Exhibit 99.1
 Metastorm Inc. and Subsidiaries




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##### 



C O N T E N T S
 PageReport of Independent Certified Public Accountants
    
    
    3Consolidated Financial StatementsConsolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    4Consolidated Statements of Operations for the years ended 

December 31, 2009, 2008 and 2007
    
    
    6Consolidated Statements of Stockholders Equity (Deficit) for the years ended 

December 31, 2009, 2008 and 2007
    
    
    7Consolidated Statements of Cash Flows for the years ended 

December 31, 2009, 2008 and 2007
    
    
    8Notes to Consolidated Financial Statements
    
    
    10
  2




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##### 



Report of Independent Certified Public Accountants
     
  3




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##### 



Metastorm Inc. and Subsidiaries
 CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    10,281,161
    
    
    $
    10,153,869Short-term investments
    
    
    
    
    
    
    1,260,872Accounts receivable, less allowance for doubtful accounts of $152,262 and $133,684, respectively
    
    
    16,946,724
    
    
    
    16,294,527Prepaid expenses and other current assets
    
    
    2,546,704
    
    
    
    2,525,080Total current assets
    
    
    29,774,589
    
    
    
    30,234,348PROPERTY AND EQUIPMENT, net
    
    
    2,469,770
    
    
    
    2,153,172OTHER ASSETS
    
    
    726,420
    
    
    
    740,674INTANGIBLE ASSETS, net
    
    
    10,233,136
    
    
    
    16,367,494GOODWILL
    
    
    35,235,191
    
    
    
    35,235,191DEFERRED INCOME TAXES
    
    
    2,621,894
    
    
    
    $
    81,061,000
    
    
    $
    84,730,879
 The accompanying notes are an integral part of these financial statements.
  4




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##### 



Metastorm Inc. and Subsidiaries
 CONSOLIDATED BALANCE SHEETS (Continued)
 December 31,2009
    
    
    2008LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIT)CURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    8,518,484
    
    
    $
    11,362,058Deferred revenue
    
    
    21,909,690
    
    
    
    16,142,555Capital leases
    
    
    287,271
    
    
    
    326,927Notes payable
    
    
    62,020
    
    
    
    56,831Deferred tax liability
    
    
    179,577
    
    
    
    Income taxes payable
    
    
    53,557
    
    
    
    17,989Total current liabilities
    
    
    31,010,599
    
    
    
    27,906,360LONG-TERM LIABILITIESDeferred rent
    
    
    738,816
    
    
    
    849,593Deferred revenue
    
    
    921,733
    
    
    
    694,800Capital leases
    
    
    419,648
    
    
    
    434,948Fair value of derivative
    
    
    4,192
    
    
    
    4,192Deferred tax liability
    
    
    
    
    
    
    145,387Notes payable, less current portion
    
    
    111,227
    
    
    
    173,2462,195,616
    
    
    
    2,302,166COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    SERIES AA REDEEMABLE CONVERTIBLE PREFERRED
STOCK, $.01 par value, 58,288,994 shares
authorized, 56,786,080 and 56,000,339 shares
issued and outstanding at December 31, 2009
and 2008, respectively, aggregate liquidation
preference of $102,242,099 at December 31,
2009
    
    
    100,919,279
    
    
    
    92,761,895SERIES CC REDEEMABLE CONVERTIBLE PREFERRED
STOCK, $.01 par value, 18,844,221 shares
authorized, 18,834,583 shares issued and
outstanding at December 31, 2009 and 2008,
aggregate liquidation preference of
$35,773,848 at December 31, 2009
    
    
    35,681,989
    
    
    
    33,247,620STOCKHOLDERS EQUITY (DEFICIT)Common stock, $.01 par value,
139,523,997 shares authorized, 960,467
shares issued and outstanding at
December 31, 2009 and 941,717 shares
issued and outstanding at December 31,
2008
    
    
    9,605
    
    
    
    9,417Additional paid-in capital
    
    
    
    
    
    
    10,556,495Accumulated other comprehensive loss
    
    
    (684,656
    )
    
    
    (428,670
    )Accumulated deficit
    
    
    (88,071,432
    )
    
    
    (81,624,404
    )(88,746,483
    )
    
    
    (71,487,162
    )$
    81,061,000
    
    
    $
    84,730,879
 The accompanying notes are an integral part of these financial statements.
  5




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##### 



Metastorm Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,2009
    
    
    2008
    
    
    2007RevenuesSoftware licenses
    
    $
    22,452,927
    
    
    $
    28,074,927
    
    
    $
    25,772,327Maintenance and support
    
    
    26,786,576
    
    
    
    23,509,829
    
    
    
    17,091,686Professional services
    
    
    18,483,463
    
    
    
    23,309,035
    
    
    
    16,848,405Total revenues
    
    
    67,722,966
    
    
    
    74,893,791
    
    
    
    59,712,418Cost of revenuesSoftware licenses (includes amortization expense of $3,169,668,
$3,856,000, and $2,252,333, respectively)
    
    
    5,189,557
    
    
    
    4,658,609
    
    
    
    4,381,683Maintenance and support (includes amortization expense of $22,691,
$229,352, and $387,820, respectively)
    
    
    1,897,544
    
    
    
    2,229,245
    
    
    
    1,863,739Professional services (includes amortization expense of $33,000 in 2007)
    
    
    15,804,301
    
    
    
    19,096,025
    
    
    
    12,972,275Total cost of revenues
    
    
    22,891,402
    
    
    
