<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-K/A-1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-27886
WORLDTALK COMMUNICATIONS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 77-0303581
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
5155 OLD IRONSIDES DRIVE
SANTA CLARA, CALIFORNIA 95054
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
(408) 567-1500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS)
------------------------
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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing price of such stock on February 27, 1998,
as reported by the Nasdaq National Market was approximately $20,728,704.
The number of outstanding shares of the Registrant's Common Stock, par
value $0.01 per share, on February 27, 1998 was 10,527,790 shares.
Portions of the Proxy Statement for Registrant's 1998 Annual Meeting of
Stockholders to be held on June 12, 1998, are incorporated by reference in Part
III of this Annual Report on Form 10-K.
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<PAGE> 2
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Financial Statements and Financial Statement Schedules. The following
financial statements are filed as part of this report on Form 10-K
beginning on page 16 under the caption, "Item 8. Financial Statements and
Supplementary Data."
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1997 and 1996
Consolidated Statements of Operation for the years ended December 31,
1997, 1996 and 1995
Consolidated Statements of Stockholders' Equity (Deficit) for the years
ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended December 31
1997, 1996 and 1995
Notes to Consolidated Financial Statements
(2) Schedule II -- Valuation and Qualifying Accounts
(b) Report on Form 8-K
None
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
2.01 Agreement and Plan of Reorganization between Registrant and
Worldtalk Corporation, a California corporation, and
material exhibits thereto (A)
2.02 Agreement and Plan of Merger dated as of November 12, 1996
by and between Worldtalk Merger corporation and Deming
Software,, Inc. (B)
2.03 Escrow Agreement dated November 12, 1996 among Registrant,
the Deming Shareholders, Robert D. Dickinson, as
Representative, and Harris Trust and Savings Bank, as Escrow
Agent. (B)
3.01 Registrant's Certificate of Incorporation. (A)
3.02 Registrant's Certificate of Designation. (A)
3.03 Registrant's Certificate of Elimination. (A)
3.04 Registrant's Bylaws. (A)
4.01 Form of Specimen Certificate for Registrant's Common Stock.
(A)
4.02 Third Amended and Restated Registration Rights Agreements
between Registrant and certain investors dated March 3,
1996, as amended. (A)
4.03 Shareholders' Agreement dated November 12, 1996 among
Registrant, Deming and the Deming Shareholders. (B)(1)
10.01 Registrant's 1992 Stock Option Plan and related documents.
(A)(3)
10.02 Registrant's 1996 Equity Incentive Plan and related
documents. (A)(3)
10.03 Registrant's 1996 Directors Stock Option Plan and related
documents (A)(3
10.04 Registrant's 1996 Employee Stock Purchase Plan and related
documents (A)(3)
10.05 Form of Identification Agreement to be entered into by
Registrant with each of its directors and executive officer.
(A)(3)
10.06 Lease Agreement, dated June 15, 1995, between Registrant and
John Arrillaga. (A)
10.07 Consulting and Development Services Agreement and Copyright
Assignment between Microsoft Corporation and Registrant
dated September 7, 1995. (A)(1)
10.08 Restricted Stock Purchase Agreement, dated December 15,
1995, between Registrant and Max Hopper. (A)(3)
10.09 Secured Full Recourse Promissory Note and related Security
Agreement, dated October 24, 1996, between Registrant and
Christopher J. Andrews. (C)(3)
10.10 Agreement and Plan of Reorganization dated as of November 9,
1996 by and among Registrant, Deming Software, Inc. and the
Deming Shareholders. (B)(1)
10.11 Form of Employment Agreement entered into by Deming with
each of the Deming Shareholders on November 12, 1996. (B)
10.12 Amendment to Loan and Security Agreement, dated January 9,
1997, between Registrant and General Bank (D)
10.13 Form of Employment Agreement, dated January 23, 1997,
between Registrant and Christopher J. Andrews, Simon A.
