INTRAWARE INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MAY 31, 2003

o 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 000-25249

INTRAWARE, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)

68-0389976
(I.R.S. Employer
Identification Number)

25 ORINDA WAY
ORINDA, CA 94563
(Address of principal executive offices)

(925) 253-4500
(Registrant’s telephone number, including area code)

Indicate by check (X) whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of June 30, 2003 there were 53,573,699 shares of the registrant’s common stock outstanding.

PART I—FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

INTRAWARE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)

	May 31, 2003			February 28, 2003
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	5,812		$	6,841
Accounts receivable, net	1,290			1,521
Prepaid licenses, services and cost of deferred revenue	296			329
Other current assets	595			338
Total current assets	7,993			9,029
Cost of deferred revenue	12			37
Property and equipment, net	1,307			1,859
Other assets	10			11
Total assets	$	9,322		$	10,936

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	925		$	683
Accrued expenses	1,082			1,189
Deferred revenue	1,947			2,495
Related party deferred revenue	525			525
Capital lease and other obligations	1,432			1,495
Total current liabilities	5,911			6,387
Deferred revenue	312			183
Related party deferred revenue	98			223
Capital lease obligations	575			906
Total liabilities	6,896			7,699
Contingencies (Note 7)
Redeemable convertible preferred stock; $.0001 par value; 10,000 shares authorized:
Series A; 1,298 shares issued and outstanding at May 31 and February 28, 2003 (aggregate liquidation preference of $2,350 at May 31 and February 28, 2003).	2,109			2,109
Series B-1; 42 and 49 shares issued and outstanding at May 31 and February 28, 2003, respectively (aggregate liquidation preference of $418 and $486 at May 31 and February 28, 2003, respectively).	313			364
Total redeemable convertible preferred stock	2,422			2,473
Stockholders’ equity:
Common stock; $0.0001 par value; 250,000 shares authorized; 52,310 and 52,101 shares issued and outstanding at May 31 and February 28, 2003, respectively.	5			5
Additional paid-in-capital	153,007			152,870
Unearned stock-based compensation	(20		)	(32		)
Accumulated deficit	(152,988		)	(152,079		)
Total stockholders’ equity	4			764
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	9,322		$	10,936

See notes to unaudited interim consolidated financial information.

INTRAWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

	For the Three Months Ended
	May 31, 2003			May 31, 2002

Revenues:
Software product sales	$	114		$	1,744
Online services and technology	1,720			1,659
Alliance and reimbursement	862			1,106
Related party online services and technology	117			—
Total revenues	2,813			4,509

Cost of revenues:
Software product sales	100			1,213
Online services and technology	623			625
Alliance and reimbursement	490			521
Total cost of revenues	1,213			2,359
Gross profit	1,600			2,150

Operating expenses:
Sales and marketing	769			2,491
Product development	919			2,195
General and administrative	766			1,587
Amortization of intangibles	—			1,085
Restructuring	—			1,391
Impairment of assets	—			403
Total operating expenses	2,454			9,152
Loss from operations	(854		)	(7,002		)
Interest expense	(69		)	(2,369		)
Interest and other income and expenses, net	14			(35		)
Gain on sale of Asset Management software business	—			2,656
Net loss	(909		)	(6,750		)
Basic and diluted net loss per share	$	(0.02	)	$	(0.16	)
Weighted average shares - basic and diluted	52,202			40,933

See notes to unaudited interim consolidated financial information.

INTRAWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	For the Three Months ended
	May 31, 2003			May 31, 2002
Cash flows from operating activities:
Net loss	$	(909	)	$	(6,750	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	685			1,173
Amortization of goodwill and intangibles	—			1,085
Amortization of unearned compensation	12			526
Provision for doubtful accounts	2			18
Gain on sale of fixed assets