UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 25, 2005
Date of Report (Date of Earliest Event Reported)
CONVERA CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 000-31989 54-1987541
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of incorporation) Identification No.)
1921 GALLOWS ROAD, SUITE 200
VIENNA, VIRGINIA 22182
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (703) 761-3700
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
_____ Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
_____ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
_____ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
_____ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results Of Operations And Financial Condition
Attached and incorporated herein by reference as Exhibit 99.1 is a copy of
a press release of Convera Corporation (the "Company"), dated May 25, 2005,
reporting the Company's financial results for the fiscal quarter ended April 30,
2005. Such information, including the Exhibit attached hereto, shall not be
deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor
shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, except as shall be expressly set forth by specific reference in
such filing.
Item 9.01(c). Financial Statements and Exhibits
99.1 Press Release of Convera Corporation dated May 25, 2005, reporting
Convera Corporation's financial results for the fiscal quarter ended April 30,
2005.
CONVERA CORPORATION
By: /s/ JOHN R. POLCHIN
John R. Polchin
Chief Financial Officer
Date: May 25, 2005
Exhibit 99.1
Contact:
John R. Polchin
Chief Financial Officer
Convera
703.761.3700
Convera Reports First Quarter Financial Results
Vienna, Va., May 25, 2005 - Convera Corporation (NASDAQ: CNVR), a leading
provider of search and categorization software for enterprises and government
agencies, today announced financial results for the three-month period ended
April 30, 2005.
Revenue for the first quarter of fiscal 2006 totaled $5.1 million, a 38%
decrease when compared to the year-ago quarter. The prior year period revenue
results included a $1.5 million, non-recurring compliance transaction from a
U.K. intelligence agency. This, coupled with budgetary constraints across the
federal sector, accounted for the revenue variance versus the prior year
quarter. Gross profit for the three-month period ended April 30, 2005 totaled
$3.6 million, resulting in a gross margin of 71% as compared to a gross margin
of 77% for the prior-year period.
The net loss for the three-month period ended April 30, 2005 was $2.5 million or
$0.06 per share, compared to a net loss of $4.8 million, or $0.14 per share, for
the comparable year-ago period. Fiscal year 2005 re-alignments to the Company's
operating infrastructure, and the adoption of FAS 86 (which requires
capitalization of software development costs once technological feasibility has
been achieved) related to the Company's Web indexing initiative as discussed
further below, were the primary causes for the reduction of the Company's net
loss for the first quarter versus the year-ago quarter.
Cash and investments as of April 30, 2005 totaled $21.8 million, inclusive of $5
million of proceeds from the March 2005 Silicon Valley Bank equipment term loan.
"The Company continues to make progress in the development of its Web indexing
system. We expect to achieve our goals of launching a Web indexing service
offering while reaching net income neutrality for our software products group by
this fiscal yearend", stated, Patrick C. Condo, Convera's President and Chief
Executive Officer.
With respect to the Company's emerging Web indexing initiative (which focuses on
applying portions of the Company's existing technology to searching and indexing
contextually relevant information from the World Wide Web), the Company
continues to realize advances in its development efforts, including increases to
its Web index. The Company is currently accepting "beta" customers and the
Company remains focused on launching a service offering later this fiscal year.
Capital outlays to date, in connection with this proposed service offering,
remain limited to equipment, personnel and general operating costs, which are
expected to increase as the indexing initiative progresses. The Company
continues to assess future capital requirements for this Web indexing initiative
and may elect to seek additional funding sources over the coming quarters.
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Page 2 - Convera Reports First Quarter Financial Results
FAS 86
FAS 86 governs the practice by which newly developed technology (e.g., software
in this case), is accounted for once "technological feasibility" has been
determined. Convera's Web indexing initiative was determined to have reached
technological feasibility during the first quarter with the attainment of a one
billion page Web index. Once technological feasibility was achieved, the Company
began capitalizing software development costs and will continue to do so until
such time, as "commercial availability" is determined. At the time of commercial
availability, capitalization of the Web indexing related research and
development costs will cease and amortization of the capitalized costs will
commence over a yet to be determined timeframe. Accordingly, the Company
capitalized approximately $2.3 million in research and development costs during
the first fiscal quarter.
