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 December 31, 2002
¨ 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 0-21484
TARANTELLA, INC.
(Exact name of registrant as specified in this charter)
| California |
94-2549086 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 425 Encinal Street, Santa Cruz, California |
95060 | |
| (Address of principal executive office) |
(Zip Code) |
(831) 427-7222
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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 ¨
The number of shares outstanding of the registrant’s common stock as of December 31, 2002 was 41,028,264.
FORM 10-Q
For the Quarterly Period Ended December 31, 2002
Table of Contents
| Page | ||||||||
| Part I. Financial Information |
||||||||
| Item 1. |
||||||||
| a) |
3 | |||||||
| b) |
Condensed Consolidated Balance Sheets, as of December 31, 2002 and September 30, 2002 |
4 | ||||||
| c) |
5 | |||||||
| d) |
6 | |||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
13 | ||||||
| Item 3. |
22 | |||||||
| Item 4. |
22 | |||||||
| Part II. Other Information |
||||||||
| Item 1. |
23 | |||||||
| Item 2. |
23 | |||||||
| Item 3. |
23 | |||||||
| Item 4. |
23 | |||||||
| Item 5. |
23 | |||||||
| Item 6. |
24 | |||||||
| 26-28 | ||||||||
2
Item 1. Financial Statements
TARANTELLA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended December 31, |
||||||||
| 2002 |
2001 |
|||||||
| (In thousands, except per share data) |
(Unaudited) |
|||||||
| Net revenues: |
||||||||
| Licenses |
$ |
3,054 |
|
$ |
2,454 |
| ||
| Services |
|
531 |
|
|
371 |
| ||
| Total net revenues |
|
3,585 |
|
|
2,825 |
| ||
| Cost of revenues: |
||||||||
| Licenses |
|
69 |
|
|
68 |
| ||
| Services |
|
258 |
|
|
250 |
| ||
| Total cost of revenues |
|
327 |
|
|
318 |
| ||
| Gross margin |
|
3,258 |
|
|
2,507 |
| ||
| Operating expenses: |
||||||||
| Research and development |
|
979 |
|
|
1,746 |
| ||
| Selling, general and administrative |
|
3,723 |
|
|
6,393 |
| ||
| Restructuring charge |
|
1,147 |
|
|
1,718 |
| ||
| Total operating expenses |
|
5,849 |
|
|
9,857 |
| ||
| Operating loss |
|
(2,591 |
) |
|
(7,350 |
) | ||
| Other income (expense): |
||||||||
| Loss of equity investment in Caldera |
|
— |
|
|
(4,010 |
) | ||
| Interest income, net |
|
32 |
|
|
233 |
| ||
| Other expense, net |
|
(14 |
) |
|
(533 |
) | ||
| Total other income (expense) |
|
18 |
|
|
(4,310 |
) | ||
| Loss before income taxes |
|
(2,573 |
) |
|
(11,660 |
) | ||
| Income tax expense |
|
60 |
|
|
— |
| ||
| Net loss |
|
(2,633 |
) |
|
(11,660 |
) | ||
| Other comprehensive income (loss): |
||||||||
| Unrealized gain on available for sale securities |
|
283 |
|
|
25 |
| ||
| Foreign currency translation adjustment |
|
(4 |
) |
|
(26 |
) | ||
| Total other comprehensive income (loss) |
|
279 |
|
|
(1 |
) | ||
| Comprehensive loss |
$ |
(2,354 |
) |
$ |
(11,661 |
) | ||
| Loss per share: |
||||||||
| Basic and diluted |
$ |
(0.06 |
) |
$ |
(0.29 |
) | ||
| Shares used in loss per share calculation: |
||||||||
| Basic and diluted |
|
41,028 |
|
|
40,121 |
| ||
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, 2002 |
September 30, 2002 |
|||||||
| (In thousands) |
(Unaudited) |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
4,701 |
|
$ |
7,055 |
| ||
| Available-for-sale equity securities |
|
506 |
|
|
223 |
| ||
| Trade receivables, net of allowance for doubtful accounts of $334 at December 31, 2002 and $340 at September 30, 2002 |
|
2,924 |
|
|
3,045 |
| ||
| Other receivables |
|
317 |
|
|
236 |
| ||
| Prepaids and other current assets |
|
590 |
|
|
823 |
| ||
| Total current assets |
|
9,038 |
|
|
11,382 |
| ||
| Property and equipment, net |
|
1,026 |
|
|
1,192 |
| ||
| Restricted cash |
|
500 |
|
|
500 |
| ||
| Other assets |
|
555 |
|
|
524 |
| ||
| Total assets |
$ |
11,119 |
|
$ |
13,598 |
| ||
| Liabilities and shareholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Trade accounts payable |
$ |
259 |
|
$ |
448 |
| ||
| Royalties payable |
|
172 |
|
|
212 |
| ||
| Income taxes payable |
|
803 |
|
|
773 |
| ||
| Accrued restructuring charges |
|
1,325 |
|
|
871 |
| ||
| Other payables—Caldera |
|
— |
|
|
400 |
| ||
| Accrued expenses and other current liabilities |
|
3,717 |
|
|
3,700 |
| ||
| Deferred revenues |
|
925 |
|
|
945 |
| ||
| Total current liabilities |
|
7,201 |
|
|
7,349 |
| ||
| Long-term deferred revenues |
|
56 |
|
|
33 |
| ||
| Total long-term liabilities |
|
56 |
|
|
33 |
| ||
| Shareholders’ equity: |
||||||||
| Preferred stock, authorized 20,000 shares; no shares issued and outstanding |
|
— |
|
|
— |
| ||
| Common stock, no par value, authorized 100,000 shares; issued and outstanding 41,028 shares at December 31, 2002 and September 30, 2002 |
|
120,844 |
|
|
120,844 |
| ||
| Accumulated other comprehensive income |
|
396 |
|
|
117 |
| ||
| Accumulated deficit |
|
(117,378 |
) |
|
(114,745 |
) | ||
| Total shareholders’ equity |
|
3,862 |
|
|
6,216 |
| ||
| Total liabilities and shareholders’ equity |
$ |
11,119 |
|
$ |
13,598 |
| ||
See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended December 31, |
||||||||
| 2002 |
2001 |
|||||||
| (In thousands) |
(Unaudited) |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(2,633 |
) |
$ |
(11,660 |
) | ||
| Adjustments to reconcile net loss to net cash used for operating activities: |
||||||||