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¶ – Release Delayed to: 4/1/11 ·As Of Filer Filing For·On·As Docs:Size Issuer Agent 11/09/10 Cornerstone OnDemand Inc S-1/A¶ 14:6.0M Toppan Vintage/FA |
Document/Exhibit Description Pages Size
1: S-1/A Pre-Effective Amendment to Registration Statement HTML 1.46M
(General Form)
14: CORRESP ¶ Comment-Response or Other Letter to the SEC HTML 111K
2: EX-3.2 Articles of Incorporation/Organization or By-Laws HTML 27K
3: EX-3.4 Articles of Incorporation/Organization or By-Laws HTML 164K
4: EX-4.7 Instrument Defining the Rights of Security Holders HTML 112K
9: EX-10.13A Material Contract HTML 54K
10: EX-10.14 Material Contract HTML 85K
11: EX-10.15 Material Contract HTML 32K
12: EX-10.16 Material Contract HTML 59K
5: EX-10.6 Material Contract HTML 75K
6: EX-10.7 Material Contract HTML 73K
7: EX-10.8 Material Contract HTML 73K
8: EX-10.9 Material Contract HTML 58K
13: EX-23.2 Consent of Experts or Counsel HTML 8K
| Unassociated Document |
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1.
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We
will process your submission and amendments without price
ranges. Since the price range triggers a number of disclosure
matters, we will need sufficient time to process the amendment when it is
included. Please understand that its effect on disclosure
throughout the document may cause us to raise issues in areas not
previously commented upon.
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2.
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Please
supplementally provide us with copies of any graphical materials or
artwork you intend to use in your prospectus. Upon review of
such materials, we may have further comments. For guidance,
refer to Question 101.02 of our Securities Act Forms Compliance and
Disclosure Interpretations.
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3.
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Please
specifically disclose the factual basis for and the context of all beliefs
and opinions set forth in the registration statement, including, as one
example, the claim that “Cornerstone OnDemand is a leading global provider
of a comprehensive learning and talent management solution delivered as
software-as-a-service.”
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4.
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With
respect to third-party statements in your prospectus, such as the data
attributed to IDC and the Bureau of Labor, please provide us with support
for such statements. To expedite our review, please clearly
mark each source to highlight the applicable portion or section containing
the information and cross-reference it to the appropriate location in your
Form S-1. Also, tell us whether you commissioned any of the
non-governmental sources.
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·
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IDC,
Worldwide HCM
Applications 2008 Vendor Shares: Analysis of 25 Vendors in Core HR,
eLearning, eRecruiting, Intelligent Compensation, Performance Management,
and Workforce Management, Doc # 221284, December
2009;
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·
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IDC,
Worldwide Software as a
Service 2010-2014 Forecast: Software Will Never Be the Same, Doc #
223628, June 2010;
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U.S.
Department of Labor, Bureau of Labor Statistics, Labor Force Statistics from
the Current Population Survey. Retrieved from www.bls.gov;
and
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·
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U.S.
Department of Labor, Bureau of Labor Statistics, Employer Costs for Employee
Compensation – June 2010. Retrieved from www.bls.gov.
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5.
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You
state that “We may also use a portion of the net proceeds for repayment of
outstanding indebtedness.” However, it appears that, based upon
your disclosure on page F-25, in the event of an initial public offering
“between March 31, 2010 and March 30, 2011, at the option of the
noteholder, the Company is required to redeem the outstanding principal
amount at 105% or 103%, respectively, together with accrued
interest.” Please advise and tell us what consideration you
gave to disclosing both here and in the Offering Summary your potential
obligation to Ironwood Equity Fund
LLP.
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6.
