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SCO 10Q: the MOU with Norris Ain't Carved in Stone, Y'all
Monday, March 17 2008 @ 11:20 PM EDT

SCO's latest 10Q is now filed, along with a couple of exhibits, Exhibit 10-1 the 2nd Amendment to Lease, that's the one in New Jersey, and Exhibit 10-2, 5th Amendment to Canopy Sublease, the lease in Utah.

In this 10Q, SCO cries some more about its sad state, worries about its future, and tells us that the MOU with Stephen Norris isn't carved in stone. Uh oh. Somebody doing some due diligence? Or were they just kidding around?

Here's the wording:

On February 13, 2008, the Company entered into a Memorandum of Understanding (the “MOU”) with Stephen Norris Capital Partners, LLC, a Delaware limited liability company (“SNCP”), whereby, SNCP agreed to provide financing to fund the Company’s plan of reorganization filed on February 29, 2008 in the Company’s Chapter 11 bankruptcy case presently pending in the United States Bankruptcy Court for the District of Delaware, In Re: The SCO Group, Inc, Case No. 07-11337(KG). The Company on the same day filed its disclosure statement in connection with the plan of reorganization, under the terms contemplated by the MOU.

The MOU is not a definitive agreement. It is a non-binding summary of the intentions of the parties and is subject to change. As such, the MOU, the plan of reorganization and the transactions they contemplate are subject to various changes and conditions precedent , including: (1) SNCP’s due diligence and (2) the Bankruptcy Court’s approval. A hearing to approve the adequacy of the Disclosure Statement is scheduled before the Bankruptcy Court on April 2, 2008.

On February 15, 2008, the Company filed Form S-8 for the registration of 644,543 additional shares of common stock for issuance as it relates to rights to purchase common stock under the Company’s 2004 Omnibus Stock Incentive Plan.

Well. Who'd ever think SCO would make a huge announcement about buckets of money coming their way, see the stock price go up temporarily, and then let us know it ain't necessarily so. That seems so totally out of character.

As to SCO's future, I believe this section says it all:

In the event that any substantial amount of the Company’s assets are frozen or if its assets or resources are further depleted, the Company may not be able to appeal the August 10, 2007 ruling....As a result of both the Court’s August 10, 2007 order and the Company’s entry into Chapter 11, among other factors, there is substantial doubt about the Company’s ability to continue as a going concern including continuing the SCO Litigation or appealing the adverse ruling of August 10, 2007.

The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties. Absent a significant cash payment to Novell for this matter, management believes that the undiscounted future cash flows generated by the Company will be sufficient to recover the carrying values of the Company’s long-lived assets over their expected remaining useful lives. However, if a significant cash payment is required, or significant assets are put under a constructive trust, the carrying amount of the Company’s long-lived assets may not be recovered....

The Debtors are operating pursuant to Chapter 11 of the Bankruptcy Code and continuation of the Company as a going concern is contingent upon, among other things, the Debtors’ ability to (i) construct and obtain confirmation of a plan of reorganization under the Bankruptcy Code; (ii) reduce payroll and benefits costs and liabilities under the bankruptcy process; (iii) achieve profitability; (iv) achieve sufficient cash flows from operations; and (v) to obtain financing sources to meet the Company’s future obligations. These matters as well as the aforementioned ruling in favor of Novell create substantial doubt about the Company’s ability to continue as a going concern.

Woe is me. There might be no appeal? No more SCO? Everything depends on money in a reorg? Plus figuring out how to actually make a profit going forward?

Now if only someone would loan SCO some eggs, at 20% interest, SCO could serve up some dancing baloney and eggs.

How do you like this news, about more downsizing ahead:

Reduction in Force.

On January 31, 2008, in an effort to reduce ongoing operating expenses and to conform our business to our current objectives and opportunities, we began the implementation of a reduction in force. We anticipate that we will reduce our workforce by approximately 30 positions or a reduction of approximately 26% of our total workforce and this reduction will be completed in April 2008. We believe that this reduction in force will allow us to continue to focus on and serve our UNIX customer base and to deliver on key opportunities with our mobile products and services.

Who is "we"? Who's left? The board, of course. But of all the names we know, who is left? Once McBride goes, are any famous folks still there? Wouldn't it be funny if they all ended up in the same place, all working for whoever York was fronting for or something?


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