    25,983,879
    
    
    
    19,217,697Gross profit
    
    
    44,831,564
    
    
    
    48,909,912
    
    
    
    40,494,721Operating expensesResearch and development
    
    
    9,753,289
    
    
    
    10,381,904
    
    
    
    6,549,159Sales and marketing
    
    
    28,677,038
    
    
    
    33,443,418
    
    
    
    24,598,054General and administrative
    
    
    8,428,012
    
    
    
    9,987,440
    
    
    
    7,677,586Write-off of costs related to initial public offering
    
    
    
    
    
    
    1,892,072
    
    
    
    Litigation-related expenses
    
    
    1,980,879
    
    
    
    1,939,565
    
    
    
    322,243Depreciation
    
    
    1,129,465
    
    
    
    1,191,951
    
    
    
    764,087Amortization of intangible assets
    
    
    2,942,000
    
    
    
    2,727,000
    
    
    
    1,105,001Total operating expenses
    
    
    52,910,683
    
    
    
    61,563,350
    
    
    
    41,016,130Loss from operations
    
    
    (8,079,119
    )
    
    
    (12,653,438
    )
    
    
    (521,409
    )Other income (expense)Change in valuation of derivative and Series BB warrants
    
    
    
    
    
    
    220,240
    
    
    
    (956,374
    )Interest expense
    
    
    (94,847
    )
    
    
    (283,781
    )
    
    
    (54,146
    )Interest income
    
    
    14,527
    
    
    
    163,587
    
    
    
    304,508Other
    
    
    (72,440
    )
    
    
    219,723
    
    
    
    (124,351
    )(152,760
    )
    
    
    319,769
    
    
    
    (830,363
    )Loss before income taxes
    
    
    (8,231,879
    )
    
    
    (12,333,669
    )
    
    
    (1,351,772
    )Income tax benefit
    
    
    (2,307,010
    )
    
    
    (150,529
    )
    
    
    (1,936,761
    )Net (loss) income
    
    
    (5,924,869
    )
    
    
    (12,183,140
    )
    
    
    584,989Accretion of preferred stock and preferred stock dividends
    
    
    (9,460,265
    )
    
    
    (9,226,766
    )
    
    
    (9,471,463
    )Net loss attributable to common stockholders
    
    $
    (15,385,134
    )
    
    $
    (21,409,906
    )
    
    $
    (8,886,474
    )
 The accompanying notes are an integral part of these financial statements.
  6




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##### 



Metastorm Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 Years ended December 31, 2009, 2008 and 2007
 Series AA
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Preferred Stock
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    StockholdersNumber
    
    
    
    
    
    
    Number
    
    
    
    
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Equityof Shares
    
    
    Amount
    
    
    of Shares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Deficit
    
    
    (Deficit)Balance at January 1, 2007
    
    
    
    
    
    $
    
    
    
    
    37,056,696
    
    
    $
    370,567
    
    
    $
    82,960,021
    
    
    $
    370,622
    
    
    $
    (70,026,253
    )
    
    $
    13,674,957Stock options exercised
    
    
    28,125
    
    
    
    281
    
    
    
    
    
    
    
    
    
    
    
    7,594
    
    
    
    
    
    
    
    
    
    
    
    7,875Conversion of Series AA Redeemable convertible Preferred Stock to Series AA Redeemable Convertible Stock
    
    
    
    
    
    
    
    
    
    
    (37,056,696
    )
    
    
    (370,567
    )
    
    
    (49,285,409
    )
    
    
    
    
    
    
    
    
    
    
    (49,655,976
    )Exchange of Series BB shares into Series AA shares and conversion of Series BB warrants for Series AA shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,425,635
    )
    
    
    
    
    
    
    
    
    
    
    (2,425,635
    )Accretion of accrued and undeclared dividend on Series AA Redeemable Convertible Preferred Stock and Series CC Redeemable Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,024,840
    )
    
    
    
    
    
    
    
    
    
    
    (12,024,840
    )Accretion of accrued Series AA Redeemable Convertible Preferred Stock to redemption value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141,186
    )
    
    
    
    
    
    
    
    
    
    
    (141,186
    )Accretion of issuance costs for Series CC Redeemable Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,822
    )
    
    
    
    
    
    
    
    
    
    
    (14,822
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236,379
    
    
    
    
    
    
    
    
    
    
    
    236,379Comprehensive incomeNet income in 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    584,989
    
    
    
    584,989Other comprehensive income:Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,942
    
    
    
    
    
    
    
    52,942Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    637,931Balance at December 31, 2007
    
    
    28,125
    
    
    
    281
    
    
    
    
    
    
    
    
    
    
    
    19,312,102
    
    
    
    423,564
    
    
    
    (69,441,264
    )
    
    
    (49,705,317
    )Stock options exercised
    
    
    1,132,475
    
    
    
    11,325
    
    
    
    
    
    
    
    
    
    
    
    308,448
    
    
    
    
    
    
    
    
    
    
    
    319,773Shares retired for cashless exercise of options
    
    
    (218,883
    )
    
    
    (2,189
    )
    
    
    
    
    
    
    
    
    
    
    (232,016
    )
    
    
    
    
    
    
    
    
    
    
    (234,205
    )Accretion of accrued and undeclared dividend on Series AA Redeemable Convertible Preferred Stock and Series CC Redeemable Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,606,835
    )
    
    
    
    
    
    
    
    
    
    
    (8,606,835
    )Accretion of accrued Series AA Redeemable Convertible Preferred Stock to redemption value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (584,241
    )
    