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You
refer to the possibility that offering proceeds may be used for several
specific categories of expenses, such as repayment of indebtedness, sales
and marketing activity, general and administrative expenses and for
acquisitions or investments. Although you state that you have
no current plans relating to acquisitions or investments, you do not
quantify the portion of the proceeds you estimate will be used for the
other potential uses of the proceeds that you
identify. Elsewhere in the filing, such as at page 41, you
describe plans to expend additional funds on sales and marketing, research
and development and general and administrative expenses. Given
your negative cash flows from operations, it would appear that the
offering proceeds would be applied to fund the increased expenditures you
plan and reference. In your supplemental response, and with a
view to disclosure, tell us whether you have a proposed plan of operations
that will require the application of the offering proceeds. To
the extent that you do not have any current plans or proposals for the use
of the proceeds of the offering, please state this more clearly, and
explain why you have decided to conduct the offering at this
time. Please note that the inclusion of meaningful information
regarding management’s current plans to apply the proceeds is not
inconsistent with management’s retention of full discretion to apply the
proceeds as it desires, based on future
conditions.
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7.
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Please
clarify to explain in more detail why you have historically experienced
seasonality in terms of when you enter into client agreements for your
solution. In this respect, explain why you sign a significantly
higher percentage of agreements with new clients, as well as renewal
agreements with existing clients, in the fourth quarter of each
year.
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8.
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Please
revise your critical accounting policy for revenue recognition to describe
in greater detail the significant estimates and assumptions that
management makes in determining the best estimate of selling price
(“BESP”). In this respect, you should expand your disclosures
to clearly describe how you develop and establish BESP. You
should indicate how your methodology is affected or incorporates the
nature of the deliverables themselves; the geographies, market conditions
and competitive landscape; internal costs; and pricing and discounting
practices. We refer you to Section V of SEC Release No.
33-8350.
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9.
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Please
revise your table on page 46 to include the 604,618 stock options granted
in September 2010. Update your disclosures to discuss each
significant factor contributing to the difference between the estimated
IPO price and the fair value determined as of the date of each grant and
equity related issuance. This reconciliation should describe
significant intervening events within the company and changes in
assumptions as well as weighting and selection of valuation methodologies
employed that explain the changes in the fair value of your common stock
up to the filing of the registration
statement.
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10.
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Please
tell us your proposed IPO price, when you first initiated discussions with
underwriters and when the underwriters first communicated their estimated
price range and amount for your
stock.
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11.
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Please
revise your disclosures to further explain the underlying reasons for your
significant revenue growth for each period presented. In this
respect, you should provide enhanced disclosures that explain why there
was a significant increase in the number of clients and the number of
users. We refer you to Section III.B of SEC Release
33-8350.
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12.
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There
are many instances where two or more sources of a material change have
been identified, but the dollar amounts for each source that contributed
to the change are not disclosed. For instance, you disclose on
page 56 that your cost of revenues increased primarily due to increased
employee related costs, increased costs related to outsourced consulting
services and increased network infrastructure costs. As another
example, you disclose on page 57 that the increase in general and
administrative costs is primarily attributable to increased professional
fees for accounting, audit, legal and taxes services, increased sales
taxes and increased employee related costs as a result of increased
headcount. Revise your disclosures to quantify each source that
contributed to a material change. In addition, your disclosure
should remove vague terms such as “primarily” in favor of specific
quantifications. We refer you to Section III.B of SEC Release
33-8350.
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13.
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We
note from your disclosures on page F-26 that your senior subordinated
promissory note agreement with Ironwood Equity Fund LP allows for
mandatory redemption at the holder’s option upon the consummation of an
initial public offering. Please revise your disclosures to
discuss how this mandatory redemption feature could potentially impact
your future liquidity. In addition, revise your disclosures to
clarify how your table of contractual obligations and commitments
considers the obligations and timing associated with the Ironwood
promissory note. We refer you to Item 303(a)(5) of Regulation
S-K and Section IV of SEC Release
33-8350.
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14.
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We
note from your disclosures on page 62 that you believe based on your
current level of operations and anticipated growth, the proceeds from this
offering, your future cash flows from operating activities, existing cash
and cash equivalents, and ability to borrow on acceptable terms will
provide adequate funds for operations for at least the next twelve
months. Please revise your disclosures to describe in greater
detail your plan of operations for the remainder of the fiscal
year. Quantify the anticipated costs and amount of additional
capital that will be needed, if any, in order to fund the company’s
projected operations for a minimum of 12 months from the date of the
filing. You should disclose the minimum period of time that you
will be able to conduct planned operations using currently-available
capital resources.
