UNITED
STATES
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 April 30, 2005
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 No. 0-24015
STEELCLOUD, INC
(Exact name of registrant as specified in its charter)
| VIRGINIA (State or other jurisdiction of incorporation or organization) |
54-1890464 (I.R.S. Employer Identification No.) |
| 14040 Park Center Road, Herndon, VA (Address of principal executive offices) |
20171 (Zip code) |
(703) 674-5500
(Registrant's telephone number, including area code)
1306 Squire Court
Dulles, VA 20166
(Former name, former address and former fiscal year, 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 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|
As of June 10, 2005 there were 13,946,862 shares of the registrant’s common stock outstanding.
| 1 |
SteelCloud, Inc.
Form 10-Q Index
For the Quarterly period ended April 30, 2005
| 2 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STEELCLOUD, INC.
CONSOLIDATED BALANCE SHEET
| October 31, 2004 |
April 30, 2005 |
|||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | (unaudited) | |||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,108,941 | $ | 5,979,895 | ||||
| Accounts receivable, net | 9,532,770 | 5,927,812 | ||||||
| Inventory, net | 3,629,685 | 3,296,207 | ||||||
| Prepaid expenses and other current assets | 307,427 | 352,398 | ||||||
| Deferred contract cost | 40,085 | 341,355 | ||||||
| Total current assets | 16,618,908 | 15,897,667 | ||||||
| Property and equipment, net | 454,928 | 1,257,804 | ||||||
| Equipment on lease, net | 373,590 | 553,706 | ||||||
| Goodwill and other intangible assets, net | 4,687,105 | 4,629,549 | ||||||
| Deferred tax asset | 400,000 | 400,000 | ||||||
| Other assets | 196,244 | 150,764 | ||||||
| Total assets | $ | 22,730,775 | $ | 22,889,490 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 4,866,079 | $ | 1,707,092 | ||||
| Accrued expenses | 1,441,350 | 1,436,169 | ||||||
| Notes payable, current | 71,176 | 2,070,941 | ||||||
| Unearned revenue | 373,017 | 714,217 | ||||||
| Total current liabilities | 6,751,622 | 5,928,419 | ||||||
| Notes payable, long-term | 120,660 | 84,805 | ||||||
| Other | 20,083 | 94,884 | ||||||
| Total long-term liabilities | 140,743 | 179,689 | ||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $.001 par value: 2,000,000 shares authorized, | ||||||||
| no shares issued and outstanding at October 31, 2004 and | ||||||||
| April 30, 2005 | — | — | ||||||
| Common stock, $.001 par value: 50,000,000 shares authorized, | ||||||||
| 14,213,514 and 14,346,862 shares issued at October 31, 2004 | ||||||||
| and April 30, 2005, respectively | 14,214 | 14,347 | ||||||
| Additional paid in capital | 50,934,453 | 51,094,690 | ||||||
| Treasury stock, 400,000 shares at October 31, 2004 and | ||||||||
| April 30, 2005, respectively | (3,432,500 | ) | (3,432,500 | ) | ||||
| Accumulated deficit | (31,677,757 | ) | (30,895,155 | ) | ||||
| Total stockholders’ equity | 15,838,410 | 16,781,382 | ||||||
| Total liabilities and stockholders’ equity | $ | 22,730,775 | $ | 22,889,490 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
STEELCLOUD,
INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| Three Months Ended April 30, |
Six Months Ended April 30, |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 |
2005 |
2004 |
2005 |
|||||||||||
| Revenues | ||||||||||||||
| Products | $ | 4,636,361 | $ | 8,924,494 | $ | 7,931,674 | $ | 17,147,952 | ||||||