    
    
    
    
    
    
    
    
    
    (584,241
    )Accretion of issuance costs for Series CC Redeemable Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,690
    )
    
    
    
    
    
    
    
    
    
    
    (35,690
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    394,727
    
    
    
    
    
    
    
    
    
    
    
    394,727Comprehensive lossNet loss in 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,183,140
    )
    
    
    (12,183,140
    )Other comprehensive loss:Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (852,234
    )
    
    
    
    
    
    
    (852,234
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,035,374
    )Balance at December 31, 2008
    
    
    941,717
    
    
    
    9,417
    
    
    
    
    
    
    
    
    
    
    
    10,556,495
    
    
    
    (428,670
    )
    
    
    (81,624,404
    )
    
    
    (71,487,162
    )Stock options exercised
    
    
    18,750
    
    
    
    188
    
    
    
    
    
    
    
    
    
    
    
    8,438
    
    
    
    
    
    
    
    
    
    
    
    8,626Issuance of Series AA Redeemable Convertible Preferred Stock to restricted stock unit holders, net of shares withheld to satisfy tax obligation of unit holders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,092,204
    )
    
    
    
    
    
    
    
    
    
    
    (2,092,204
    )Accretion of accrued and undeclared dividend on Series AA Redeemable Convertible Preferred Stock and Series CC Redeemable Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,527,434
    )
    
    
    
    
    
    
    (385,171
    )
    
    
    (8,912,605
    )Accretion of accrued Series AA Redeemable Convertible Preferred Stock to redemption value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (384,051
    )
    
    
    
    
    
    
    (128,017
    )
    
    
    (512,068
    )Accretion of issuance costs for Series CC Redeemable Convertible Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,621
    )
    
    
    
    
    
    
    (8,971
    )
    
    
    (35,592
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465,377
    
    
    
    
    
    
    
    
    
    
    
    465,377Comprehensive lossNet loss in 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,924,869
    )
    
    
    (5,924,869
    )Other comprehensive loss:Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (255,986
    )
    
    
    
    
    
    
    (255,986
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,180,855
    )Balance at December 31, 2009
    
    
    960,467
    
    
    $
    9,605
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (684,656
    )
    
    $
    (88,071,432
    )
    
    $
    (88,746,483
    )
 The accompanying notes are an integral part of these financial statements.
  7




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##### 



Metastorm Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activitiesNet (loss) income
    
    $
    (5,924,869
    )
    
    $
    (12,183,140
    )
    
    $
    584,989Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:Depreciation
    
    
    1,129,465
    
    
    
    1,191,951
    
    
    
    764,087Amortization of software development costs
    
    
    20,627
    
    
    
    134,525
    
    
    
    365,684Amortization of intangible assets
    
    
    6,134,359
    
    
    
    6,812,352
    
    
    
    3,778,154Noncash compensation
    
    
    
    
    
    
    78,688
    
    
    
    Deferred rent
    
    
    (110,777
    )
    
    
    (4,184
    )
    
    
    (49,052
    )Bad debt expense (recovery)
    
    
    191,915
    
    
    
    349,207
    
    
    
    (143,133
    )Loss (gain) on disposal of property and equipment
    
    
    16,474
    
    
    
    5,483
    
    
    
    (94,518
    )Stock-based compensation expense
    
    
    465,377
    
    
    
    394,727
    
    
    
    236,379Change in fair value of derivative and Series BB Warrants
    
    
    
    
    
    
    (220,240
    )
    
    
    956,374Changes in operating assets and liabilities:Accounts receivable
    
    
    (325,008
    )
    
    
    3,295,166
    
    
    
    (9,270,394
    )Prepaid expenses and other current assets
    
    
    113,273
    
    
    
    (1,149,165
    )
    
    
    (326,889
    )Deferred income taxes
    
    
    (2,322,501
    )
    
    
    (168,518
    )
    
    
    (2,055,893
    )Accounts payable and accrued expenses
    
    
    (3,064,372
    )
    
    
    702,112
    
    
    
    2,188,485Income taxes payable
    
    
    35,171
    
    
    
    (42,043
    )
    
    
    60,032Deferred revenue
    
    
    5,498,592
    
    
    
    4,445,275
    
    
    
    2,658,153Net cash provided by (used in) operating activities
    
    
    1,857,726
    
    
    
    3,642,196
    
    
    
    (347,542
    )Cash flows from investing activitiesPurchase of property and equipment
    
    
    (1,210,712
    )
    
    
    (543,960
    )
    
    
    (345,700
    )Proceeds from sale of property and equipment
    
    
    1,650
    
    
    
    1,300
    
    
    
    113,207Receipt of restricted cash to collateralize letter of credit
    
    
    
    
    
    
    341,068
    
    
    
    30,892Cash paid for acquisition, net of cash acquired
    
    
    
    
    
    
    (488,786
    )
    
    
    (27,181,487
    )Proceeds from maturity of short-term investments
    
    
    1,248,000
    
    
    
    
    
    
    
    Short-term investments purchased
    
    
    
    
    
    
    (1,248,000
    )
    
    
    Net cash provided by (used in) investing activities
    
    
    38,938
    
    
    
    (1,938,378
    )
    
    
    (27,383,088
    )
 The accompanying notes are an integral part of these financial statements.
  8




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##### 



Metastorm Inc. and Subsidiaries
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
 Year ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from financing activitiesRepayments of borrowings under notes payable
    
    
    (56,831
    )
    
    
    (11,476
    )
    
