<PAGE>   1


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark one)
    [X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended APRIL 30, 2001
                                       OR
    [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

           For the transition period from ____________to ____________

                         Commission file number 0-29911

                           CALDERA INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                     87-0662823
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

                             240 West Center Street
                                Orem, Utah 84057
              (Address of principal executive office and zip code)

                                 (801) 765-4999
              (Registrant's telephone number, including area code)

                              CALDERA SYSTEMS, INC.
                   (Former name, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 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 filing requirements
for the past 90 days.

YES [X] NO [ ]

AS OF JUNE 12, 2001, THERE WERE 57,026,361 SHARES OF THE ISSUER'S COMMON STOCK
OUTSTANDING.


<PAGE>   2

                           CALDERA INTERNATIONAL, INC.

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                 Number
                                                                                                 ------

<S>                                                                                             <C>
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
         Condensed Consolidated Balance Sheets as of April 30, 2001 and
           October 31, 2000 ...................................................................    3
         Condensed Consolidated Statements of Operations and
           Comprehensive Loss for the three and six months ended April 30, 2001 and 2000 ......    4
         Condensed Consolidated Statements of Cash Flows for the six months ended
           April 30, 2001 and 2000 ............................................................    5
         Notes to Condensed Consolidated Financial Statements .................................    7
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
           Operations .........................................................................   15
Item 3.  Quantitative and Qualitative Disclosures About Market Risk ...........................   23
         Risk Factors .........................................................................   25
PART II. OTHER INFORMATION
Item 1.  Legal Proceedings ....................................................................   35
Item 2.  Changes in Securities and Use of Proceeds ............................................   35
Item 3.  Defaults Upon Senior Securities ......................................................   35
Item 4.  Submission of Matters to a Vote of Security Holders ..................................   36
Item 5.  Other Information ....................................................................   36
Item 6.  Exhibits and Reports on Form 8-K .....................................................   36
Item 7.  Signatures ...........................................................................   37
</TABLE>




                                      -2-
<PAGE>   3





                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                                                                                 April 30,               October 31,
                                                                                   2001                     2000
                                                                              --------------           --------------
                                                                               (unaudited)

<S>                                                                           <C>                      <C>

                                     ASSETS

CURRENT ASSETS:
    Cash and cash equivalents                                                 $   20,244,536           $   36,560,267
    Available-for-sale securities                                                 47,022,729               54,179,307
    Accounts receivable, net of allowance for doubtful accounts of
      $98,500 and $312,300, respectively                                           1,990,715                1,544,526
    Note receivable from The Santa Cruz Operation                                  7,000,000                       --
    Inventories                                                                      189,311                  389,438
    Other current assets                                                             592,200                1,310,173
                                                                              --------------           --------------
      Total current assets                                                        77,039,491               93,983,711
                                                                              --------------           --------------

PROPERTY AND EQUIPMENT:
    Computer equipment                                                             1,298,036                1,321,806
    Furniture and fixtures                                                         1,097,330                1,097,048
    Leasehold improvements                                                           354,025                  342,015
                                                                              --------------           --------------
                                                                                   2,749,391                2,760,869
    Less accumulated depreciation and amortization                                (1,349,214)              (1,171,549)
                                                                              --------------           --------------
      Net property and equipment                                                   1,400,177                1,589,320
                                                                              --------------           --------------

INVESTMENTS IN NON-MARKETABLE SECURITIES:
    Affiliate                                                                      1,179,704                1,179,704
    Non-affiliates                                                                 3,999,497                3,999,497
                                                                              --------------           --------------
                                                                                   5,179,201                5,179,201
                                                                              --------------           --------------

EQUITY INVESTMENT IN AFFILIATE                                                            --                4,957,325
                                                                              --------------           --------------

OTHER ASSETS, net                                                                  4,020,932                1,808,746
                                                                              --------------           --------------

      Total assets                                                            $   87,639,801           $  107,518,303
                                                                              ==============           ==============



                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
    Accounts payable                                                          $    3,098,865           $    2,414,359
    Payable to The Santa Cruz Operation                                                   --                  898,026
    Accrued liabilities                                                            2,039,814                1,664,818
    Deferred revenue                                                                 554,681                  326,330
                                                                              --------------           --------------
      Total current liabilities                                                    5,693,360                5,303,533
                                                                              --------------           --------------

MINORITY INTEREST                                                                    172,700                       --
                                                                              --------------           --------------

STOCKHOLDERS' EQUITY:
    Preferred stock, $0.001 par value; 25,000,000 shares authorized,
      none outstanding                                                                    --                       --
    Common stock, $0.001 par value; 75,000,000 shares authorized,
      39,749,105 and 39,444,457 shares outstanding, respectively                      39,749                   39,444
    Additional paid-in capital                                                   154,948,635              155,649,244
    Deferred compensation                                                         (2,071,879)              (3,714,720)
    Accumulated other comprehensive income                                           414,366                  299,456
    Accumulated deficit                                                          (71,557,130)             (50,058,654)
                                                                              --------------           --------------
      Total stockholders' equity                                                  81,773,741              102,214,770
                                                                              --------------           --------------

      Total liabilities and stockholders' equity                              $   87,639,801           $  107,518,303
                                                                              ==============           ==============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.




                                      -3-
<PAGE>   4


                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED STATEMENTS OF
                        OPERATIONS AND COMPREHENSIVE LOSS


<TABLE>
<CAPTION>
                                                                         Three Months Ended April 30,   Six Months Ended April 30,
                                                                         ---------------------------   ---------------------------
                                                                             2001           2000           2001           2000
                                                                         ------------   ------------   ------------   ------------
                                                                                (unaudited)                     (unaudited)

<S>                                                                      <C>            <C>            <C>            <C>
REVENUE:
      Software and related products                                      $  1,397,025   $  1,122,854   $  1,849,381   $  1,517,694
      Services                                                                201,213        238,280        802,517        396,639
                                                                         ------------   ------------   ------------   ------------
        Total revenue                                                       1,598,238      1,361,134      2,651,898      1,914,333
                                                                         ------------   ------------   ------------   ------------

COST OF REVENUE:
     Software and related products                                          1,439,854        733,333      1,666,357      1,028,135
     Services                                                                 367,655        349,300      1,317,986        604,584
                                                                         ------------   ------------   ------------   ------------
        Total cost of revenue                                               1,807,509      1,082,633      2,984,343      1,632,719
                                                                         ------------   ------------   ------------   ------------

GROSS MARGIN (DEFICIT)                                                       (209,271)       278,501       (332,445)       281,614
                                                                         ------------   ------------   ------------   ------------

OPERATING EXPENSES:
      Sales and marketing (exclusive of non-cash compensation of
        $26,608, $418,700, $166,728 and $905,832, respectively)             4,858,636      3,847,785     10,378,744      5,878,341
      General and administrative (exclusive of non-cash compensation of
        $123,050, $755,338, $183,680 and $1,447,114, respectively)          1,333,421      1,426,196      3,081,241      2,504,706
      Research and development (exclusive of non-cash compensation of
        $107,211, $240,904, $240,285 and $604,863, respectively)            2,226,325      1,315,204      4,095,502      2,279,944
      Cost-sharing arrangement with The Santa Cruz Operation                       --             --        601,974             --
      Write-down of investments                                             4,309,636             --      4,309,636             --
      Non-cash compensation                                                   256,869      1,414,942        590,693      2,957,809
                                                                         ------------   ------------   ------------   ------------
        Total operating expenseses                                         12,984,887      8,004,127     23,057,790     13,620,800
                                                                         ------------   ------------   ------------   ------------

LOSS FROM OPERATIONS                                                      (13,194,158)    (7,725,626)   (23,390,235)   (13,339,186)
                                                                         ------------   ------------   ------------   ------------

EQUITY IN LOSS OF AFFILIATE                                                        --             --       (647,689)            --
                                                                         ------------   ------------   ------------   ------------

OTHER INCOME (EXPENSE):
      Interest income                                                       1,600,337        747,834      2,608,156        861,208
      Other income (expense), net                                             (39,154)            --        (19,492)          (547)
                                                                         ------------   ------------   ------------   ------------
        Other income, netxpense), net                                       1,561,183        747,834      2,588,664        860,661
                                                                         ------------   ------------   ------------   ------------

LOSS BEFORE INCOME TAXES                                                  (11,632,975)    (6,977,792)   (21,449,260)   (12,478,525)

PROVISION FOR INCOME TAXES                                                    (22,516)       (14,500)       (49,216)       (27,150)
                                                                         ------------   ------------   ------------   ------------

NET LOSS                                                                 $(11,655,491)  $ (6,992,292)  $(21,498,476)  $(12,505,675)
                                                                         ============   ============   ============   ============

DIVIDENDS RELATED TO CONVERTIBLE PREFERRED STOCK                         $         --   $ (2,252,717)  $         --   $(12,252,717)
                                                                         ============   ============   ============   ============

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS                             $(11,655,491)  $ (9,245,009)  $(21,498,476)  $(24,758,392)
                                                                         ============   ============   ============   ============

BASIC AND DILUTED NET LOSS PER COMMON SHARE                              $      (0.29)  $      (0.32)  $      (0.54)  $      (0.93)
                                                                         ============   ============   ============   ============

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                 39,692,471     28,602,324     39,639,599     26,670,075
                                                                         ============   ============   ============   ============

OTHER COMPREHENSIVE LOSS:
      Net loss attributable to common stockholders                       $(11,655,491)  $ (9,245,009)  $(21,498,476)  $(24,758,392)
      Unrealized gain (loss) on available-for-sale securities                   2,744             --       (152,650)            --
      Foreign currency translation adjustment                                  11,033          3,809         (2,076)       (11,957)
                                                                         ------------   ------------   ------------   ------------
COMPREHENSIVE LOSS:                                                      $(11,641,714)  $ (9,241,200)  $(21,653,202)  $(24,770,349)
                                                                         ============   ============   ============   ============
</TABLE>



     See accompanying notes to condensed consolidated financial statements.


