
|
1,255,135
|
AMENDMENT
AND RESTATEMENT OF
INTEGRAL
VISION, INC. 2008 EQUITY INCENTIVE PLAN
Integral
Vision, Inc. ("Company") hereby amends and restates the Integral Vision, Inc.
2008 Equity Incentive Plan ("Plan"), effective April 19, 2010, as set out
herein.
ARTICLE
I
APPROVAL AND
PURPOSE
Section
1.01.
Approval of Amendment and
Restatement
. The Company's Board of Directors approved this
Amendment and Restatement of the Plan on April 19, 2010, contingent on approval
by the Company's shareholders at or before the 2010 annual meeting of
shareholders, and the Company's shareholders approved this Amendment and
Restatement of the Plan on ______, 2010.
Section
1.02.
Description of
Plan
. The Plan is designed to promote the interests of the
Company and its shareholders by providing a means by which the Company can grant
equity-based incentives to eligible employees of the Company or any Subsidiary
as well as non-employee directors, consultants, or advisors who are in a
position to contribute materially to the Company’s success
("Participants"). The Plan permits the Compensation Committee of the
Company's Board of Directors to grant Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock, and Shares, all as provided
herein.
Section
1.03.
Purpose of
Plan
. The purpose of the Plan is to further the growth,
development, and financial success of the Company by providing for stock-based
incentives to Participants that align their interests more closely with those of
the Company's shareholders. The Company also believes that the Plan
will assist it in its efforts to attract and retain quality employees,
directors, consultants, and advisors.
ARTICLE
II
DEFINITIONS AND RULES OF
CONSTRUCTION
Section
2.01.
Definitions.
When
capitalized in this Plan, the following terms shall have the meanings specified
below, unless the context otherwise requires:
(a)
“Advisor”
means an individual who provides valuable services to the Company or a
Subsidiary in a capacity other than as an Employee or Director.
(b)
"Agreement"
means a written instrument between the Company and a Participant evidencing an
Award and prescribing the terms, conditions, and restrictions applicable to the
Award.
(c)
"Award"
an Incentive Stock Option, a Non-Qualified Stock Option, Restricted Stock, or
Shares granted pursuant to the Plan.
(d)
"Board
of Directors" or "Board" means the Company's Board of Directors, as constituted
from time to time.
(e)
"Code"
means the Internal Revenue Code of 1986, as amended from time to
time.
(f)
"Committee"
means the committee described in Section 3.01; provided however, to the extent
that the Board has not designated a Committee, "Committee" means the
"Board."
(g)
"Company"
means Integral Vision, Inc.
(h)
"Director"
means a director of the Company or a Subsidiary who is not also an
Employee.
(i)
"Effective
Date" means March 12, 2008, the effective date of the Plan.
(j)
"Employee"
means any individual employed by the Company or a Subsidiary, including an
employee who is a member of the Board or the board of directors of a
Subsidiary.
(k)
"Employer"
means the Company and/or a Subsidiary.
(l)
"Exercise
Price" means the price required to be paid to the Company upon the exercise of
an Award.
(m)
"Fair
Market Value" means, with respect to a Share on any date, as
follows:
(1)
if
the Shares are listed or admitted to trade and are readily tradable on a
national securities exchange, the closing price of a Share on the principal
national securities exchange on which the Shares are listed or admitted to trade
on such date, or, if there is no trading of the Shares on such date, the closing
price of a Share as quoted on the next preceding date on which there was trading
in Shares;
(2)
if
the Shares are not subject to paragraph (1) above, but are readily tradable on
an established securities market, the closing price of a Share on such date on
such market, or if there is no trading of the Shares on such date, the closing
price of a Share on the next preceding date on which there was trading in
Shares; and
(3)
if
the Shares are not subject to paragraph (1) or (2) above, the fair market value
of the Shares on such date, as determined by the Committee in a manner that
satisfies the requirements of Code Section 409A and the guidance thereunder for
exempt equity-based compensation.
(n)
"Grant
Date" means the date on which the Committee or its designee approves the grant
of an Award. Notwithstanding the preceding sentence, if the Committee
grants an Option and expressly designates a future Grant Date, with the minimum
per Share Exercise Price based on the Fair Market Value of a Share on that
future date, such future date shall be the Grant Date.
(o)
"Incentive
Stock Option" means an option for Shares granted pursuant to the Plan that
satisfies the requirements of Code Section 422.
(p)
"Non-Qualified
Stock Option" means an option for Shares granted pursuant to the Plan that is
not an Incentive Stock Option.
