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 September 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 _____.
Commission File Number: 0-26739
ITXC CORP.
(Exact name of registrant as specified in its charter)
| Delaware |
|
22-35-31960 |
750 College Road East
Princeton, New Jersey 08540
(Address of principal executive office, including zip code)
(609) 750-3333
(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 |
o |
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
At November 13, 2002, there were 42,779,765 shares of Common Stock, par value $.001 per share, outstanding.
ITXC CORP.
INDEX
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Page |
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| Part I. |
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| Item 1. |
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Condensed Consolidated Balance Sheets as of |
1 |
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2 | |
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3 | |
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4 | |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
5 |
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| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 |
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| Item 3. |
21 | |
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| Item 4. |
22 | |
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| Part II. |
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| Item 1. |
22 | |
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| Item 2. |
23 | |
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| Item 6. |
23 | |
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| 24 | ||
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| 25 | ||
-i-
PART I - Financial Information
ITXC CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
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September 30, |
|
December 31, |
| |||
|
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| |||
| Cash and cash equivalents |
|
$ |
21,279,362 |
|
$ |
53,193,357 |
| |
| Marketable securities |
|
|
90,214,208 |
|
|
94,361,251 |
| |
| Accounts receivable, net |
|
|
26,389,919 |
|
|
21,189,007 |
| |
| Prepaid expenses and other current assets |
|
|
4,453,991 |
|
|
2,875,980 |
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|
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Total current assets |
|
|
142,337,480 |
|
|
171,619,595 |
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| Property and equipment, net |
|
|
42,203,516 |
|
|
42,359,300 |
| |
| Restricted cash |
|
|
2,208,687 |
|
|
— |
| |
| Goodwill |
|
|
7,913,319 |
|
|
— |
| |
| Intangible assets, net |
|
|
2,810,922 |
|
|
101,648 |
| |
| Other assets |
|
|
1,411,721 |
|
|
1,300,700 |
| |
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Total assets |
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$ |
198,885,645 |
|
$ |
215,381,243 |
|
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| Accounts payable and accrued liabilities |
|
$ |
31,069,971 |
|
$ |
27,579,480 |
| |
| Other liabilities |
|
|
566,432 |
|
|
734,365 |
| |
| Equipment note payable |
|
|
— |
|
|
1,196,660 |
| |
| Current portion of capital lease obligations |
|
|
2,675,167 |
|
|
3,290,981 |
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Total current liabilities |
|
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34,311,570 |
|
|
32,801,486 |
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| Capital lease obligation, less current portion |
|
|
503,824 |
|
|
1,976,676 |
| |
| Common stock |
|
|
46,656 |
|
|
45,726 |
| |
| Additional paid in capital |
|
|
459,826,390 |
|
|
456,216,326 |
| |
| Deferred employee compensation |
|
|
— |
|
|
(1,394,722 |
) | |
| Accumulated other comprehensive income |
|
|
154,871 |
|
|
660,354 |
| |
| Accumulated deficit |
|
|
(295,957,666 |
) |
|
(274,924,603 |
) | |
|
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|
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Total stockholders’ equity |
|
|
164,070,251 |
|
|
180,603,081 |
|
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| Total liabilities and stockholders’ equity |
|
$ |
198,885,645 |
|
$ |
215,381,243 |
| |
|
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| |
See accompanying notes.
-1-
ITXC CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months ended September 30, |
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2002 |
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2001 |
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| Total revenue |
|
$ |
70,137,146 |
|
$ |
46,467,479 |
| |
| Costs and expenses: |
|
|
|
|
|
|
| |
| Data communications and telecommunications (exclusive of depreciation shown separately below) |
|
|
62,495,183 |
|
|
40,201,299 |
| |
| Network operations (exclusive of depreciation shown separately below and exclusive of $0 and $125,527 of equity related charges included in non-cash employee compensation in 2002 and 2001, respectively) |
|
|
2,112,529 |
|
|
2,250,700 |
| |
| Selling, general and administrative (exclusive of depreciation shown separately below and exclusive of $0 and $879,681 of equity related charges included in non-cash employee compensation in 2002 and 2001, respectively) |
|
|
7,965,521 |
|
|
10,516,936 |
| |
| Depreciation |
|
|
6,551,898 |
|
|
5,149,469 |
| |
| Amortization |
|
|
128,020 |
|
|
347,823 |
| |
| Impairment of assets |
|
|
— |
|
|
5,715,027 |
| |
| Restructuring charges |
|
|
134,285 |
|
|
3,442,747 |
| |
| Non-cash employee compensation |
|
|
— |
|
|
1,005,208 |
| |
|
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Total costs and expenses |
|
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79,387,436 |
|
|
68,629,209 |
|
|
|
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|
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|
| |
| Loss from operations |
|
|
(9,250,290 |
) |
|
(22,161,730 |
) | |
| Interest income, net |
|
|
624,061 |
|
|
1,904,276 |
| |
|
|
|
|
|
|
|
|
| |
| Loss before income taxes |
|
|
(8,626,229 |
) |
|
(20,257,454 |
) | |
|
|
|
|
|
|
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|
| |
| Income tax expense |
|
|
150,500 |
|
|
— |
| |
|
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| Net loss |
|
$ |
(8,776,729 |
) |
$ |
(20,257,454 |
) | |
|
|
|
|
|
|
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| |
| Basic and diluted net loss per share |
|
$ |
(0.19 |
) |
$ |
(0.45 |
) | |
|
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|
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|
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|
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| Weighted average shares used in computation of basic and diluted net loss per share |
|
|
46,342,092 |
|
|
45,485,413 |
| |
See accompanying notes.