                                      -4-
<PAGE>   5


                      CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                    INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS



<TABLE>
<CAPTION>
                                                                                                  Six Months Ended April 30,
                                                                                                  2001                 2000
                                                                                             -------------         -------------
                                                                                                         (unaudited)

<S>                                                                                          <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                                                 $ (21,498,476)        $ (12,505,675)
    Adjustments to reconcile net loss to net cash used in operating activities:
       Write-down of investments                                                                 4,309,636                    --
       Depreciation and amortization                                                               426,702               171,119
       Non-cash compensation                                                                       590,693             2,957,809
       Equity in loss of affiliate                                                                 647,689                    --
       Loss on disposal of assets                                                                   41,485
       Issuance of common stock for services                                                            --               134,664
       Changes in operating assets and liabilities:
          Accounts receivable, net                                                                (446,189)             (574,475)
          Other receivables                                                                             --               371,684
          Inventories                                                                              200,127               (97,471)
          Other current assets                                                                     717,973            (1,699,383)
          Other assets                                                                             (80,884)               29,536
          Accounts payable                                                                         684,506               726,911
          Payable to The Santa Cruz Operation                                                     (898,026)                   --
          Accrued liabilities                                                                      374,996               505,901
          Deferred revenue                                                                         228,351                58,050
                                                                                             -------------         -------------
            Net cash used in operating activities                                              (14,701,417)           (9,921,330)
                                                                                             -------------         -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                                            (231,983)             (601,366)
    Loan to The Santa Cruz Operation                                                            (7,000,000)                   --
    Proceeds from available-for-sale securities, net                                             7,224,699                    --
    Deferred acquisition costs                                                                  (2,178,363)                   --
    Acquisition of investment in non-marketable security                                                --            (2,000,000)
                                                                                             -------------         -------------
            Net cash used in investing activities                                               (2,185,647)           (2,601,366)
                                                                                             -------------         -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Borrowings from majority stockholder                                                                --               300,000
    Repayment of borrowings from majority stockholder                                                   --              (300,000)
    Repayments of long-term debt                                                                        --                (9,460)
    Proceeds from sale of common stock, net of offering costs                                           --            73,390,235
    Proceeds from sale of Series B convertible preferred stock, net of offering costs                   --            29,790,674
    Minority interest in subsidiary                                                                172,700                    --
    Proceeds from sale of common stock through ESP program                                          91,286                    --
    Proceeds from exercise of common stock options                                                 260,568               176,484
                                                                                             -------------         -------------
            Net cash provided by financing activities                                              524,554           103,347,933
                                                                                             -------------         -------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                           (16,362,510)           90,825,237
EFFECT OF FOREIGN EXCHANGE RATES ON CASH                                                            46,789               (11,957)
CASH AND CASH EQUIVALENTS, beginning of period                                                  36,560,267               121,989
                                                                                             -------------         -------------
CASH AND CASH EQUIVALENTS, end of period                                                     $  20,244,546         $  90,935,269
                                                                                             =============         =============
</TABLE>


     See accompanying notes to condensed consolidated financial statements.




                                      -5-
<PAGE>   6


                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)



<TABLE>
<CAPTION>
                                                                                          Six Months Ended April 30,
                                                                                          2001                 2000
                                                                                       ------------        ------------
                                                                                                 (unaudited)

<S>                                                                                    <C>                 <C>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
     FINANCING ACTIVITIES:

     Issuance of common shares and the acquisition of a license fee for
        non-marketable securities                                                      $         --        $  1,999,497

     Conversion of 6,596,146 shares of common stock to 6,596,146
        shares of Series A convertible preferred stock                                 $         --        $      6,596

     Conversion of 6,596,146 shares of Series A convertible preferred stock and
        5,000,000 shares of Series B convertible preferred stock to 11,596,146
        shares of common stock                                                         $         --        $     11,596

     Dividends related to Series B convertible preferred stock                         $         --        $ 12,252,717

     Issuance of common shares in exchange for investment in Lineo, Inc.               $         --        $ 10,000,000

     Distribution to majority stockholder for fair value of shares issued in
        excess of the carryover basis of the investment in Lineo, Inc.                 $         --        $ (9,999,999)

     Distribution to majority stockholder for license rights                           $         --        $   (450,849)
</TABLE>


     See accompanying notes to condensed consolidated financial statements.




                                      -6-
<PAGE>   7



                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(1) ORGANIZATION AND DESCRIPTION OF BUSINESS

         Caldera Systems, Inc. ("Caldera Systems"), was incorporated as a Utah
corporation on August 21, 1998, and was reincorporated as a Delaware corporation
on March 6, 2000. On May 7, 2001, Caldera Systems was merged into Caldera
International, Inc. ("Caldera"). Caldera Systems developed and marketed software
and provided related services that enabled the development, deployment and
management of Linux-based specialized servers and Internet devices that extend
the eBusiness infrastructure. Caldera Systems sold and distributed its software
and related products indirectly through distributors and solutions providers,
which include value-added resellers ("VARs"), original equipment manufacturers
("OEMs"), and systems integrators, as well as directly to end-user customers.
These sales occurred throughout the United States and in certain international
locations.

         On May 7, 2001, Caldera International, acquired all of the assets of
the server and professional services groups of The Santa Cruz Operation, Inc.
("SCO") pursuant to an Agreement and Plan of Reorganization, dated as of August
1, 2000 and as amended on September 13, 2000, December 12, 2000, and February 9,
2001, among Caldera, Caldera Systems and SCO (as amended, the "Agreement").
Under the Agreement, Caldera acquired the tangible and intangible assets used in
the server and professional services groups of SCO, including all of the capital
stock of certain SCO subsidiaries. Additionally, each share of existing Caldera
Systems stock, as well as options to purchase shares of Caldera Systems stock,
were converted into an equal number of shares of Caldera stock and options to
purchase shares of Caldera stock.

         In consideration for the sale and transfer to Caldera of the stock and
assets of the server and professional services groups by SCO and their
respective subsidiaries, Caldera (i) issued to SCO 16,000,000 shares of its
common stock (1,600,000 of which are being held in escrow), (ii) offered to
issue options to purchase up to an aggregate of 1.8 million shares of Caldera
common stock to holders of options to purchase SCO common stock who were to
become employees of Caldera, (iii) paid to SCO $23.0 million in cash, including
the forgiveness of $7.0 million of indebtedness owed by SCO to Caldera, and (iv)
delivered a non-interest bearing promissory note in the amount of $8.0 million
that will be paid in quarterly installments of $2.0 million beginning in the
fifth fiscal quarter after the combination. In addition, if the OpenServer line
of business of the server and professional services groups generates revenue in
excess of specified thresholds during the three-year period following the
combination, SCO will have earn out rights entitling it to receive 45% of the
excess revenue as defined in the Agreement. The consideration paid was
determined by arms-length negotiations.




                                      -7-
<PAGE>   8


                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


         The server group of SCO provides server software for networked business
computing and is a leading producer of UNIX server operating systems. The
professional services group of SCO complements the server group and provides
professional services to implement and maintain UNIX system software products.
The acquisition of the server and professional services groups of SCO provides
Caldera with 18 offices throughout the world and ownership of the largest
Linux/UNIX distribution channel with over 15,000 resellers worldwide.
Application and hardware solution providers now have a single Linux company that
can facilitate the marketing and delivery of business solutions to all major
markets globally.

(2) SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
of Caldera International, Inc. and subsidiaries (the "Company") have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the following
disclosures, when read in conjunction with the financial statements and the
notes thereto included in the Company's Form 10-K are adequate to make the
information presented not misleading.

         The condensed consolidated financial statements reflect all adjustments
that, in the opinion of management, are necessary to present fairly the
financial position and results of operations of the Company as of the balance
sheet dates and for the periods presented. Operating results for the three and
six months ended April 30, 2001 are not necessarily indicative of the results
that may be expected for the year ending October 31, 2001.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.

PRINCIPLES OF CONSOLIDATION

         The condensed consolidated financial statements include the accounts of
Caldera and its wholly owned subsidiary, Caldera Deutschland GmbH ("Caldera
GmbH") and its majority owned subsidiary, Caldera Japan ("Caldera KK"), after
elimination of intercompany accounts and transactions.




                                      -8-
<PAGE>   9



                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


CASH AND CASH EQUIVALENTS

         For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with original maturities of three or
fewer months to be cash equivalents. Cash equivalents primarily consist of
investments in money market mutual funds, commercial paper or other short-term
investments.

AVAILABLE-FOR-SALE SECURITIES

         Available-for-sale securities include investments in debt securities
such as commercial paper, treasury notes and bonds. These investments are
recorded at fair market value, based on quoted market prices and unrealized
gains and losses are recorded as a component of comprehensive income (loss).
Realized gains and losses, which are calculated based on the specific
identification method, are recorded in operations as incurred. As of April 30,
2001, available-for-sale securities with original maturity dates less than one
year totaled approximately $29.0 million and available-for-sale securities with
original maturity dates greater than one year totaled approximately $18.0
million.

INVENTORIES

         Inventories consist primarily of raw materials and completed products.
Inventories are stated at the lower of cost (using the first-in, first-out
method) or market value. As of April 30, 2001 and October 31, 2000, inventories
consisted of raw materials of approximately $142,400 and $201,800, respectively,
and completed products of approximately $46,900 and $187,600, respectively.

         Provisions, when required, are made to reduce excess and obsolete
inventories to their estimated net realizable values. Due to competitive
pressures and technological innovation, it is possible that estimates of the net
realizable value could change in the near term.

REVENUE RECOGNITION

         The Company generates revenue from software and related products sold
indirectly through distributors and solutions providers and directly to
end-users. The Company also generates services revenue from training royalties
and tuition fees, consulting fees, and customer support fees.

         Revenue from the sale of software and related products is recognized
upon delivery of the product when persuasive evidence of an arrangement exists,
the price is fixed or determinable and collection is probable. All sales into
the distribution channel or to OEM's and VAR's require a binding purchase order.
Prior to November 1, 2000, sales to resellers for which payment was considered
to be substantially contingent on the reseller's success in distributing
individual units of the product or sales to resellers with which Caldera did not
have historical experience were accounted for as consignments and the revenue
was recognized once sell-through verification was





                                      -9-
<PAGE>   10


                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


received and payments from customers became due. Prior to October 31, 1999,
Caldera did not have any consignment arrangements. During the year ended October
31, 2000, approximately 22% of product revenue was derived on a sell-through
basis.

         Effective November 1, 2000, the Company began to defer revenue
recognition for products sold through the distribution channel until the
products have been sold through the channel to the end user. All sales require a
binding purchase order. Direct sales to end-users are evidenced by concurrent
payment for the product and are governed by a license agreement. Generally, the
only multiple element arrangement of the Company's initial software sales is
certain telephone and e-mail technical support services the Company provides at
no additional charge. These services do not include product update or upgrade
rights. After the initial support period, customers can elect to enter into
separate support agreements. The cost of providing the initial support services
is not significant; accordingly, the Company accrues the estimated costs of
providing the services at the time of revenue recognition. Revenue from the
extended support agreements and maintenance contracts are deferred and
recognized over the period of the contract or as the services are provided.