Khalaf and Sathvik Krishnamurthy (D)(3)
10.14 Form of Employment Agreement, dated January 23, 1997,
between Registrant and Stephen R. Bennion, Steve M. Goldner
and Mark A. Jung (D)(3)
10.15 Separation, Consulting and Release Agreement dated July 23,
1997 between Mark A. Jung and the Registrant (E)(1)(3)
10.16 Settlement, Consulting and Release Agreement dated July 15,
1997 between Christopher Andrews and the Registrant
(E)(*1(3)
10.17 Settlement, Consulting and Release Agreement dated July 15,
1997 between Steven Goldner and the Registrant (E)(1)(3)
10.18 Secure Messaging Distribution Agreement between Registrant
and Security Dynamics Technologies, Inc., dated September 8,
1997(2)
10.19 License and Distribution Agreement between Registrant and
ASCII Something Good Corporation, dated September 8, 1997
(2)
23.01 Consent of Independent Auditors (F)
27.01 Financial Data Schedule
27.02 Amended Financial Data Schedules for the three month period
ended March 31, 1997, the six month period ended June 30,
1997 and the nine month period ended September 30, 1997. (F)
27.03 Amended Financial Data Schedules for the three month period
ended March 31, 1996, the six month period ended June 30,
1996, the nine month period ended September 30, 1996 and the
year ended December 31, 1996. (F)
</TABLE>
- ---------------
(1) Confidential treatment has been granted with respect to certain portions of
this agreement. Such portions have been filed separately with the Securities
and Exchange Commission.
(2) Confidential treatment has been requested with respect to certain portions
of this agreement. Such portions have been filed separately with the
Securities and Exchange Commission.
(3) Management contract or compensatory plan.
(A) Incorporated by reference to the Exhibits to the Company's Registration
Statement on form S-1, as amended (File No. 333-1482) as declared effective
by the Securities and Exchange Commission.
(B) Incorporated by reference to the Exhibits to the Company's report on Form
8K, as amended (File No. 0-27886) filed with the Securities and Exchange
Commission on November 12, 1996.
(C) Incorporated by reference to the Exhibits to the Company's report on Form
10K (File No. 0-27886) filed with the Securities and Exchange Commission on
March 31, 1997.
(D) Incorporated by reference to the Exhibits to the Company's report on Form
10Q (File No. 0-27886) filed with the Securities and Exchange Commission on
May 14, 1997.
(E) Incorporated by reference to the Exhibits to the Company's report on Form
10Q (File No. 0-27886) filed with the Securities and Exchange Commission on
November 14, 1997.
(F) Filed herewith.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: April 13, 1998
WORLDTALK COMMUNICATIONS
CORPORATION
By: /s/ STEPHEN R. BENNION
------------------------------------
Stephen R. Bennion
Vice President, Finance and
Operations,
Chief Financial Officer and
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of registrant and in
the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ BERNARD HARGUINDEGUY President and Chief Executive March 31, 1998
- ------------------------------------------------ Officer
/s/ STEPHEN R. BENNION Vice President, Finance and March 31, 1998
- ------------------------------------------------ Operations,
Chief Financial Officer and
Secretary
(Principal Accounting Officer)
/s/ WADE WOODSON Director March 31, 1998
- ------------------------------------------------
/s/ MAX HOPPER Director March 31, 1998
- ------------------------------------------------
/s/ DAVID COWAN Director March 31, 1998
- ------------------------------------------------
/s/ ANTHONY SUN Director March 31, 1998
- ------------------------------------------------
</TABLE>
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
2.01 Agreement and Plan of Reorganization between Registrant and
Worldtalk Corporation, a California corporation, and
material exhibits thereto (A)
2.02 Agreement and Plan of Merger dated as of November 12, 1996
by and between Worldtalk Merger corporation and Deming
Software,, Inc. (B)
2.03 Escrow Agreement dated November 12, 1996 among Registrant,
the Deming Shareholders, Robert D. Dickinson, as
Representative, and Harris Trust and Savings Bank, as Escrow
Agent. (B)
