8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

April 29, 2004

Date of Report (Date of earliest event reported)

TARANTELLA, INC.

(Exact name of registrant as specified in its charter)

California	000-21484	94-2549086
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

425 Encinal Street

Santa Cruz, California 95060

(Address of principal executive offices)

(831) 427-7222

(Registrant’s telephone number, including area code)

Item 7. Financial Statements and Exhibits

The following exhibit is filed herewith:

Exhibit Number	Description
99.1	Text of press release issued by Tarantella, Inc., dated April 29, 2004, reporting the results of operations for Tarantella’s second fiscal quarter for the period ended March 31, 2004

Item 12. Results of Operations and Financial Condition

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

On April 29, 2004, Tarantella, Inc. issued a press release regarding its financial results for its second fiscal quarter for the period ended March 31, 2004. The full text of the earnings release concerning the foregoing results is furnished herewith as Exhibit 99.1.

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 hereunto duly authorized.

	TARANTELLA, INC.
Date: April 30, 2004	By:	/s/ John M. Greeley
		John M. Greeley
		Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description
99.1	Text of press release issued by Tarantella, Inc., dated April 29, 2004, reporting the results of operations for Tarantella’s second fiscal quarter for the period ended March 31, 2004

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACTS:

John M. Greeley, CFO	Joanna Green
Tarantella, Inc.	Griffin Public Relations
831-427-7460	212-481-3456
jgreeley@tarantella.com	jgreen@griffinpr.com

Tarantella, Inc. Announces Financial Results for Second Quarter Fiscal Year 2004

Santa Cruz, CA (April 29, 2004) – Tarantella, Inc. (OTC: TTLA.PK), a leading supplier of secure application access software, today announced its financial results for the second quarter of fiscal 2004.

For the second fiscal quarter ended March 31, 2004, the Company announced revenue of $3.1 million, an operating loss of $3.5 million, and a net loss of $3.7 million or $0.18 per share. This compares to revenue of $3.5 million, an operating loss of $2.6 million, and a net loss of $2.8 million or $0.22 per share in the prior quarter ended December 31, 2003. In addition, the company originated $4.5 million of sales, of which approximately 50% was recognized in the second quarter. The portion of sales that was not recognized is reflected in the 44% sequential increase in deferred revenues.

“We have made significant progress during the quarter — regaining compliance with our reporting obligations to the SEC, strengthening our balance sheet via a $16.3 million private equity offering, and implementing new programs that will assist us in our efforts to obtain profitability. The Company is now well positioned to focus on generating additional revenue from existing enterprise customers, new customers and strategic OEM accounts,” said John M. Greeley, Tarantella’s CFO.

The Company will conduct its previously scheduled conference call to discuss its 2004 fiscal second quarter results today at 1:45 p.m. Pacific Daylight Time (4:45 p.m. EDT). This call is being webcast by CCBN and can be accessed at Tarantella’s web site at www.tarantella.com or in audio mode by dialing (617) 801-9711 with the passcode of 92276858. The call will be available for audio replay for seven days following the call by dialing (617) 801-6888 with the passcode of 56699897.

The webcast is also being distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN’s individual investor center at www.fulldisclosure.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. Institutional investors can access the call via CCBN’s password-protected event management site, StreetEvents (www.streetevents.com).

For Tarantella Investors:

This press release contains forward-looking statements. These forward-looking statements may be identified by use of terms such as “anticipates”, “believes”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, “should” or “will”, or the negative of those terms or similar expressions. These forward-looking statements are subject to significant

-More-

Tarantella Announces Second Quarter Fiscal Year 2004 Financial Results 2

risks and uncertainties. Actual results may differ materially from those described in such statements as a result of these risks and uncertainties. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the risk that the Company may not achieve profitability and other risks detailed from time to time in Tarantella’s SEC filings, including its filings on Forms 10-Q and 10-K. Tarantella disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

About Tarantella, Inc.

Tarantella, Inc. is a leading provider of purpose-built application access and deployment software to nearly 12,000 customer sites worldwide. Tarantella enables organizations to access and manage information, data and applications across all platforms, networks and devices. Tarantella bridges the gap between vendors, ensuring that customers have complete access to business-critical information. Using Tarantella’s software, customers realize the benefits of secure corporate data, maximizing return on existing IT assets and improved productivity. The company markets its products through key industry partnerships and a worldwide network of consultants and resellers. Tarantella is headquartered in Santa Cruz, Calif. For more information, please visit the Tarantella web site at http://www.tarantella.com.

Tarantella, Tarantella Enterprise 3, Canaveral iQ, New Moon Systems, Caststream, cast:stream and the Tarantella logo are trademarks or registered trademarks of Tarantella, Inc., in the USA and other countries. All other brand and product names are or may be trademarks of, and are used to identify products or services of, their respective owners.