         If other significant post-delivery vendor obligations exist or if a
product is subject to customer acceptance, revenue is deferred until no
significant obligations remain or acceptance has occurred. To date, the Company
has not shipped any software and related products subject to acceptance terms or
subject to other post-delivery vendor obligations. Additionally, the Company has
not recognized revenue on any contracts with customers that may include customer
cancellation or termination clauses that indicate a demonstration period or
otherwise incomplete transaction.

         The Company also offers its customers consulting, training and other
services separate from the software sale. The services are not integral to the
functionality of the software and are available from other vendors. This
services revenue is recognized as the services are performed.

NET LOSS PER COMMON SHARE

         Basic net loss per common share ("Basic EPS") is computed by dividing
net loss available to common stockholders by the weighted average number of
common shares outstanding. Diluted net loss per common share ("Diluted EPS") is
computed by dividing net loss by the sum of the weighted average number of
common shares and the dilutive potential common share equivalents then
outstanding. Potential common share equivalents consist of shares issuable upon
the exercise of stock options and shares issuable upon the conversion of Series
A and Series B convertible preferred stock for the periods during which they
were outstanding. There were approximately 5.5 million and approximately 6.5
million outstanding options to purchase common shares as of April 30, 2001 and
2000, respectively, that were not included in the computation of diluted net
loss per common share as their effect would have been anti-dilutive, thereby
decreasing the net loss per common share.




                                      -10-
<PAGE>   11


                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


(3) EQUITY INVESTMENT IN EBIZ ENTERPRISES, INC

         During the three months ended January 31, 2001, the Company's ownership
interest in Ebiz Enterprises, Inc. ("Ebiz") was diluted to approximately 12
percent as a result of Ebiz issuing new shares in connection with an acquisition
and the conversion of convertible securities. As a result of these transactions,
on January 5, 2001, the Company discontinued the use of the equity method of
accounting for its investment in Ebiz. The Company accounted for the investment
as an available-for-sale security in accordance with Statement of Financial
Accounting Standards ("SFAS") 115. Under SFAS 115, the Company carried its
investment at fair market value using quoted trading prices and recorded any
unrecognized gains or losses as a component of other comprehensive income
(loss).

          During the three months ended April 30, 2001, the Company determined
that the quoted trading price of the Ebiz common stock on the Over the Counter
Bulletin Board was not reflective of the realizable value of the Company's
investment in Ebiz. Due to certain factors, including Ebiz's continuing losses
and lack of adequate funding, the Company determined that its investment in Ebiz
would most likely not be realized and an impairment write-down was necessary.
Accordingly, the investment was written down from the January 31, 2001 balance
of approximately $4.3 million to an estimated net realizable value of $0.65 per
common share, or $2.6 million at April 30, 2001, resulting in an impairment
charge of approximately $1.7 million. The remaining investment was also
reclassified from available-for-sale securities to investment in non-affiliates
in the accompanying consolidated balance sheet as of April 30, 2001.

(4) INVESTMENTS IN NON-MARKETABLE SECURITIES

         The Company accounts for each of its investments in non-marketable
securities using the cost method, as the Company has no ability to exercise
significant influence over any of the entities. The Company's management
routinely assesses its investments for impairment and adjusts the carrying
amount to estimated realizable values when impairment has occurred. During the
three months ended April 30, 2001, the Company determined that the carrying
value of the investment in Evergreen of $3.6 million would most likely not be
realized and an impairment charge was necessary. The investment has been
recorded at its estimated realizable value of $1.0 million and the Company
recorded an impairment charge of $2.6 million in the accompanying condensed
consolidated statements of operations.

(5) STOCKHOLDERS' EQUITY

STOCK-BASED COMPENSATION

         The Company accounts for its stock options issued to directors,
officers and employees under Accounting Principles Board Opinion No. 25 and
related interpretations ("APB 25"). Under APB 25, compensation expense is
recognized if an option's exercise price on the measurement date is below the
fair market value of the Company's common stock. During the three months ended
April 30, 2001, the Company granted




                                      -11-
<PAGE>   12



                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


55,000 stock options with an average exercise price of $2.31 per share. None of
these stock option grants were at prices that were below the estimated fair
market value on the date of grant. As of April 30, 2001, there were
approximately 5.5 million stock options outstanding with an average exercise
price of $4.25 per share. Subsequent to April 30, 2001, and in connection with
the acquisition of the SCO server software and professional services groups,
Caldera granted approximately 4.4 million stock options to current Caldera
employees and employees of the SCO server software and professional services
groups who accepted employment with Caldera. These stock options were granted at
a weighted average exercise price of $2.27 per share. None of these grants were
at prices below the estimated fair market value of the stock on the date of the
grant.

         During the six months ended April 30, 2000, the Company granted
approximately 3.9 million stock options with exercise prices that were below the
estimated fair market value on the measurement date resulting in approximately
$6.8 million in deferred compensation. Amortization of deferred compensation was
approximately $257,000 and $1.4 million, respectively, during the three months
ended April 30, 2001 and 2000 and approximately $591,000 and $3.0 million,
respectively, during the six months ended April 30, 2001 and 2000.

         During the six months ended April 30, 2001, the Company eliminated
approximately $1.1 million in deferred compensation for employees who terminated
employment with Caldera. This deferred compensation had been included as a
component of stockholder's equity and would have been amortized as non-cash
compensation if the employees were not terminated.

EMPLOYEE STOCK PURCHASE PLAN

         The 2000 Employee Stock Purchase Plan was adopted by the board of
directors on February 15, 2000 and was approved by the stockholders on March 1,
2000. The plan became effective upon the closing of the Company's initial public
offering. The plan is designed to allow eligible employees of Caldera and its
participating subsidiaries to purchase shares of Caldera common stock, at
semi-annual intervals, through periodic payroll deductions. A total of 500,000
shares of common stock have been reserved for issuance under the plan. The share
reserve will increase on the first trading day of each calendar year beginning
with the 2001 calendar year by 1% of the total number of shares of common stock
outstanding on the last day of the immediately preceding year but no such annual
increase will exceed 750,000 shares. In no event, however, may a participant
purchase more than 750 shares, nor may all participants in the aggregate
purchase more than 125,000 shares on any semi-annual purchase date.

         In July 2000, the board of directors amended the plan to increase the
maximum number of shares of common stock authorized for issuance over the term
of the plan by an additional 1,500,000 shares. The stockholders approved this
increase on April 27, 2001. Additionally, the board of directors amended the
plan to increase the number of shares each participant may purchase to 1,000
shares from 750 each offering period,







                                      -12-
<PAGE>   13


                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


increased the aggregate purchase by all employees on any semi-annual purchase
date to 350,000 shares from 125,000 shares, and changed the purchase interval
date to May 31 and November 30, starting with the May 31, 2001 purchase
interval.

         On April 30, 2001, 54,467 shares of common stock of the Company were
purchased through the plan at a price of $1.68 per share.

(6) RESTRUCTURING CHARGE

         In anticipation of the closing of the acquisition of the server and
professional services groups of SCO and in an effort to reduce operating costs,
Caldera Systems reduced its workforce by approximately 17%. The reductions
targeted all functional areas. The cost-cutting efforts resulted in a one-time
charge of approximately $428,000 for severance benefits and outplacement. For
the six months ended April 30, 2001, the costs associated with the restructuring
were recorded as a component of operating expenses. As of April 30, 2001,
approximately $194,000 of the total restructuring costs had been paid.

(7) SEGMENT INFORMATION

         SFAS 131, "Disclosures about Segments of an Enterprise and Related
Information", requires disclosures related to components of a company for which
separate financial information is available and evaluated regularly by the
Company's chief operating decision makers in deciding how to allocate resources
and in assessing performance. It also requires segment disclosures about
products and services as well as geographic areas. The Company has determined
that it does not have any separately reportable operating segments. However, the
Company does sell software and related products in geographic locations outside
of the United States.

         Revenue attributed to individual countries based on the location of
sales to unaffiliated customers for the three and six months ended April 30,
2001 and 2000 is as follows:

<TABLE>
<CAPTION>
                      Three Months Ended April 30,   Six Months Ended April 30,
                          2001           2000           2001           2000
                       ----------     ----------     ----------     ----------
<S>                    <C>            <C>            <C>            <C>
Revenue:
  United States        $1,425,363     $1,054,518     $2,136,747     $1,445,228
  Asia pacific            125,995        142,150        410,179        184,073
  Europe                   43,513         88,308         84,050        182,633
  Other countries           3,367         76,158         20,922        102,399
                       ----------     ----------     ----------     ----------
     Total revenue     $1,598,238     $1,361,134     $2,651,898     $1,914,333
                       ==========     ==========     ==========     ==========
</TABLE>


(8) SUBSEQUENT EVENTS

         As discussed above in Note 1, Caldera completed its acquisition of the
server and professional services groups of SCO on May 7, 2001.



                                      -13-
<PAGE>   14

                  CALDERA INTERNATIONAL, INC. AND SUBSIDIARIES

                         NOTES TO CONDENSED CONSOLIDATED
                        FINANCIAL STATEMENTS (CONTINUED)


         On May 3, 2001, the Company acquired the WhatifLinux technology from
Acrylis, Inc. WhatifLinux technology provides Open Source users and system
administrators with Internet-delivered tools and services for faster, more
reliable software management. In consideration for the assets acquired from
Acrylis, the Company issued 1.25 million shares of common stock and paid $1.0
million in cash.




                                      -14-
<PAGE>   15



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         The following discussion should be read in conjunction with our
condensed consolidated financial statements and notes thereto, included
elsewhere in this quarterly filing as well as our annual report on Form 10-K for
the year ended October 31, 2000 filed with the Securities and Exchange
Commission. This discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including those set forth under "Risk Factors" and elsewhere in this quarterly
filing.

OVERVIEW

         We began operations in 1994 as Caldera, Inc. In July 1996, through an
asset purchase, Caldera, Inc. acquired an additional business unit that was not
engaged in developing and marketing Linux software. Caldera, Inc. subsequently
made the strategic determination to separate its two business lines into
separate entities and, under an asset purchase agreement dated as of September
1, 1998, as amended, sold the assets relating to its business of developing and
marketing Linux software to Caldera Systems, Inc., a newly formed corporation.
Caldera Systems subsequently completed an initial public offering in March of
2000. On May 7, 2001, Caldera Systems completed its acquisition of the assets of
the server and professional services groups of The Santa Cruz Operation, Inc.
("SCO") pursuant to an Agreement and Plan of Reorganization, dated August 1,
2001. In order to facilitate this acquisition Caldera International, Inc. was
formed and Caldera Systems became a wholly owned subsidiary of Caldera
International. Former holders of shares and options to purchase shares of
Caldera Systems received an equal number of shares and options to purchase
shares in Caldera International. As used herein, Caldera refers to Caldera
International, its subsidiaries, and its two predecessors, Caldera Systems and
that portion of Caldera, Inc. related to the Linux software business.