    
    (797,392
    )Repayments of capital leases
    
    
    (372,373
    )
    
    
    (277,319
    )
    
    
    (82,405
    )Proceeds from stock options exercised
    
    
    8,625
    
    
    
    6,900
    
    
    
    7,875Payment of tax obligation for issuance of Series AA Redeemable Convertible Preferred Stock to restricted stock
unit holders
    
    
    (960,736
    )
    
    
    
    
    
    
    Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs of $177,966 in 2007
    
    
    
    
    
    
    
    
    
    
    29,806,690Net cash (used in) provided by financing activities
    
    
    (1,381,315
    )
    
    
    (281,895
    )
    
    
    28,934,768Effects of exchange rate changes on cash and cash equivalents
    
    
    (388,057
    )
    
    
    (289,057
    )
    
    
    37,157Net increase in cash and cash equivalents
    
    
    127,292
    
    
    
    1,132,866
    
    
    
    1,241,295Cash and cash equivalents at beginning of year
    
    
    10,153,869
    
    
    
    9,021,003
    
    
    
    7,779,708Cash and cash equivalents at end of year
    
    $
    10,281,161
    
    
    $
    10,153,869
    
    
    $
    9,021,003Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    94,847
    
    
    $
    285,129
    
    
    $
    55,940Income taxes
    
    
    79,707
    
    
    
    48,801
    
    
    
    59,100Supplemental schedule of non-cash investing and financing activities:Leasehold improvements, paid by landlord
    
    $
    
    
    
    $
    
    
    
    $
    90,342Fixed assets purchased under capital leases
    
    
    225,775
    
    
    
    531,202
    
    
    
    580,897Fixed assets purchased included in accounts payable at year-end
    
    
    
    
    
    
    
    
    
    
    207,900Process Competence purchase price payable
    
    
    
    
    
    
    
    
    
    
    210,159Fixed assets purchased under notes payable
    
    
    
    
    
    
    136,690
    
    
    
    Issuance of 9,276,033 shares of Convertible Preferred Stock as partial consideration to Proforma Corporation
    
    
    
    
    
    
    
    
    
    
    12,429,884Proforma acquisition purchase price receivable
    
    
    
    
    
    
    
    
    
    
    248,337
 The accompanying notes are an integral part of these financial statements.
  9




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Organization
  2. Significant Accounting Policies
 Principles of Consolidation
  Use of Estimates
  Cash and Cash Equivalents
   10




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Short-Term Investments
  Property and Equipment
  Deferred Equity Offering Costs
  Financial Instruments
  Accounting
Standards Codification 815 Derivatives and Hedging
  11




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Financial Instruments (Continued)
 ASC 480
Distinguishing Liabilities from Equity
   Software Development Costs
 ASC 985 Software
  12




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Software Development Costs (Continued)
  Business Combinations
 ASC 805 Business Combinations
   13




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Goodwill and Intangible Assets
  ASC 350 Intangibles  Goodwill and Other
 Deferred Rent
   14




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Revenue Recognition
 ASC 985-605 Software  Revenue Recognition
   15




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Revenue Recognition (Continued)
    
    
    If a significant portion of the fee is due after the Companys established payment
terms, revenue recognition is deferred until payment has been received from the customer.
  16




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Revenue Recognition (Continued)
 
    
    If a transaction is subject to customer acceptance provisions where delivery is
uncertain, revenue recognition is deferred until evidence of the customers acceptance of
the product is received.
 
    
    If the price is subject to refund or forfeiture, concession or other adjustment,
revenue recognition is deferred until these rights expire.
    17




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Revenue Recognition (Continued)
   Concentrations of Credit Risk
   18




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Concentrations of Credit Risk (Continued)
  2009
    
    
    2008Balance beginning of year
    
    $
    133,684
    
    
    $
    86,579Additions charged to expenses
    
    
    191,915
    
    
    
    349,207Deductions (1)
    
    
    (173,337
    )
    
    
    (302,102
    )Balance end of the year
    
    $
    152,262
    
    
    $
    133,684
 (1)
    
    Uncollectable amounts written off, net of recoveries.  2009
    
    
    2008
    
    
    2007Revenues:Americas
    
    $
    48,468,400
    
    
    $
    50,902,895
    
    
    $
    41,531,196United Kingdom
    
    
    7,336,047
    
    
    
    11,540,612
    
    
    
    9,909,972Rest of World
    
    
    11,918,519
    
    
    
    12,450,284
    
    
    
    8,271,250$
    67,722,966
    
    
    $
    74,893,791
    
    
    $
    59,712,418
  19




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Concentrations of Credit Risk (Continued)
  Impairment of Long-Lived Assets
  Foreign Currency Translation
   Advertising Costs
   20




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Research and Development Expenses
  Income Taxes
 ASC 740 Income Taxes Accounting for Uncertainty in Income Taxes,
    21




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Stock-Based Compensation
 ASC 718 Compensation  Stock Compensation
   2009
    
    
    2008Risk-free interest rate
    
    
    1.99
    %
    
    
    3.46
    %Expected dividend rate
    
    
    0.00
    %
    
    
    0.00
    %Expected term
    
    4.6 years
    
    
    5.4 yearsExpected volatility
    
    
    41.8
    %
    
    
    43.2
    %Fair value of stock option awards during the
year
    
    $
    0.26
    
    
    $
    0.45
 Risk-free interest rate
 Expected dividend rate
 Expected term
  22




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Stock-Based Compensation (Continued)
 Expected volatility
   December 31,2009
    