| Services | 1,155,403 | 759,544 | 2,023,787 | 1,599,679 | ||||||||||
| Total revenues | 5,791,764 | 9,684,038 | 9,955,461 | 18,747,631 | ||||||||||
| Cost of revenues | ||||||||||||||
| Products | 3,338,071 | 6,696,927 | 6,140,158 | 12,631,545 | ||||||||||
| Services | 716,861 | 471,014 | 1,285,977 | 1,062,316 | ||||||||||
| Total cost of revenues | 4,054,932 | 7,167,941 | 7,426,135 | 13,693,861 | ||||||||||
| Gross profit | 1,736,832 | 2,516,097 | 2,529,326 | 5,053,770 | ||||||||||
| Selling and marketing | 514,530 | 367,608 | 984,815 | 809,593 | ||||||||||
| Research and product development | 124,973 | 177,813 | 275,417 | 391,295 | ||||||||||
| General and administrative | 1,411,661 | 1,578,450 | 3,202,767 | 3,024,794 | ||||||||||
| Amortization of other intangible assets | — | 28,779 | — | 57,557 | ||||||||||
| (Loss) income | (314,332 | ) | 363,447 | (1,933,673 | ) | 770,531 | ||||||||
| Interest expense (income), net | 1,597 | (4,362 | ) | (11,645 | ) | (12,071 | ) | |||||||
| Net (loss) income | (315,929 | ) | 367,809 | (1,922,028 | ) | 782,602 | ||||||||
| (Loss) earnings per share: | ||||||||||||||
| Basic (loss) earnings per share | $ | (0.02 | ) | $ | 0.03 | $ | (0.14 | ) | $ | 0.06 | ||||
| Diluted (loss) earnings per share | $ | (0.02 | ) | $ | 0.03 | $ | (0.14 | ) | $ | 0.05 | ||||
| Weighted-average shares outstanding, basic | 13,431,893 | 13,882,019 | 13,351,257 | 13,858,562 | ||||||||||
| Weighted-average shares outstanding, diluted | 13,431,893 | 14,633,702 | 13,351,257 | 14,482,490 | ||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
STEELCLOUD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| Six Months Ended April 30, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2004 | 2005 | |||||||
| Operating activities | ||||||||
| Net (loss) income | $ | (1,922,028 | ) | $ | 782,602 | |||
| Adjustments to reconcile net (loss) income to net cash (used in) | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization | 287,241 | 393,956 | ||||||
| Changes in operating assets and liabilities, net of effects of | ||||||||
| acquisition: | ||||||||
| Accounts receivable | 2,115,967 | 3,604,958 | ||||||
| Inventory | (295,161 | ) | 333,478 | |||||
| Prepaid expenses and other assets | (135,012 | ) | 509 | |||||
| Deferred contract costs | (718,096 | ) | (301,270 | ) | ||||
| Accounts payable | (841,607 | ) | (3,158,987 | ) | ||||
| Accrued expenses | 150,041 | 73,089 | ||||||
| Unearned revenue and other liabilities | 841,856 | 337,731 | ||||||
| Net cash (used in) provided by operating activities | (516,799 | ) | 2,066,066 | |||||
| Investing activities | ||||||||
| Purchase of property and equipment | (295,111 | ) | (1,319,392 | ) | ||||
| Cash paid in acquisition | (630,015 | ) | — | |||||
| Net cash used by investing activities | (925,126 | ) | (1,319,392 | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of common stock | 718,714 | — | ||||||
| Proceeds from exercise of common stock options | 271,785 | 160,370 | ||||||
| Payments on notes payable | (99,690 | ) | (36,090 | ) | ||||
| Proceeds on line of credit | — | 2,000,000 | ||||||
| Net cash provided by financing activities | 890,809 | 2,124,280 | ||||||
| Net (decrease) increase in cash and cash equivalents of operations | (551,116 | ) | 2,870,954 | |||||
| Cash and cash equivalents at beginning of period | 8,098,221 | 3,108,941 | ||||||
| Cash and cash equivalents at end of period | $ | 7,547,105 | $ | 5,979,895 | ||||
| Supplemental cash flow information</ | ||||||||