         In consideration of the acquisition of the server and professional
services groups from SCO Caldera (i) issued to SCO 16,000,000 shares of its
common stock (1,600,000 of which are being held in escrow), (ii) issued options
to purchase up to an aggregate of 1.8 million shares of Caldera common stock to
holders of options to purchase SCO common stock who become employees of Caldera,
(iii) paid to SCO $23.0 million in cash, including the forgiveness of $7.0
million of indebtedness owed by SCO to Caldera, and (iv) delivered a
non-interest bearing promissory note in the amount of $8.0 million that will be
paid in quarterly installments of $2.0 million beginning July 2002. In addition,
if the OpenServer line of business of the server and professional services
groups generates revenue in excess of specified thresholds during the three-year
period following the combination, SCO will have earn out rights entitling it to
receive 45% of the excess revenue. The consideration paid was determined by
arms-length negotiations.

         Caldera has invested heavily in the expansion of sales, marketing and
professional services organizations to support its long-term growth strategy. As
a result, employee headcount increased from 28 at September 1, 1998 to 164





                                      -15-
<PAGE>   16

immediately prior to the SCO transaction. As a result of the acquisition of the
server and professional services groups of SCO, our headcount increased to
approximately 650. As a consequence of our investment and growth strategy, we
have incurred net losses in each fiscal period since inception and as of April
30, 2001, had an accumulated deficit of $71.6 million.

         Prior to the acquisition of the Unix and OpenServer lines of business
from SCO, substantially all of our revenue was derived from sales of Linux
products and related services. After the completion of the combination, the
majority of our revenue will be derived from sales of OpenServer and UnixWare
products as well as from products resulting from the integration of our Linux
products with the OpenServer and UnixWare products and related applications.

         We also offer our customers consulting, training and other services
separate from the software sale. The services are not integral to the
functionality of the software and are available from other vendors. This service
revenue is recognized as the services are performed.

         Historically, we have experienced substantial fluctuations in our
revenue from period to period relating to the introduction of new products and
new versions of our existing products. Upon our announcement of an expected
release date for new products or upgrades, we often experience a significant
decrease in sales of our existing products. Additionally, we often experience
the strongest sales for a new product during the first 30 days after its
introduction as we fill advance orders from our distribution channel partners.

         The acquisition of the server and professional services groups of SCO
is expected to significantly increase the net revenue and operating expenses of
Caldera for the next twelve months and future periods. The results of operations
for Caldera for the remaining quarters of fiscal 2001 and future periods will
also include non-cash charges for the amortization of goodwill and other
intangibles of approximately $5.3 million per quarter for the first three years
and approximately $3.5 million per quarter for the next two years. Additionally,
Caldera anticipates additional working capital requirements to fund the acquired
operations of the server and professional services groups.

RESULTS OF OPERATIONS

THREE-MONTH PERIODS ENDED APRIL 30, 2001 AND 2000

Revenue

         Our revenue was $1.6 million for the three-month period ended April 30,
2001 and $1.4 million for the three-month period ended April 30, 2000. During
the 2001 period, approximately 87% of our revenue was generated from the sale of
software and related products of which approximately 80% was derived from the
sale of SCO OpenServer products to corporate accounts. During the three-month
period ended April 30, 2000, approximately 82% of our revenue was generated from
the sale of software and related products. Revenue from international customers
was approximately 11% of total revenue for the 2001 quarter, and 23% of total
revenue for the 2000 quarter.




                                      -16-
<PAGE>   17

         Software and Related Products. Our software and related products
revenue was $1.4 million for the three-month period ended April 30, 2001 and
$1.1 million for the three-month period ended April 30, 2000, an increase of
$274,000, or 24%. The increase was attributable to the sale of SCO OpenServer
products to corporate accounts. During the three-month period ended April 30,
2001 revenue from corporate and OEM customers accounted for approximately all of
total software and related products revenue as the Company continued its shift
away from retail sales.

         Services. Our services revenue was $201,000 for the three-month period
ended April 30, 2001 and $238,000 for the three-month period ended April 30,
2000, a decrease of $37,000, or 16%. The decrease in services revenue from the
same three-month period of the prior year was attributable to the delay in the
release of new training and education-related products to enhance the Company's
existing software products.

Cost of Revenue

         Cost of Software and Related Products Revenue. Our cost of software and
related products revenue was $1.4 million for the three-month period ended April
30, 2001 and $733,000 for the three-month period ended April 30, 2000, an
increase of $707,000, or 96%. Cost of software and related products revenue as a
percentage of software and related products revenue was 103% for the three-month
period ended April 30, 2001 and 65% for the three-month period ended April 30,
2000. The increase as a percentage of software and related products revenue is
attributed to the sale of the SCO OpenServer products to strategic corporate
accounts. Caldera purchased the products in connection with a distribution
agreement entered into with SCO and the sale of these products resulted in a
small gross margin. The negative gross margin for the 2001 period for software
and related products results from the low margin incurred on the sale of the SCO
products as well as from certain fixed costs related to the delivery of Linux
products that were in excess of Linux software and related products revenue.

         Cost of Services Revenue. Our cost of services revenue was $368,000 for
the three-month period ended April 30, 2001 and $349,000 for the three-month
period ended April 30, 2000, an increase of $19,000, or 5%. Cost of services
revenue as a percentage of services revenue was 183% for the three-month period
ended April 30, 2001 and 147% for the three-month period ended April 30, 2000.
The increase was attributed to lower services revenue for the three-month period
ended April 30, 2001 with costs remaining relatively constant in both periods.

Operating Expenses

         Sales and Marketing. Our sales and marketing expenses were $4.9 million
for the three-month period ended April 30, 2001 and $3.8 million for the
three-month period ended April 30, 2000, an increase of $1.1 million, or 26%.
The increase was primarily attributable to additional marketing expenses in
anticipation of our acquisition of the server software and professional services
groups of SCO, marketing expenses related to the branding of Caldera
International and increased personnel costs.

         General and Administrative. Our general and administrative expenses
were $1.3 million for the three-month period ended April 30, 2001 and $1.4
million for the three-month




                                      -17-
<PAGE>   18
period ended April 30, 2000, a decrease of $93,000, or 7%. The minor decrease is
attributable to information systems costs that were included in general and
administrative expense in the 2000 period, but were allocated to other internal
departments for the 2001 period.

         Research and Development. Our research and development expenses were
$2.2 million for the three-month period ended April 30, 2001 and $1.3 million
for the three-month period ended April 30, 2000, an increase of $911,000, or
69%. The increase in research and development expenses was attributed to payroll
costs and related benefits for additional employees in software development and
quality assurance.

         Write-down of Investments. During the three-month period ended April
30, 2001, the Company determined that the current carrying value of two of its
investments would most likely not be realized and impairment charges were
necessary. The investments have been recorded at their estimated realizable
values and the Company recorded an impairment charge of $4.3 million in the
accompanying condensed consolidated statement of operations.

         Non-cash Compensation. In connection with stock options granted to
employees, the Company recorded approximately $257,000 of non-cash compensation
during the three-month period ended April 30, 2001. During the three-month
period ended April 30, 2000, the Company recorded $1.4 million of non-cash
compensation.

Other Income (Expense), net

         Other income (expense), net consists primarily of interest income
received on cash and equivalents and investments. Interest income was $1.6
million during the three-month period ended April 30, 2001, and $748,000 during
the three-month period ended April 30, 2000. The increase is related to higher
average cash balances during the period ended April 30, 2001 as well as the
recognition of gains on available-for-sale securities that were sold prior to
their maturity.

Provision for Income Taxes

         For the three-month periods ended April 30, 2001 and 2000, our
subsidiary, Caldera GmbH, incurred income tax expense of $23,000 and $15,000,
respectively.

SIX-MONTH PERIODS ENDED APRIL 30, 2001 AND 2000

Revenue

         Our revenue was $2.7 million for the six-month period ended April 30,
2001 and $1.9 million for the six-month period ended April 30, 2000. During the
six-month period ended April 30, 2001, approximately 70% of our revenue was
generated from the sale of software and related products. During the same period
in 2000, approximately 79% of our revenue was generated from the sale of
software and related products. Revenue from international customers was
approximately 19% of total revenue for the six-month period ended April 30,
2001, and 25% of total revenue for the six-month period ended April 30, 2000.
The decrease in international revenue as a percentage of total revenue during
the 2001 period was due to the result of a greater increase in corporate account
sales made in the United States since the absolute dollar amount of revenue from





                                      -18-
<PAGE>   19

international customers increased from 2000 to 2001. During the six-month period
ended April 30, 2001, approximately 49% of our revenue was derived from the sale
of SCO OpenServer products to corporate accounts.

         Software and Related Products. Our software and related products
revenue was $1.8 million for the six-month period ended April 30, 2001 and $1.5
million for the six-month period ended April 30, 2000, an increase of $332,000,
or 22%. The increase during the six-month period ended April 30, 2001 was
primarily attributable to the sale of SCO OpenServer products to corporate
accounts and the release of Caldera Volution, our first management product.
During the six-month period ended April 30, 2001, revenue from corporate and OEM
customers accounted for approximately 92% of total software and related products
revenue as the Company shifted its focus away from retail sales and focused on
corporate and OEM accounts.

         Services. Our services revenue was $803,000 for the six-month period
ended April 30, 2001 and $397,000 for the six-month period ended April 30, 2000,
an increase of $406,000, or 102%. The increase in services revenue over the same
six-month period of the prior year was attributable to increased education and
training-related offerings as well as from promotional fees received from our
Linux training program tour.

Cost of Revenue

         Cost of Software and Related Products Revenue. Our cost of software and
related products revenue was $1.7 million for the six-month period ended April
30, 2001 and $1.0 million for the six-month period ended April 30, 2000, an
increase of $638,000 or 62%. Cost of software and related products revenue as a
percentage of software and related products revenue was 90% for the six-month
period ended April 30, 2001 and 68% for the six-month period ended April 30,
2000. The increase as a percentage of software and related products revenue is
attributable to the increased sales of SCO OpenServer products to strategic
corporate accounts in 2001. Caldera purchased these products in connection with
a distribution agreement entered into with SCO and the sale of these products
resulted in a small gross margin.