    
    2008
    
    
    2007Cost of revenuesMaintenance and support
    
    $
    7,053
    
    
    $
    5,900
    
    
    $
    3,571Professional services
    
    
    16,397
    
    
    
    15,118
    
    
    
    12,678Total stock-based compensation
expense included in cost of revenues
    
    
    23,450
    
    
    
    21,018
    
    
    
    16,249Operating expensesResearch and development
    
    
    67,760
    
    
    
    54,367
    
    
    
    19,094Sales and marketing
    
    
    214,157
    
    
    
    179,119
    
    
    
    109,973General and administrative
    
    
    160,010
    
    
    
    140,223
    
    
    
    91,063Total stock-based compensation expense
    
    $
    465,377
    
    
    $
    394,727
    
    
    $
    236,379
  23




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Comprehensive (Loss) Income
 ASC 220 Comprehensive Income .
 Litigation Reserves
  Recent Accounting Pronouncements
  ASC 855-10-50 Subsequent Events  Disclosure
  24




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Recent Accounting Pronouncements (Continued)
  ASC 860 Transfers and Servicing
 ASC 350-30 General Intangibles Other than Goodwill
  25




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 2. Significant Accounting Policies (Continued)
 Recent Accounting Pronouncements (Continued)
 ASC 805 Business Combinations,
  ASC 810 Consolidation
 3. Acquisitions
 Proforma Corporation
   26




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 3. Acquisitions (Continued)
 Proforma Corporation (Continued)
  Cash paid
    
    $
    24,751,679Series AA Redeemable Convertible Preferred Stock
    
    
    12,429,884Transaction costs
    
    
    289,434Cash acquired on acquisition
    
    
    (261,641
    )$
    37,209,356
   Trade receivables
    
    $
    3,049,552Prepaid expenses and other current assets
    
    
    294,572Fixed assets
    
    
    275,629Customer relationships with a useful life of 4.4 years
    
    
    10,184,000Acquired technologies with a useful life of 6.2 years
    
    
    8,487,000Customer order backlog with a useful life of 3.3 years
    
    
    637,000Goodwill
    
    
    18,000,217Deferred tax liability recognized for acquired definite-lived assets
    
    
    (7,616,041
    )Reduction in valuation allowance attributable to deferred tax assets
    
    
    6,564,651Accounts payable and accrued expenses
    
    
    (773,360
    )Deferred revenue
    
    
    (1,571,289
    )Notes payable
    
    
    (322,575
    )Total acquired assets and liabilities
    
    $
    37,209,356
  27




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 3. Acquisitions (Continued)
 Proforma Corporation (Continued)
 Accounting in a Business Combination for Deferred Revenue of an Acquiree.
    Year ended December 31,2007(Unaudited)Pro Forma revenues
    
    $
    71,737,278Pro Forma net loss
    
    $
    (3,728,751
    )Accretion of preferred stock and preferred stock dividends
    
    
    (9,471,463
    )Pro Form net loss attributable to common stockholders
    
    $
    (13,200,214
    )
 Process Competence B.V.
   28




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 3. Acquisitions (Continued)
 Process Competence B.V. (Continued)
  Spotlight Data Solution, Inc.
    29




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 4. Property and Equipment
  Years ended December 31,2009
    
    
    2008Computer equipment
    
    $
    2,572,657
    
    
    $
    2,041,300Office furniture and equipment
    
    
    520,399
    
    
    
    482,994Equipment under capital lease
    
    
    1,337,874
    
    
    
    1,112,099Leasehold improvements
    
    
    1,214,275
    
    
    
    1,168,6185,645,205
    
    
    
    4,805,011Accumulated depreciation
    
    
    (3,175,435
    )
    
    
    (2,651,839
    )$
    2,469,770
    
    
    $
    2,153,172
  5. Acquired Intangible Assets
  Weighted-Average
    
    
    Gross
    
    
    
    
    
    
    NetUseful Life
    
    
    Carrying
    
    
    Accumulated
    
    
    Carryingin Years
    
    
    Amount
    
    
    Amortization
    
    
    AmountDecember 31, 2009:Customer
relationships
    
    
    4.4
    
    
    $
    10,184,000
    
    
    $
    (6,776,000
    )
    
    $
    3,408,000Acquired technology
    
    
    5.3
    
    
    
    18,207,000
    
    
    
    (11,401,000
    )
    
    
    6,806,000Backlog
    
    
    3.4
    
    
    
    692,000
    
    
    
    (672,864
    )
    
    
    19,136December 31, 2008:Customer
relationships
    
    
    4.4
    
    
    $
    10,184,000
    
    
    $
    (3,834,000
    )
    
    $
    6,350,000Acquired technology
    
    
    5.3
    
    
    
    18,207,000
    
    
    
    (8,231,334
    )
    
    
    9,975,666Backlog
    
    
    3.4
    
    
    
    692,000
    
    
    
    (650,172
    )
    
    
    41,828
  30




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 5. Acquired Intangible Assets (Continued)
  AmortizationYears ending December 31,
    
    Expense2010
    
    $
    5,017,4812011
    
    
    2,594,4042012
    
    
    1,262,2512013
    
    
    928,0002014
    
    
    431,000
 6. Software Development Costs
  December 31,2009
    
    
    2008Internal development costs
    
    $
    2,941,403
    
    
    $
    2,748,746Capitalized interest
    
    
    21,433
    
    
    
    42,1522,962,836
    
    
    
    2,790,898Accumulated amortization
    
    
    (2,962,836
    )
    
    
    (2,770,739
    )$
    
    
    
    $
    20,159
   31




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 7. Notes Payable
 December 31,2009
    
    
    2008Note payable issued to the landlord in February
2006 to fund leasehold improvements. The note is
being repaid monthly in installments of principal
and interest through March 1, 2016. The note
accrues interest at 9%.
    