(q)
"Option"
means an Incentive Stock Option or a Non-Qualified Stock Option.
(r)
"Participant"
means a person to whom an Award has been granted under the Plan, provided,
however, a Participant shall cease to be such at such time as all Awards granted
to him under the Plan have been exercised and/or forfeited.
(s)
"Period
of Restriction" means the period during which a Share of Restricted Stock is
subject to restrictions and a substantial risk of forfeiture.
(t)
"Plan"
means the Integral Vision, Inc. 2008 Equity Incentive Plan, as set out in this
document, as amended from time to time.
(u)
"Restricted
Stock" means Shares awarded pursuant to the Plan that, at the time of grant, are
non-transferable and subject to a substantial risk of forfeiture.
(v)
"Prior
Plan" means the Integral Vision , Inc. 2004 Stock Option Plan.
(w)
"Rule
16b-3" means Rule 16b-3 under the Securities Exchange Act of 1934, as
amended.
(x)
"Separation
from Service," "Separates from Service," or any variation of such term means,
(i) in the case of an Employee, a complete termination of the employment
relationship between the Employee and all Employers, (ii) in the case of a
Director, termination of the Director's service as a Director, and (iii), in the
case of an Advisor, a complete termination of the contractual relationship
between the Advisor and the Company and all Subsidiaries.
(y)
"Share"
means a share of the Company's common stock.
(z)
"Subsidiary"
means any company that is a "subsidiary corporation" of the Company within the
meaning of Code Section 424.
Section
2.02.
Rules of
Construction.
The following rules shall apply in construing
the Plan and any Agreement:
(a)
Except
as expressly provided below, the Plan, all Awards and Agreements, and all other
related documents shall be governed by, and construed in accordance with, the
laws of the State of Michigan without regard to conflict of law
principles.
(b)
Words
used in the masculine shall be construed to include the feminine gender, where
appropriate, and words used in the singular or plural shall be construed as
being in the plural or singular, where appropriate.
(c)
Provisions
of the Plan applicable to Incentive Stock Options shall be construed to effect
compliance with Code Section 422.
(d)
Captions
and headings are for convenience only, and they shall not affect the
construction of the Plan or any Agreement.
(e)
Reference
to any provision of the Code or other law shall be deemed to include a reference
to the successor of such provision.
(f)
The
Plan and the Awards are intended to comply with and shall be construed to effect
compliance with, the exemptions under Rule 16b-3, in the case of Participants
who are subject to Section 16 of the Securities Exchange Act of 1934; provided,
however, the Company shall have no liability to any Participant for Section 16
consequences of an Award.
(g)
It
is intended that Options shall qualify as performance-based compensation or
otherwise be exempt from deductibility limitations under Code Section 162(m),
and the Plan and the Agreements shall be construed accordingly.
(h)
It
is intended that all Awards shall be exempt from the provisions of Code Section
409A, and the provisions of the Plan and all Agreements shall be construed in
accordance with such intent.
(i)
If
a court of competent jurisdiction holds any provision hereof invalid and
unenforceable, the remaining provisions shall continue in effect, provided that
the essential economic terms of the Plan and any Award can still be
enforced.
ARTICLE
III
ADMINISTRATION
Section
3.01.
Committee
. Except
as otherwise provided herein, the Plan shall be administered by the compensation
committee of the Board. The Committee shall consist solely of two or
more non-employee directors (within the meaning of Rule 16b-3) who are "outside
directors" for purposes of Code Section 162(m) and the regulations
thereunder. Any action of the Committee with respect to
administration of the Plan shall be taken by a majority vote or written consent
of its members.
Section
3.02.
Powers of
Committee
. Subject to the express provisions of the Plan and
any express limitations on its authority, the Committee is authorized and
empowered to administer the Plan and to (i) designate those persons who are
Participants; (ii) grant Awards; (iii) determine the effective date of each
Award, the number of Shares subject to the Award, and the other terms and
conditions governing the Award, which terms and conditions need not be the same
for each Award; (iv) interpret the Plan; (v) determine the Fair Market Value of
the Shares; (vi) accelerate the time during which an Option may be exercised or
the restrictions applicable to Shares of Restricted Stock shall lapse,
notwithstanding any provision of the applicable Agreement; (vii) prescribe,
amend, and rescind rules relating to the Plan; (viii) authorize any person to
execute on behalf of the Company any instrument required to effectuate the grant
of an Award; (ix) determine the rights and obligations of Participants under the
Plan; and (x) make all other determinations deemed necessary or advisable for
the administration of the Plan. Notwithstanding the preceding
provisions, the Committee is not authorized to take any action that would cause
an Award to become subject to the provisions of Code Section
409A.