-2-
ITXC CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
|
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Nine Months ended September 30, |
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2002 |
|
2001 |
| |||
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| Total revenue |
|
$ |
193,846,103 |
|
$ |
121,411,054 |
| |
| Costs and expenses: |
|
|
|
|
|
|
| |
| Data communications and telecommunications (exclusive of depreciation shown separately below) |
|
|
167,407,742 |
|
|
106,260,689 |
| |
| Network operations (exclusive of depreciation shown separately below and exclusive of $192,526 and $357,130 of equity related charges included in non-cash employee compensation in 2002 and 2001, respectively) |
|
|
6,000,722 |
|
|
6,660,826 |
| |
| Selling, general and administrative (exclusive of depreciation shown separately below and exclusive of $1,202,196 and $2,400,710 of equity related charges included in non-cash employee compensation in 2002 and 2001, respectively) |
|
|
22,047,292 |
|
|
36,734,110 |
| |
| Depreciation |
|
|
18,471,555 |
|
|
14,645,184 |
| |
| Amortization |
|
|
230,726 |
|
|
13,727,917 |
| |
| Impairment of assets |
|
|
— |
|
|
113,737,278 |
| |
| Loss associated with investments |
|
|
— |
|
|
250,000 |
| |
| Restructuring charges |
|
|
1,364,372 |
|
|
3,442,747 |
| |
| Non-cash employee compensation |
|
|
1,394,722 |
|
|
2,757,840 |
| |
|
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|
|
|
|
|
|
| |
|
|
Total costs and expenses |
|
|
216,917,131 |
|
|
298,216,591 |
|
|
|
|
|
|
|
|
|
| |
| Loss from operations |
|
|
(23,071,028 |
) |
|
(176,805,537 |
) | |
| Interest income, net |
|
|
2,188,465 |
|
|
7,049,409 |
| |
|
|
|
|
|
|
|
|
| |
| Loss before income taxes |
|
|
(20,882,563 |
) |
|
(169,756,128 |
) | |
|
|
|
|
|
|
|
|
| |
| Income tax expense |
|
|
150,500 |
|
|
— |
| |
|
|
|
|
|
|
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|
| |
| Net loss |
|
$ |
(21,033,063 |
) |
$ |
(169,756,128 |
) | |
|
|
|
|
|
|
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|
| |
| Basic and diluted net loss per share |
|
$ |
(0.46 |
) |
$ |
(3.75 |
) | |
|
|
|
|
|
|
|
|
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| Weighted average shares used in computation of basic and diluted net loss per share |
|
|
46,132,608 |
|
|
45,298,420 |
| |
See accompanying notes.
-3-
ITXC CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
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Nine months ended September 30, |
| |||||
|
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|
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2002 |
|
2001 |
| |||
|
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|
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| Operating activities |
|
|
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|
|
|
| |
| Net loss |
|
$ |
(21,033,063 |
) |
$ |
(169,756,128 |
) | |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
| |
|
|
Depreciation |
|
|
18,471,555 |
|
|
14,645,184 |
|
|
|
Amortization of intangibles |
|
|
230,726 |
|
|
13,727,917 |
|
|
|
Impairment of assets |
|
|
— |
|
|
113,737,278 |
|
|
|
Provision for doubtful accounts |
|
|
920,982 |
|
|
6,752,106 |
|
|
|
Non-cash restructuring charges |
|
|
559,912 |
|
|
669,199 |
|
|
|
Realized gain on sale of investments |
|
|
(36,939 |
) |
|
(301,716 |
) |
|
|
Amortization of non-cash deferred employee compensation |
|
|
1,394,722 |
|
|
2,757,840 |
|
|
|
Amortization of original issue discounts |
|
|
(50,457 |
) |
|
(1,162,576 |
) |
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
| |
|
|
Increase in accounts receivable |
|
|
(6,121,894 |
) |
|
(9,372,110 |
) |
|
|
Increase in prepaid expenses and other assets |
|
|
(1,763,701 |
) |
|
(1,094,418 |
) |
|
|
Increase in accounts payable and accrued expenses |
|
|
3,432,208 |
|
|
5,624,517 |
|
|
|
Decrease in other liabilities |
|
|
(167,933 |
) |
|
(273,606 |
) |
|
|
|
|
|
|
|
|
|
|
| Net cash used in operating activities |
|
|
(4,163,882 |
) |
|
(24,046,513 |
) | |
|
|
|
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
|
| |
| Purchase of property and equipment |
|
|
(17,993,245 |
) |
|
(19,230,581 |
) | |
| Restricted cash |
|
|
(2,208,687 |
) |
|
— |
| |
| Purchase of Nexcom assets |
|
|
(9,051,716 |
) |
|
— |
| |
| Purchase of available for sale securities |
|
|
(126,815,964 |
) |
|
(89,063,887 |
) | |
| Sale of available for sale securities |
|
|
42,398,023 |
|
|
31,987,260 |
| |
| Maturities of available for sale securities |
|
|
88,412,167 |
|
|
92,745,267 |
| |
|
|
|
|
|
|
|
|
|
|
| Net cash (used in) provided by investing activities |
|
|
(25,259,422 |
) |
|
16,438,059 |
| |
|
|
|
|
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