    $
    65,971
    
    
    $
    73,634Note payable issued to a vendor in December 2008
to fund the implementation of accounting
software. The note is being repaid monthly in
installments of principal through December 2011.
The note accrues interest at 0%.
    
    
    107,276
    
    
    
    156,443173,247
    
    
    
    230,077Less current portion
    
    
    (62,020
    )
    
    
    (56,831
    )$
    111,227
    
    
    $
    173,246
  Years
    
    Amount2010
    
    $
    62,0202011
    
    
    62,8062012
    
    
    10,0282013
    
    
    10,9692014
    
    
    11,998Thereafter
    
    
    15,426
 8. Accounts Payable and Accrued Expenses
  December 31,2009
    
    
    2008Accounts payable
    
    $
    3,862,137
    
    
    $
    4,488,787Accrued expenses
    
    
    2,051,977
    
    
    
    3,767,801Accrued commissions
    
    
    2,016,467
    
    
    
    2,116,057Other accrued compensation and related expenses
    
    
    587,903
    
    
    
    989,413$
    8,518,484
    
    
    $
    11,362,058
  32




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 9. Preferred Stock
 Series AA Redeemable Convertible Preferred Stock
      33




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 9. Preferred Stock (Continued)
 Series AA Redeemable Convertible Preferred Stock (Continued)
     Series CC Redeemable Convertible Preferred Stock
     34




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 9. Preferred Stock (Continued)
 Series CC Redeemable Convertible Preferred Stock (Continued)
      Series BB Redeemable Convertible Preferred Stock
   35




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 9. Preferred Stock (Continued)
 Series BB Redeemable Convertible Preferred Stock (Continued)
   10. Stock Purchase Warrants
  Number
    
    
    
    
    
    
    Exerciseof Shares
    
    
    Class
    
    
    Price
    
    
    Expiration Date1,257
    
    
    Series AA
    
    
    29.84
    
    
    October 20104,536
    
    
    Series AA
    
    
    7.35
    
    
    February 201039,155
    
    
    Common
    
    
    1.28
    
    
    March 201244,948
 
  36




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 10. Stock Purchase Warrants (Continued)
   .
  Series BBDerivative
    
    
    WarrantLiability
    
    
    Liability
    
    
    TotalFair value at January 1, 2007
    
    $
    163,256
    
    
    $
    3,607,921
    
    
    $
    3,771,177Change in value
    
    
    61,176
    
    
    
    895,198
    
    
    
    956,374Conversion of Series BB
warrants to Series AA
Preferred Stock
    
    
    
    
    
    
    (4,503,119
    )
    
    
    (4,503,119
    )Fair value at December 31, 2007
    
    
    224,432
    
    
    
    
    
    
    
    224,432Change in value
    
    
    (220,240
    )
    
    
    
    
    
    
    (220,240
    )Fair value at December 31, 2008
    
    
    4,192
    
    
    
    
    
    
    
    4,192Change in value
    
    
    
    
    
    
    
    
    
    
    Fair value at December 31, 2009
    
    $
    4,192
    
    
    $
    
    
    
    $
    4,192
  37




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 11. Shares Reserved for Future Issuance
  Conversion of Series AA
    
    
    58,288,994Conversion of Series CC
    
    
    18,844,221Exercise of common stock purchase warrants
    
    
    39,155Exercise of stock options
    
    
    8,121,037Stock options reserved by the Board of Directors
    
    
    3,469,94088,763,347
 12. Stock Option Plan
 Equity Incentive Plans
    38




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 12. Stock Option Plan (Continued)
 Equity Incentive Plans (Continued)
  WeightedWeighted
    
    
    AverageRange of
    
    
    Average
    
    
    RemainingNumber
    
    
    Exercise
    
    
    Exercise
    
    
    Contractualof Shares
    
    
    Prices
    
    
    Prices
    
    
    LifeOutstanding at January 1, 2007
    
    
    5,125,625
    
    
    
    0.28
    
    
    
    0.28Granted
    
    
    3,192,500
    
    
    
    0.28  0.46
    
    
    
    0.45Exercised
    
    
    (28,125
    )
    
    
    0.28
    
    
    
    0.28Forfeited
    
    
    (77,500
    )
    
    
    0.28  0.46
    
    
    
    0.37Outstanding at December 31, 2007
    
    
    8,212,500
    
    
    
    0.28  0.46
    
    
    
    0.35Granted
    
    
    1,451,667
    
    
    
    1.09
    
    
    
    1.09Exercised
    
    
    (1,132,380
    )
    
    
    0.28  0.46
    
    
    
    0.29Forfeited
    
    
    (127,500
    )
    
    
    0.28  0.46
    
    
    
    0.45Outstanding at December 31, 2008
    
    
    8,404,287
    
    
    
    0.28  1.09
    
    
    
    0.48Granted
    
    
    248,000
    
    
    
    0.63
    
    
    
    0.63Exercised
    
    
    (18,750
    )
    
    
    0.46
    
    
    
    0.46Forfeited
    
    
    (512,500
    )
    
    
    0.28  1.09
    
    
    
    0.44Outstanding at December 31, 2009
    
    
    8,121,037
    
    
    
