ACT TELECONFERENCING INC - 10-Q Quarterly Report

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2002
	or
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to_____________ to_____________

Commission file number 0-27560

ACT Teleconferencing, Inc.
(Exact name of registrant as specified in its charter)

Colorado		84-1132665

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1658 Cole Blvd., Suite 130, Golden, Colorado 80401
(Address of principle executive offices, zip code)

(303) 235-9000

(Registrant’s telephone number, including area code)

Indicate by checkmark 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 the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of July 31, 2002, 8,980,523 shares of the issuer’s common stock were outstanding.

ACT TELECONFERENCING, INC.

FORM 10-Q

Table of Contents

PART I.	Financial Information	Page No.

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Shareholders’ Equity	5
	Consolidated Statements of Cash Flow	6
	Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Qualitative and Qualitative Disclosures about Market Risk	24

PART II.	Other Information

Item 2.	Changes in Securities and Use of Proceeds

Item 4.	Submission of Matters to a Vote of Security Holders	25

Item 6.	Exhibits and Reports on Form 8-K	26

SIGNATURE		26

PART I – Financial Information

ACT Teleconferencing, Inc.
Consolidated Balance Sheets

		June 30			December 31
		2002			2001

Assets		(Unaudited)
Current assets:
Cash and cash equivalents	$	3,355,898		$	5,126,723
Accounts receivable (net of allowance for doubtful accounts
of $585,000 and $591,000 in 2002 and 2001, respectively)		10,685,526			9,468,057
Prepaid expenses and other current assets		2,133,474			914,391

Total current assets		16,174,898			15,509,171

Equipment:
Telecommunications equipment		16,064,295			14,270,491
Software		4,856,155			4,453,807
Office equipment		9,523,793			8,143,992
Less: accumulated depreciation		(11,290,941	)		(8,760,256	)

Total equipment – net		19,153,302			18,108,034

Other assets:
Goodwill		20,264,349			16,476,194
Other intangible assets (net of accumulated amortization of
$396,000 and $221,000 in 2002 and 2001, respectively)		1,188,951			1,313,043
Cash held in escrow		1,355,951			1,355,951
Other long term assets		460,125			473,185
Long term note receivable from a related party		259,924			251,383

Total assets	$	58,857,500		$	53,486,961

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	5,624,824		$	3,950,445
Accrued liabilities		4,377,257			3,716,323
Current portion of debt		5,747,726			6,972,977
Capital lease obligations due in one year		1,042,755			1,128,161
Income taxes payable		624,653			1,101,409

Total current liabilities		17,417,215			16,869,315

Long-term debt		4,762,694			5,657,118
Capital lease obligations due after one year		2,244,385			1,381,546
Deferred income taxes		498,322			415,987

Convertible preferred stock, 500 shares authorized, issued, and
outstanding, net of discount		4,001,749			–

Shareholders’ equity:
Common stock, no par value; 25,000,000 shares
authorized 8,945,870 and 8,620,134 shares issued
and outstanding in 2002 and 2001, respectively		38,458,408			34,765,731
Treasury stock, at cost		(179,283	)		(36,765	)
Accumulated deficit		(7,570,548	)		(4,167,312	)
Accumulated other comprehensive loss		(775,442	)		(1,398,659	)

Total shareholders’ equity		29,933,135			29,162,995

Total liabilities and shareholders’ equity	$	58,857,500		$	53,486,961

See accompanying notes to consolidated financial statements.

ACT Teleconferencing, Inc.
Consolidated Statements of Operations
(Unaudited)

		For the three months ended						For the six months ended
		June 30,						June 30,
		2002			2001			2002			2001

Net revenues	$	12,959,522		$	11,821,771		$	25,729,738		$	23,347,235
Cost of services		8,476,397			6,500,645			16,821,585			12,479,842

Gross profit		4,483,125			5,321,126			8,908,153			10,867,393

Selling, general and administration expense		5,757,660			4,698,315			11,258,126			9,269,475

Operating income (loss)		(1,274,535	)		622,811			(2,349,973	)		1,597,918

Interest expense, net		336,402			226,546			679,735			623,833

Income (loss) before income taxes		(1,610,937	)		396,265			(3,029,708	)		974,085

Provision for income taxes		120,486			144,523			243,055			370,297

Net income (loss) before extraordinary item		(1,731,423	)		251,742			(3,272,763	)		603,788

Extraordinary charge related to early
extinguishment of debt		–			416,366			–			416,366

Net income (loss)		(1,731,423	)		(164,624	)		(3,272,763	)		187,422

Preferred stock dividends		130,473			40,000			130,473			79,999

Net income (loss) available to common
shareholders	$	(1,861,896	)	$	(204,624	)	$	(3,403,236	)	$	107,423

Weighted average number of shares
outstanding – basic		8,931,543			6,091,257			8,971,696			6,054,912

Weighted average number of shares
outstanding – diluted		8,931,543			6,091,257			8,971,696			6,557,737


Earnings per share
Basic
Net income (loss) before extraordinary item	$	(0.21	)	$	0.04		$	(0.38	)	$	0.09
Extraordinary item		–			(0.07	)		–			(0.07	)

Net income (loss)	$	(0.21	)	$	(0.03	)	$	(0.38	)	$	0.02

Diluted
Net income (loss) before extraordinary item	$	(0.21	)	$	0.04		$	(0.38	)	$	0.08
Extraordinary item		–			(0.07	)		–			(0.06	)

Net income (loss)	$	(0.21	)	$	(0.03	)	$	(0.38	)	$	0.02

See accompanying notes to consolidated financial statements.

ACT Teleconferencing, Inc.
Consolidated Statements of Shareholders’ Equity
(Unaudited)

									Accumulated
									Other
	Common Stock					Accumulated			Comprehensive		Treasury
	Shares			Amount		Deficit			Income (loss)		Stock			Total

Balance at January 1, 2002	8,620,134		$	34,765,731	$	(4,167,312	)	$	(1,398,659	)	(36,765	)	$	29,162,995
Shares issued for acquisitions	350,000			2,720,208										2,720,208
Increase in equity due to the issuance of warrants in association with debt and preferred stock				718,515										718,515
Shares purchased by employees	24,236			125,954										125,954
Purchase of treasury stock	(48,580	)									(142,518	)		(142,518	)
Value of stock issued to employees as compensation				128,000										128,000
Preferred dividend and accretion to redemption value of convertible preferred stock						(130,473)								(130,473	)
Comprehensive loss
Net loss						(3,272,763)								(3,272,763	)
Other comprehensive gain, net of tax
Foreign currency translation									623,217					623,217

Total comprehensive loss														(2,649,546	)

Balance at June 30, 2002	8,945,870		$	38,458,408	$	(7,570,548)		$	(775,442)