UNITED STATES OF AMERICA
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 April 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 0-29757
VERSATA, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 68-0255203 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
300 Lakeside Drive Suite 1500
Oakland, CA 94612
(Address including zip code, of principal executive offices)
(510) 238-4100
(Registrant’s telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of May 28, 2004, the total number of outstanding shares of the Registrant’s common stock was 8,122,069
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
| Page | ||||
| Item 1. |
Financial Statements (Unaudited): | |||
| Condensed Consolidated Balance Sheets as of April 30, 2004 and October 31, 2003 | 3 | |||
| 4 | ||||
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2004 and 2003 | 5 | |||
| Notes to Condensed 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 | 23 | ||
| Item 4. |
Controls and Procedures | 24 | ||
| PART II. OTHER INFORMATION | ||||
| Item 1. |
Legal Proceedings | 25 | ||
| Item 2. |
Changes in Securities and Use of Proceeds | 25 | ||
| Item 3. |
Defaults on Senior Securities | 25 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 25 | ||
| Item 5. |
Other Information | 25 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 25 | ||
| 27 | ||||
| EXHIBIT 31.1 |
||||
| EXHIBIT 31.2 |
||||
| EXHIBIT 32.1 |
||||
| EXHIBIT 32.2 |
||||
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| April 30, 2004 |
October 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 6,619 | $ | 8,089 | ||||
| Short-term investments |
4,093 | 5,693 | ||||||
| Accounts receivable, net |
2,464 | 1,917 | ||||||
| Prepaid expenses and other current assets |
1,304 | 411 | ||||||
| Total current assets |
14,480 | 16,110 | ||||||
| Restricted cash |
— | 4,781 | ||||||
| Property and equipment, net |
1,510 | 2,098 | ||||||
| Intangibles, net |
— | 2 | ||||||
| Other assets |
130 | 129 | ||||||
| Total assets |
$ | 16,120 | $ | 23,120 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 604 | $ | 346 | ||||
| Accrued liabilities |
1,849 | 2,230 | ||||||
| Current portion of accrued restructuring and other |
803 | 1,862 | ||||||
| Current portion of deferred revenue |
4,695 | 3,897 | ||||||
| Total current liabilities |
7,951 | 8,335 | ||||||
| Accrued restructuring and other, less current portion |
— | 4,005 | ||||||
| Deferred revenue, less current portion |
924 | 934 | ||||||
| Other long-term liabilities |
37 | — | ||||||
| Total liabilities |
8,912 | 13,274 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock $0.001 par value; 25,000 shares authorized, 8,122, and 7,882 shares issued and outstanding as of April 30, 2004 and October 31, 2003 respectively |
45 | 45 | ||||||
| Additional paid-in capital |
216,778 | 216,672 | ||||||
| Unearned stock-based compensation |
(26 | ) | (225 | ) | ||||
| Accumulated other comprehensive loss |
(204 | ) | (523 | ) | ||||
| Accumulated deficit |
(209,385 | ) | (206,123 | ) | ||||
| Total stockholders’ equity |
7,208 | 9,846 | ||||||
| Total liabilities and stockholders’ equity |
$ | 16,120 | $ | 23,120 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
(Unaudited)
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| April 30, 2004 |
April 30, 2003 |
April 30, 2004 |
April 30, 2003 |
|||||||||||||
| Revenue: |
||||||||||||||||
| Software license |
$ | 1,294 | $ | 1,878 | $ | 2,517 | $ | 4,586 | ||||||||
| Maintenance and support |
1,453 | 1,542 | 2,890 | 2,913 | ||||||||||||
| Professional services |
983 | 1,057 | 1,739 | 2,078 | ||||||||||||
| Total revenue |
3,730 | 4,477 | 7,146 | 9,577 | ||||||||||||
| Cost of revenue: |
||||||||||||||||
| Software license |
51 | 138 | 117 | 186 | ||||||||||||
| Maintenance and support (1) |
353 | 422 | 751 | 786 | ||||||||||||
| Professional services (1) |
831 | 892 | 1,561 | 1,872 | ||||||||||||
| Total cost of revenue |
1,235 | 1,452 | 2,429 | 2,844 | ||||||||||||
| Gross profit |
2,495 | 3,025 | 4,717 | 6,733 | ||||||||||||
| Operating expense: |
||||||||||||||||
| Sales and marketing (1) |
1,413 | 1,646 | 2,913 | 3,253 | ||||||||||||
| Product development (1) |
884 | 1,248 | 2,115 | 2,695 | ||||||||||||
| General and administrative (1) |
1,105 | 657 | 2,179 | 1,475 | ||||||||||||
| Stock-based compensation |
100 | 121 | 223 | 294 | ||||||||||||
| Amortization of intangibles |
— | 500 | — | 973 | ||||||||||||
| Restructuring and other (1) |
(99 | ) | 83 | 571 | 406 | |||||||||||
| Total operating expense |
3,403 | 4,255 | 8,001 | 9,096 | ||||||||||||
| Loss from operations |
(908 | ) | (1,230 | ) | (3,284 | ) | (2,363 | ) | ||||||||
| Interest income, net |
35 | 41 | 57 | 122 | ||||||||||||
| Other non-operating income (expense), net |
(7 | ) | 20 | (35 | ) | (98 | ) | |||||||||
| Net loss |
$ | (880 | ) | $ | (1,169 | ) | $ | (3,262 | ) | $ | (2,339 | ) | ||||
| Other comprehensive income (loss): |
||||||||||||||||
| Change in unrealized loss on marketable securities |
(1 | ) | (6 | ) | — | (8 | ) | |||||||||
| Change in foreign currency translation adjustments |
452 | (85 | ) | 319 | (165 | ) | ||||||||||
| Comprehensive loss |
$ | (429 | ) | $ | (1,260 | ) | $ | (2,943 | ) | $ | (2,512 | ) | ||||
| Basic and diluted net loss per share |
$ | (0.11 | ) | $ | (0.16 | ) | $ | (0.41 | ) | $ | (0.32 | ) | ||||
| Weighted-average common shares outstanding |
8,082 | 7,326 | 7,995 | 7,294 | ||||||||||||
| (1) Unearned stock-based compensation excluded from cost of revenues and operating expenses: |
||||||||||||||||
| Maintenance and support |
2 | 56 | 7 | 117 | ||||||||||||
| Professional services |
14 | 4 | 34 | 10 | ||||||||||||
| Sales and marketing |
20 | 68 | 47 | 127 | ||||||||||||
| Product development |
45 | 78 | 97 | 97 | ||||||||||||
| General and administrative |
19 | 34 | 38 | 62 | ||||||||||||
| Restructuring and other |
— | (119 | ) | — | (119 | ) | ||||||||||
| Total |
$ | 100 | $ | 121 | $ | 223 | $ | 294 | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
| Six Months Ended |
||||||||
| April 30, 2004 |
April 30, 2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ | (3,262 | ) | $ | (2,339 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
538 | 1,922 | ||||||
| Provision for doubtful accounts |
96 | (261 | ) | |||||