    0.28  1.09
    
    
    
    0.49
    
    
    
    6.91Exercisable at December 31, 2009
    
    
    5,704,381
    
    
    
    0.28  1.09
    
    
    
    0.41
    
    
    
    6.45Vested and expected to vest at December 31, 2009
    
    
    7,806,872
    
    
    
    0.28  1.09
    
    
    
    0.48
    
    
    
    6.07
    39




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 12. Stock Option Plan (Continued)
 Restricted Stock Units
   13. Income Taxes
  2009
    
    
    2008
    
    
    2007Federal
    
    
    343,577
    
    
    $
    343,577
    
    
    $
    102,680State and local
    
    
    71,267
    
    
    
    64,275
    
    
    
    75,409Foreign
    
    
    (2,721,854
    )
    
    
    (558,381
    )
    
    
    (2,114,850
    )Total income tax benefit
    
    $
    (2,307,010
    )
    
    $
    (150,529
    )
    
    $
    (1,936,761
    )Current
    
    $
    114,046
    
    
    $
    17,989
    
    
    $
    119,132Deferred
    
    
    (2,421,056
    )
    
    
    (168,518
    )
    
    
    (2,055,893
    )Total income tax benefit
    
    $
    (2,307,010
    )
    
    $
    (150,529
    )
    
    $
    (1,936,761
    )
  40




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 13. Income Taxes (Continued)
  2009
    
    
    2008Net operating loss carryforwards
    
    $
    15,761,803
    
    
    $
    14,077,592Deferred stock compensation
    
    
    379,499
    
    
    
    1,040,760Accrued expenses and deferred revenue
    
    
    2,076,720
    
    
    
    1,518,642Amortization of intangible assets and goodwill
    
    
    6,288,168
    
    
    
    4,250,507Provision for bad debts
    
    
    21,459
    
    
    
    39,032Depreciation
    
    
    250,951
    
    
    
    233,092AMT credit
    
    
    98,772
    
    
    
    98,772Capital loss carryover
    
    
    34,153
    
    
    
    34,153R&D credit carryover
    
    
    85,246
    
    
    
    85,246Other
    
    
    (129,637
    )
    
    
    18,306Total deferred tax assets
    
    
    24,867,134
    
    
    
    21,396,102Valuation allowance for deferred assets
    
    
    (12,853,481
    )
    
    
    (12,304,866
    )Net deferred tax assets
    
    
    12,013,653
    
    
    
    9,091,236Deferred tax liabilitiesPrepaid expenses
    
    
    349,616
    
    
    
    325,134Goodwill
    
    
    1,605,679
    
    
    
    1,295,448Basis difference for intangibles on acquisitions
    
    
    7,616,041
    
    
    
    7,616,041Total deferred tax liabilities
    
    
    9,571,336
    
    
    
    9,236,623Net deferred tax asset (liability)
    
    $
    2,442,317
    
    
    $
    (145,387
    )
  41




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 13. Income Taxes (Continued)
  December 31,2009
    
    
    2008Balance at beginning of year
    
    $
    (12,304,866
    )
    
    $
    (9,279,279
    )Decrease due to release of valuation
allowance in Metastorm Ltd.
    
    
    2,734,392
    
    
    
    Increase due to operations
    
    
    (3,283,007
    )
    
    
    (3,025,587
    )Balance at end of year
    
    $
    (12,853,481
    )
    
    $
    (12,304,866
    )
     42




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 13. Income Taxes (Continued)
    December 31,2009
    
    
    2008
    
    
    2007Tax benefit at U.S. statutory rate
    
    $
    (2,813,886
    )
    
    $
    (4,196,424
    )
    
    $
    (459,602
    )Effect of permanent differences
    
    
    (67,451
    )
    
    
    586,793
    
    
    
    1,272,614State income benefits, net of federal effect
    
    
    (272,478
    )
    
    
    (645,123
    )
    
    
    (16,625
    )Foreign income tax rates different from
U.S. statutory rate
    
    
    45,407
    
    
    
    (105,666
    )
    
    
    (105,799
    )Alternative minimum tax
    
    
    
    
    
    
    
    
    
    
    52,709Other reconciling items
    
    
    (67,574
    )
    
    
    (131
    )
    
    
    52,564Change in valuation allowance
    
    
    868,972
    
    
    
    4,210,022
    
    
    
    (2,732,622
    )$
    (2,307,010
    )
    
    $
    (150,529
    )
    
    $
    (1,936,761
    )
   43




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 14. Leases
  Years
    
    Amount2010
    
    $
    1,835,4752011
    
    
    1,581,3672012
    
    
    1,265,3332013
    
    
    954,0352014
    
    
    467,495Thereafter
    
    
    592,381
   Years
    
    Amount2010
    
    $
    365,4382011
    
    
    217,9552012
    
    
    143,1912013
    
    
    73,7312014
    
    
    36,866Future minimum payments
    
    
    837,181Less:Amounts representing interest
    
    
    86,419Amounts representing taxes
    
    
    43,843Current portion of capital leases
    
    
    287,271Long-term portion of capital leases
    
    $
    419,648
  44




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 15. Employee Defined Contribution Retirement Plans
   16. Related Party Transaction
    45




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 17. Commitments and Contingencies
      46




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 18. Geographic and Segment Information
 ASC 280 Segment Reporting
     47




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 18. Geographic and Segment Information (Continued)
  Americas
    
    
    International
    
    
    Total2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007RevenuesSoftware licenses
    