###

Tarantella Announces Second Quarter Fiscal Year 2004 Financial Results 3

TARANTELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended March 31,						Six Months Ended March 31,
	2004			2003			2004			2003
				(As restated *)						(As restated *)
	(Unaudited)						(Unaudited)
Net revenues:
Licenses	$	2,159		$	3,433		$	4,525		$	5,795
Services		978			797			2,080			1,380
Total net revenues		3,137			4,230			6,605			7,175
Cost of revenues
Licenses		202			82			370			138
Services		394			291			724			549
Total cost of revenues		596			373			1,094			687
Gross margin		2,541			3,857			5,511			6,488
Operating expenses:
Research and development		1,205			906			2,166			1,893
Selling, general and administrative		4,867			3,740			9,452			7,401
Restructuring charge		(8	)		—			11			1,147
Total operating expenses		6,064			4,646			11,629			10,441
Operating loss		(3,523	)		(789	)		(6,118	)		(3,953	)
Other income (expense):
Interest income (expense), net		2			14			(5	)		46
Other income (expense), net		(61	)		63			(111	)		49
Total other income (expense)		(59	)		77			(116	)		95
Loss before income taxes		(3,582	)		(712	)		(6,234	)		(3,858	)
Income tax expense		97			98			195			158
Net loss		(3,679	)		(810	)		(6,429	)		(4,016	)
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale securities		689			(177	)		764			106
Foreign currency translation adjustment		52			(18	)		121			(22	)
Total other comprehensive income (loss)		741			(195	)		885			84
Comprehensive loss	$	(2,938	)	$	(1,005	)	$	(5,544	)	$	(3,932	)
Net Loss per share:
Basic and diluted	$	(0.18	)	$	(0.10	)	$	(0.39	)	$	(0.49	)
Shares used in net loss per share calculation:
Basic and diluted		20,232			8,240			16,440			8,223

* Restated as discussed in the Company’s September 30, 2003 Form 10-K

Tarantella Announces Second Quarter Fiscal Year 2004 Financial Results 4

TARANTELLA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2004			September 30, 2003
(In thousands)	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	16,575		$	3,151
Available-for-sale equity securities		1,396			632
Trade receivables, net of allowances of $0.3 million at March 31, 2004 and $0.5 million at September 30, 2003		3,190			2,980
Other receivables		181			175
Prepaids and other current assets		591			720
Total current assets		21,933			7,658
Property and equipment, net		666			734
Acquired intangible assets, net		1,330			1,262
Goodwill		2,395			2,391
Other assets		403			343
Total assets	$	26,727		$	12,388
Liabilities and shareholders’s equity
Current liabilities:
Trade payables	$	540		$	1,043
Line of credit		—			319
Royalties payable		1			22
Royalties payable - former New Moon shareholders		1,713			1,725
Income taxes payable		534			549
Accrued restructuring charges		416			854
Accrued expenses and other current liabilities		4,453			3,615
Deferred revenues		2,514			1,757
Total current liabilities		10,171			9,884
Long-term deferred revenues		1,205			36
Total long-term liabilities		1,205			36
Shareholders’ equity:
Preferred stock, authorized 20,000 shares; no shares issued and outstanding		—			—
Common stock, no par value, authorized 100,000 shares; issued and outstanding 27,288 at March 31, 2004 and 11,959 shares at September 30, 2003		145,716			126,749
Deferred stock compensation		(540	)		—
Accumulated other comprehensive income		1,438			553
Accumulated deficit		(131,263	)		(124,834	)
Total shareholders’ equity		15,351			2,468
Total liabilities and shareholders’ equity	$	26,727		$	12,388

Tarantella Announces Second Quarter Fiscal Year 2004 Financial Results 5

TARANTELLA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended March 31,
	2004			2003
				(As restated * )
(In thousands)	(Unaudited)
Cash flows from operating activities:
Net loss	$	(6,429	)	$	(4,016	)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization		525			381
Foreign currency exchange loss (gain)		78			(32	)
Loss on disposal of property and equipment		2			82
Deferred stock compensation expense		166			—
Stock compensation expense		198			—
Changes in operating assets and liabilities, net of New Moon acquisition:
Trade receivables		(204	)		(1,155	)
Other receivables		(6	)		(118	)
Prepaids and other current assets		129			304
Other assets		(60	)		22
Trade payables		(524	)		26
Royalties payable		(21	)		(56	)
Income taxes payable		(15	)		36
Accrued restructuring expenses		(438	)		(83	)
Accrued expenses and other current liabilities		835			(887	)
Deferred revenues		1,926			209
Net cash used in operating activities		(3,838	)		(5,287	)
Cash flows from investing activities
Purchase of property and equipment		(176	)		(134	)
Change in Goodwill		(4	)		—
Change in royalties payable - former New Moon shareholders		(12	)		—
Net cash used in investing activities		(192	)		(134	)
Cash flows from financing activities:
Payments on capital lease obligations		(31	)		(2	)
Line of credit payments		(319	)		—
Net proceeds from issuance of common stock and warrants		17,810			34
Net cash provided by financing activities		17,460			32
Effects of exchange rate changes on cash and cash equivalents		(6	)		(1	)
Increase (decrease) in cash and cash equivalents		13,424			(5,390	)
Cash and cash equivalents at beginning of period		3,151			7,055
Cash and cash equivalents at end of period	$	16,575		$	1,665

* Restated as discussed in the Company’s September 30, 2003 Form 10-K

-END-