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15.
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Tell
us your consideration of providing enhanced disclosures that focus on the
primary drivers of and other material factors necessary to an
understanding of your cash flows and the indicative value of historical
cash flows. For instance, you should consider disclosing the
days sales outstanding (“DSO”) at each balance sheet date and the impact
it has on your cash flows. You should also consider disclosing
the cause of the seasonality and the related payment terms or timing
impact on your cash flows. We refer you to Section IV.B of SEC
Release No. 33-8350.
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16.
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We
note your use of specified performance goals for short-term incentives,
the executive compensation plan for Messrs. Miller, Seymour and Wallack,
and the sales commission plans for Messrs. Belliveau and
Carter. Please tell us why you have not provided quantitative
disclosure of the terms of the performance targets utilized in determining
compensation for your executive officers for fiscal year
2009. If you believe that disclosure of the performance targets
is not required because it would result in competitive harm such that the
targets could be excluded under Instruction 4 to Item 402(b) of Regulation
S-K, please provide a supplemental analysis supporting your
conclusion. In particular, your competitive harm analysis
should justify why you do not intend to disclose what appear to be
historical financial performance objectives, and it should clearly explain
the nexus between disclosure of the performance objectives and the
competitive harm that is likely to result from
disclosure.
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17.
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We
note your use of peer group comparisons. Please clarify whether
you use specific peer group compensation percentiles in making
compensation decisions. If so, please clarify what
consideration you gave to disclosing the actual percentiles for fiscal
2009 compensation and each benchmarked element of
compensation. Disclosure in this regard should include a
discussion of where you target each element of compensation against the
comparator companies and where actual payments fall within targeted
parameters.
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18.
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Where
appropriate, please describe and explain how the appropriate payment and
benefit levels are determined under the various circumstances that trigger
payments or provision of benefits under the employment
agreements. See paragraphs (b)(1)(v) and (j)(3) of Item 402 of
Regulation S-K. Also, in the compensation discussion and
analysis, discuss how these arrangements fit into your overall
compensation objectives and affect the decisions you made regarding other
compensation elements and the rationale for decisions made in connection
with these arrangements.
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19.
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Please
tell us why you have not filed as exhibits the stock purchase agreements
pursuant to which you sold Series D and Series E shares to related
parties. Although in certain circumstances you are not required
to file contracts that were entered into more than two years before your
filing, it would appear that the contract and the obligations associated
with the Series D financing will be performed after the filing of the
registration statement and should therefore be filed. Please
advise or file the Series D and E stock purchase
agreements. With regards to the Series E contracts, those were
entered into in January of 2009. Refer to Item 601(b)(10)(i)
and (ii)(A) of Regulation S-K.
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20.
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Your
disclosure suggests that Paul S. Madera, Michael B. Gordon, Robert D. Ward
and George H. Bischof exercise shared voting and dispositive power over
the shares held by the entities affiliated with Meritech Capital, but is
somewhat unclear in that regard. Similarly, it appears Atul
Kapadia, Neal Dempsey and Neil G. Sadaranganey exercise shared voting and
dispositive power over the shares held by the entities affiliated with Bay
Partners. Please revise your filing to
clarify.
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21.
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Once
your selling shareholders are identified, please confirm that there are no
broker-dealers or affiliates of
broker-dealers.
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22.
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Please
complete your pro forma information as of June 30, 2010 to present the
conversion of your preferred stock upon the completion of a qualified
offering and the reclassification of the preferred stock warrant liability
to additional-paid-in-capital for certain preferred stock
warrants. In addition, the pro forma basic and diluted earnings
per share amounts that reflect the conversion of all outstanding preferred
securities upon a qualified public offering should also be
completed.
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23.
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We
note from your disclosures on page 74 that you currently offer two
editions of your solutions to meet the needs of different business
segments. Clarify how you have evaluated FASB ASC 280-10-50-1
through 50-9 when determining that the Enterprise Edition and Business
Edition do not represent separate operating segments. Describe
what information is reviewed by your chief operating decision maker with
respect to these business segments.
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24.