Section
3.03.
Binding
Determinations
. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their sole discretion with
respect to matters within their authority related to the Plan, and any action
taken by, or inaction of, the Company, the Board, or the Committee consistent
with the terms of the Plan and relating or pursuant to the Plan shall be
conclusive and binding on all persons.
Section
3.04.
Reliance on
Experts
. In making any determination or in taking or not
taking any action under the Plan, the Committee may obtain and rely upon the
advice of experts, including employees of and professional advisors to the
Company.
Section
3.05.
Delegation
. The
Committee may delegate ministerial non-discretionary functions to one or more
Company officers or employees. Subject to applicable law, the
Committee may delegate to the Company's Chief Executive Officer all or part of
its authority and duties with respect to the granting of Awards to individuals
who are not (i) subject to the reporting and other provisions of Section 16 of
the Securities Exchange Act of 1934 or (ii) covered employees within the meaning
of Code Section 162(m)(3). Any delegation pursuant to this Section
shall specify the duration of the delegation and limit the amount and types of
Awards that may be granted pursuant thereto.
Section
3.06.
Limitations on
Liability
. No director, officer, or agent of the Company shall
be liable for any action, omission, or decision under the Plan that is taken,
made, or omitted in good faith.
ARTICLE
IV
ELIGIBILITY
The Committee shall, from time to time,
designate those persons eligible to receive Awards under the Plan from among
Employees, Directors, and Advisors. The Committee may grant more than
one Award to any Participant.
ARTICLE
V
SHARES SUBJECT TO
AWARDS
Section
5.01.
Shares Available
The only
shares subject to Awards shall be the Company's authorized, but unissued, or
reacquired Shares. Upon the expiration or termination, in whole or in
part, for any reason of an outstanding Award or any portion thereof that shall
not have vested or shall not have been exercised in full, or upon the surrender
of Shares as payment for an Award, any Shares subject to the Award that have not
been acquired by the Participant or that are forfeited or surrendered by the
Participant shall again become available for the granting of additional
Awards.
Section
5.02.
Aggregate Share
Limit
. Subject to adjustment as provided in Section 5.04 and
any limitations specified elsewhere in the Plan, the maximum number of Shares
cumulatively available for issuance pursuant to Awards shall not exceed the sum
of the following:
(a)
4,828,000
Shares authorized upon
original adoption of Plan, plus
(b)
2,500,000
additional Shares approved in 2009, plus
(c)
6,672,000
additional Shares, plus
(d)
any
Shares covered by an Award under the Plan or option under the Prior Plan that
are forfeited or remain unpurchased or undistributed upon termination or
expiration of the Award or option under the Prior Plan, plus
(e)
any
Shares exchanged by a Participant as full or partial payment to the Company of
the Exercise Price of any Award under the Plan.
Section
5.03.
Limitation Applicable to Incentive
Stock Options
. The maximum number of Shares that may be
delivered pursuant to Incentive Stock Options granted under the Plan is
14,000,000 Shares, subject to adjustment under Section 5.04. The only
limitations on the number of Shares available for Awards other than Incentive
Stock Options shall be those specified in Sections 5.02.
Section
5.04.
Adjustments Upon Recapitalization or
Reorganization
. If the outstanding Shares are changed into, or
exchanged for, a different number or kind of shares or securities of the Company
through any capital reorganization or reclassification, or if the number of
outstanding Shares is changed through a stock split or stock dividend, an
appropriate adjustment shall be made by the Committee in the number, kind,
and/or Exercise Price with respect to Shares as to which Awards may be granted
under the Plan. A corresponding adjustment shall likewise be made in
the number, kind, and/or Exercise Price for Shares with respect to which there
are unexercised outstanding Awards. Any such adjustment in an
outstanding Award, however, shall be made without change in the total price
applicable to the unexercised portion of the Award but with a corresponding
adjustment in the price for each Share covered by the Award. In
making such adjustments, or in determining that no such adjustments are
necessary, the Committee may rely upon the advice of counsel and accountants to
the Company, and the good faith determination of the Committee shall be final,
conclusive, and binding. No fractional Shares shall be issued or
issuable under the Plan on account of any such adjustment. No
adjustment shall be made pursuant to this Section, if it would cause an Award to
become subject to Code Section 409A or would cause an Incentive Stock Option to
fail to be such.