3.01 Registrant's Certificate of Incorporation. (A)
3.02 Registrant's Certificate of Designation. (A)
3.03 Registrant's Certificate of Elimination. (A)
3.04 Registrant's Bylaws. (A)
4.01 Form of Specimen Certificate for Registrant's Common Stock.
(A)
4.02 Third Amended and Restated Registration Rights Agreements
between Registrant and certain investors dated March 3,
1996, as amended. (A)
4.03 Shareholders' Agreement dated November 12, 1996 among
Registrant, Deming and the Deming Shareholders. (B)(1)
10.01 Registrant's 1992 Stock Option Plan and related documents.
(A)(3)
10.02 Registrant's 1996 Equity Incentive Plan and related
documents. (A)(3)
10.03 Registrant's 1996 Directors Stock Option Plan and related
documents (A)(3
10.04 Registrant's 1996 Employee Stock Purchase Plan and related
documents (A)(3)
10.05 Form of Identification Agreement to be entered into by
Registrant with each of its directors and executive officer.
(A)(3)
10.06 Lease Agreement, dated June 15, 1995, between Registrant and
John Arrillaga. (A)
10.07 Consulting and Development Services Agreement and Copyright
Assignment between Microsoft Corporation and Registrant
dated September 7, 1995. (A)(1)
10.08 Restricted Stock Purchase Agreement, dated December 15,
1995, between Registrant and Max Hopper. (A)(3)
10.09 Secured Full Recourse Promissory Note and related Security
Agreement, dated October 24, 1996, between Registrant and
Christopher J. Andrews. (C)(3)
10.10 Agreement and Plan of Reorganization dated as of November 9,
1996 by and among Registrant, Deming Software, Inc. and the
Deming Shareholders. (B)(1)
10.11 Form of Employment Agreement entered into by Deming with
each of the Deming Shareholders on November 12, 1996. (B)
10.12 Amendment to Loan and Security Agreement, dated January 9,
1997, between Registrant and General Bank (D)
10.13 Form of Employment Agreement, dated January 23, 1997,
between Registrant and Christopher J. Andrews, Simon A.
Khalaf and Sathvik Krishnamurthy (D)(3)
10.14 Form of Employment Agreement, dated January 23, 1997,
between Registrant and Stephen R. Bennion, Steve M. Goldner
and Mark A. Jung (D)(3)
10.15 Separation, Consulting and Release Agreement dated July 23,
1997 between Mark A. Jung and the Registrant (E)(1)(3)
10.16 Settlement, Consulting and Release Agreement dated July 15,
1997 between Christopher Andrews and the Registrant
(E)(*1(3)
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.17 Settlement, Consulting and Release Agreement dated July 15,
1997 between Steven Goldner and the Registrant (E)(1)(3)
10.18 Secure Messaging Distribution Agreement between Registrant
and Security Dynamics Technologies, Inc., dated September 8,
1997(2)
10.19 License and Distribution Agreement between Registrant and
ASCII Something Good Corporation, dated September 8, 1997
(2)
23.01 Consent of Independent Auditors (F)
27.01 Financial Data Schedule
27.02 Amended Financial Data Schedules for the three month period
ended March 31, 1997, the six month period ended June 30,
1997 and the nine month period ended September 30, 1997. (F)
27.03 Amended Financial Data Schedules for the three month period
ended March 31, 1996, the six month period ended June 30,
1996, the nine month period ended September 30, 1996 and the
year ended December 31, 1996. (F)
</TABLE>
- ---------------
(1) Confidential treatment has been granted with respect to certain portions of
this agreement. Such portions have been filed separately with the Securities
and Exchange Commission.
(2) Confidential treatment has been requested with respect to certain portions
of this agreement. Such portions have been filed separately with the
Securities and Exchange Commission.
(3) Management contract or compensatory plan.
(A) Incorporated by reference to the Exhibits to the Company's Registration
Statement on form S-1, as amended (File No. 333-1482) as declared effective
by the Securities and Exchange Commission.
(B) Incorporated by reference to the Exhibits to the Company's report on Form
8K, as amended (File No. 0-27886) filed with the Securities and Exchange
Commission on November 12, 1996.
(C) Incorporated by reference to the Exhibits to the Company's report on Form
10K (File No. 0-27886) filed with the Securities and Exchange Commission on
March 31, 1997.