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Please
tell us and disclose, if required, the separate amount of revenues
attributable to subscription fees, consulting services and E-learning
content. We refer you to FASB ASC
280-10-50-40.
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25.
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Please
revise your disclosures to clarify whether you recognize revenues on a net
basis for those revenues generated from your global OEM agreement with
ADP.
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26.
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Please
clarify how you determine that collectability of your accounts receivable
is reasonably assured pursuant to Section 13(A)(1) and footnote 6 of FASB
ASC 650-10-S99. Further explain why you have not historically
established an allowance for doubtful accounts and how your bad debt
analysis considers the relatively large DSOs at each balance sheet
date. Please clarify whether you generally receive payment
within the terms of the contractual arrangement with
customers.
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27.
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Revise
to disclose that the estimated aggregate amortization expense for each of
the next five succeeding fiscal years. We refer you to the
guidance in FASB ASC 350-30-50-2.
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28.
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We
note from your disclosures on pages 30 and F-26 that the Ironwood Equity
Fund LLP senior secured promissory note allows for mandatory redemption at
the note holders option upon the occurrence of a change in control or an
initial public offering. We further note that you have
classified the senior secured promissory note as a long-term liability in
your consolidated balance sheets. Please explain whether you
considered classifying the senior secured promissory note as a current
liability in light of the filing of the registration
statement. Cite the guidance you relied upon in determining the
appropriate classification for the senior secured promissory
note.
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·
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The
ASC Master Glossary (ASC 210-10-20) defines current liabilities as
“obligations whose liquidation is reasonably expected to require the use
of existing resources properly classifiable as current assets, or the
creation of other current liabilities.” The repayment of the
Ironwood Equity Fund LLP senior secured promissory note (the “Note”) would be
made, if elected by Ironwood, from proceeds of the offering. As
such, the repayment of the Note would not require the use of existing
resources, and the rights of Ironwood are applicable only if the Company
consummates the offering.
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·
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The
consummation of the initial public offering is not probable and not within
the Company's control, and therefore, as Ironwood cannot demand repayment
of the Note until the offering occurs, the Company would not
recognize the Note as short-term until such time. Ironwood cannot
demand repayment of the Note until an initial public offering
occurs. Such accounting is consistent with the accounting for
stock-based compensation awards with performance conditions, such as
vesting upon an initial public offering, where the vesting and any
resulting charge is not recognized until the performance condition
actually occurs.
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·
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The
Company respectfully submits that debt-covenant compliance guidance (FASB
ASC 470-10-45) supports the Company’s position with respect to the
long-term classification of the Note. Such guidance
describes a scenario where a company is in compliance with covenants at a
balance sheet date but becomes non-compliant after the balance sheet
date. In this scenario, the debt continues to be classified as
long-term at the balance sheet date with disclosure in the notes to the
financial statements surrounding the event of
non-compliance. In the Company’s circumstances, at the
balance sheet date, the event triggering potential repayment, the initial
public offering, had not occurred and therefore the Company believes
disclosure in the notes to the financial statements is
appropriate.
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29.
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Tell
us whether you considered disclosing the components of “Income (loss)
before provision for income taxes” as either domestic or
foreign. See Rule 4-08(h)(1)(i) of Regulation
S-X.
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30.
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We
note your statement that several of your sales “were exempt from the
registration requirements of the Securities Act of 1933 in reliance on
Section 4(2) thereof, or Rule 506 of Regulation D promulgated
thereunder.” Please clarify what transactions you believe were
exempt under Section 4(2) and what transactions were exempt under Rule
506.
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31.
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We
note that your principal offices of approximately 30,000 square feet are
subject to two subleases that expire in November 2011. Please
tell us how you determined you should not file these leases as
exhibits. Refer to Item 601(b)(10)(ii)(D) of Regulation
S-K.
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| This ‘S-1/A’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 3/30/11 | ||||
| Filed on: | 11/9/10 | |||
| 10/26/10 | UPLOAD | |||
| 9/28/10 | S-1 | |||
| 6/30/10 | ||||
| 3/31/10 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/22/21 Cornerstone OnDemand Inc. 10-K 12/31/20 122:11M |