ARTICLE
VI
OPTION
GRANTS
Section
6.01.
Option Grants
. The
Committee may grant Non-Qualified Stock Options to any Employee, Director, or
Advisor, and it may grant Incentive Stock Options to any Employee, in each case,
as it deems appropriate. The Company may assume options granted by an
organization acquired by the Company or may grant Options in replacement of, or
in substitution for, any such options. Each Option shall consist of a
right to purchase a specified number of Shares during a specified period and at
a specified Exercise Price, all as determined by the Committee. In
addition to the terms, conditions, vesting periods, and restrictions established
by the Committee in the Agreement, each Incentive Stock Option must comply with
the requirements of Code Section 422 and Section 6.03.
Section
6.02.
Terms and Conditions of Options;
Agreements
. Each Option shall be evidenced by an Agreement
executed by the Company and the Participant, which shall contain such terms and
be in such form as the Committee may from time to time approve, subject to the
following limitations and conditions:
(a)
Grant and Notice of
Option
. The date of an Option grant shall, for all purposes,
be the date on which the Committee or its designee makes the determination
granting such Option, unless the Committee designates a specific future Grant
Date at such time. Notice of the determination shall be given to each
Participant to whom an Option is granted within a reasonable time after the
Grant Date. The grant of an Option shall not obligate the Participant
to exercise it.
(b)
Number of
Shares
. The Agreement shall state the number of Shares with
respect to which each Option is granted and whether the Option is a
Non-Qualified Stock Option or Incentive Stock Option.
(c)
Exercise
Price.
The Agreement shall state the per Share Exercise Price
for the Shares subject to the Option. The per Share Exercise Price
under an Option shall not be less than the Fair Market Value of a Share on the
Grant Date. For Incentive Stock Options, the per Share Exercise Price
shall satisfy the requirements of Section 6.03 and the provisions of the Code
applicable to incentive stock options.
(d)
Exercise and Payment of Exercise
Price
. A Participant may exercise a vested Option by (i)
giving written notice to the Company specifying the number of Shares to be
purchased and accompanied by payment of the full Exercise Price therefor in
cash, by check, or in such other form of lawful consideration as the Committee
may approve, including without limitation and in the sole discretion of the
Committee, the transfer by the Participant to the Company of outstanding Shares
held by the Participant in a manner intended to comply with the provisions of
Rule 16b-3, if applicable, and (ii) satisfying any other requirements set forth
herein (including, without limitation, the tax withholding requirements of
Article IX) or in the applicable Agreement. Any Shares delivered by
the Participant in connection with the exercise of an Option must have been
owned by the Participant for at least six months as of the date of
delivery. Shares used to satisfy the Exercise Price of an Option
shall be valued at their Fair Market Value on the date of exercise.
(e)
Restrictions on Grants
.
Notwithstanding any
other provisions set forth herein or in an Agreement, no Option may be granted
under the Plan after March 11, 2018.
(f)
Limitations on
Transfer
. No Option may be assigned, transferred, or pledged,
except by will or under the laws of descent and distribution. During
the lifetime of a Participant, an Option may be exercised only by the
Participant and may not be assigned, transferred, or pledged.
(g)
Vesting of
Options
. Options shall vest based on longevity of service
and/or other schedules established by the Committee, as set forth in each
Agreement. The Committee may grant Options that are fully vested and
exercisable at grant.
(h)
Issuance of Shares and Compliance
with Securities Laws
. The Company may postpone the issuance
and delivery of certificates representing Shares until (i) the admission of such
Shares to listing on any stock exchange on which Shares are then listed and (ii)
the completion of such registration or other qualification of Shares under any
state or federal law, rule, or regulation as the Company shall determine to be
necessary or advisable, which registration or other qualification the Company
shall use its best efforts to complete; provided, however, a person purchasing
or otherwise receiving Shares pursuant to the Plan has no right to require the
Company to register the Shares under federal or state securities laws at any
time. Any person purchasing or otherwise receiving Shares pursuant to
the Plan may be required to make such representations and furnish such
information as may, in the opinion of counsel for the Company, be appropriate to
permit the Company, in light of the existence or non-existence with respect to
such Shares of an effective registration under the Securities Act of 1933, as
amended, or any similar state statute, to issue the Shares in compliance with
the provisions of those or any comparable acts.
Section
6.03.
Additional Limitations Applicable to
Incentive Stock Options.
(a)
General.
