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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 

 
(Mark One)
 
 
x
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2002
or
 
 
¨
 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                                  to                                 
 
COMMISSION FILE NUMBER: 000-49793
 
ALTIRIS, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware
 
87-0616516
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer Identification Number)
588 West 400 South, Lindon, Utah
 
84042
(Address of Principal Executive Offices)
 
(Zip Code)
 
(801) 805-2400
(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.
 
Yes x    No ¨
 
There were 19,797,433 shares of the Registrant’s common stock (voting and nonvoting), par value $0.0001, outstanding on November 13, 2002.
 


Table of Contents
TABLE OF CONTENTS
 
                
Page

PART I.
        
1
       
Item 1.
    
1
       
Item 2.
    
11
       
Item 3.
    
32
       
Item 4.
    
32
PART II.
        
33
       
Item 1.
    
33
       
Item 2.
    
33
       
Item 3.
    
33
       
Item 4.
    
33
       
Item 5.
    
33
       
Item 6.
    
34
          
36

i


Table of Contents
PART I FINANCIAL INFORMATION
 
ITEM 1.     FINANCIAL STATEMENTS
 
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
      
September 30, 2002

      
December 31, 2001

 
ASSETS
                     
Currents assets:
                     
Cash and cash equivalents
    
$
56,982,000
 
    
$
1,023,000
 
Accounts receivable, net of allowances of $1,300,000 and $750,000, respectively
    
 
11,316,000
 
    
 
7,288,000
 
Prepaid expenses and other current assets
    
 
1,009,000
 
    
 
330,000
 
      


    


Total current assets
    
 
69,307,000
 
    
 
8,641,000
 
Property and equipment, net
    
 
2,977,000
 
    
 
2,547,000
 
Intangible assets, net
    
 
1,082,000
 
    
 
1,669,000
 
Long-term investments
    
 
10,623,000
 
    
 
 
Other assets
    
 
201,000
 
    
 
88,000
 
      


    


Total Assets
    
$
84,190,000
 
    
$
12,945,000
 
      


    


LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
                     
Current liabilities
                     
Borrowings under financing arrangement
    
$
 
    
$
136,000
 
Convertible note payable and accrued interest
    
 
 
    
 
3,064,000
 
Current portion of capital lease obligations
    
 
783,000
 
    
 
513,000
 
Current portion of note payable
    
 
127,000
 
    
 
292,000
 
Accounts payable
    
 
1,793,000
 
    
 
1,489,000
 
Accrued salaries and benefits
    
 
2,434,000
 
    
 
1,637,000
 
Other accrued expenses
    
 
2,635,000
 
    
 
2,258,000
 
Deferred revenue
    
 
10,307,000
 
    
 
7,323,000
 
      


    


Total current liabilities
    
 
18,079,000
 
    
 
16,712,000
 
Capital lease obligations, net of current portion
    
 
841,000
 
    
 
827,000
 
Note payable, net of current portion
    
 
 
    
 
73,000
 
Deferred revenue, non-current
    
 
2,497,000
 
    
 
1,077,000
 
      


    


Total liabilities
    
 
21,417,000
 
    
 
18,689,000
 
      


    


Commitments and contingencies (Note 6)
                     
Stockholders’ equity (deficit)
                     
Preferred stock, $0.0001 par value; none and 5,044,445 shares authorized, respectively
                     
Series A convertible preferred stock; none and 2,111,112 shares outstanding, respectively (liquidation preference of $9,500,000 as of December 31, 2001)
    
 
 
    
 
9,500,000
 
Common Stock, $0.0001 par value; 100,000,000 and 50,000,000 shares authorized respectively; 19,539,369 and 9,206,958 shares outstanding, respectively
    
 
2,000
 
    
 
1,000
 
Class B non-voting common stock, $0.0001 par value; 258,064 authorized and outstanding at September 30, 2002
    
 
 
    
 
 
Additional paid-in capital
    
 
90,982,000
 
    
 
10,454,000
 
Deferred compensation
    
 
(2,986,000
)
    
 
(2,267,000
)
Accumulated other comprehensive loss
    
 
(88,000
)
    
 
(3,000
)
Accumulated deficit
    
 
(25,137,000
)
    
 
(23,429,000
)
      


    


Total stockholders’ equity (deficit)
    
 
62,733,000
 
    
 
(5,744,000
)
      


    


Total liabilities and stockholders’ equity (deficit)
    
$
84,190,000
 
    
$
12,945,000
 
      


    


 
See accompanying notes to condensed consolidated financial statements.
 

