CONVERA
CORPORATION
(Exact name of registrant as specified in its charter)
|
Delaware (State or other jurisdiction of incorporation or organization) |
54-1987541
(I.R.S. Employer Identification No.) |
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| 1921
Gallows Road, Suite 200, Vienna, Virginia (Address of principal executive offices) |
22182
(Zip Code) |
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Registrant’s telephone number, including area code: (703) 761 - 3700
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 the filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the
registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2.)
Yes |_| No |X|
The number of shares outstanding of the registrant’s Class A common stock as of December 13, 2004, 2004 was 37,948,903.
2
CONVERA
CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except
share data)
| ASSETS | October
31, 2004 (Unaudited) |
January 31, 2004 | ||||
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| Current Assets: | ||||||
| Cash and cash equivalents | $ | 22,662 | $ | 30,530 | ||
| Short term investments | 71 | 71 | ||||
| Accounts receivable, net of allowance for doubtful | ||||||
| accounts of $890 and $1,793, respectively | 6,833 | 5,464 | ||||
| Prepaid expenses and other | 2,274 | 2,536 | ||||
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| Total current assets | 31,840 | 38,601 | ||||
| Equipment and leasehold improvements, net of | ||||||
| accumulated depreciation of $13,827 and $12,692, | ||||||
| respectively | 2,158 | 1,759 | ||||
| Other assets | 1,762 | 2,225 | ||||
| Goodwill | 2,275 | 2,275 | ||||
| Other intangible assets, net of accumulated amortization of | ||||||
| $713 and $511, respectively | 633 | 835 | ||||
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| Total assets | $ | 38,668 | $ | 45,695 | ||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current Liabilities: | ||||||
| Accounts payable | $ | 2,802 | $ | 2,615 | ||
| Accrued expenses | 3,331 | 4,093 | ||||
| Accrued bonuses | 300 | 745 | ||||
| Deferred revenues | 3,869 | 620 | ||||
| Restructuring reserve | 793 | 3,720 | ||||
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| Total current liabilities | 11,095 | 11,793 | ||||
| Restructuring reserve, net of current portion | 265 | 887 | ||||
| Other long-term liabilities | 485 | 1,647 | ||||
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| Total liabilities | 11,845 | 14,327 | ||||
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| Commitments and Contingencies | ||||||
| Shareholders’ Equity: | ||||||
| Common stock Class A, $0.01 par value, | ||||||
| 100,000,000 shares authorized; 38,413,557 | ||||||
| and 34,655,344 shares issued, respectively; | ||||||
| 37,656,731 and 33,842,087 shares | ||||||
| outstanding, respectively | 384 | 347 | ||||
| Treasury stock at cost, 756,826 and 813,257 shares, | ||||||
| respectively | (1,748 | ) | (1,879 | ) | ||
| Additional paid-in capital | 1,082,594 | 1,070,880 | ||||
| Accumulated deficit | (1,052,951 | ) | (1,036,625 | ) | ||
| Accumulated other comprehensive loss | (1,456 | ) | (1,355 | ) | ||
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| Total shareholders’ equity | 26,823 | 31,368 | ||||
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| Total liabilities and shareholders’ equity | $ | 38,668 | $ | 45,695 | ||
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See accompanying notes.
3
CONVERA
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share and per share data)
| Three
Months Ended October 31, |
Nine
Months Ended October 31, |
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| 2004 | 2003 | 2004 | 2003 | |||||||||
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| Revenues: | ||||||||||||
| License | $ | 3,043 | $ | 6,279 | $ | 11,096 | $ | 15,097 | ||||
| Professional services | 1,274 | 741 | 2,898 | 3,407 | ||||||||
| Maintenance | 1,813 | 1,677 | 5,373 | 4,766 | ||||||||
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| 6,130 | 8,697 | 19,367 | 23,270 | |||||||||
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| Cost of revenues: | ||||||||||||
| License | $ | 516 | $ | 368 | $ | 1,643 | $ | 1,320 | ||||
| Professional services | 1,074 | 963 | 2,591 | 3,755 | ||||||||
| Maintenance | 428 | 534 | 1,387 | 1,500 | ||||||||
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| 2,018 | 1,865 | 5,621 | 6,575 | |||||||||
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| Gross margin: | 4,112 | 6,832 | 13,746 | 16,695 | ||||||||
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| Operating expenses: | ||||||||||||
| Sales and marketing | 2,931 | 4,375 | 12,246 | 13,708 | ||||||||
| Research and product development | 3,039 | 2,894 | 10,311 | 9,395 | ||||||||
| General and administrative | 2,187 | 2,908 | 7,109 | 7,432 | ||||||||
| Restructuring charges | 518 | — | 518 | 620 | ||||||||
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| 8,675 | 10,177 | 30,184 | 31,155 | |||||||||
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| Operating loss | (4,563 | ) | (3,345 | ) | (16,438 | ) | (14,460 | ) | ||||
| Interest income, net | 45 | 44 | 112 | 145 | ||||||||
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| Net loss | $ | (4,518 | ) | $ | (3,301 | ) | $ | (16,326 | ) | $ | (14,315 | ) |
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| Basic and diluted net loss per common share | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.47 | ) | $ | (0.47 | ) |
| Weighted-average number of common shares | ||||||||||||
| outstanding - basic and diluted | 35,824,046 | 33,800,142 | 34,604,827 | 30,699,046 | ||||||||
| Other comprehensive loss: | ||||||||||||
| Net loss | $ | (4,518 | ) | $ | (3,301 | ) | $ | (16,326 | ) | $ | (14,315 | ) |
| Foreign currency translation adjustment | (385 | ) | (214 | ) | (220 | ) | (321 | ) | ||||
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| Comprehensive loss | $ | (4,903 | ) | $ | (3,515 | ) | $ | (16,546 | ) | $ | (14,636 | ) |
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See accompanying notes.
4
CONVERA
CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in
thousands)
| For the Nine Months Ended October 31, | ||||||
| 2004 | 2003 | |||||
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| Cash Flows from Operating Activities: | ||||||
| Net loss | $ | (16,326 | ) | $ | (14,315 | ) |
| Adjustments to reconcile net loss to net cash used in | ||||||
| operating activities: | ||||||
| Depreciation | 1,084 | 1,279 | ||||
| Provision for doubtful accounts | 119 | 189 | ||||
| Amortization of intangible assets | 202 | 202 | ||||
| Equity compensation | 1,049 | 390 | ||||
| Changes in operating assets and liabilities, net of effects | ||||||
| from acquisition: | ||||||
| Accounts receivable | (1,321 | ) | (329 | ) | ||
| Prepaid expenses and other assets | 736 | 588 | ||||
| Accounts payable, accrued expenses and accrued | ||||||
| bonuses | (1,047 | ) | 455 | |||
| Restructuring reserve | (449 | ) | (1,153 | ) | ||
| Deferred revenues | 132 | 1,436 | ||||
| Long-term payables | (1,162 | ) | — | |||
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| Net cash used in operating activities | (16,983 | ) | (11,258 | ) | ||
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| Cash Flows from Investing Activities: | ||||||
| Proceeds from maturities of investments, net | — | 19,982 | ||||
| Purchases | ||||||