         Cost of Services Revenue. Our cost of services revenue was $1.3 million
for the six-month period ended April 30, 2001 and $605,000 for the six-month
period ended April 30, 2000, an increase of $713,000, or 118%. The increase in
cost of services revenue was due in part to additional employees and other
internal costs to increase our support offerings as well as for costs related to
our Linux training program. These costs as a percentage of services revenue were
164% for the six-month period ended April 30, 2001 and 152% for the six-month
period ended April 30, 2000.

Operating Expenses

         Sales and Marketing. Our sales and marketing expenses were $10.4
million for the six-month period ended April 30, 2001 and $5.9 million for the
six-month period ended April 30, 2000, an increase of $4.5 million, or 77%. The
increase was primarily attributed to additional marketing expenses in
anticipation of our acquisition of the server software and professional services
groups of SCO, advertising expenses targeted at branding the Caldera
International image, marketing expenses related to the launch





                                      -19-
<PAGE>   20

and release of Caldera Volution, attendance at major Linux tradeshows and
increased personnel costs.

         General and Administrative. Our general and administrative expenses
were $3.1 million for the six-month period ended April 30, 2001 and $2.5 million
for the six-month period ended April 30, 2000, an increase of $577,000, or 23%.
The increase was mainly attributable to salaries and benefits for additional
general and administrative employees and increased facilities and related costs
consistent with our growth in personnel and overall business.

         Research and Development. Our research and development expenses were
$4.1 million for the six-month period ended April 30, 2001 and $2.3 million for
the six-month period ended April 30, 2000, an increase of $1.8 million, or 80%.
The increase in research and development expenses was primarily attributable to
payroll costs and related benefits for additional employees for software
development and quality assurance.

         Cost-sharing Arrangement with The Santa Cruz Operation. During August
2000 and after entering into the reorganization agreement with SCO to acquire
the server software and professional services groups, the Company and SCO agreed
that Caldera would reimburse SCO for certain employee payroll and related costs.
Caldera agreed to reimburse SCO for costs related to certain employees that SCO
had identified for termination in a company-wide layoff in September 2000.
Caldera viewed these employees as a critical part of the success of the new
combined company and SCO agreed to retain the employees if Caldera would
reimburse SCO for a portion of their payroll and related costs. At the time
Caldera committed to reimburse SCO for these employee costs, the ultimate amount
was not determinable and both parties agreed that the amount would be determined
prior to the completion of the acquisition. During December 2000, both parties
agreed, pursuant to an amendment to the reorganization agreement, that Caldera
would reimburse SCO $1.5 million relating to services rendered from August
though December 2000. Accordingly, as of October 31, 2000, Caldera accrued
$898,026. The Company recorded the remaining $601,974 during the six-month
period ended April 30, 2001. Caldera made the $1.5 million payment to SCO on
January 26, 2001.

         Write-down of Investments. During the six-month period ended April 30,
2001, the Company determined that the current carrying value of two of its
investments would most likely not be realized and an impairment charge was
necessary. The investments have been recorded at their estimated realizable
value and the Company recorded an impairment charge of $4.3 million in the
accompanying condensed consolidated statements of operations.

         Non-cash Compensation. In connection with stock options granted to
employees, we recorded approximately $591,000 of non-cash compensation during
the six-month period ended April 30, 2001. During the six-month period ended
April 30, 2000, we recorded $3.0 million of non-cash compensation.




                                      -20-
<PAGE>   21

Equity in Loss of Affiliate

         Through January 5, 2001, Caldera accounted for its investment in Ebiz
Enterprises, Inc. ("Ebiz") using the equity method of accounting. Under the
equity method, Caldera recognized its portion of the net income or net loss of
Ebiz in its consolidated statement of operations. For the six months ended April
30, 2001, Caldera recognized approximately $431,000 in its statement of
operations that represented its portion of Ebiz's net loss for the period from
October 31, 2000 through January 5, 2001. Additionally, because Ebiz had a
stockholders' deficit at the time of Caldera's investment, Caldera was
amortizing, on a straight-line basis, the difference between its portion of the
Ebiz net stockholders' deficit and Caldera's basis in the Ebiz common stock. For
the six months ended April 30, 2001, Caldera recognized approximately $217,000
of amortization in connection with its investment in Ebiz.

         During the six-month period ended April 30, 2001, Caldera's ownership
interest in Ebiz was diluted to approximately 12 percent as a result of Ebiz
issuing new shares in connection with an acquisition and the conversion of
convertible securities. As a result of these transactions, on January 5, 2001,
Caldera discontinued the use of the equity method of accounting for its
investment in Ebiz. During the three months ended April 30, 2001, the Company
wrote down its investment in Ebiz to its estimated net realizable value, which
established a new cost basis in Caldera's investment in Ebiz.

Other Income (Expense), net

         Other income (expense), net, consists primarily of interest income
received on cash and equivalents. Interest income was $2.6 million during the
six-month period ended April 30, 2001, and $861,000 during the six-month period
ended April 30, 2000. The increase is related to higher average cash balances
during the period ended April 30, 2001.

Provision for Income Taxes

         For the six-month periods ended April 30, 2001 and 2000, our
subsidiary, Caldera GmbH, incurred income tax expense of $49,000 and $27,000,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception as a separate legal entity in August 1998, we have
funded our operations primarily through loans from our major stockholder and
through sales of common and preferred stock.

         As of April 30, 2001, we had cash and cash equivalents and
available-for-sale securities of $67.3 million and working capital of $71.3
million. Decreases in cash and cash equivalents and working capital from October
31, 2000 were the result of cash used in operations of approximately $14.7
million, a cost-sharing payment to SCO of $1.5 million and an advance of $7.0
million to SCO as part of the consideration for the server and professional
services groups.

         Our net cash used in operations during the six-month period ended April
30, 2001 was $14.7 million. Cash used in operations was primarily attributable
to the net loss of $21.5 million. The net loss was partially offset by non-cash
charges for the





                                      -21-
<PAGE>   22

amortization of deferred compensation, depreciation and amortization, the
write-down of our investment in non-affiliates and equity in loss of affiliate.

         Our investing activities have historically consisted of purchases of
property and equipment and certain intangible assets, investing in strategic
partners and the purchase and sale of available-for-sale securities. During the
six-month period ended April 30, 2001, cash used in investing activities was
$2.2 million. The primary uses of this cash were for a $7.0 million payment made
to SCO as part of the consideration for the combination as well as costs paid
for capital expenditures and acquisition costs, partially offset by the net
proceeds received from the purchase and sale of available-for-sale securities.
We anticipate that we will experience an increase in the level of our capital
expenditures, lease commitments and investment activities as we grow our
operations.

         Our financing activities provided approximately $525,000 during the
six-month period ended April 30, 2001 as a result of the exercise of vested
stock options, the purchase of shares of common stock through Caldera's employee
stock purchase program and from minority stockholders in Caldera KK.

         As of April 30, 2001, we had no outstanding debt obligations.

         Caldera's accounts receivable balance increased from $1.5 million as of
October 31, 2000 to $2.0 million as of April 30, 2001, an increase of $446,000.
The increase in accounts receivable relates primarily to large corporate sales
made during the three-month period ended April 30, 2001. The allowance for
doubtful accounts decreased from $312,000 as of October 31, 2000 to $99,000 as
of April 30, 2001, a decrease of $213,000. As a percentage of total accounts
receivable, the allowance decreased from 17 percent as of October 31, 2000 to 5
percent as of April 30, 2001, as Caldera was able to collect outstanding
balances on many accounts.

         Subsequent to April 30, 2001, Caldera forgave the $7.0 million debt
obligation and paid an additional $16.0 million of the total cash consideration
to SCO. Additionally, on May 3, 2001, in connection with the acquisition of
assets from Acrylis, Inc., Caldera paid $1.0 million.

         Management believes that its current cash and cash equivalents and
available-for-sale securities will be sufficient to meet capital expenditures
and working capital requirements for at least the next twelve months. However,
Caldera may need to raise additional funds to support more rapid expansion,
respond to competitive pressures, acquire complimentary businesses or
technologies, respond to unanticipated requirements or to fund the acquired
operations of the server software and professional services groups of SCO.
Management cannot assure you that additional funding will be available in
amounts or on terms acceptable to Caldera. If sufficient funds are not available
or are not available on acceptable terms, the ability to fund expansion, take
advantage of acquisition opportunities, develop or enhance our services or
products, or otherwise respond to competitive or operational pressures would be
significantly limited.





                                      -22-
<PAGE>   23

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", or SFAS 133. SFAS 133 establishes new
accounting and reporting standards for companies to report information about
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. This statement, as amended, became effective for the Company
beginning November 1, 2000. The adoption of this statement did not have a
material impact on our results of operations, financial position or liquidity.

         In December 1999, the Securities and Exchange Commission ("SEC") staff
issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements". This pronouncement summarizes certain of the SEC staff's
views in applying generally accepted accounting principles to selected revenue
recognition issues. The Company adopted SAB 101 during the six months ended
April 30, 2001. The adoption of SAB 101 did not have a material impact on our
results of operations, financial position or liquidity.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Caldera's products and services are primarily developed in the United
States and marketed in North America, and to a lesser extent in Europe and the
Asia/Pacific region. As a result, financial results could be affected by changes
in foreign currency exchange rates or weak economic conditions in foreign
markets. Because all of Caldera's revenue is currently denominated in U.S.
dollars, a strengthening of the dollar could make its Linux products less
competitive in foreign markets.

         Caldera's German subsidiary, Caldera Deutschland, GmbH, performs
research and development activities. To date, foreign currency fluctuations have
had little effect on Caldera's business because only its German subsidiary's
contracts, payables and receivables are denominated in a foreign currency. As of
April 30, 2001, the assets of Caldera Deutschland were approximately $1.3
million. All other transactions of Caldera's business are denominated in the
U.S. dollar. As time passes and as management sees fit, more transactions in
Europe and Asia may be denominated in local currencies. As Caldera expands
operations in Europe and Asia, management will continue to evaluate its foreign
currency exposures and risks and develop appropriate hedging or other strategies
to manage those risks. Caldera has not engaged in any foreign currency hedging
activities.