    $
    15,765
    
    
    $
    18,937
    
    
    $
    16,954
    
    
    $
    6,688
    
    
    $
    9,138
    
    
    $
    8,818
    
    
    $
    22,453
    
    
    $
    28,075
    
    
    $
    25,772Professional services
    
    
    15,773
    
    
    
    18,705
    
    
    
    13,882
    
    
    
    2,710
    
    
    
    4,604
    
    
    
    2,966
    
    
    
    18,483
    
    
    
    23,309
    
    
    
    16,848Maintenance and support
    
    
    18,739
    
    
    
    15,884
    
    
    
    11,315
    
    
    
    8,048
    
    
    
    7,626
    
    
    
    5,777
    
    
    
    26,787
    
    
    
    23,510
    
    
    
    17,092Revenues
    
    
    50,277
    
    
    
    53,526
    
    
    
    42,151
    
    
    
    17,446
    
    
    
    21,368
    
    
    
    17,561
    
    
    
    67,723
    
    
    
    74,894
    
    
    
    59,712Cost of revenuesSoftware licenses
    
    
    1,781
    
    
    
    608
    
    
    
    1,003
    
    
    
    218
    
    
    
    195
    
    
    
    1,126
    
    
    
    1,999
    
    
    
    803
    
    
    
    2,129Professional services
    
    
    13,158
    
    
    
    15,238
    
    
    
    10,367
    
    
    
    2,513
    
    
    
    3,842
    
    
    
    2,559
    
    
    
    15,671
    
    
    
    19,080
    
    
    
    12,926Maintenance and support
    
    
    1,362
    
    
    
    1,889
    
    
    
    662
    
    
    
    500
    
    
    
    105
    
    
    
    811
    
    
    
    1,862
    
    
    
    1,994
    
    
    
    1,473Cost of revenues
    
    
    16,301
    
    
    
    17,735
    
    
    
    12,032
    
    
    
    3,231
    
    
    
    4,142
    
    
    
    4,496
    
    
    
    19,532
    
    
    
    21,877
    
    
    
    16,528Segment gross profitSoftware licenses
    
    
    13,984
    
    
    
    18,329
    
    
    
    15,951
    
    
    
    6,470
    
    
    
    8,943
    
    
    
    7,692
    
    
    
    20,454
    
    
    
    27,272
    
    
    
    23,643Professional services
    
    
    2,615
    
    
    
    3,467
    
    
    
    3,515
    
    
    
    197
    
    
    
    762
    
    
    
    407
    
    
    
    2,812
    
    
    
    4,229
    
    
    
    3,922Maintenance and support
    
    
    17,377
    
    
    
    13,995
    
    
    
    10,653
    
    
    
    7,548
    
    
    
    7,521
    
    
    
    4,966
    
    
    
    24,925
    
    
    
    21,516
    
    
    
    15,619Segment gross profit
    
    
    33,976
    
    
    
    35,791
    
    
    
    30,119
    
    
    
    14,215
    
    
    
    17,226
    
    
    
    13,065
    
    
    
    48,191
    
    
    
    53,017
    
    
    
    43,184Operating expensesResearch and development
    
    
    6,104
    
    
    
    7,015
    
    
    
    4,691
    
    
    
    3,545
    
    
    
    3,310
    
    
    
    1,839
    
    
    
    9,649
    
    
    
    10,325
    
    
    
    6,530Sales and marketing
    
    
    16,702
    
    
    
    18,642
    
    
    
    13,258
    
    
    
    8,810
    
    
    
    10,959
    
    
    
    8,294
    
    
    
    25,512
    
    
    
    29,601
    
    
    
    21,552Operating expenses
    
    
    22,806
    
    
    
    25,657
    
    
    
    17,949
    
    
    
    12,355
    
    
    
    14,269
    
    
    
    10,133
    
    
    
    35,161
    
    
    
    39,926
    
    
    
    28,082Segment operating profit
    
    $
    11,170
    
    
    $
    10,134
    
    
    $
    12,170
    
    
    $
    1,860
    
    
    $
    2,957
    
    
    $
    2,932
    
    
    $
    13,030
    
    
    $
    13,091
    
    
    $
    15,102
  2009
    
    
    2008
    
    
    2007Americas
    
    $
    15,676
    
    
    $
    18,937
    
    
    $
    16,954United Kingdom
    
    
    1,700
    
    
    
    3,671
    
    
    
    3,765Rest of World
    
    
    5,077
    
    
    
    5,467
    
    
    
    5,053$
    22,453
    
    
    $
    28,075
    
    
    $
    25,772
  48




---



##### 



Metastorm Inc. and Subsidiaries
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 18. Geographic and Segment Information (Continued)
  2009
    
    
    2008
    
    
    2007Total margin from operating segments
    
    $
    13,030
    
    
    $
    13,091
    
    
    $
    15,102Corporate and general and administrative expenses
    
    
    (13,000
    )
    
    
    (18,538
    )
    
    
    (11,610
    )Amortization of intangible assets
    
    
    (6,134
    )
    
    
    (6,812
    )
    
    
    (3,778
    )Stock-based compensation
    
    
    (465
    )
    
    
    (395
    )
    
    
    (236
    )Interest expense
    
    
    (84
    )
    
    
    (284
    )
    
    
    (54
    )Non-operating income (expense), net
    
    
    (1,579
    )
    
    
    604
    
    
    
    (776
    )Loss before provision for income taxes
    
    $
    (8,232
    )
    
    $
    (12,334
    )
    
    $
    (1,352
    )
  49