The
limitations and conditions of this Section, in addition to the terms and
conditions otherwise specified by the Plan and the Agreement, shall apply to all
Incentive Stock Options.
(b)
Price
. The per
Share Exercise Price under an Incentive Stock Option shall be not less than the
Fair Market Value of a Share on the Grant Date. In the case of an
Incentive Stock Option granted to an Employee who is a 10% shareholder, the per
Share Exercise Price shall be not less than one hundred ten percent (110%) of
the Fair Market Value of a Share on the Grant Date.
(c)
Exercise
Period
. Unless terminated earlier pursuant to other terms and
provisions of the Agreement or the Plan, the term of each Incentive Stock Option
shall expire within the period prescribed in the Agreement relating thereto,
which shall not be more than five years from the Grant Date, if the Participant
is a 10% shareholder (as defined in Code Section 422(b)(6)), and not more than
ten years from the Grant Date, if the Participant is not a 10% shareholder (as
defined in Code Section 422(b)(6)). An Option shall not be treated as
an Incentive Stock Option if it is exercisable by the Participant more than (i)
three months after his termination of employment (ii), if the Participant is
disabled (within the meaning of Code Section 22(e)(3)), 12 months after his
termination of employment.
(d)
Maximum Exercise
Rule
. The aggregate Fair Market Value (determined as of the
Grant Date) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year under
this Plan and any other incentive stock option plan (within the meaning of Code
Section 422) of the Company or any parent or subsidiary corporation of the
Company shall not exceed $100,000.
(e)
Other
Restrictions
. Incentive Stock Options may be granted only to
employees of the Company (or a Subsidiary) that satisfy the other eligibility
requirements of the Code. There shall be imposed in any Agreement
relating to Incentive Stock Options such other terms and conditions as from time
to time are required for the Option be an "incentive stock option" within the
meaning of Code Section 422.
Section
6.04.
Termination of
Options
.
(a)
Each
Option granted under the Plan shall set forth a termination date, which shall be
not later than ten years from the Grant Date, subject to earlier termination as
set forth in this Plan or the Agreement.
(b)
The
Committee shall establish the effect of a Separation from Service on the rights
and benefits under each Option and in so doing may make distinctions based upon,
among other factors, the cause of Separation from Service. Following
Separation from Service, an Option may be exercised only in accordance with the
applicable Agreement and, unless otherwise expressly provided by the Committee,
only with respect to that number of Shares for which the Option could have been
exercised by the Participant on the date of Severance from Service.
(c)
The
Committee may cancel any unexpired Options at any time, if the Participant is
not in compliance with all applicable provisions of the Plan or with any
Agreement, or if the Participant, whether or not he is currently employed by an
Employer, engages in any of the following activities without the prior written
consent of the Employer:
(1)
directly
or indirectly renders services to or for an organization, or engages in a
business, that is, in the judgment of the Committee, in competition with the
Employer; or
(2)
discloses
to anyone outside of the Employer, or uses for any purpose other than the
Employer's business, any confidential or proprietary information or material
relating to the Employer, whether acquired by the Participant during or after
employment with the Employer.
The
Committee may, in its discretion and as a condition to the exercise of an
Option, require a Participant to acknowledge in writing that he is in compliance
with all applicable provisions of the Plan and of any Agreement and has not
engaged in any activities referred to in clauses (1) and (2) above.
(d)
Subject
to Section 6.06, (i) upon the dissolution, liquidation, or sale of all or
substantially all of the business, properties, and assets of the Company, (ii)
upon any reorganization, merger, consolidation, sale, or exchange of securities
in which the Company does not survive, (iii) upon any sale, reorganization,
merger, consolidation, or exchange of securities in which the Company does
survive and any of the Company's shareholders have the opportunity to receive
cash, securities of another corporation, partnership, or limited liability
company and/or other property in exchange for their capital stock of the
Company, or (iv) upon any acquisition by any person or group (as defined in
Section 13d of the Exchange Act) of beneficial ownership of more than 50% of the
then outstanding Shares (each of the events described in clauses (i), (ii),
(iii) or (iv) is referred to herein as an "Extraordinary Event"), the Plan and
each outstanding Option shall terminate, subject to any provision that has been
made by the Committee through a plan of reorganization or otherwise for the
substitution, assumption, settlement, or other continuation of the
Options. If Options are to terminate (with no substitution,
assumption, settlement, or other continuation) in such circumstances, each
Participant shall have the right, by giving notice at least ten days before the
effective date of the Extraordinary Event ("Effective Date"), to exercise on or
before the Effective Date, in whole or in part, any unexpired Option issued to
the Participant, to the extent that the Option is vested and exercisable as of
the Effective Date.