FOREIGN CURRENCY RISK

         Caldera intends generally to maintain the foreign offices and
operations of the server and professional services groups that are in place at
the closing of the combination. As a result of the acquisition of the server and
professional services groups, substantial portions of Caldera's revenue will be
derived from sales to customers outside the United States. A significant portion
of this international revenue will be denominated in U.S. dollars. However, a
substantial portion of the operating expenses related to the foreign-based sales
will be denominated in foreign currencies and therefore operating results will
be affected by changes in the U.S. dollar exchange







                                      -23-
<PAGE>   24

rate in relation to foreign currencies such as the U.K. pound sterling and the
euro, among others. If the U.S. dollar weakens compared to the U.K. pound
sterling and the euro, then operating expenses of foreign operations will be
higher when translated back into U.S. dollars and may require additional funds
to meet these obligations. Caldera's revenue can also be affected by general
economic conditions in the United States, Europe and other international
markets. Historically, the server and professional services groups' operating
strategy and pricing take into account changes in exchange rates over time.
However, Caldera's results of operations may be significantly affected in the
short term by fluctuations in foreign currency exchange rates.

         Caldera is aware of the issues associated with the new European
economic and monetary union (the "EMU"). One of the changes resulting from this
union required EMU member states to irrevocably fix their respective currencies
to a new currency, the Euro, on January 1, 1999. On that day, the euro became a
functional legal currency within these countries. During the subsequent two
years, business in the EMU member states will have been conducted in both the 25
existing national currencies, such as the franc or deutsche mark, and the euro.
As a result, companies operating in or conducting business in EMU member states
will need to ensure that their financial and other software systems are capable
of processing transactions and properly handling these currencies, including the
euro. Management has not revised its current business practices or its products
to address Europe's conversion to the euro. Caldera has not yet determined all
of the costs related to addressing this issue, and there can be no assurance
that this issue and its related costs will not have a materially adverse affect
on Caldera's business, operating results and financial condition.

         Because the EMU member states fixed the value of their respective
national currencies to the Euro, the dispositive exchange rate for determining
the effects of foreign currency fluctuation on the results of operations of a
U.S. company earning significant revenues from Europe is the U.S. dollar-euro
exchange rate. The overall trend since the adoption of the euro in January 1999
has been a devaluation compared to the U.S. dollar. Historically, Caldera has
not been materially effected by fluctuations in the U.S. dollar-euro exchange
rates because the level of activity denominated in euros has not been
significant.

INTEREST RATE RISK

         The primary objective of Caldera's cash management strategy is to
invest available funds in a manner that assures maximum safety and liquidity and
maximizes yield within such constraints. A portion of the securities in which
Caldera invests may be subject to market risk, which means that a change in
prevailing rates or market conditions may adversely affect the principal amount
of the investment. To minimize this risk, Caldera invests in a broad range of
short-term fixed income securities with varying maturities. As of April 30,
2001, available-for-sale securities included money market instruments,
tax-exempt municipal funds, notes and bonds, and US government security backed
instruments. Caldera does not borrow money for short-term investment purposes
and currently does not have any debt obligations. Consequently, our expenses
would not be affected by a change in interest rates. We anticipate that the
amounts we hold in interest rate sensitive instruments will decrease as our cash
and




                                      -24-
<PAGE>   25

cash equivalents and amounts held in available-for-sale securities are utilized
in our business.

INVESTMENT RISK

         Caldera has invested in equity instruments of privately held and public
companies in the high-technology industry for business and strategic purposes.
Investments in privately held companies are included under the caption
Investments in the consolidated balance sheet and are accounted for under the
cost method if Caldera's ownership is less than 20 percent and Caldera is not
able to exercise influence over operations. Caldera's only investment to date in
a public company is in Ebiz Enterprises, Inc. Caldera's investment policy is to
regularly review the assumptions and operating performance of these companies
and to record impairment losses when events and circumstances indicate that
these investments may be impaired. During the six months ended April 30, 2001,
Caldera recorded an impairment charge of $4.3 million for investments that were
deemed to have been permanently impaired.

RISK FACTORS

WE ARE A NEW COMPANY WITH A LIMITED OPERATING HISTORY, WHICH MAY MAKE IT
DIFFICULT FOR YOU TO ASSESS THE RISKS RELATED TO OUR BUSINESS

         Although we began operations in 1994, during the past 24 months we have
substantially revised our business plan to focus on Linux for eBusiness, made
additions to our product line and hired a significant number of new employees,
including key members of our management team, and completed two acquisitions. In
January 2000, we released our server product, eServer. In January 2001, we
released our management product, Volution. In May 2001, we acquired the server
and professional services groups of SCO, which have employees, operations,
revenue and expenses significantly greater than those of Caldera. Our historical
sales have been primarily from our OpenLinux products, including OpenLinux 2.3
(renamed eDesktop because of its focus on the desktop environment), which were
historically developed for first-time Linux users who predominantly have
experience using Windows desktop environments. We do not anticipate that these
will continue to be a significant part of our business as we continue to shift
focus to corporate users. As a company in a new and rapidly evolving industry,
we face risks and uncertainties relating to our ability to successfully
implement our strategy. You must consider the risks, expenses and uncertainties
that a company like ours, operating with an unproven business model, faces in a
new and rapidly evolving market such as the market for Linux software. These
risks also include our ability to:

     -    broaden awareness of the Caldera brand;

     -    maintain our current, and develop new, strategic relationships with
          technology partners and solutions providers;

     -    attract, integrate and retain qualified management personnel;

     -    attract, integrate and retain qualified personnel for the expansion of
          our sales, professional services, engineering, marketing and customer
          support organizations;




                                      -25-
<PAGE>   26

     -    continue to develop and upgrade product offerings tailored for
          business;

     -    respond effectively to competitive pressures; and

     -    generate revenues from the sale of our software products, services,
          education programs and training.

         If we cannot address these risks and uncertainties or are unable to
execute our strategy, we may not be successful.

WE MIGHT FAIL TO SUCCESSFULLY INTEGRATE THE SERVER AND PROFESSIONAL SERVICES
GROUPS OF SCO

         In May 2001, we completed the acquisition of the server and
professional services groups of SCO. This acquisition significantly increased
our personnel, products, operations, and geographic locations. One key issue
will be the integration of Caldera's Linux product offerings with SCO's UnixWare
product offerings. This product line integration will involve consolidation of
products with duplicative functionality, coordination of research and
development activities, and convergence of the technologies supporting the
various products.

         Other business integration issues could arise, including:

     -    maintaining brand recognition for key products of the server business,
          such as UnixWare and OpenServer, while migrating customer
          identification of the brands to Caldera;

     -    resolving channel conflicts that may arise between historical third
          party distributor and electronic solution provider channels of Caldera
          and the channels of the server business;

     -    coordinating, integrating and streamlining geographically dispersed
          operations; and

     -    coping with customers' uncertainty about continued support for
          duplicative products.

         Management and employee integration issues could also arise, including:

     -    resolving differences between the corporate cultures of Caldera and
          the server and professional services groups;

     -    employee turnover; and

     -    integrating the management teams of both companies successfully.

         The integration will be expensive. In addition, management's focus on
the combination is likely to interrupt the current business activities of
Caldera and the server and professional services groups. Any of these risks
could harm future revenue and results of operations.

         Operational issues could arise, including potential problems in
integrating:

     -    management information systems;




                                      -26-
<PAGE>   27

     -    telephone systems; and

     -    customer data.

WE WILL INCUR SIGNIFICANT ACCOUNTING CHARGES IN CONNECTION WITH THE COMBINATION
THAT WILL IMPACT OPERATING RESULTS IMMEDIATELY AND IN THE FUTURE

         The significant costs of integration associated with the combination
increases the risk that Caldera will not realize the anticipated benefits.
Because we will account for the combination as a purchase, we expect to incur a
non-cash charge of approximately $1.5 million, related to the write-off of
in-process research and development. We will record charges to operations for
the amortization of goodwill and other intangible assets of approximately $5.3
million per quarter for the first three years and approximately $3.5 million per
quarter for the subsequent two years. Such charges will increase our net losses,
or offset our net income in the event we otherwise become profitable, until such
amounts have been completely amortized.

WE HAVE NOT BEEN PROFITABLE AND WE EXPECT OUR LOSSES TO CONTINUE

         Caldera has not been profitable. The server and professional services
groups recently acquired from SCO have not been profitable and their revenue has
been declining. If our revenue declines or grows at a slower rate than
anticipated or we are unable to efficiently reduce operating expenses, Caldera
may not achieve or sustain profitability or generate positive cash flow. For the
three months ended April 30, 2001, we incurred a net loss of approximately $11.7
million. As of April 30, 2001, we had incurred total net losses of approximately
$78.0 million since the inception of our business in 1994. As a result of the
acquisition of operations from SCO, we expect to continue to incur net losses
because we anticipate incurring significant expenses in connection with the
integrating of the businesses, developing our products, hiring and training
employees, expanding our market reach, building awareness of our brand and
integrating the products offered by the server and professional services groups
of SCO. We may find it necessary to accelerate expenditures relating to product
development and support and our sales and marketing efforts beyond our current
expectations or otherwise increase our financial commitment to creating and
maintaining brand awareness among potential customers. If we are unable to
achieve positive cash flow from operations, we will not be able to implement our
business plan or we will need additional funding, which may not be available to
us.

OUR PRODUCT AND SERVICE OFFERINGS MAY NOT BE ACCEPTED

         We face risks and uncertainties relating to our ability to successfully
implement our strategy. Our business model is based on an expectation that we
can create and develop demand for product and service offerings, which will
include both UNIX and Linux products and services. There is no current market
for business solutions combining both Linux and UNIX-based products and
services. At present, the business community favors Microsoft and other
non-Linux operating systems. Our success will depend on market acceptance of the
products we currently offer and the development of additional products that are
accepted by the market.

         In order for our product offering to be accepted we must:



                                      -27-
<PAGE>   28

     -    broaden awareness of the Caldera brand;

     -    maintain our current, and develop new, strategic relationships with
          technology partners and solution providers;

     -    continue to develop and upgrade product offerings tailored for
          business; and

     -    respond effectively to competitive pressures.

OUR WORKFORCE WILL INCREASE SIGNIFICANTLY AND WE WILL FACE MANY DIFFICULTIES IN
MANAGING A LARGER COMPANY

         On completion of the SCO transaction, our workforce increased to
approximately 650. Key personnel have little experience managing this type of
growth. This growth is likely to strain our management control systems and
resources, including decision support, accounting and management information
systems. We will need to continue to improve our financial and management
controls and our reporting systems and procedures to manage our employees and
expanded operations.

IF WE ARE UNABLE TO RETAIN KEY PERSONNEL IN AN INTENSELY COMPETITIVE
ENVIRONMENT, OUR OPERATIONS COULD BE ADVERSELY AFFECTED

         We will need to retain the personnel of both Caldera and the server and
professional services groups. Competition for qualified professionals in the
software industry is intense, and we may be unable to retain sufficient
professionals to operate the combined business. Departures of existing personnel
could be disruptive to our business and can result in the departure of other
employees.

