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
March 7, 2007
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 OPERATION AND FINANCIAL CONDITION.
On March 9, 2007, Convera Corporation (the "Company") issued a press release
reporting that the Company will restate its previously issued financial
statements contained in the Company's Quarterly Report on Form 10-Q for the
quarter ended October 31, 2006 (the "Third Quarter Financial Statements"). A
copy of the Company's press release is attached hereto as Exhibit 99.1 and is
hereby incorporated by reference.
ITEM 4.02. NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On March 7, 2007, the Company's management and the Audit Committee of the
Company's Board of Directors (the "Audit Committee") concluded that the Third
Quarter Financial Statements should not be relied upon because of errors in the
Third Quarter Financial Statements described below. The Company is restating its
Third Quarter Financial Statements to reflect an increase of approximately
$400,000 to the previously recorded and announced impairment loss related to
capitalized development costs and equipment. This increases the impairment loss
to approximately $6.4 million. The Company is also reducing revenue recognized
during the third quarter by approximately $80,000 relating to a single contract.
Such revenues under this contract are now being recognized ratably over the
service life of the contract. The required charges to income are non cash items
and will not reduce the balance of the Company's cash and cash equivalents at
October 31, 2006.
The Company's management and the Audit Committee have determined that the
addition to the impairment loss resulted from a material weakness in its
accounting close process. The adjustment to revenue, when combined with the
material weakness that was previously reported in its Quarterly Report on Form
10-Q for the quarter ended July 31, 2006 and its Quarterly Report on Form 10-Q
for the quarter ended October 31, 2006, will likely result in a material
weakness related to the controls surrounding revenue for the year ended January
31, 2007. The Company is currently evaluating the impact of remediation efforts
previously implemented in the quarter ended October 31, 2006 and assessing an
additional plan of remediation to address the material weakness in internal
controls. The Company will include a description of the remediation plan in the
amendment to its Quarterly Report on Form 10-Q for the quarter ended October 31,
2006 to be filed as soon as reasonably practicable.
The decision to restate the Third Quarter Financial Statements was made by the
Audit Committee upon the recommendation of the Company's management, after
consultation with Ernst & Young LLP, the Company's independent registered public
accounting firm.
ITEM 9.01(D). FINANCIAL STATEMENTS AND EXHIBITS.
99.1 Press Release of Convera Corporation dated March 9, 2007.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
CONVERA CORPORATION
By: /s/ Matt Jones
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Matt Jones
Chief Financial Officer
Date: March 9, 2007
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