Section
6.05.
Rights as a Shareholder
.
Unless otherwise provided by the Board or the Committee, a Participant shall
have rights as a shareholder with respect to Shares covered by an Option,
including voting rights or rights to dividends, only upon the date of issuance
of a certificate to him and, if payment is required, only after payment if full
has been made for such Shares.
Section
6.06.
Acceleration of
Options
.
(a)
Notwithstanding
the preceding provisions of this Article or any provision to the contrary
contained in a particular Agreement, the Committee, in its sole discretion, may
accelerate the vesting and exercisability of all or any portion of any Option
then outstanding. The decision by the Committee to accelerate an
Option or to decline to accelerate an Option shall be final. In the
event of the acceleration of the exercisability of Option as the result of a
decision by the Committee pursuant to this Section, each outstanding Option so
accelerated shall be exercisable for a period from and after the date of such
acceleration and upon such other terms and conditions as the Committee may
determine in its sole discretion, provided that such terms and conditions (other
than terms and conditions relating solely to the acceleration of exercisability
and the related termination of an Option) may not materially adversely affect
the rights of any Participant without the consent of that
Participant. Any outstanding Option that has not been exercised by
the holder at the end of such period shall terminate automatically at that
time.
(b)
If
the vesting of an Option has been accelerated in anticipation of an event, and
the Committee or the Board later determines that the event will not occur, the
Committee may rescind the effect of the acceleration as to any then outstanding
and unexercised or otherwise unvested Options.
Section
6.07.
Substitute
Options
. If the Company at any time should succeed to the
business of another entity through a merger, consolidation, corporate
reorganization or exchange, or through the acquisition of stock or assets of
such entity or its subsidiaries or otherwise, the Committee may grant Options
under the Plan to option holders of such entity or its subsidiaries, in
substitution for options to purchase shares in such entity held by them at the
time of succession. The Committee, in its sole and absolute
discretion, shall determine the extent to which such substitute Options shall be
granted (if at all), the person or persons to receive such substitute Options
(who need not be all option holders of such entity), the number of Options to be
received by each such person, the exercise price of such Option, and the other
terms and conditions of such substitute Options.
ARTICLE
VII
RESTRICTED
STOCK
Section
7.01.
Grants of Restricted
Stock.
Subject to the terms and provisions of the Plan,
including Article V, the Committee, at any time and from time to time, may grant
Shares of Restricted Stock to any Employee, Director, or Advisor in such amounts
as the Committee, in its sole discretion, shall determine.
Section
7.02.
Restricted Stock Award
Agreement.
Each Award of Restricted Stock shall be evidenced
by an Agreement, which shall specify the Period of Restriction, the number of
Shares granted, and the terms and conditions of the Award.
Section
7.03.
Restrictions on
Transferability.
Except as provided in herein, Shares of
Restricted Stock may not be assigned, transferred, or pledged, whether by
operation of law and whether voluntarily or involuntarily, until the end of the
applicable Period of Restriction.
Section
7.04.
Other
Restrictions.
The Committee, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate in accordance with this Article. Such
restrictions may be based upon any one or more of the following criteria: (i)
the achievement of specific performance targets, (ii) vesting based on period of
service with the Company and any of its Subsidiaries, (iii) applicable federal
or state securities laws, or (iv) any other basis determined by the Committee,
in its sole discretion.
Section
7.05.
Legend on
Certificates.
The Committee, in its sole discretion, may
require the placement of a legend on certificates representing Shares of
Restricted Stock to give appropriate notice of such restrictions. For example,
the Committee may determine that some or all certificates representing Shares of
Restricted Stock shall bear the following legend:
THE
SALE, PLEDGE, OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS
CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER UNDER FEDERAL AND STATE SECURITIES LAWS AND
UNDER THE INTREGRAL VISION, INC. 2008 EQUTY INCENTIVE PLAN, AS SET FORTH IN AN
AWARD AGREEMENT EXECUTED THEREUNDER. A COPY OF SUCH PLAN AND SUCH AWARD
AGREEMENT MAY BE OBTAINED FROM THE CORPORATE SECRETARY OF INTEGRAL VISION,
INC.
Section
7.06.
Removal of
Restrictions.