         The loss or departure of any officers or key employees could harm our
ability to implement our business plan and could adversely affect our
operations. Our future success depends to a significant extent on the continued
service and coordination of our management team, particularly Ransom H. Love,
President and Chief Executive Officer. We do not maintain key person insurance
for any member of our management team.

YOU SHOULD NOT RELY ON OUR QUARTERLY OPERATING RESULTS AS AN INDICATION OF OUR
FUTURE RESULTS BECAUSE THEY ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
FLUCTUATIONS IN OUR OPERATING RESULTS OR THE FAILURE OF OUR OPERATING RESULTS TO
MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS MAY NEGATIVELY
IMPACT OUR STOCK PRICE

         Our quarterly operating results have varied in the past. Historically,
we have experienced substantial fluctuations in our software and related
products revenue from period to period relating to the introduction of new
products and new versions of our existing products. Upon our announcement of an
expected release date for a new product or upgrade, we often experience a
significant decrease in sales of our existing products. Additionally, we often
experience the strongest sales for a new product during the first 30 days after
its introduction as we fill advance orders from our distribution channel
partners. Fluctuations in our quarterly operating results could cause our stock
price to decline. You should not rely on quarter-to-quarter comparisons of our
results of operations as an indication of future performance. Factors that may
affect our quarterly results include:




                                      -28-
<PAGE>   29

     -    the interest level of electronic solutions providers in recommending
          our Linux business solutions to end users;

     -    the introduction, development, timing, competitive pricing and market
          acceptance of our products and services and those of our competitors;

     -    changes in general economic conditions, such as recessions, that could
          affect capital expenditures and recruiting efforts in the software
          industry in general and in the Linux environment in particular;

     -    the magnitude and timing of marketing initiatives;

     -    changing business attitudes toward Linux as a viable operating system
          alternative to other competing systems;

     -    the maintenance and development of our strategic relationships with
          technology partners and solution providers;

     -    the attraction, retention and training of key personnel; and

     -    our ability to manage our anticipated growth and expansion.

         As a result of the factors listed above and elsewhere, it is possible
that in some future periods our results of operations may be below the
expectations of public market analysts and investors. This could cause our stock
price to decline. In addition, we plan to increase our operating expenses to
expand our sales and marketing, administration, consulting and training,
maintenance and technical support and research and development groups. If
revenue falls below our expectations in any quarter and we are unable to quickly
reduce our spending in response, our operating results would be lower than
expected and our stock price may fall.

WE RELY ON OUR INDIRECT SALES CHANNEL FOR DISTRIBUTION OF OUR PRODUCTS, AND ANY
DISRUPTION OF OUR CHANNEL AT ANY LEVEL COULD ADVERSELY AFFECT THE SALES OF OUR
PRODUCTS

         We have a two-tiered distribution channel. Our relationships allow us
to offer our products and services to a much larger customer base than we would
otherwise be able to reach through our direct sales and marketing efforts. Some
electronic solutions providers also purchase solutions through our distributors,
and we anticipate they will continue to do so as we expand our product
offerings. Because we usually sell indirectly through distributors, we cannot
control the relationships through which they purchase our products. In turn we
do not control the presentation of our products to end-users. Therefore, our
distribution channel could be affected by disruptions in the relationships
between our distributors and electronic solutions providers or between
electronic solutions providers and end users. Also, distributors and electronic
solutions providers may choose not to emphasize our products to their customers.
Any of these occurrences could diminish the effectiveness of our distribution
channel and lead to decreased sales.



                                      -29-
<PAGE>   30
OUR BUSINESS MODEL, WHICH RELIES ON A COMBINATION OF OPEN SOURCE SOFTWARE AND
PROPRIETARY TECHNOLOGY, IS UNPROVEN

         Our business model incorporates as integral elements of our product
offerings both commercial products and open source software. We know of no
company that has built a profitable business based in whole or in part on open
source software. By incorporating open source components in our product
offerings, we face many of the same risks that other open source company's
experience, including the inability to offer warranties and indemnities on
products and services. In addition, by developing products based on proprietary
technology that is not freely downloadable we may run counter to the perception
of Linux as an open source model and alienate the Linux community. Negative
reaction such as this, if widely shared by our customers, developers or the open
source community, could harm our reputation, diminish our brand and decrease our
revenue. Our business will fail if we are unable to successfully implement our
business model.

         Our business model also depends upon incorporating contributions from
the open source community into products that we open source. The viability of
our product offerings depends in large measure upon the efforts of the open
source community in enhancing products and making them compatible for use across
multiple software and hardware platforms. There are no guarantees that these
products will be embraced by the open source community such that programmers
will contribute sufficient resources for their development. If the open source
community does not embrace products that we view as integral to providing
eBusiness solutions, we will be required to devote significant resources to
develop these products on our own.

BECAUSE OUR LINUX PRODUCTS HAVE RELATIVELY SHORT LIFE CYCLES, WE MUST DEVELOP
AND INTRODUCE NEW LINUX PRODUCTS TO SUSTAIN OUR LEVEL OF SALES

         Our Linux software products have a limited life cycle and it is
difficult to estimate when they will become obsolete. If we do not develop and
introduce new Linux products before our existing Linux products have completed
their life cycles, we will not be able to sustain our level of sales. In
addition, to succeed, many customers must adopt our new Linux products early in
the product's life cycle. Therefore, if we do not attract sufficient customers
early in a product's life, we may not realize the amount of revenue that we
anticipate for the product. We cannot be sure that we will continue to be
successful in marketing our key products.

WE RELY ON INDEPENDENT DEVELOPERS IN THE OPEN SOURCE COMMUNITY, SUCH AS LINUS
TORVALDS, IN ORDER TO RELEASE UPGRADES OF OUR LINUX-BASED PRODUCTS

         Many of the components of our software products, including the Linux
kernel, the core of the Linux operating system, are developed by independent
developers in the open source community and are available for inclusion in our
products without cost. Linus Torvalds, the original developer of the Linux
kernel, and a small group of independent engineers have in the past developed
and upgraded the Linux kernel. Neither Mr. Torvalds nor any significant
contributor to the Linux kernel is an employee of ours, and none of these
individuals are required to further update the Linux kernel. If these
independent developers and others in the open source community do not further
develop the Linux kernel and other open source software included in our products
on a timely basis, or at all, our ability to enhance our product offerings will
suffer. As a consequence, we will be forced to rely to a greater extent on our
own





                                      -30-
<PAGE>   31

development efforts or license commercial software products as replacements,
which would increase our expenses and delay enhancements to our products. For
example, in the past we have sometimes been unable to upgrade all open source
components of a product in connection with a proposed release because
enhancements had not yet been made by these independent developers. Any failure
on the part of the kernel developers to further develop and enhance the kernel
could also stifle the development of additional Linux applications.

IF THE MARKET FOR LINUX BUSINESS SOLUTIONS DOES NOT GROW AS WE ANTICIPATE, WE
MAY NOT BE ABLE TO CONTINUE OUR BUSINESS PLAN AND GROW OUR BUSINESS

         Our strategy for marketing Linux solutions to businesses depends in
part upon our belief that many businesses will follow a trend away from the use
of networked computers linked by centralized servers and move toward the use of
distributed applications through thin appliance servers, or specialized servers,
Internet access devices and application service providers. We also are relying
on electronic solutions providers making these technologies available on Linux
and on Linux then becoming a desirable operating system under these
circumstances. However, if businesses, which at present favor Microsoft and
other non-Linux operating systems, do not adopt these trends in the near future,
or if Linux is not viewed as a desirable operating system in connection with
these trends, a significant market for our products may not develop. Factors
that may keep businesses from adopting these trends include:

     -    costs of installing and implementing new hardware devices;

     -    costs of porting legacy systems into new platforms;

     -    security concerns regarding manipulation of data through application
          service providers;

     -    limited adoption of Linux among businesses generally;

     -    previous significant investments in competing systems;

     -    lack of adequate Linux-trained professionals and support services;

     -    lack of standards among Linux products and applications; and

     -    lack of acceptance of the Internet as a medium for distributing
          business applications.

         Even if these trends toward distributed applications are adopted, if
the development of Linux products and Linux applications is not sufficient, a
significant market for Linux business solutions such as ours may not
materialize.


                                      -31-
<PAGE>   32
WE OPERATE IN A HIGHLY COMPETITIVE MARKET AND FACE SIGNIFICANT COMPETITION FROM
A VARIETY OF CURRENT AND POTENTIAL SOURCES, INCLUDING RED HAT AND SUN
MICROSYSTEMS; MANY OF OUR CURRENT AND POTENTIAL COMPETITORS HAVE GREATER
FINANCIAL AND TECHNICAL RESOURCES; THUS, WE MAY FAIL TO COMPETE EFFECTIVELY

         Our principal competitors include:

     -    Microsoft;

     -    Cygnus Solutions;

     -    VA Linux;

     -    Wind River Systems;

     -    Sun Microsystems;

     -    Corel;

     -    MacMillan;

     -    Red Hat;

     -    SuSE;

     -    AT&T;

     -    Compaq;

     -    Hewlett-Packard;

     -    IBM;

     -    Novell; and

     -    Unisys.

         Many of our competitors have substantially greater financial and
technical resources, more extensive marketing and distribution capabilities;
larger development staffs and more widely recognized brands and products.

         Also, due to the open source nature of Linux, anyone can freely
download Linux and many Linux applications and modify and re-distribute them
with few restrictions. For example, solution providers upon whom we depend for
the distribution of our products could instead create their own Linux solutions
to provide to their customers. Also, established companies and other
institutions could easily produce competing versions of Linux.

OUR FOREIGN-BASED OPERATIONS AND SALES CREATE SPECIAL PROBLEMS, INCLUDING THE
IMPOSITION OF GOVERNMENTAL CONTROLS AND FLUCTUATIONS IN CURRENCY EXCHANGES THAT
COULD HURT OUR RESULTS

         As a result of the purchase of the server and professional services
groups from SCO, we will have significantly more foreign operations that we have
had in the past, including development facilities, sales personnel and customer
support operations in Europe, Latin America and Southeast Asia. These foreign
operations are subject to certain inherent risks, including:

     -    potential loss of developed technology through piracy,
          misappropriation, or more lenient laws regarding intellectual property
          protection;




                                      -32-
<PAGE>   33

     -    imposition of governmental controls, including trade restrictions;

     -    fluctuations in currency exchange rates and economic instability;

     -    longer payment cycles for sales in foreign countries;

     -    difficulties in staffing and managing the foreign operations;

     -    seasonal reductions in business activity in the summer months in
          Europe and other countries; and

     -    political unrest, particularly in areas in which we have facilities.