(D) Incorporated by reference to the Exhibits to the Company's report on Form
10Q (File No. 0-27886) filed with the Securities and Exchange Commission on
May 14, 1997.
(E) Incorporated by reference to the Exhibits to the Company's report on Form
10Q (File No. 0-27886) filed with the Securities and Exchange Commission on
November 14, 1997.
(F) Filed herewith.
<PAGE> 1
EXHIBIT 23.01
WORLDTALK COMMUNICATIONS CORPORATION
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Worldtalk Corporation:
We consent to incorporation by reference in the registration statements
(Nos. 333-3510 and 333-32925) on Form S-8 of Worldtalk Corporation of our
report dated February 3, 1998, relating to the consolidated balance sheets of
Worldtalk Corporation and subsidiary as of December 31, 1997 and 1996, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the years in the three-year period ended December 31,
1997, and the related schedule, which report appears in the December 31, 1997,
annual report on Form 10-K of Worldtalk Corporation.
KPMG Peat Marwick LLP
Mountain View, California
April 6, 1998
<TABLE> <S> <C>
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<MULTIPLIER> 1,000
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<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 7,272 5,058 4,205
<SECURITIES> 5,365 5,004 5,465
<RECEIVABLES> 3,227 3,107 2,332
<ALLOWANCES> 148 121 121
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 16,160 13,856 12,701
<PP&E> 3,153 3,311 3,453
<DEPRECIATION> 1,280 1,454 1,633
<TOTAL-ASSETS> 19,033 16,657 15,384
<CURRENT-LIABILITIES> 5,741 5,772 5,676
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 103 104 104
<OTHER-SE> 12,648 10,320 9,149
<TOTAL-LIABILITY-AND-EQUITY> 19,033 16,657 15,384
<SALES> 1,364 2,420 4,509
<TOTAL-REVENUES> 2,661 4,921 8,022
<CGS> 281 499 821
<TOTAL-COSTS> 1,113 2,150 3,128
<OTHER-EXPENSES> 3,483 7,496 10,954
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 121 255 365
<INCOME-PRETAX> (1,834) (4,470) (5,695)
<INCOME-TAX> 65 64 139
<INCOME-CONTINUING> (1,899) (4,534) (5,834)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (1,899) (4,534) (5,834)
<EPS-PRIMARY> (0.18) (0.44) (0.56)
<EPS-DILUTED> (0.18) (0.44) (0.56)
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<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996 JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 2,280 10,497 7,588 7,012
<SECURITIES> 0 0 7,575 6,027
<RECEIVABLES> 2,619 2,949 4,159 5,673
<ALLOWANCES> 150 150 466 149
<INVENTORY> 92 0 0 0
<CURRENT-ASSETS> 5,264 19,063 19,334 19,185
<PP&E> 1,708 2,144 2,544 2,875
<DEPRECIATION> 768 877 1,009 1,144
<TOTAL-ASSETS> 6,522 20,645 21,179 21,719
<CURRENT-LIABILITIES> 5,122 5,568 6,156 6,604
<BONDS> 0 0 0 0
12,816 0 0 0
0 0 0 0
<COMMON> 15 97 97 103
<OTHER-SE> (12,012) 14,430 14,411 14,293
<TOTAL-LIABILITY-AND-EQUITY> 8,522 20,645 21,179 21,719
<SALES> 1,942 4,164 6,727 9,711
<TOTAL-REVENUES> 2,709 6,981 9,853 14,205
<CGS> 145 441 751 1,083
<TOTAL-COSTS> 619 1,471 2,381 3,438
<OTHER-EXPENSES> 2,676 5,557 8,569 16,547
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 7 142 355 540
<INCOME-PRETAX> (579) (905) (742) (5,240)
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> (579) (905) (742) (5,240)
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<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (579) (905) (742) (5,240)
<EPS-PRIMARY> (0.37) (0.16) (0.11) (0.68)
<EPS-DILUTED> (0.37) (0.16) (0.11) (0.68)
</TABLE>