Except as otherwise provided in this Article, as
soon as practicable after the applicable Period of Restriction lapses, Shares of
Restricted Stock covered by an Award shall be subject to release to the
Participant in accordance with the terms of the Award. The Committee,
in its sole discretion, may accelerate the time at which any restrictions shall
lapse or remove any restrictions.
Section
7.07.
Voting
Rights.
During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares, unless the applicable Award Agreement provides
otherwise.
Section
7.08.
Return of Restricted Stock to
Company.
On the date set forth in the applicable Agreement,
the Restricted Stock for which restrictions have not lapsed by the last day of
the Period of Restriction shall revert to the Company and thereafter shall be
available for the grant of new Awards.
Section
7.09.
Termination of
Service.
Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant Terminates Service during the
Period of Restriction, Shares of Restricted Stock still subject to restriction
shall be forfeited by the Participant and thereafter shall be available for the
grant of new Awards; provided, however, that the Committee shall have the sole
discretion to waive, in whole or in part, any or all remaining restrictions with
respect to any or all of such Participant's Shares of Restricted
Stock.
Section
7.10.
Issuance of Shares and Compliance
with Securities Laws.
The Company may postpone the issuance
and delivery of certificates representing Shares until (i) the admission of such
Shares to listing on any stock exchange on which Shares are then listed and (ii)
the completion of such registration or other qualification of Shares under any
state or federal law, rule, or regulation as the Company shall determine to be
necessary or advisable, which registration or other qualification the Company
shall use its best efforts to complete; provided, however, a person purchasing
or otherwise receiving Shares pursuant to the Plan has no right to require the
Company to register the Shares under federal or state securities laws at any
time. Any person purchasing or otherwise receiving Shares pursuant to
the Plan may be required to make such representations and furnish such
information as may, in the opinion of counsel for the Company, be appropriate to
permit the Company, in light of the existence or non-existence with respect to
such Shares of an effective registration under the Securities Act of 1933, as
amended, or any similar state statute, to issue the Shares in compliance with
the provisions of those or any comparable acts.
ARTICLE
VIII
SHARE
GRANTS
Subject
to the provisions of the Plan, including Article V and this Section, the
Committee may make an Award of Shares to any Employee, Director, or Advisor in
such amount as the Committee, in its sole discretion, may
determine. A grant pursuant to this Section may be evidenced by an
Agreement or such other documents as the Committee, in its sole discretion,
determines to be appropriate. Awards of shares pursuant to this
Section shall be subject to the withholding requirements of Article
IX.
ARTICLE
IX
WITHHOLDING OF
TAXES
The
Company (or a Subsidiary) may deduct and withhold from the wages, salary, bonus,
and other income paid by the Company (or Subsidiary) to the Participant the
requisite tax upon the amount of taxable income, if any, recognized by the
Participant in connection with the exercise in whole or in part of any Option,
lapse of restrictions on Restricted Stock, grant of Shares, or sale of Shares
issued to the Participant upon the exercise of an Option, as may be required
from time to time under any federal or state tax laws and
regulations. This withholding of tax shall be made from the Company's
(or Subsidiary's) concurrent or next payment of wages, salary, bonus, or other
income to the Participant or by payment to the Company by the Participant of the
required withholding tax, as the Committee may determine; provided, however,
that, in the sole discretion of the Committee, the Participant may pay such tax
by reducing the number of Shares issued upon exercise of an Option, lapse of
restrictions, or award of Shares (for which purpose such Shares shall be valued
at Fair Market Value at such time). Notwithstanding the foregoing,
the Company shall not be obligated to issue certificates representing the Shares
to be acquired through the exercise of an Option or grant of an Award, if the
Participant fails to provide the Company with adequate assurance that the
Participant will pay such amounts to the Company as required
herein. Participants shall notify the Company in writing of any
amounts included as income in the Participants' federal income tax returns in
connection with an Award. Any Shares or cash withheld by the Company
to satisfy a Participant's withholding tax obligation in connection with an
Award shall not exceed the number of Shares or amount of cash necessary to
satisfy the minimum required levels of withholding under applicable
law.
ARTICLE
X
COMPLIANCE WITH
LAWS
Section
10.01.
General
. The Plan,
the granting and vesting of Awards under the Plan, and the offer, issuance, and
delivery of the Shares to Awards are subject to compliance with all applicable
federal and state laws, rules, and regulations (including but not limited to
state and federal securities laws and federal margin requirements) and to such
approvals by any listing, regulatory, or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. A person acquiring any securities under the Plan shall, if
requested by the Company, provide such assurances and representations to the
Company as the Committee may deem necessary or desirable to assure compliance
with all applicable legal and accounting requirements.