1


Table of Contents
ALTIRIS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
 
    
Three Months Ended
September 30,

    
Nine Months Ended
September 30,

 
    
 

2002

 

  
 

2001

 

  
 

2002

 

  
 

2001

 

Revenue:
                                   
Software
  
$
10,452,000
 
  
$
5,368,000
 
  
$
26,186,000
 
  
$
13,607,000
 
Services
  
 
5,522,000
 
  
 
3,535,000
 
  
 
18,554,000
 
  
 
10,211,000
 
    


  


  


  


Total revenue
  
 
15,974,000
 
  
 
8,903,000
 
  
 
44,740,000
 
  
 
23,818,000
 
    


  


  


  


Cost of revenue:
                                   
Software
  
 
263,000
 
  
 
328,000
 
  
 
739,000
 
  
 
851,000
 
Amortization of acquired IP
  
 
245,000
 
  
 
912,000
 
  
 
1,644,000
 
  
 
2,072,000
 
Write-down of acquired IP
  
 
 
  
 
1,677,000
 
  
 
 
  
 
1,677,000
 
Service
  
 
1,151,000
 
  
 
714,000
 
  
 
5,571,000
 
  
 
2,965,000
 
    


  


  


  


Total cost of revenue
  
 
1,659,000
 
  
 
3,631,000
 
  
 
7,954,000
 
  
 
7,565,000
 
    


  


  


  


Gross profit
  
 
14,315,000
 
  
 
5,272,000
 
  
 
36,786,000
 
  
 
16,253,000
 
    


  


  


  


Operating expenses:
                                   
Sales and marketing (exclusive of stock-based compensation of $370,000, $176,000, $1,097,000 and $436,000, respectively)
  
 
7,651,000
 
  
 
4,142,000
 
  
 
19,920,000
 
  
 
12,274,000
 
Research and development (exclusive of stock-based compensation of $67,000, $31,000, $196,000 and $78,000, respectively)
  
 
4,353,000
 
  
 
2,905,000
 
  
 
11,610,000
 
  
 
6,989,000
 
General and administrative (exclusive of stock-based compensation of $228,000, $108,000, $672,000 and $268,000, respectively)
  
 
1,833,000
 
  
 
1,063,000
 
  
 
5,033,000
 
  
 
2,963,000
 
Amortization of intangible assets
  
 
 
  
 
109,000
 
  
 
25,000
 
  
 
325,000
 
Write-down of intangible assets
  
 
 
  
 
788,000
 
  
 
 
  
 
788,000
 
Stock-based compensation
  
 
665,000
 
  
 
315,000
 
  
 
1,965,000
 
  
 
782,000
 
    


  


  


  


Total operating expenses
  
 
14,502,000
 
  
 
9,322,000
 
  
 
38,553,000
 
  
 
24,121,000
 
    


  


  


  


Loss from operations
  
 
(187,000
)
  
 
(4,050,000
)
  
 
(1,767,000
)
  
 
(7,868,000
)
    


  


  


  


Other income (expenses):
                                   
Interest income (expense), net
  
 
227,000
 
  
 
(147,000
)
  
 
(96,000
)
  
 
(443,000
)
Other income (expense), net
  
 
(60,000
)
  
 
10,000
 
  
 
737,000
 
  
 
26,000
 
    


  


  


  


Other income (expense), net
  
 
167,000
 
  
 
(137,000
)
  
 
641,000
 
  
 
(417,000
)
    


  


  


  


Loss before income taxes
  
 
(20,000
)
  
 
(4,187,000
)
  
 
(1,126,000
)
  
 
(8,285,000
)
Provision for income taxes