SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31, 2003
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 0-26149
US SEARCH.COM INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
95-4504143 (I.R.S. Employer Identification Number) |
5401 Beethoven Street, Los Angeles, CA 90066
(Address of principal executive offices, including zip code)
(310) 302-6300
(Registrant’s telephone number, including area code)
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) Yes x No ¨ and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
There were 97,025,977 shares of outstanding Common Stock of the registrant as of May 9, 2003.
US SEARCH.COM INC.
Form 10-Q for the quarterly period ended March 31, 2003
| Part I. |
FINANCIAL INFORMATION |
|||
| Item 1. |
Financial Statements |
1 | ||
| Consolidated Statements of Operations for the three month periods ended March 31, 2003 and 2002 |
1 | |||
| Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 |
2 | |||
| Consolidated Statements of Cash Flows for the three month periods ended March 31, 2003 and 2002 |
3 | |||
| 4 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. |
28 | |||
| Item 4. |
28 | |||
| Part II. |
OTHER INFORMATION |
|||
| Item 1. |
30 | |||
| Item 2. |
30 | |||
| Item 3. |
30 | |||
| Item 4. |
30 | |||
| Item 5 |
30 | |||
| Item 6. |
30 | |||
| 32 | ||||
| 33 | ||||
| INDEX TO EXHIBITS |
||||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
US SEARCH.COM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Net revenues |
$ |
8,079,000 |
|
$ |
6,663,000 |
| ||
| Cost of services |
|
2,693,000 |
|
|
1,988,000 |
| ||
| Gross profit |
|
5,386,000 |
|
|
4,675,000 |
| ||
| Operating expenses: |
||||||||
| Selling and marketing |
|
2,766,000 |
|
|
2,782,000 |
| ||
| General and administrative |
|
3,430,000 |
|
|
3,031,000 |
| ||
| Information technology |
|
769,000 |
|
|
938,000 |
| ||
| Total operating expenses |
|
6,965,000 |
|
|
6,751,000 |
| ||
| Loss from operations |
|
(1,579,000 |
) |
|
(2,076,000 |
) | ||
| Interest expense, net (including non-cash charges relating to amortization of debt issuance costs of $171,000 and $886,000 for the three months ended March 31, 2003 and 2002, respectively) |
|
(230,000 |
) |
|
(935,000 |
) | ||
| Other income, net |
|
— |
|
|
15,000 |
| ||
| Loss before income taxes |
|
(1,809,000 |
) |
|
(2,996,000 |
) | ||
| Provision for income taxes |
|
2,000 |
|
|
2,000 |
| ||
| Net loss |
$ |
(1,811,000 |
) |
$ |
(2,998,000 |
) | ||
| Net loss per share |
$ |
(0.02 |
) |
$ |
(0.11 |
) | ||
| Weighted-average shares outstanding used in per share calculation |
|
97,021,055 |
|
|
26,610,383 |
| ||
The accompanying notes are an integral part of these statements.
1
US SEARCH.COM INC.
(unaudited)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
899,000 |
|
$ |
2,254,000 |
| ||
| Restricted cash |
|
475,000 |
|
|
575,000 |
| ||
| Accounts receivable, net of allowance for doubtful accounts of $72,000 as of March 31, 2003 and December 31, 2002 |
|
1,944,000 |
|
|
1,864,000 |
| ||
| Prepaids and other current assets |
|
1,045,000 |
|
|
1,150,000 |
| ||
| Total current assets |
|
4,363,000 |
|
|
5,843,000 |
| ||
| Property and equipment, net |
|
9,070,000 |
|
|
9,028,000 |
| ||
| Goodwill |
|
13,529,000 |
|
|
13,529,000 |
| ||
| Intangible assets, net |
|
2,572,000 |
|
|
2,650,000 |
| ||
| Other assets |
|
249,000 |
|
|
249,000 |
| ||
| Total assets |
$ |
29,783,000 |
|
$ |
31,299,000 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY: |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
5,307,000 |
|
$ |
5,604,000 |
| ||
| Accrued liabilities |
|
2,352,000 |
|
|
2,958,000 |
| ||
| PRSI acquisition obligations, current portion |
|
647,000 |
|
|
474,000 |
| ||
| Bank debt, current portion |
|
1,111,000 |
|
|
1,142,000 |
| ||
| Notes payable, current portion |
|
1,405,000 |
|
|
50,000 |
| ||
| Capital lease obligations, current portion |
|
111,000 |
|
|
125,000 |
| ||
| Total current liabilities |
|
10,933,000 |
|
|
10,353,000 |
| ||
| PRSI acquisition obligations, net of current portion |
|
1,091,000 |
|
|
1,370,000 |
| ||
| Bank debt, net of current portion |
|
20,000 |
| |||||
| Capital lease obligations, net of current portion |
|
14,000 |
|
|
27,000 |
| ||
| Other non-current liabilities |
|
5,000 |
|
|
5,000 |
| ||
| Total liabilities |
|
12,043,000 |
|
|
11,775,000 |
| ||
| Commitments and contingencies (Note 4) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock $0.001 par value; 1,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2003 and December 31, 2002 |
|
— |
|
|
— |
| ||
| Common stock $0.001 par value; 300,000,000 shares authorized; 97,025,978 and 97,018,716 shares issued and outstanding as of March 31, 2003 and December 31, 2002, respectively |
|
97,000 |
|
|
97,000 |
| ||
| Additional paid-in capital |
|
118,048,000 |
|
|
118,021,000 |
| ||
| Accumulated deficit |
|
(100,405,000 |
) |
|
(98,594,000 |
) | ||
| Total stockholders’ equity |
|
17,740,000 |
|
|
19,524,000 |
| ||
| Total liabilities and stockholders’ equity |
$ |
29,783,000 |
|
$ |
31,299,000 |
| ||
The accompanying notes are an integral part of these statements.
2
US SEARCH.COM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(1,811,000 |
) |
$ |
(2,998,000 |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
|
732,000 |
|
|
830,000 |
| ||
| Provision for doubtful accounts |
|
48,000 |
| |||||
| Non-cash interest expense |
|
171,000 |
|
|
886,000 |
| ||
| Change in assets and liabilities: |
||||||||
| Accounts receivable |
|
(80,000 |
) |
|
(670,000 |
) | ||
| Prepaid and other assets |
|
3,000 |
|
|
(126,000 |
) | ||
| Accounts payable and accrued expenses |
|
(903,000 |
) |
|
(1,912,000 |
) | ||
| Net cash used in operating activities |
|
(1,888,000 |
) |
|
(3,942,000 |
) | ||
| Cash flows from investing activities: |
||||||||
| Purchase of property and equipment |
|
(696,000 |
) |
|
(505,000 |
) | ||
| PRSI acquisition costs |
|
— |
|
|
(158,000 |
) | ||
| Net cash used by investing activities |
|
(696,000 |
) |
|
(663,000 |
) | ||
| Cash flows from financing activities: |
||||||||
| (Increase) decrease in restricted cash |
|
100,000 |
|
|
(1,250,000 |
) | ||
| Repayments of third party notes payable |
|
(45,000 |
) |
|
— |
| ||
| Repayment of PRSI acquisition obligation |
|
(150,000 |
) |
|
(490,000 |
) | ||
| Repayments of bank debt |
|
(51,000 |
) |
|
(234,000 |
) | ||
| Repayments of capital lease obligations |
|
(27,000 |
) |
|
(81,000 |
) | ||
| Proceeds from | ||||||||