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 September 30, 2004
OR
| ¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File Number: 0-30925
BLUE MARTINI SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 94-3319751 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
2600 Campus Drive
San Mateo, California 94403
(Address of principal executive offices)
Telephone Number (650) 356-4000
(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 ¨
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 November 1, 2004, there were approximately 12,465,000 shares of the Registrant’s common stock outstanding.
INDEX
| Page No. | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. |
||||
| Condensed Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003 |
3 | |||
| 4 | ||||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. |
21 | |||
| Item 4. |
21 | |||
| PART II. OTHER INFORMATION | ||||
| Item 1. |
24 | |||
| Item 6. |
25 | |||
| 26 | ||||
2
| ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 5,688 | $ | 14,361 | ||||
| Short-term investments |
28,473 | 30,865 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $283 in 2004 and $604 in 2003 |
3,820 | 3,787 | ||||||
| Prepaid expenses and other current assets |
1,398 | 1,334 | ||||||
| Total current assets |
39,379 | 50,347 | ||||||
| Property and equipment, net |
278 | 469 | ||||||
| Restricted cash |
648 | 962 | ||||||
| Intangible and other assets, net |
267 | 302 | ||||||
| Total assets |
$ | 40,572 | $ | 52,080 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 254 | $ | 891 | ||||
| Accrued employee compensation |
1,628 | 2,951 | ||||||
| Accrued restructuring charges |
1,669 | 794 | ||||||
| Other current liabilities |
2,960 | 4,216 | ||||||
| Deferred revenues |
4,956 | 4,872 | ||||||
| Total current liabilities |
11,467 | 13,724 | ||||||
| Accrued restructuring charges, less current portion |
741 | 1,637 | ||||||
| Total liabilities |
12,208 | 15,361 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.001 par value, authorized 500,000 shares; 12,443 in 2004 and 11,542 in 2003 shares issued and outstanding |
260,467 | 258,155 | ||||||
| Accumulated other comprehensive loss |
(1,054 | ) | (850 | ) | ||||
| Accumulated deficit |
(231,049 | ) | (220,586 | ) | ||||
| Total stockholders’ equity |
28,364 | 36,719 | ||||||
| Total liabilities and stockholders’ equity |
$ | 40,572 | $ | 52,080 | ||||
See accompanying notes to condensed consolidated financial statements.
3
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues: |
||||||||||||||||
| License |
$ | 1,585 | $ | 4,203 | $ | 6,517 | $ | 8,469 | ||||||||
| Service |
5,211 | 4,851 | 16,355 | 16,115 | ||||||||||||
| Total revenues |
6,796 | 9,054 | 22,872 | 24,584 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| License |
215 | 439 | 697 | 1,112 | ||||||||||||
| Service* |
2,958 | 3,357 | 9,277 | 11,149 | ||||||||||||
| Total cost of revenues |
3,173 | 3,796 | 9,974 | 12,261 | ||||||||||||
| Gross profit |
3,623 | 5,258 | 12,898 | 12,323 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing* |
3,106 | 5,131 | 12,193 | 14,224 | ||||||||||||
| Research and development* |
1,491 | 2,643 | 6,321 | 7,545 | ||||||||||||
| General and administrative* |
723 | 1,818 | 3,698 | 5,337 | ||||||||||||
| Amortization of deferred stock compensation |
— | 569 | 96 | 1,336 | ||||||||||||
| Impairment of long-lived assets and goodwill |
— | (102 | ) | — | (673 | ) | ||||||||||
| Restructuring charges |
1,500 | — | 1,500 | 180 | ||||||||||||
| Total operating expenses |
6,820 | 10,059 | 23,808 | 27,949 | ||||||||||||
| Loss from operations |
(3,197 | ) | (4,801 | ) | (10,910 | ) | (15,626 | ) | ||||||||
| Interest income and other, net |
118 | 334 | 447 | 979 | ||||||||||||
| Net loss |
$ | (3,079 | ) | $ | (4,467 | ) | $ | (10,463 | ) | $ | (14,647 | ) | ||||
| Basic and diluted net loss per common share |
$ | (0.25 | ) | $ | (0.40 | ) | $ | (0.86 | ) | $ | (1.36 | ) | ||||
| Shares used in computing basic and diluted net loss per common share |
12,370 | 11,110 | 12,100 | 10,767 | ||||||||||||
* Amounts exclude amortization of deferred stock compensation for the three and nine months ended September 30, 2004 and 2003 as follows:
|
| |||||||||||||||
| Cost of service revenues |
$ | — | $ | 102 | $ | — | $ | 277 | ||||||||
| Sales and marketing |
— | 67 | 96 | 105 | ||||||||||||
| Research and development |
— | 141 | — | 292 | ||||||||||||
| General and administrative |
— | 259 | — | 662 | ||||||||||||
| $ | — | $ | 569 | $ | 96 | $ | 1,336 | |||||||||
See accompanying notes to condensed consolidated financial statements.
4
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | (10,463 | ) | $ | (14,647 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation of property and equipment and amortization of intangible and other assets |
346 | 1,049 | ||||||
| Provision for doubtful accounts |
(321 | ) | 29 | |||||
| Impairment of long-lived assets and goodwill |
— | (673 | ) | |||||
| Amortization of deferred stock compensation |
96 | 1,336 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
288 | 762 | ||||||
| Prepaid expenses and other assets |
(29 | ) | 160 | |||||
| Accrued restructuring charges |
(21 | ) | (862 | ) | ||||
| Accounts payable, accrued employee compensation and other current liabilities |
(3,216 | ) | (1,301 | ) | ||||
| Deferred revenues |
84 | 1,684 | ||||||
| Net cash used in operating activities |
(13,236 | ) | (12,463 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Purchases of property and equipment |
(155 | ) | (460 | ) | ||||
| Sales and maturities of short-term investments |
2,296 | 18,823 | ||||||
| Net cash provided by investing activities |
2,141 | 18,363 | ||||||
| Cash flows from financing activities: |
||||||||
| (Increase) decrease in restricted cash |
314 | 358 | ||||||
| Net proceeds from issuance of common stock |
2,216 | 2,639 | ||||||
| Net cash provided by financing activities |
2,530 | 2,997 | ||||||
| Effect of exchange rate changes on cash and cash equivalents |
(108 | ) | (538 | ) | ||||
| Net increase (decrease) in cash and cash equivalents |
(8,673 | ) | 8,359 | |||||
| Cash and cash equivalents at beginning of period |
14,361 | 6,371 | ||||||
| Cash and cash equivalents at end of period |
$ | 5,688 | $ | 14,730 | ||||
| Supplemental disclosure of non-cash activities: |
||||||||
| Issuance (retirement) of common stock and warrants for Cybrant Corp. |
$ | — | $ | (102 | ) | |||