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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 March 31, 2005
 
OR
 
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: 000-25781

NET PERCEPTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
  
41-1844584
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification Number)

One Landmark Square
Stamford, Connecticut 06901 
(Address of principal executive offices, Zip Code)
 
 
(203) 428-2040
(Registrant’s telephone number, including area code)
 

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 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 x
 
As of May 1, 2005, there were outstanding 28,917,745 shares of the registrant’s Common Stock, $0.0001 par value.

 
 
NET PERCEPTIONS, INC.
FORM 10-Q
For the Quarter Ended March 31, 2005

TABLE OF CONTENTS
 
 
Page
   
PART I. FINANCIAL INFORMATION
  
   
Item 1. Financial Statements
  
   
Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004
3
   
Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004
4
   
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004
5
   
Notes to the Consolidated Financial Statements
6
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
10
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk
14
   
Item 4. Controls and Procedures
14
   
PART II. OTHER INFORMATION
  
   
Item 6. Exhibits
15
   
SIGNATURES
15
   
EXHIBIT INDEX
16

 
-2-

PART I. FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
NET PERCEPTIONS, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)
    
                
              
March 31,
2005
   
December 31,
2004
  
   
(Unaudited)
      
Assets
          
Current assets:
          
Cash and cash equivalents
  
$
14,699
 
$
14,444
  
Accounts receivable, net
    
5
    
--
 
Prepaid expenses and other current assets
    
92
    
40
  
Total current assets
    
14,796
    
14,484
  
               
Other assets
    
232
    
239
  
Total assets
  
$
15,028
 
$
14,723
  
               
Liabilities and Stockholders’ Equity
              
Current liabilities:
              
Accounts payable & accrued liabilities
    
195
    
178
  
Total current liabilities
   
195
    
178
  
Note Payable
    
2,531
    
2,517
  
Total liabilities
   
2,726
    
2,695
  
               
Commitments and contingencies
              
Stockholders’ equity:
              
Common stock
    
2
    
2
  
Additional paid-in capital
    
234,350
    
234,350
  
Unearned stock compensation
    
(120
)
  
(135
)
Accumulated deficit
    
(221,930
)
  
(222,189
)
Total stockholders’ equity
    
12,302
    
12,028
  
Total liabilities and stockholders’ equity
  
$
15,028
  
$
14,723
  

 
See accompanying notes to the consolidated financial statements.
 
-3-

NET PERCEPTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
                  
   
Three Months Ended
  
   
March 31,
  
       
2005
   
2004
  
 
           
Revenues:
           
Product
  
$
--
  
$
354
  
Service, maintenance and royalties
    
10
    
146
 
Total revenues
    
10
    
500
 
Cost of revenues:
              
Service and maintenance
    
--
    
102
 
Total cost of revenues
    
--
    
102
 
               
Gross Margin
    
10
    
398
  
               
Operating expenses:
              
Research and development
    
--
    
250
 
General and administrative
    
60
    
1,028
 
Gain on sale of patents
    
--
    
(1,800
)
Gain on litigation settlement
    
(229
)
  
--
  
Restructuring related charges
    
--
    
(7
)
Total operating expenses
    
(169
)
  
(529
)
               
Operating income
   
179
    
927
  
               
Other income (expense):
              
Interest income
    
83
    
26
  
Interest expense
    
(27
)
  
--
  
Other income
   
24
    
25
  
Total other income, net
    
80
    
51
  
Net income
 
$
259
  
$
978
  
Net income per share:
              
Basic
 
$
0.01
  
$
0.03
  
Diluted
  
$
0.01
  
$
0.03
  
Shares used in computing basic and diluted net income per share:
              
Basic
   
28,918
    
28,206
  
Diluted
    
29,172
    
28,641
  

See accompanying notes to the consolidated financial statements.
 
-4-

NET PERCEPTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)

 
                
   
Three Months Ended
March 31,
  
       
2005
  
2004
  
       
Cash flows from operating activities:
          
Net income
  
$
259
  
$
978
  
Reconciliation of net income to net cash provided by (used in) operating activities:
              
Gain on sale of patents
    
--
    
(1,800
)