Section
10.02.
Compliance with Securities
Laws
. No Participant shall sell, pledge, or otherwise transfer
Shares acquired pursuant to an Award or any interest in such Shares except in
accordance with the express terms of the Plan and the applicable
Agreement. Any attempted transfer in violation of this Section shall
be void and of no effect. Without in any way limiting the provisions
set forth above, no Participant shall make any disposition of all or any portion
of Shares acquired or to be acquired pursuant to an Award, except in compliance
with all applicable federal and state securities laws. Notwithstanding anything
else herein to the contrary, the Company has no obligation to register the
Shares or file any registration statement under either federal or state
securities laws.
ARTICLE
XI
TERMINATION OF
PLAN
The Plan
shall terminate at the close of business on March 11, 2018, provided, however,
the Board may, in its sole discretion, terminate the Plan at any prior
time. Subject to Sections 6.04 and 6.06, no such termination shall in
any way affect any Award then outstanding or the Committee's authority hereunder
with respect to such Award.
ARTICLE
XII
AMENDMENT OF
PLAN
Subject
to Article VI, the Committee may make such amendments to the Plan and/or an
Agreement as it shall deem advisable; provided, however, except as permitted by
Article VI, no amendment shall materially adversely affect any Award then
outstanding without the written consent of the affected
Participant. Adjustments contemplated by Section 5.04 shall not be
deemed to be amendments for purposes of the foregoing. Shareholder
approval for any amendment shall be required only to the extent required under
applicable law, including Code Section 162(m) and Code Section 422 and other
provisions of the Code applicable to incentive stock options, or to the extent
deemed necessary or advisable by the Board.
ARTICLE
XIII
INDEMNIFICATION
In
addition to such other rights of indemnification as they may have as members of
the Board, the members of the Committee shall be indemnified by the Company to
the fullest extent permitted by law against reasonable expenses, including
attorneys' fees, actually and necessarily incurred in connection with the
defense of any action, suit, or proceeding, or in connection with any appeal
thereof, to which they or any of them may be a party by reason of any act or
failure to act under or in connection with the Plan or any Award, and against
all amounts paid by them in satisfaction of a judgment in any such action, suit,
or proceeding except in relation to matters as to which it shall be adjudged in
such action, suit, or proceeding that such Committee member is not entitled to
indemnification under applicable law; provided, however, within 60 days after
institution of any such action, suit, or proceeding, such Committee member shall
in writing offer the Company the opportunity, at the Company's expense, to
handle and defend the same, and such Committee member shall cooperate with and
assist the Company in the defense of any such action, suit, or
proceeding. The Company shall not be obligated to indemnify any
Committee member with regard to the settlement of any action, suit, or
proceeding to which the Company did not give its prior written
consent.
ARTICLE
XIV
NOT AN EMPLOYMENT OR
CONSULTING AGREEMENT
Nothing
contained in the Plan or in any Agreement shall confer, intend to confer, or
imply any right of employment or right to continued employment by, or rights to
a continued relationship with, the Company (or any affiliate) in favor of any
Participant or limit the ability of the Company (or any affiliate) to terminate,
with or without cause, in its sole and absolute discretion, the employment or
other relationship between the Company and the Participant, subject to the terms
of any written agreement between the Company and the Participant. In
addition, nothing contained in the Plan or in any Agreement shall preclude any
lawful action by the Company or the Board. Status as an eligible
person under the Plan shall not be construed as a commitment that any Award will
be granted to the eligible person.
ARTICLE
XV
MISCELLANEOUS
Section
15.01.
Non-Exclusivity of
Plan
. Nothing in the Plan shall limit or be deemed to limit
the authority of the Board or the Committee to grant options or authorize any
other compensation, with or without reference to the Shares, under any other
plan or independent authority.
Section
15.02.
No Restriction on Corporate
Powers
. The existence of the Plan and the Awards granted
hereunder shall not affect or restrict in any way the right or power of the
Board or the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting
the Company's capital stock or the rights thereof, the dissolution or
liquidation of the Company or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding.
Section
15.03.
No Fiduciary
Duties
. Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between the Company and any
Participant or other person.
Integral Vision (CE) (USOTC:INVI)
Graphique Historique de l'Action
De Fév 2025 à Mar 2025
Integral Vision (CE) (USOTC:INVI)
Graphique Historique de l'Action
De Mar 2024 à Mar 2025