SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended February 28, 2005
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
000-30221
(Commission File number)
SABA SOFTWARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 94-3267638 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 2400 Bridge Parkway, Redwood Shores, CA |
94065-1166 | |
| (Address of principal executive offices) | (Zip Code) |
(650) 696-3840
(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 Company 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
On April 12, 2005, 16,192,091 shares of the registrant’s Common Stock, $.001 par value, were outstanding.
FORM 10-Q
QUARTER ENDED February 28, 2005
INDEX
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
| February 28, 2005 |
May 31, 2004 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 15,362 | $ | 16,628 | ||||
| Short-term investments |
— | 150 | ||||||
| Accounts receivable, net |
9,058 | 6,648 | ||||||
| Prepaid expenses and other current assets |
1,136 | 1,030 | ||||||
| Total current assets |
25,556 | 24,456 | ||||||
| Property and equipment, net |
710 | 1,040 | ||||||
| Goodwill, net |
5,288 | 5,288 | ||||||
| Purchased intangible assets, net |
— | 2 | ||||||
| Other assets |
909 | 955 | ||||||
| Total assets |
$ | 32,463 | $ | 31,741 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 991 | $ | 1,625 | ||||
| Accrued compensation and related expenses |
2,532 | 2,533 | ||||||
| Accrued expenses |
3,014 | 4,175 | ||||||
| Deferred revenue |
9,422 | 9,265 | ||||||
| Borrowings under bank line of credit |
— | 3,500 | ||||||
| Current portion of debt and lease obligations |
780 | 752 | ||||||
| Total current liabilities |
16,739 | 21,850 | ||||||
| Deferred revenue |
83 | 179 | ||||||
| Accrued rent |
2,594 | 2,520 | ||||||
| Debt and lease obligations, less current portion |
357 | 671 | ||||||
| Total liabilities |
19,773 | 25,220 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, issuable in series: $0.001 par value; 5,000,000 authorized shares at February 28, 2004; none issued or Outstanding |
— | — | ||||||
| Common stock: $0.001 par value; 50,000,000 authorized shares and 16,282,237 issued at February 28, 2005 and 200,000,000 authorized shares and 13,328,680 issued at May 31, 2004 |
56 | 54 | ||||||
| Additional paid-in capital |
200,887 | 191,925 | ||||||
| Treasury stock: 102,997 shares held at February 28, 2005 and at May 31, 2004, at cost |
(232 | ) | (232 | ) | ||||
| Accumulated deficit |
(187,856 | ) | (185,012 | ) | ||||
| Accumulated other comprehensive loss |
(165 | ) | (214 | ) | ||||
| Total stockholders’ equity |
12,690 | 6,521 | ||||||
| Total liabilities and stockholders’ equity |
$ | 32,463 | $ | 31,741 | ||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| Three months ended |
Nine months ended |
|||||||||||||||
| February 28, 2005 |
February 29, 2004 |
February 28, 2005 |
February 29, 2004 |
|||||||||||||
| Revenues: |
||||||||||||||||
| License |
$ | 3,758 | $ | 2,320 | $ | 9,598 | $ | 6,316 | ||||||||
| Services |
6,780 | 5,515 | 20,590 | 17,940 | ||||||||||||
| Total revenues |
10,538 | 7,835 | 30,188 | 24,256 | ||||||||||||
| Cost of revenues: |
||||||||||||||||
| Cost of license |
43 | 27 | 219 | 178 | ||||||||||||
| Cost of services |
2,895 | 2,845 | 9,054 | 9,188 | ||||||||||||
| Amortization of acquired developed technology |
— | 96 | 2 | 290 | ||||||||||||
| Total cost of revenues |
2,938 | 2,968 | 9,275 | 9,656 | ||||||||||||
| Gross profit |
7,600 | 4,867 | 20,913 | 14,600 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Research and development |
2,417 | 2,310 | 7,197 | 7,516 | ||||||||||||
| Sales and marketing |
4,309 | 3,933 | 12,775 | 12,405 | ||||||||||||
| General and administrative |
1,228 | 872 | 3,544 | 3,188 | ||||||||||||
| Amortization of deferred stock compensation and other stock charges |
— | 4 | — | 45 | ||||||||||||
| Amortization of purchased intangible assets |
— | 41 | — | 125 | ||||||||||||
| Settlement of litigation |
— | — | — | 1,701 | ||||||||||||
| Total operating expenses |
7,954 | 7,160 | 23,516 | 24,980 | ||||||||||||
| Loss from operations |
(354 | ) | (2,293 | ) | (2,603 | ) | (10,380 | ) | ||||||||
| Interest income (expense) and other, net |
(73 | ) | 47 | (101 | ) | 16 | ||||||||||
| Loss before provision for income taxes |
(427 | ) | (2,246 | ) | (2,704 | ) | (10,364 | ) | ||||||||
| Provision for income taxes |
(58 | ) | (45 | ) | (140 | ) | (127 | ) | ||||||||
| Net loss |
$ | (485 | ) | $ | (2,291 | ) | $ | (2,844 | ) | $ | (10,491 | ) | ||||
| Basic and diluted net loss per share |
$ | (0.03 | ) | $ | (0.17 | ) | $ | (0.18 | ) | $ | (0.79 | ) | ||||
| Shares used in computing basic and diluted net loss per share |
16,146 | 13,370 | 15,419 | 13,281 | ||||||||||||
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine months ended |
||||||||
| February 28, 2005 |
February 29, 2004 |
|||||||
| Operating activities: |
||||||||
| Net loss |
$ | (2,844 | ) | $ | (10,491 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
710 | 1,346 | ||||||
| Gain on sale of fixed assets |
(1 | ) | — | |||||
| Amortization of purchased intangible assets |
— | 125 | ||||||
| Amortization of acquired developed technology |
2 | 290 | ||||||
| Amortization of deferred stock compensation |
— | 45 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(2,361 | ) | (476 | ) | ||||
| Prepaid expenses and other current assets |
(106 | ) | 168 | |||||
| Other assets |
46 | (11 | ) | |||||
| Accounts payable |
(634 | ) | (405 | ) | ||||
| Accrued expenses |
(1,162 | ) | 1 | |||||
| Accrued rent |
74 | (126 | ) | |||||
| Deferred revenue |
61 | 1,611 | ||||||
| Other liabilities |
— | (61 | ) | |||||
| Net cash used in operating activities |
(6,215 | ) | (7,984 | ) | ||||
| Investing activities: |
||||||||
| Purchases of short-term investments |
— | — | ||||||
| Proceeds from redemptions and maturities of short-term investments |
150 | 3,474 | ||||||
| Proceeds from sale of property and equipment |
1 | — | ||||||
| Purchases of property and equipment |
(380 | ) | (184 | ) | ||||
| Net cash (used in) provided by investing activities |
(229 | ) | 3,290 | |||||
| Financing activities: |
||||||||
| Proceeds from issuance of common stock under stock plans |
295 | 92 | ||||||
| Proceeds from issuance of common stock in private placement, net of issuance costs |
8,669 | — | ||||||
| Borrowings, net of issuance costs |
304 | 10,523 | ||||||
| Repayments on borrowings under the credit facility |
(3,500 | ) | (7,171 | ) | ||||
| Repayments on equipment term loan |
(527 | ) | — | |||||
| Repayments on note payable |
||||||||