IN OTHER NEWS
The Company's Annual Shareholder meeting will be held on July 12, 2005 at the
Company's offices located at 1921 Gallows Road, Suite 200, Vienna, Virginia
22182. The meeting is scheduled to begin promptly at 10 a.m. EST.
The attached financial information compares the results of operations for the
three-month period ended April 30, 2005 to the same period in 2004 and the
balance sheet as of April 30, 2005 to the balance sheet as of January 31, 2005.
About Convera
Convera is a leading provider of mission-critical enterprise
search and categorization solutions. Convera's RetrievalWare solutions maximize
return on investment in vast stores of unstructured information by providing
highly scalable, fast, accurate and secure search across more than 200 forms of
text, video, image and audio information, in more than 50 languages. More than
900 customers in 33 countries rely on Convera's search solutions to power a
broad range of applications including enterprise portals, knowledge management,
intelligence gathering, profiling, corporate policy compliance, regulatory
compliance, customer service and more. For more information, contact Convera at
800-788-7758, via e-mail at info@convera.com or on the Web at www.convera.com
This release, including any statements from Convera personnel, contains
statements about Convera's future expectations, performance, plans, and
prospects, as well as assumptions about future events. The reader is cautioned
not to put undue reliance on these forward-looking statements, as these
statements are subject to numerous factors and uncertainties, including without
limitation, business and economic conditions and trends; continued success in
technological advances and development including the Web initiative; possible
disruption in commercial activities caused by terrorist activity and armed
conflict, such as changes in logistics and security arrangements; reduced
customer demand relative to expectations; competitive factors; and other risk
factors listed from time to time in the company's SEC reports. Actual results
may differ materially from our expectations as the result of these and other
important factors relating to Convera's business and product development
efforts, which are further described in Convera's filings with the Securities
and Exchange Commission. These filings can be obtained from the SEC's website
located at www.sec.gov. Any forward-looking statements are based on information
available to Convera on the date of this release, and Convera assumes no
obligation to update such statements. The Convera design logo and the following
are worldwide trademarks of Convera: Convera(TM), RetrievalWare(R), and
Screening Room(R). The names of actual companies and products mentioned herein
may be the trademarks of their respective owners.
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Page 3 - Convera Reports First Quarter Financial Results
The condensed, consolidated statements of operations for the Company appear
below and are presented in accordance with accounting principles generally
accepted in the United States. All amounts, except per share amounts, are
expressed in thousands of U.S. dollars.
Three Months Ended
April 30,
2005 2004
(unaudited) (unaudited)
Revenues:
License $ 2,187 $ 5,856
Services 840 583
Maintenance 2,051 1,731
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Total revenues 5,078 8,170
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Cost of Revenues:
License 430 659
Services 828 716
Maintenance 221 522
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Total cost of revenues 1,479 1,897
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Gross Margin 3,599 6,273
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Operating Expenses:
Sales and marketing 2,196 5,013
Research and product development, gross 3,940 3,640
Capitalized research and development costs (2,286) -
General and administrative 2,300 2,416
Restructuring charge (56) -
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Total operating expenses 6,094 11,069
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Operating Loss (2,495) (4,796)
Other Income, net 26 37
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Net Loss $ (2,469) $ (4,759)
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Net loss per common share - basic & diluted $ (0.06) $ (0.14)
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Weighted-average number of common
shares outstanding - basic & diluted 38,351 33,936
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Page 4 - Convera Reports First Quarter Financial Results
The condensed, consolidated balance sheets for the Company appear below and
are presented in accordance with accounting principles generally accepted in the
United States. All amounts are expressed in thousands of U.S. dollars.
ASSETS April 30, 2005 January 31, 2005
(unaudited)
Current Assets
Cash and cash equivalents $ 21,701 $ 17,766
Short term investments 71 71
Accounts receivable, net 5,383 6,530
Prepaid expenses and other 1,819 2,390
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Total current assets 28,974 26,757
Other assets, net 6,046 6,696
Goodwill & Other intangible assets 2,774 2,841
Capitalized research and development costs 2,286 -
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Total Assets $ 40,080 $ 36,294
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,280 $ 1,967
Accrued expenses 3,497 4,055
Deferred revenues 3,630 4,288
Restructuring reserve - current 522 835
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Total current liabilities 8,929 11,145
Other long-term liabilities 5,000 -
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Total long-term liabilities 5,000 -
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Total Liabilities 13,929 11,145
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Shareholders' Equity 26,151 25,149
Total Liabilities & Shareholders'
Equity $ 40,080 $ 36,294
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