         In addition, certain operating expenses will be denominated in local
currency, creating risk of foreign currency translation gains and losses that
could harm our financial results. If we generate profits or losses in foreign
countries, our effective income tax rate could also be increased.

         In Latin America and Southeast Asia in particular, several countries
have suffered and may be especially susceptible to recessions and economic
instability which may lead to increased governmental ownership or regulation of
the economy, higher interest rates, increased barriers to entry such as higher
tariffs and taxes, and reduced demand for goods manufactured in the United
States.

WE ARE VULNERABLE TO CLAIMS THAT OUR PRODUCTS INFRINGE THIRD-PARTY INTELLECTUAL
PROPERTY RIGHTS, PARTICULARLY BECAUSE OUR PRODUCTS ARE COMPRISED OF MANY
DISTINCT SOFTWARE COMPONENTS DEVELOPED BY THOUSANDS OF INDEPENDENT PARTIES

         We may be exposed to future litigation based on claims that our
products infringe the intellectual property rights of others. This risk is
exacerbated by the fact that most of the code in our products is developed by
independent parties over whom we exercise no supervision or control and who,
themselves, might not have the same financial resources as us to pay damages to
a successful litigant. Claims of infringement could require us to re-engineer
our products or seek to obtain licenses from third parties in order to continue
offering our products. In addition, an adverse legal decision affecting our
intellectual property, or the use of significant resources to defend against
this type of claim could place a significant strain on our financial resources
and harm our reputation.

FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS ADEQUATELY WOULD RESULT IN
SIGNIFICANT HARM TO OUR BUSINESS

         While much of the code for our products is open source, our success
depends significantly on our ability to protect our trademarks, trade secrets
and certain proprietary technology contained in our products. We rely on a
combination of copyright and trademark laws, and on trade secrets and
confidentiality provisions and other contractual provisions to protect our
proprietary rights. These measures afford only limited protection. Some
trademarks that have been registered in the United States have been licensed to
us, and we have other trademark applications pending in the United States.
Effective trademark protection may not be available in every country in which we
intend to offer our products and services. Our means of protecting our







                                      -33-
<PAGE>   34

proprietary rights in the United States or abroad may not be adequate and
competitors may independently develop similar technologies. Our future success
will depend in part on our ability to protect our proprietary rights. Despite
our efforts to protect our proprietary rights and technologies, unauthorized
parties may attempt to copy aspects of our products or to obtain and use trade
secrets or other information that we regard as proprietary. Legal proceedings to
enforce our intellectual property rights could be burdensome and expensive and
could involve a high degree of uncertainty. These legal proceedings may also
divert management's attention from growing our business. In addition, the laws
of some foreign countries do not protect our proprietary rights as fully as do
the laws of the United States. If we do not enforce and protect our intellectual
property, our business may suffer substantial harm.

WE COULD LOSE REVENUE AS A RESULT OF SOFTWARE ERRORS OR DEFECTS

         Software programs frequently contain errors or defects, especially when
first introduced or when new versions are released. We could, in the future,
lose revenue as a result of errors or defects in our software products. We
cannot assure you that errors will not be found in new products or releases.
Although we have both product liability and errors and omissions insurance, we
might incur losses in excess of the dollar limits or beyond the scope of
coverage of our policies. While we test our products prior to release, the fact
that most of the components of our software offerings are developed by
independent parties over whom we exercise no supervision or control makes it
particularly difficult to identify and remedy any errors or defects that could
exist. Any errors could result in loss of revenue, or delay in market
introduction or acceptance, diversion of development resources, damage to our
reputation or increased service costs.

OUR COMPETITIVE POSITION COULD DECLINE IF WE ARE UNABLE TO OBTAIN ADDITIONAL
FINANCING TO ACQUIRE BUSINESSES OR TECHNOLOGIES THAT ARE STRATEGIC FOR OUR
SUCCESS, OR OTHERWISE EXECUTE OUR BUSINESS STRATEGY, OR IF WE FAIL TO
SUCCESSFULLY INTEGRATE ANY ACQUISITIONS WITH OUR CURRENT BUSINESS

         We believe that our current cash and cash equivalents will be
sufficient to fund our working capital and capital expenditure requirements for
at least the next 12 months. However, we may need to raise additional funds to
support more rapid expansion, respond to competitive pressures, acquire
complementary businesses or technologies or respond to unanticipated
requirements. We cannot assure you that additional funding will be available to
us in amounts or on terms acceptable to us. If sufficient funds are not
available or are not available on acceptable terms, our ability to fund our
expansion, take advantage of acquisition opportunities, develop or enhance our
services or products, or otherwise respond to competitive pressures would be
significantly limited.

         If appropriate opportunities arise, we intend to acquire businesses,
technologies, services or products that we believe are strategic for our
success. The market for eBusiness solutions such as Linux products is new and is
rapidly evolving and our competitive position could decline if we are unable to
identify and acquire businesses or technologies that are strategic for our
success in this market.




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<PAGE>   35

THE GROWTH OF OUR BUSINESS WILL BE DIMINISHED IF THE INTERNET IS NOT ACCEPTED AS
A MEDIUM FOR COMMERCE AND BUSINESS NETWORKING APPLICATIONS.

         An important part of our business strategy is to develop and market our
products for the support of secure business networks hosted on the internet. In
addition, we plan to sell our products and provide a significant amount of
technical support and education via our web site. If the internet is not
accepted as a medium for commerce and business networking applications, demand
for our products and services will be diminished. A number of factors may
inhibit internet usage, including:

     -    inadequate network infrastructure;

     -    lack of knowledge and training on Internet use and benefits;

     -    consumer concerns for internet privacy and security;

     -    lack of availability of cost-effective, high-speed service;

     -    interruptions in internet commerce caused by unauthorized users;

     -    changes in government regulation relating to the internet; and

     -    internet taxation.

         If internet usage grows, the infrastructure may not be able to support
the demands placed on it by that growth and its performance and reliability may
decline. web sites have experienced interruptions as a result of delays or
outages throughout the internet infrastructure. If these interruptions continue,
internet usage may decline.

FUTURE SALES OF OUR COMMON STOCK MAY NEGATIVELY AFFECT OUR STOCK PRICE

         The market price of our common stock could decline as a result of sales
of a large number of shares of our common stock in the market, or the perception
that such sales could occur. As a result of the registration that occurred in
connection with the SCO transaction, we have a large number of shares of common
stock outstanding and available for resale This also might make it more
difficult for us to sell equity securities in the future at a time and at a
price that we deem appropriate. Certain holders of our common stock also have
certain demand and piggyback registration rights obligating us to register their
shares under the Securities Act for sale.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.




                                      -35-
<PAGE>   36

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         During the three months ended April 30, 2001, the following matters
were submitted and approved by the stockholders of Caldera Systems, at the
annual meeting held April 27, 2001:

         1.       To combine Caldera with the server and professional services
                  groups of the Santa Cruz Operation and create a new company,
                  Caldera International. This resolution was passed, with
                  23,375,525 votes in favor, 30,611 votes against, and 4,657,179
                  abstentions and brokers non-votes.

         2.       To elect six directors to serve for one-year terms ending in
                  the year 2002 or until successors are duly elected and
                  qualified. All six directors were elected with Ransom H. Love
                  receiving 28,034,782 votes in favor and 28,533 votes withheld;
                  Ralph J. Yarro III receiving 28,034,782 votes in favor and
                  28,533 votes withheld, Raymond J. Noorda receiving 28,034,082
                  votes in favor and 29,233 votes withheld; Steven M. Cakebread
                  receiving 28,031,313 votes in favor and 32,002 votes withheld;
                  Edward Iacobucci receiving 28,026,227 votes in favor and
                  37,088 votes withheld; and Thomas P. Raimondi receiving
                  28,033,782 votes in favor and 29,533 votes withheld.

         3.       To amend the 1999 Omnibus Stock Incentive Plan to increase the
                  number of shares reserved for issuance from 4,105,238 to
                  10,905,238 and to provide for an automated director option
                  grant program. This resolution was passed with 23,001,072
                  votes in favor, 391,004 votes against, and 4,671,239
                  abstentions and brokers non-votes.

         4.       To amend our 2000 Employee Stock Purchase Plan to increase the
                  number of shares reserved for issuance from 500,000 to
                  2,000,000. This resolution was passed with 23,133,231 votes in
                  favor, 256,636 votes against, and 4,673,448 abstentions and
                  brokers non-votes.

         5.       To amend our Certificate of Incorporation to increase the
                  authorized number of shares of common stock from 75 million to
                  175 million. This resolution was passed with 27,871,831 votes
                  in favor, 176,309 votes against, and 15,175 abstentions.

         6.       To ratify the appointment of Arthur Andersen LLP as Caldera's
                  independent auditors for the fiscal year ending October 31,
                  2001. This resolution was passed with 27,960,642 votes in
                  favor, 86,390 votes against, and 16,283 abstentions.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits




                                      -36-
<PAGE>   37


                  3.1      Caldera International, Inc.'s Amended and Restated
                           Certificate of Incorporation (incorporated by
                           reference to Exhibit 3.1 to Caldera's registration
                           statement on Form S-4, SEC file number 333-45936)

                  3.2      Caldera International, Inc.'s Amended and Restated
                           Bylaws (incorporated by reference to Exhibit 3.2 to
                           Caldera's registration statement on Form S-4, SEC
                           file number 333-45936).

                  10.1     1999 Omnibus Stock Incentive Plan, as amended
                           (incorporated by reference to Exhibits 10.4 - 10.9 to
                           Caldera's registration statement on Form S-4, SEC
                           File Number 333-45936).

                  10.2     2000 Employee Stock Purchase Plan, as amended
                           (incorporated by reference to Exhibit 10.10 to
                           Caldera's registration statement on Form S-4, SEC
                           File Number 333-45936).

         (b)      Reports on Form 8-K

         On February 14, 2001, the Company filed a current report on Form 8-K
announcing the signing of a third amendment to the definitive agreement with The
Santa Cruz Operation.

         On April 25, 2001, the Company filed a current report on Form 8-K
announcing a reduction in force in anticipation of the completion of the
acquisition of the server and professional services groups of SCO and to reduce
operating costs.

ITEM 7.  SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

Date:  June 14, 2001                  CALDERA SYSTEMS, INC.

                                              By: /s/ Robert K. Bench
                                                  -----------------------------
                                                  Robert K. Bench
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)



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